Monday, 30 December 2013

The ethics of medical marketing

Is it ethical to sell medicines in the same way as you sell soap ? A trivially put , but troubling question. Consider the arguments for and against.

The problem in the medical industry is that the consumer, in most cases, is absolutely ignorant and is completely reliant on a doctor's opinion. But it is not the doctor who is paying - it is the consumer. At the time of consumption, the consumer is usually also not in a frame of mind to make rational , sensible choices. He is at his most vulnerable and therefore it can be argued that freedom of choice, a basic underpinning of capitalisim is, by definition, a contradiction in terms when it comes to a medical product

The basics of the medical industry is predicated on a few facts
  • New discoveries are extremely costly - be it a drug or a medical device.
  • Most nations grant a patent for a new discovery which enables the inventor to enjoy a monopoly for a fairly long time
  • Once the patent expires, the product is subject to the same pressures of competition, demand and supply as any other product in any other industry. 
  • There is very little product differentiation that is possible - formulations being legally regulated. Consequently, distribution and selling become the primary marketing tool for companies.
The industry is also peculiar in that the consumer is forced to consume - if it were possible, the consumer would prefer not to consume any medical product at all.  Given that it is the doctor who "forces" the consumer to consume, the backlash of customer dissatisfaction is also on the doctor - at the very least a virulent negative opinion against the doctor and more likely in the US for example, a lawsuit.

If that is so, is it correct for aggressive sales practices, usually found in most industries, to flourish in the medical industry as well ?  Most of the aggression on sales is towards doctors which raises even more ethical questions - should the doctors be influenced so heavily in their decision making. Every major drug company has been caught in questionable sales practices.  GlaxoSmithKline has been accused of bribery of medical professionals in China. Eli Lilly was charged with the same thing in Brazil. Pfizer sponsored incentive trips for Bulgarian doctors - euphemism for holidaying in Greece. Glaxo again took US medical professionals for "conferences" in Hawaii. Amgen offered discounts to  doctors to shift from competing products but allowed them a way to claim full price from health insurers.  Johnson & Johnson has been fined a colossal $2.2 billion for marketing practices stretching over 10 years in the US. Is anybody still left  who hasn't been fined ?

Almost every patient who sees a doctor in India complains of over testing and over prescription. Aggressive sales practices of medical companies and hospitals have certainly contributed to this "disease". One doctor I know, quit a hospital, because he was given a target for generating revenues through tests and prescriptions, regardless of whether the patient needed it or not.

While it would be easy to condemn all sales practices, these are a fundamental and essential part of the capitalist system. We would not bat an eyelid on any of them in other industries like telecom or clothing, or whatever. Its because the industry is the medical industry that there is unease. Although die hard loony leftists will argue against this, it is undeniable that capitalism and free markets have made incredible medical advances possible. If you simply ban all selling , and therefore dampen the means of achieving the profit motive, the industry would inevitably stagnate and then decline.

So where should the line be drawn. What is the difference between educating a doctor on a new drug or the effectiveness of an existing drug  and pushing him to prescribe it. We would, of course,  encourage a "soft sell" but would frown on a "hard sell" - the difficulty is to determine what is "soft" and what is "hard". These are extremely tough issues on which there isn't an easy answer. Doesn't mean that we shouldn't grapple with, or debate about, them.

Thursday, 26 December 2013

When two arrogant heavyweights meet

In the blue corner - the gigantic gorllia, sometimes the most valuable company in the world. The inventor of the smartphone and the giant who believes that you can have any colour you want as long as it is black or white. Yes it makes a great product, but then behaves like a monopolist - sets prices , forces you and carriers, charges an absolute bomb and snubs India, launching its product whenever it likes, a few million years after launching in the US.  Meet Apple Inc.

In the red corner, the largest telecom carrier in the world. Has a mere 750 million subscribers. Cares two hoots about anybody anywhere, so much so that it has a proprietary system for 3G which nobody else in the world uses. Tells every body in the telecom ecosystem to grovel on bended knees before even coming to visit. Has the almighty Chinese government at its back; so it can basically do whatever it wants. Meet China Mobile.

