"Inside Job" - a must watch

Last week, I had the occasion to watch "Inside Job" a documentary on financial sector meltdown in the US - and its consequential effects on other economies. First, it is great to see Sony release a movie such as this in the mainstream theaters. Second, it emphasized yet again (as if reiteration was at all needed) that when confronted with self-serving greed, a system supposedly working on "self-regulation" is destined to fail.

The fact that the "freedom of markets" has been taken to an extreme - and needs urgent correction is there for all to see. Painfully, the lobbyists are so strong that the system continues - in fact becomes worse as the "solutions" turn out to be even sillier than the cause.

"Too big to fail" has now translated into "Even bigger" - rather than regulatory action breaking up large companies posing systemic risks into smaller entities that can be regulated better, the reverse has happened. The industry has managed through fear and favour to lobby the regulators and law makers from passing any laws that curtail the industry's ability to cause another catastrophe.

One hard hitting fact that emerged was the lack of intellectual integrity in the so-called thought-leader academic institutes. Leading academicians - deans and professors from Harvard and Columbia were filmed acting like petty thieves caught with their hands in the till. They apparently found nothing wrong in writing research as original work - where the recommendations benefited clients who paid for the research - and these august institutions apparently have no policy to avoid this conflict of interest.

In essence, one comes away from the movie - more than a little disgusted with the worshippers of the mammon - and of the antics of the "intellectuals" in business schools. Is it any wonder that with ethics such as theirs, the students have no compunction in causing misery to the millions in the real economy - so long as they get their bonus.!

A Visit to the USA - The Good, the Bad, the Ugly

I just returned from an 18 day vacation to the USA. This time around, my understanding of the issues affecting the country was certainly better than ever in the past. Some thoughts.

The Good

Nature has been kind to the USA, and the citizens have used nature well. Large open spaces (outside the metro cities – and large parks in most metros), clean air and reasonable infrastructure in most parts make the country extremely livable. I envy the houses and community infrastructure most places enjoy – something India may take a long time to achieve, if at all.

Obama’s policy of funding infrastructure is clearly visible, with roads being built in most places I visited. Perhaps more so than in India!

Local government representatives seem responsive to needs of their electorate. I heard stories of people reaching out to their senators to get issues sorted out, and the senators responding! India seems to have the same population per MP. Some lessons to learn here.

The Bad

Bureaucracy is abundant. JFK immigration took 90 minutes to clear – with immigration officers either absent from their stations, or busy sipping coffee and chatting among themselves – oblivious to the mile long line of travelers waiting to have their passports checked. Reminded me of Calcutta of the late ’70 when communists were at their peak!

Compared to that, Indian immigration is now a breeze – at 3:30 at night, it takes less than 10 mins to clear two plane load of travelers.

Socialism exists in various forms – housing taxes come bundled with school fees – clearly detrimental to those who have no children, but have to pay. This forces ghetto of a different kind – communities are generally homogenous with age and social strata determining housing – because of the taxes involved. The argument that the same level of education is available to all levels of income earners is fallacious – you can only stay in a community if you can afford to pay the house taxes of that area!

The Ugly

The healthcare system is a rip-off. Hospitals charge fees that have no connection to the value of service provided – George Washington University Hospital charged me a $1000 for a clinical examination of my daughter – no tests, no ambulance, no admission. I was advised (later on) that these fees are best “negotiated”! Wow!

The pharmacies are even more of a rip-off. A medicine that was supplied by Sun Pharma (which would, I assume, be making about 20 paise per tablet) was charged at $6 per tablet! Further, the pharmacy keeps the prescription – so that more than the prescribed medication is not made available to the patient. In a country where guns can be purchased in the department stores (almost), and where freedom to harm yourself is protected as a fundamental right (almost), the need to “protect” the patient against medication, (increasing the cost of drug delivery by several times what it needs to be – by eliminating competition in distribution) is criminal.

Overall, the country remains seriously uncompetitive in most matters. Most businesses make money through cartelization (finance), or through regulations (patent protection, visa controls, minimum wages) creating entry barriers. The basic education system stresses more on games and less on studies – a football coach at a college will likely earn 5x-10x what the math teacher makes. The country has some serious challenges to face as it comes to terms with a world where other countries offer greater opportunities for growth.

Cell size and scale - awesome

Genetics and Size - click HERE

Strike by professors of IIT and IIM

The Professors of IIT and IIM are planning a hunger strike in a few days to protest the fresh pay structure awarded to them in the pay commission. One grouse is that the teachers at these "premier institutes" are now to be paid at par with those of the other UGC supported institutes (actually the differential is being reduced). The consulting income that these professors make (in part because they are professors at these institutes instead of any run-of-the-mill university) is ofcourse not part of the debate.

The irony is that the IIM chaps think that they deserve more than even the IIT profs. Given that the debate is based on the grounds that these institutes are "premier" I thought it would be worthwhile to check the kind of academic work they do. IIMA's website is quite informative when it comes to the kind of programs they offer. However, click here - on the research and publications weblink - and you will be greeted by a blank page. The research page ofcourse claims that IIM A produces a third of all the management research done in India. I wonder if they mean that they are responsible for a third of nothing !

As Ram Tzu says (refer previous post)

You stand at the edge
Ready to throw yourself in.

What a shock to discover

There is nowhere to go
And no one to throw

Go figure

Correcting our Education system

Kapil Sibal, the new Education Minister recently unveiled his 100 day plan for "reforming" the education system in India. A proposal that seems, surprisingly, to have met with almost universal enthusiasm, has been that of abolishing examinations at the 10th grade. Speaking of education, he said

"We need to de-traumatise it and reduce the burden on parents and children. We could, for instance, think of abolishing the class 10 board exam. Why does a child need to appear for a board exam in class 10 if he/she is continuing in the same school?"

There a many things wrong in our education system - but eliminating competition in the name of "de-traumatising" is a huge mistake. In recent years, the world has woken up to the fact that India produces one of the largest numbers of technologists - scientists, engineers et al. In a U.S. Senate Committee Hearing on "Strengthening American Competitiveness", Bill Gates reportedly said:

"Unless we transform the American high school, we'll limit the economic opportunities for millions of Americans...we need to adopt more rigorous standards and set clear expectations. We must collect data that will enable students, parents and teachers to improve performance.And if we are going to demand more from our students, we'll need to expect more from teachers."

Those in India who hold the US education system as epitomizing the best should keep in mind the statement by Senator Enzi made at the same hearing :

"A year ago I was in India. We were trying to find out why they graduate so many scientists and engineers. I did have one person that I thought had some great insight. They said that they didn't have any professional sports teams. (Laughter.) So the highest pay and the most prestige that they could get was being a scientist or an engineer or a doctor, something in that kind of field."

Though almost farcical, there is a glimmer of truth in the statment that the votaries of "no stress" need to bear in mind.

The world does not seem to think there is much wrong with the Indian system. Japan has, seemingly, a cult following for "Indian" Maths.
A special reporter accompanying a business delegation from Japan in 2008 remarked

"After making a deep assessment of educational systems all over the world, particularly the developed countries, a majority of our educators have concluded that the teaching system in the Indian subcontinent can do wonders for Japan."

A story erroneously attributed to Bill Gates is none the less correct in the extreme. Charles Sykes when writing an op-ed on dumbing down of school education commented:

Your school may have done away with winners and losers. Life hasn't. In some schools, they'll give you as many times as you want to get the right answer. Failing grades have been abolished and class valedictorians scrapped, lest anyone's feelings be hurt. Effort is as important as results. This, of course, bears not the slightest resemblance to anything in real life.

Is anyone listening?