A Thud in the Hills, and Monsoon Wedding

Dilip D’ Souza has a post up at the newly launched How The Other Half Lives called Thud in the Hills which asks a question that isn’t asked often enough: when will reforms benefit the poor? And can they do nothing but wait for the benefits to trickle down?

My answer: it depends.

The little reforms we have had so far have made it much easier for corporations to do business- by making it easier for them to raise money, start new businesses without having to run around for as many licenses, and choose for themselves how much to produce and what price to set. And they have made it easier- no, possible- for them to import raw materials and equipment.

But reforms have been non-existent in some other, vital, aspects. There has been no judicial reform. Litigation and criminal justice still move so slowly that a legal case becomes a weapon with which to bludgeon your rivals. It also results in pathetic conviction rates, so that imprisonment or even the dealth penalty are not deterrents to criminals.

Until this year, reforms also made it difficult for buyers to compete with each other for buying farm produce, which led to middlemen cornering the market, and contributed to farmers falling into dire straits. And of course, there have been no reforms which allow farmers to sell their land legally and at market prices.

There have also been no reforms to place checks on our various taxation departments, so they can continue to harass us unabated.

This means that as individuals, we have to wait for the slightly freer private and corporate sector to pass the benefits of reform on to us.

This has a problem: although the private sector does pass on the benefits to us- as cheaper prices, new products, better service and variety- these benefits reach the rich before they reach the poor. The rich have the money to pay for these benefits, after all. Only after the rich have been tapped and exhausted as a market, will we see the private sector move to the poor.

We are seeing this happen with cellphones. Delhi and Mumbai now have teledensity levels equal to London and New York. What are Airtel and Reliance and Tata Teleservices doing now? Pushing their network beyond the cities and into the small towns and villages, so that they can capture the market there (and also allow Dilip to call his friends and tell them that he wishes they were there). They also dropped their cost of staying connected- earlier to 200 rupees a month, and now to a thousand rupees for life.

It’s unfair, isn’t it? The rich got their cellphones way back in 1994, and the poor had to wait until 2005.

But the unfairness is compensated, because of this: reform reaches the poor the last, but it benefits them the most.

For the rich guy who bought the cellphone in 1994, it was at best a convenience. He already had a telephone- probably more than one- at his home and office. He could now be connected to his contacts sixteen hours a day instead of twelve.

But for the auto driver or vegetable cart owner who bought it last year, the cellphone is their first phone. It doesn’t represent four additional hours of connectivity- it represents being connected, for the first time ever. It isn’t a way to stay in touch with existing contacts. It’s a way to have contacts- and most probably, these contacts are new customers who will provide new business, or fellow small businesspeople who will help each other to find the best deals.

The first person to notice this was not an economist or a journalist or a telecom company CEO, it was a film director. In Monsoon Wedding, Mira Nair created PK Dubey- an entrepreneuer with no fixed assets- but who created wealth for himself using nothing but his intelligence and his cellphone.

Three years after Monsoon Wedding was released, Vodafone commissioned a study on their African consumer base. Only then did they discover that taxi drivers in Kenya were using mobile phones to tell each other where fares were to be found, unemployed villagers used SMS to check for jobs in Nairobi instead of paying the bus fare each week, and plumbers were able to see three instead of two customers a day.

Five years from now, when mobile phones have reached many more corners of the country, can you imagine what a similar study would find? Farmers using mobile phones to check prices, small retailers managing their inventory far more effectively, and maybe even as vehicles to spread the information that the Right to Information Act promises.

I’ll close this post with two thoughts.

First, the next revolution of this sort we’ll see will probably be in credit. ICICI Bank, GE Money and CitiFinancial are in two hundred cities so far, and they know that they can’t leave the next two hundred cities open to each other.