In the middle is the Chinese consumer who is absolutely nuts. He and she own a zillion mobile phones. They are constantly at it; so much so that Homo Sapiens Chinesensis has evolved a neck at a 15% angle to the rest of the body so that the being can see the phone better. Loves the iPhone, loves every other company phone, has a million ripoffs as choice and spends  89.4% of waking hours fiddling with the phone - the rest 10.6% spent in the Karoake bar, popularly called KTV ! It also helps that the aforesaid species has tons of cash in the pocket.

Until now the two beasts circled each other warily, but never really wanted to get into the wrestling ring together. Apple was basically selling whatever it was producing and didn't care about China Mobile. China Mobile was busy recruiting the entire Chinese population and didn't care about any phone manufacturer. End result was that iPhones couldn't be used on the China Mobile network, atleast on 3G and no self respecting Chinese would be seen dead on 2G.

Things have however changed for both the giants. Apple has seen Samsung overtake it as the largest smartphone maker. Apple increasingly can't sit back after launching an iPhone model and simply count the cash . So much so that  it had to descend from its lofty heights and condescend to launch the iPhone 5S in India, a mere two months after launching it elsewhere (fly a kite Apple; I am not buying your product anymore). The hope for salvation  is the largest market in the world, China - where Apple has a miserable 6% market share.

China Mobile has two "tiny" competitors - China Telecom and China Unicom who adopt the global standard for 3G and have been offering iPhones for years. These pygmy upstarts have "only" 450m subscribers.  China Mobile's profits are falling and it is absolutely pissed off that Chinese kiddos, besotted with iPhones are ditching it despite getting Mao Zedong to order them not to from his grave !

Now the two giants have shed a bit of their arrogance and have  done a deal. Tim Cook actually flew to Beijing instead of the usual practice of asking every telecom company chief to stand outside his door and recite Gayatri Mantra 1008 times before coming in. China Mobile have actually welcomed him into their sanctum sanctorum, thus far reserved for only Xi Jinping and Li Keqiang. Terms of the deal have not been disclosed but it appears that China Mobile's 4G standards will be something that iPhones will be compatible with and hence China Mobile will now offer iPhones to its customers.

We'll have to wait for full details of the deal to judge which of the two heavyweights had to shed their arrogance more.  But is nice to see two beasts eating a little bit of humble pie. Especially since I can sit on the sidelines and hoot derisively having no truck with either. It's three and a half years since I escaped from the clutches of China Mobile. And yes, I know I said this in a  long ago post in Preeti's blog, but I am hoping that readers have short memories and will not hold this against me !

Saturday, 21 December 2013

Oh Yes, Wait a minute Mr Postman

There are some endangered species in  the business world. One is the Secretary - gone are the good old days when an Amazon or a pretty young thing (you had a choice) would guard the entrance to your cabin, get you tea, organise your wife's kitty party, bring a shorthand notebook and take dictation (remember that ?), and do such other extremely important activities. It was invariably a woman - gender equality activists please note - and the choice of an Amazon or the pretty young thing depended on whether your need was mothering , or ....... you get the drift !

But this post is not about secretaries ! It is about another , what I though was an endangered species,  the mail room kid.


In the good old days, all offices had a big mailroom. Usually in the basement, this was a fairly large room into which all the incoming mail would come.  There was a massive pigeon hole contraption and the boys would expertly flick the mail into the relevant pigeon hole. This done they would collect all the sorted stuff and make their way to each part of the office, delivering the mail. 

Now, it must be understood that the mail room boy was the lowest on the corporate totem pole and it was the entry job for a young boy (always boys) who was , well, not qualified for greater things. There have been examples of those who started in the mail room and made their way to the corner office, but let us say, this was the exception. Being young, and in his opinion incredibly handsome, he was rather looking forward to that portion of his job that involved  delivering and collecting mail. His time and demeanor when delivering however depended on whether he was encountering the above mentioned Amazon or pretty young thing. A hopelessly big smile, lots of chit chat, a sing song voice, a general slowness of speed, etc etc all characterised the journey to those stations where the Amazon was not the resident species.

This of course, must be long gone. surely. Whoever has heard of a mail room still in existence - surely no dinosaur still writes a paper letter anymore.  Right ? Imagine my surprise when I read the news item that corporate mail rooms in the UK are straining under the weight of incoming stuff and they have had to take extra staff !!! What on earth is happening ? Have the Brits , with their well known fondness for ancient customs, gone back to snail mail ?

Well, it appears that the culprit is Christmas shopping. Staff are doing all their shopping on line and getting it delivered to their offices. So the mail room kid is making a comeback - instead of delivering a mountain of paper, he is now deluged with everything from frilly knickers to iphones ! He still does the rounds of the offices, whistling to himself, but alas, there is no Amazon to avoid or pretty young thing to chat up. Instead there are only dull boring spectacled oafs all hunched up over their keyboard.

The problem of a deluge of Christmas shopping deliveries has apparently reached epic proportions. Sir Humphrey Appleby (Ramamritham's guru and mentor) has issued a decree banning government department staff from ordering online stuff to be delivered to the office. He has invoked the principle that office was office and staff are not supposed to use the office facilities for personal stuff. The staff are protesting saying that since they have to be in the office all day, where else could they accept the deliveries. They are threatening Sir Humphrey that denying  Christmas shopping opportunities and making staff work instead, tantamounts to human slavery and denial of basic human rights (Mr Preet Bharara, please note !)  The matter had not been satisfactorily resolved at the time of publishing this post, and its only 5 days to Christmas.

Even endangered species make comebacks ! And this blogger has taken to posting utterly trivial and inane stuff as the holiday season approaches !!

PS : Regular readers with the exception of those old enough to know (Sriram and Ravi !!) might want to learn of the significance of the title of the post from here :)

Tuesday, 17 December 2013

United States beware - you have twisted Ramamritham's tail

The recent diplomatic spat between India and the US, should normally not be the subject matter of this blog - it having nothing to do with economics or business. However, since the nuclear weapon of Ramamritham has been invoked by India, it now falls into the realm of comment here, considering rhe world beating expertise this blog has on that venerable gentleman.

In case you have not been following the events, the US arrested the deputy consul of India in New York on the grounds that she had underpaid her domestic maid (imported from India) and consequently committed "visa fraud". I don't wish to discuss the merits of the case here, although this pertained to an event in the past, is subjudice in an Indian court, and very likely debatable hinging on the obscure valuation of accommodation and food. But in true American government fashion, this was handled with extreme insensitivity - the lady was arrested as she was dropping her children to school , handcuffed in public, searched (allegedly strip searched) and taken to jail before being released on bail.  This blogger has long been a critic of how America handles such matters even when it comes to its own citizens - there is hardly a need to handcuff people , make them do the perp walk, hold them along with those accused of criminal charges etc, for alleged civil crimes. No civilised country does this  but that is the prerogative of American voters to decide if it is right or wrong.

India, or at least, the Indian government is mightily pissed and has retaliated. It has done such things as summoning the US ambassador in India and giving her a dressing down, refusing to meet a US delegation currently in India and such other diplomatic rebuffs.  But the real deadly move has been to let Ramamritham loose on the US embassy in India ! Ramamritham has now sought details of the activities of every diplomat and his or her spouse, asked them to furnish details of salaries paid to Indian staff, including maids, they employ here, etc etc. He has asked them to turn in their ID cards and has withdrawn their special privileges that breezes them through the every day bureaucracy that anybody in India faces. He has also hinted that gays in the US embassy could equally be arrested under the current laws of India !!