This means that they’ll hire thugs to threaten defaulters in Indore and Palakkad and Patiala, not just Delhi and Mumbai. They’ll call up people and offer unsolicited loans in Moradabad and Sangli and Bokaro, not just Hyderabad and Chennai. And just as cellphone companies cut their tariffs and offered ever more options to us, the customers, credit companies will eventually improve their behaviour and offer loans which are structured the way semiurban and rural consumers actually need them. Not because the Finance Ministry told them to do it, but because if they don’t, their competition will.

Second, this is what has happened and can happen if you set corporations free. If you set people free, can you imagine how much faster the poor would benefit? And how much more?

The Downside of Tull

Jethro Tull is the main act at Unmaad, IIM Bangalore’s cultural fest.

This does flip Unmaad into a league well above any other college festival- Euphoria or Parikrama just don’t compare to Tull. But it does have its downside.

The main downside is that the Tull show is soaking up sponsorship money like nobody’s business- seating, sound and security don’t come cheap, and the budget for prizes has been slashed by 4 lakh rupees.

What this means is that the Open Quiz, which I was conducting along with SKimpy and Kodhi will no longer have a first prize of thirty thousand rupees. It will instead have a prize of nine thousand rupees- still much better than what any other festival gives, but not the Landmark/ Odyssey killer we had fondly dreamt of. If you had decided to come to Unmaad based on my pitching of the prize money, I most humbly apologise, and can only promise to try and give you a quiz that is worth your ticket to Bangalore.

On the positive side of things, the events team has been highly apologetic, tried its darndest to bring in decent kind prizes, and have been refreshingly transparent about the whole thing. Amd when you’re doing something pathbreakingly different like getting an international band over, I suppose budget slippage is forgivable.

Finally, I know nine thousand isn’t as tempting as thirty thousand, but if you’re a quizzer do come to IIMB for our quiz. It’s on the fourth of February, and will feature questions we’ve been working on since July. There shall be no chimps, no peters and very little floyd.

Update: Prizes increased to 15000, 12000 and 9000!

Pre Placement Talks

Placements are upon us, and this is the month with all the PPTs (Pre-Placement Talks, if you were wondering). Recruiters come down to campus, and tell us about themselves and the roles they’re offering in one hour slots (longer, if the role is high-paying and Placecom thinks they deserve pandering pampering.

The worst PPTs are the ones where the recruiters promise you that working with them will lead to your personal growth and development.

It’s so arrogant. It has the subtext that you can’t grow and develop as a person unless you join that particular recruiter, and that you have grown at all upto that point.

I don’t want a job that leads to my personal growth. I want a job that gives me a lot of money and free weekends. Then, I’ll take care of my personal growth myself, the way I’ve been doing for the past eleven years.

The very worst PPTs are the ones with presentations that spend more time on company size and values than they do on what the company actually does (by which I mean makes and/ or sells), and on what you’ll do with them.

Not all PPTs are like this. The best PPTs are of three types:

  1. The only person giving the talk is an alumnus, who knows that we’re much more interested in the nuts and bolts of the role than on company values.
  2. The person giving the talk is a clued-in senior manager, who talks with great passion on the work the company does, and actually fits ‘company values’ into context, instead of making them a fuzzy pink cloud that is repeated with minor variations at every PPT. We had one like this last week by a boutique I-bank. I fell in love with it. There was no Powerpoint presentation, the CEO questioned the utility of PPTs themselves, and suggested alternatives, and proudly prcoclaimed that they had no HR department.
  3. The talk is an interaction session with the company, but instead of talking about the roles they’re hiring for, they talk solely about the industry they’re in (or some other industry if they’re consultants). Some excellent ones of this sort have been a talk on mortgage backed securities, and two talks by consultancies on private equity and the airline industry.

Holy Crap!

I seem to have missed this news entirely: the Tamil Nadu government is planning to take over the cable operators in the state.

Hmm, so two or three years without any obvious power-mad incidents was too good to be true. Indira Gandhi nationalised banks, and now Jayalalitha is planning to nationalize (should that be state-ize?) cable access systems.