America does not know what it is risking by attracting the attention of Ramamritham. If he puts his mind into it, he will discover innumerable violations of the law that American diplomats have done, albeit in ignorance or involuntarily.  Such is the nature of India's laws and pedantry that it is impossible for any human to exist in India without having violated the letter of  one law or the other. The violation may be purely procedural in nature - for example not filing some form or intimating some trifling detail, but that is enough. Ramamritham will go after you with gusto. There is no power on earth who can stop him. For example if the diplomat and his family have stayed in a hotel somewhere and not taken great care to fill their nationality as US citizen on the hotel form (whoever looks at that form's fine print when checking in at 11 PM after a delayed flight) - he has committed a crime. Years ago, Ramamritham arrested Nusli Wadia precisely for this ! If the embassy has not displayed the Provident Fund rules on its notice board for the benefit of Indian staff (and there are rules on where the notice board has to be situated in relation to the office) , it has broken the law.  There are potentially 1,453, 678 violations he can look into. I have great pity for the American embassy staff and their families - they have no idea what they have gotten into - and all because of the actions of some insensitive pig headed Ramamritham equivalent in New York.

If the United States knows what is good for it, it will promptly meet with Ramamritham, beg his pardon, fall at his feet ,  do shashtang namaskar, recite Abhivadiye three times and beseech him to turn his kind attention back on the hapless Indian citizens who he has been torturing from time immemorial.

Friday, 13 December 2013

I love Samoa Air


I am likely to vote for Samoa Air as the best airline in the world. I have never flown the airline, nor have I been to Samoa. So why this sudden fancy ? Its because I just discovered that they charge passengers based on their weight !

I have traveled many a long mile on planes and can be considered a fair expert on the matter of air travel. But even I have failed to understand how airlines fix their fares. Nor can I be sure that I won't have to cough up more on reaching the airport, for check in bag fees (horrible American airlines) , place in the queue to board fee (Southwest), going to the loo fee (Ryan Air), quench thirst fee (Indian carriers)  whatever, whatever. If there is a logic to air fares, it has thus far escaped my comprehension.

But I do have  a pet peeve when it comes to airfare. You see, the cost of flying an airplane is all down to weight - airlines will do anything to reduce the weight of the aircraft.  You would therefore expect that airlines would have some linkage of their fares to weight That is indeed the case with checked in baggage. But when it come to the more substantial issue of the weight of the passenger itself,  it seems to have been forgotten. Now, I must confess that I have a serious weight problem  - I weigh literally nothing !!! Therefore my pet peeve has always been that I have to pay the same fare as  Rajalakshmi sitting beside me - she of the gargantuan proportions ! And I always seem to attract Rajalakshmis as my neighbour - so I occupy one tenth of the seat and the good lady spills over from hers and occupies the balance nine tenths !



I have railed often against the injustice of it all, but to no avail. And then I came across Samoa Air's policy on fares. Fares are simply based on your and your baggage's weight. They quote a per kg price. You and your baggage stand on the weighing machine. Weight multiplied by the per kg fare and that's your bill !!! If you don't believe this, visit their website.

Wow - I can now fly almost for free.  Wouldn't that be the most spectacular thing to happen. I , a jaded traveler, who can't stand the sight of a plane anymore, is now all perked up and energised to travel - thanks to the wonderful policy of Samoa Air.

The airline was forced to take this practical step because Samoans are the most obese people in the world. Any airline that flew Samoans and did not have a weight policy would not take off - pun intended. So this was virtually forced on them, but then who cares what is the motive for a brilliant pricing strategy.

I love Samoa Air.  Samoa - Oute alofa ia te oe !!


Saturday, 7 December 2013

How about a WTO deal inside India

If you can get 159 people to agree to anything, you must be a magician. Well, Roberto Azevêdo, did just that. The Brazilian is the Director General of the World Trade Organisation and today 159 countries agreed to a treaty. For years and years, nothing but bickering has the been the result - in Geneva, in Seattle, in Cancun, in Doha.  But at last in Bali today, something has been signed. Modest it may be, that will set common customs standards and ease the flow of goods through borders around the world. But to get all 159 countries to sign up (even one could scuttle any deal), is a major achievement.

They almost didn't. The chief spoiler was India - at the end of the negotiations, virtually every country was pissed off with India. India was threatening to veto the deal on the issue of its programme to feed 75% of its population at subsidised rates (the unfortunate Right to Food Programme).  India's stand in most multilateral forums is to shout loudly, be a spoiler, pontificate, and in general be a nuisance. Such a position was usually the role of the United States, which remains very good in pontificating. But in the last decade, the developing countries have been big noise makers - none more so than India. At the end of the Bali round, Anand Sharma, India's Commerce Minister is not going to be very welcome in most parts of the world. But finally he did relent and India signed too.

A global free trade agreement is in everybody's interests, although the loony left usually rail against any form of globalisation. Most countries have come to realise the value of free trade, except for the problem that they want it to be free when it suits them and want to shamelessly protect when they encounter some lobby or the other. One of the chief culprits is the self appointed bastion of free trade , the United States. It champions free trade to other countries, but has horrible market distorting subsidies in a wide range of industries - chiefly farming. So does the EU. Both of them want free trade, but do everything in their power to stop free movement of services - the draconian visa restrictions is as trade blocking a move as any customs barrier. India wants the US and everybody else to let it freely export IT services (the one thing it is good at), but refuses to import say wheat or onions . China wants to export to the world, but will not allow foreigners anywhere near banking, insurance, etc. Everybody is protecting special lobbies and screwing the consumers in the bargain - the consumer has a right to the best and cheapest product, wherever it may originate from and yet governments do their best to block this, citing the need to protect some powerful lobby, usually of the rich.

It is not this blog's intention to make the case for free trade - it has been well made by far more illustrious men and women.  In any case, no rational argument is going to convince the loony left and the rabid right - so why even try ? This post instead is going to plead for a "National Trade Organisation" inside India itself. If you thought there is free trade inside India, you are grossly mistaken. Each state draws it boundaries, and the sight of the long queue of trucks on the state border is enough to tell you that every possible block is made on the free movement of goods. The honourable lady in charge of one of our Eastern states went even to the extent of banning the movement of potatoes from her state to the North East recently, ostensibly to reduce potato prices in her state. She was literally playing with a nuclear bomb - first of all her act was grossly unconstitutional and secondly if every state decided to copy her, what will become of India.

For years, India has been trying to implement the Goods and Services Tax - a common indirect tax regime across the country.  Nobody can get the States to agree (although I am sure none of the honourable finance ministers of any state can cogently argue why he is opposing this ). BJP Chief Ministers are the chief blockers although the idea itself came about when Vajpayee was the Prime Minister and the move was a BJP brain child. Freeing up the state borders will do wonders to India's economy. The only person it will hurt is Ramamritham - and he along with his political masters are doing their best to block this.

Mr Anand Sharma is not going to be very welcome outside India. Maybe he may want to sit in Delhi and try and get a national treaty signed by all states. After all, there are only 35 states and union territories. And if 159 countries can agree to a treaty, surely 35 states  can. Oh I forgot. In the WTO, there is only 1 India - Inside,  there are 35 India types, each worse than the other. Fat chance of a deal.

Thursday, 5 December 2013

Blimey ; what a spectacular trade deal

The sight of David Cameron, prostrating himself flat at the feet of the Chinese "emperors" is a beautiful reminder of the state of affairs of the British Empire. To understand the context, about a year or so ago, David Cameron had the temerity to meet with the Dalai Lama. Now anybody who even smiles at the Dalai Lama is a pariah  as far as the Chinese government is concerned. David Cameron committed the unpardonable sin of actually shaking His Holiness's hand. China promptly condemned UK to the doghouse - no meetings, no trade deals, no investments, etc etc. For one year, the naughty schoolboy was made to stand outside the class.  After a year of punishment, he has been allowed inside again.

Promptly the Rt Hon'ble Prime Minister has taken a big delegation and gone straight to Beijing, to do Shashtang Namaskar (Indian way of prostrating at one's feet). It is as yet unclear as to whether he did "Abhivadiye" as well :) No less than 130 other luminaries accompanied the Prime Minister , no doubt to clinch innumerable trade deals (rumours to the effect that they have gone there to sample Peking Duck are strictly untrue).


I have been scouring the newspapers as to what sort of trade deals these worthy leaders of the British Empire have struck. Only one real deal has been reported so far. Britain will now be able to export pig semen to China.