A few thoughts:

  1. If this is meant as an anti-DMK measure, it’s stupid. Anti-incumbency will eventually push the DMK back into power anyway. The DMK will then ensure that the state-owned broadcasting apparatus it controls shows only Sun TV and there is a total blackout of Jaya TV. As Salvor Hardin said, it’s a poor blaster that can’t point both ways.
  2. This can’t be passed off as an isolated incident. The central government has its own creeping nationalization process going on. It has the utterly loathsome ADC regime in telecom, and closer to the topic of television, it has stolen cricket broadcasting rights from the people who bought them legitimately and passed them to its inhouse pet Doordarshan.
  3. The cable TV takeover is ostentiably being done to improve customer satisfaction. I shudder to think what customer satisfaction will be like after six months of government operation.
  4. Points one and three suggest that anything done to shaft a political opponent will very likely end up shafting the electorate more.

No Land for Air

Skimpy has a post up about how the shortage of airport infrastructure is a looming crisis for Indian aviation, and talks about how it might play out.

He suggests that the way out of the crisis is for the government to facilitate the construction of new airports- without necessarily building it themselves. According to him, private entrepreneuers can run the airport on a BOO (Build, Own, Operate) basis. The major role for the government would be to start a licensing or tendering process for new airports, and to facilitate the land acquisition.

He’s right. The less the government is involved with the actual development, the faster a new airport will actually come up. And I’ll have to reluctantly admit that the government will need to acquire the land and hand it over.

Why reluctantly? Because when the government acquires land and hands it over, it will be solving a problem of its own making. The reason the government would have to acquire land for the airport is that land laws in India are such a mess that airport operators can’t possibly do it on their own.

For example, in most states farmers can only sell their land to other farmers. This idiotic legislation means that any time any real estate developer wants to build anything- be it an airport, a highway, or an apartment block on agricultural land, he has to first get the government to buy it from farmers and then sell it to him.

This has two bad consequences. First, since the government is the dealmaker and has all the information about land value, it creates opportunities for corruption. Secondly, since neither the buyer nor the seller have information about how much value the other places on the land, it ensures that at least one of the buyer and seller will be unhappy with the price that is paid.

Suppose the government buys the land from the original owners at a price less than the value they associate with it. They’re going to be unhappy. This unhappiness will manifest itself as riots, protest movements, or litigation against the project. This will lead to delays in the project, driving up its costs.

Suppose the government decides to avoid all this hassle and pays a price which is definitely higher than what the owners value the land at. Now, the real estate developer ends up paying more than the market price. This could have two consequences- either it passes on the extra costs to the end consumers, or it decides that the project isn’t worth it at that price, and abandons it. This is a loss not only to the developer- it loses a money making opportunity- but also to the landowners- they lose the opportunity to sell.

These absurd land laws are a much bigger hassle than the shortage of airport infrastructure- in fact, they’re probably one of the root causes. And unless these laws are reformed, even private sector airport development is going to be plagued with litigation, delays and protests, just as other infrastructure projects like the Bangalore-Mysore Infrastructure Corridor have been.

Related links:

Indian Economy Blog: Reality of Indian Realty
Indian Economy Blog: Eminent Domain and Suchlike

They don’t make women like this any more

She was tall, full-bosomed and large-limbed, with compact shoulders. Her whole figure reflected an unusual strength, without detracting from the feminity of her appearance. She was all woman, in spite of her bearing and her garments. The latter were incongruous, a view of her present environs. Instead of a skirt, she wore short, wide-legged silk breeches, which ceased a hand’s breadth short of her knees, and were upheld by a wide silken sash worn as a girdle. Flaring-topped boots of soft leather came almost to her knees, and a low-necked, wide-collared, wide-sleeved silk shirt completed her costume. On one shapely hip she wore a straight double-edged sword, and on the other a long dirk. Her unruly golden hair, cut square at her shoulders, was confined by a band of crimson satin.
Against the background of somber, primitive forest she posed with an unconscious picturesqueness, bizarre and out of place. She should have been posed against a background of sea-clouds, painted masts and wheeling gulls. There was the colour of the sea in her wide eyes. And that was as it should have been, because this was Valeria of the Red Brotherhood, whose deeds are celebrated in song and ballad wherever seafarers gather.