Until now, Britain was unable to export pig semen to China, because apparently Chinese sows had concluded that their would be British  suitors, er, rather smelled. China did not want its dainty damsel sows, "polluted" by laowais.. The British Prime Minister and his 130 strong entourage succeeded, after marathon negotiations, to convince the Chinese that British pigs did not smell. The clincher was achieved when it was pointed out that suitors would not travel to China, but instead, er, only the manifestation of their manhood, would .

Animal Rights activists perhaps protested that it was unfair that Romeos and Juliets were not allowed to coo sweet nothings personally, before being asked to maximise "production". Such protests were firmly quelched - on the Chinese side, by rounding up the entire lot and sending them to the 114th People's Prison in Hohhot, Inner Mongolia, and on the British side by Sir Humphrey Appleby proclaiming that for services to country and Her Majesty, the aforesaid love deprived pigs would be awarded the Order of the Thistle and Garter (2nd grade).

It is  well known in knowledgeable circles the the male species amongst China's various living organisms are rather less well endowed than their counterparts from the West. Now it has been expertly opined that British pigs were capable of producing 30 piglets a year, whereas the Chinese cousin could only manage 16. Pork is the staple food of the Chinese, and the fact that the Chinese were prepared to overlook the insult to their manhood to satisfy their bellies, is proof that the stomach is mightier than the organs further south.

The British are crowing about this trade deal saying that it will generate some £45m. It is unclear as to whether the great and mighty British empire has fallen to such levels where the aforementioned sum is considered "big". I suspect it is the affirmation of the superiority of British manhood , albeit of the porcine variety, that has made the British crow about the deal. Well, it wouldn't be cricket to boast about the size of the matter in question (deal I mean), but in the pubs across Westminster, after a few pints, that is precisely the boast being made !

What a spectacular, almighty, game changing deal that the Prime Minister of the United Kingdom of Great Britain and Northern Ireland has achieved along with 130 illustrious subjects of Her Majesty, the Queen, traveling halfway around the world.

Wednesday, 4 December 2013

Send Ramamritham to Mars

Statutory Warning : This piece is not a sober, reasoned, point of view. It is an unadulterated rant. It may be highly biased and devoid of much logical argument. But , what the hell, once in a  while a blogger deserves a good yell. So here goes

I wish the Indian Space Agency had hit upon the idea of sending somebody with a one way ticket in the recently launched Mars expedition. I would have happily sponsored the ticket for Ramamritham. Especially the Ramamritham who sits in the Income Tax Department.

What has prompted this rant is the antics by Ramamritham against Nokia. He has been going against Nokia disallowing their royalty payments as an expense and demanding tax on them. When the company refused, he went to court and has frozen their main factory in Sriperumbudur.  By this act, he is jeopardising the sale of Nokia's telecom business to Microsoft. Succumbing to sheer blackmail, Nokia has offered to pay some Rs 2000 crores just to get Ramamritham off its back - so that it can include the Indian operations in the sale to Microsoft. This is nothing short of extortion. But Ramamritham has refused this amount too to settle the case .

This specimen has a problem with every global company that operates in India. He has a problem with their linkage with overseas operations - maybe transfer pricing., maybe structuring of M&A, maybe whatever. He has gone after Vodafone in the famous case, he is going after IBM, he is going after Nokia and no doubt he will be going against every global company that operates in India.

I am not for one moment saying that global corporations are saints. Far from it. But these sort of tax planning actions are done by all companies in all corners of the world. Remember, tax avoidance is not a crime; only tax evasion is. Every company cannot be a rogue. In true Ramamritham fashion he is going after soft targets and cares two hoots about its fall out effects on the Indian economy. No  global M&A transaction is possible these days without India proving to be a massive headache or else excluded altogether. Every Indian operation now has to staff an oversize tax department to cater to Ramamritham. Only an absolute idiot will invest in India today. India is not some special divine country which is separate from the rest of the world. If Ramamritham has a problem with transfer pricing, he should go to the WTO and negotiate tax treaties with the entire world. He should also remember that the shoe can equally be on the other foot too - other governments can also screw Indian companies in their respective countries. The US equivalent of Ramamritham has to only do a fraction of what he is doing and the Indian IT industry will come to a halt.

The British government and the Finnish government, to name only two, have intervened at government levels and asked the Prime Minister to rein in Ramamritham. But Ramamritham cannot be stopped. Once he has gotten into his silly head that he must do something, not even an asteroid hit will stop him.

If Ramamritham is seriously interested in increasing tax revenues, he should at least be man enough to go after the people who do not pay any tax at all. Only 3% of the Indian population pays income tax. The rest of the 97% don't. If he has the guts, he should go after the blatant tax evaders, who number in the millions. By going against respected companies, who are tax payers,  he is basically saying to the world - come to India at your peril. We would be delighted if you don't come to India at all . In Ramamritham's view of the world, it is best if there is no economic activity at all - for then his tax department will be perfect - there are no taxes to collect and hence nobody to go after.

Deliver us God, from this parasite who infests us. The only route to salvation for India is to send Ramamritham to Mars.


Sunday, 1 December 2013

Hooray Hooray; It was not a holiday !

I never thought that my Nobel Prize winning poetry ( !!) , featured in the previous post,  would so fox my readers. No my dear ladies and gentlemen , No, I was not on a holiday. I did not go trekking in the hills. I was not marooned on Robinson Crusoe island. I was not a trillion miles away from civilization.

I was in the People's Republic of China. And all of the facts mentioned in my "poem" are true.

The country hides behind the jīndùn gōngchéng. The Chinese have their own equivalents of everything - Weibo is actually bigger than Twitter;  TMall and Taobao are bigger than Amazon and E Bay.  Youku may not be as big as YouTube, but its all there and Renren is as big as Facebook. But then only the Chinese use these . CCTV is all in Chinese, except for one appalling English channel and the less said about China Daily, the better.

What a shame, that such a proud, fine, great and strong culture like China wants to retreat into isolationism. Three years after I left China, I go back and the thing that strikes me most is how much more inward looking China has become.

China has every qualification to "conquer" the world - not on horseback, but into the minds and hearts of the people everywhere. But my dear Chinese friends, you can hardly do that if you are gazing intently at your navel !


Sunday, 24 November 2013

With apologies to Rabindranath Tagore



Where the mind is maybe with a little fear but the head is held high

Where there is no Blogger to corrupt the thoughts

Where there is no Facebook to waste time

Where there is no Twitter to inform the world that you are brushing your teeth

Where there is no YouTube so that you don’t watch Justin Bieber

Where there is no Google for you to check what sesquipedalian means

Where you can’t get to Dropbox  for the trillions of useless stuff you have stored

Where there is no Picasa , you narcissist, for admiring your selfies

Where there is no TV, to watch mindless soaps (or football if you prefer)

Where there is no bourgeois newspapers to corrupt the mind

Into that pure , unpolluted, NSA free heaven, my father, I shall awake tomorrow, and be there for a week !

Monday, 18 November 2013

No Tim, No

Caesar's wife must be above suspicion , as the saying goes. It is not just important to be right, you must also appear to be right. This is even more important for very public figures. That is why this post is titled No Tim, No .

Timothy Geithner, the former Treasury Secretary (in Indian parlance, Finance Minister) is going to become the President of Warburg Pincus, an investment banking firm. There is nothing legally wrong in what Geithner is doing. He was the Treasury Secretary during Obama's first term.  He left office in January 2013 and has been writing  a book since. Now comes the news that he is to become the head of Warburg. He is perfectly entitled to do whatever he wants once he steps out of pubic office.

The problem is the old one of Caesar's wife being above suspicion.The cosy nexus between businessmen and politicians is a significant problem today - especially in the US after Citizens United. The financial sector is in the eye of the storm of government attention and regulation , much of which Geithner himself started when he was Treasury Secretary. In his new role, he will have a considerable amount of interaction with the US government. While he may want to , and maybe even will, be prim and proper, it is inconceivable that he will apeear to be so in the eyes of the public. While we will be charitable to Warburg, it is not inconceivable that they hired him precisely for his political talents and connection.