Come to think of it, they don’t make men like this any more either. When was the last time you celebrated anybody’s deeds in song and ballad?

It’s a cruel, bland, dispiriting world.

Market Failures in Fiction?

After seeing the heat generated by this post, I was reminded of a discussion I had almost two years ago with Arnab.

Read PG Wodehouse’s autobiography, or his letters, and you’ll notice the importance magazines played in his early career. His novels would often be serialized as magazine stories stretching over several issues before they were released as books.

Is this unique to PG Wodehouse? No, Agatha Christie too got one of her first breaks selling twenty Poirot short stories to a magazine- I forget which one right now. And on the subject of fictional detectives- each and every Sherlock Holmes story or novel originally appeared in The Strand.

What’s my point?

This: the Strands and Ladies’ Home Companions of the past used to serve the same purpose with fiction that Instapundit and Desipundit do today with blogs. They filter the best fiction and deliver it to the readers. If the readers like it, that shows up in letters to the editor and requests for more stories by the same author. Based on his or her magazine career, the author can then start pitching books to publishers.

This has its disadvantages. It’s an indirect way of judging quality. People will buy magazines based on the overall bundle, not just the story they would be running in one particular issue. People might not write back to the editor and report whether they liked a particular story or not. But this imperfect feedback and quality monitoring system is still better than what we have today.

Twentieth century writers had to ‘pay their dues’ and consistently deliver good stories before they would be accepted by the general public and publishers. This placed novelists in the same situations as doctors and lawyers- you had to struggle for years, but if you were good, you hit the big time.

But what is the filtering and quality monitoring process today? There are specialty fiction magazines for sf and other genres overseas, but nothing with a decent circulation in India. Femina with one story a month is hardly a suitable filter.

Instead of filtering being done by readers, it is now done by editors. This means that a great number of Indian novelists will each come out with an average-to-excellent first novel- but very few will match that quality with their subsequent books- as Ravikiran pointed out here.

But when Ravikiran says that society is to blame for tolerating bad novelists, I have to ask: what choice does society have? The mechanism by which it can distinguish consistently good content creators from one hit wonders doesn’t exist.

But that leads to another question: why doesn’t it exist. And this is something I have no idea about.

It could be consumer behaviour- consumers genuinely aren’t interested in going through a huge number of average stories and picking out authors who have the potential to shine in the future. It could be because of business models- maybe nobody has yet come up with a profitable way simultaneously pay authors for stories, generate circulation, get readers to provide feedback, and build advertising revenue. Or the number of writers is too small- which again comes back to the business model- if there is enough money to pay people for their stories, would you see more and better stories?

Ideas for a business model / system of incentives that solves this problem are welcome. If you think I’ve got the whole idea wrong, and that I’m talking crap, you’re also welcome to tell me why.

No Best Title Contest

I must confess that I am taken aback by the adulation my blog title has received from so many quarters.

Because frankly, I always thought that the funda- leave alone the humour- of the title would be appreciated by very few people. Let’s face it, despite the delightful nature and versatility of IITM lingo, general junta doesn’t hold it in high regard. Those are the junta who’ve heard it, of course, so many people have not even had that privelege.

The adulation is all the more unexpected because I never planned to call the blog MSAF. My blog title used to be plain and simple aadisht dot net before I switched to WordPress. When I ran the setup and WordPress asked me for a title, I couldn’t think of a title. Of course, when you can’t think of anything sensible to fill in a text box, you fill it with Maajorly Shadymax Arbit Fundaes.