This is the age old problem of government servants and regulators leaving their jobs, or retiring, and then joining the very corporates they regulated or oversaw.  In some countries there are statutory cooling off periods before they can do so. My belief is that it should never be done. It is impossible to ignore the conflicts of interest. Even if the individual concerned is meticulously honest, he will have to recuse himself from virtually any issue that has a bearing on his old job. That will make him completely ineffective. In effect, the very reason corporates hire them is to take advantage of their past connections. That is why it is wrong.

The reverse flow also happens. Corporate honchos join the government too - in the US many past Treasury Secretaries have been CEOs of Goldman Sachs. I would not go so far as to ban corporate types from joining the government - the flow of talent from the private sector to the government is one to be encouraged. But I believe, they should not take up a position that is in the same field as where they came from. I have no problem with say Henk Paulson becoming the Secretary of Education , but as Treasury Secretary, where his job would be to supervise his former employer Goldman Sachs , ...... that fails the test of Caesar's wife. I know this would not utilise his talent in his field of expertise, but if public trust in government is to be maintained, fairness must be above board. Do you really think Paulson's decision not to rescue Lehman Brothers, a hated rival of Goldman Sachs, can ever be whiter than white, even though it may have actually been so ?

I am well aware that such a view will be met with derision in today's circles as old fashioned, romantic rubbish. Yes, old fashioned values have little support in today's environment. But that does not detract from the merits of them. Pompeia, Ceasar's wife held a festival for women only in which Cloudius gatecrashed dressed as a woman, ostensibly for seducing her.  He was caught, but in the trial that followed, he was acquitted. And yet, Caesar divorced Pompeia, leading to that famous expression. Can you imagine in today's world, such standards being set by those in power. Alas, that is why governance today is at such a low point.  When values come to the fore again, we shall be governed by honourable people.

Sunday, 10 November 2013

Wonga Wonga

If you are a Brit, you know Wonga very well. If you aren't, you probably have not heard of them. Ed Miliband, Britain's opposition leader even called the ruling government's philosophy, the "Wonga economy". This post is a continuation of my struggle with moral dilemmas -  its been that sort of a time these days. What was black and white  long ago,  now, appears to be impossible shares of grey - far more than fifty, if you must know !

Who or what is Wonga ?  Wonga is a provider of  something called payday lending - a concept very familiar to those of us who came from humble beginnings. Wonga gives small amounts of credit for extremely short periods - until the next pay day. It helps poor families tide over until the next salary comes. The maximum amount you can borrow is £ 1000 and the maximum period you can borrow upto is 30 days. Loan evaluation and grant is extremely quick (has to be , isn't it) . Sounds very good. So what's the catch ?

The catch is that the interest rate works out to  some 5000% per annum. Yes, the number of zeroes is correct and there is no mistake in the decimal point. Five or six thousand percent per annum. Except that when you charge it, say for 18 days, it doesn't seem to amount to much in absolute money.
On the face of it, you can't fault Wonga. They are extremely efficient in processing and disbursing loans ; often on the same day. They don't hide the interest rate or the charges you have to pay. Their website couldn't have been more clearer on this - they say 5853% clearly  (credit card companies might wish to learn a thing or two from them). So , they are not cheating anybody. They are upfront with the costs, deliver exactly what they say and as a consumer, you have every right to take them or not go anywhere near them.
On the other hand, you can argue that if ever there was a better example of usury, you would be hard pressed to find it. 5000 % ?? Does anybody need to buy anything at all borrowing moneys at 5000% interest. ? This is what is getting Ed Miliband's goat - the culture of borrowing at ridiculous costs to buy things you don't really need. Or at least you wouldn't die if you didn't have them. Yes there may be emergencies , for which such financing is a boon, but outside of that, do you really need it. Remember, this is the UK, where the NHS makes sure you get free medical care; so can there really be an emergency outside of the medical arena ?
This is , of course, not unique to the UK. In India, the local pawn broker performs exactly the same function. Judging by the numbers of people who make use of pawn brokers, Wonga and the like, there is a big consumer need for such service - interest rates be damned.
Herein is my dilemma. There is a consumer need and this is being filled transparently, legally and efficiently , at least by Wonga. If this were banned, it would only drive the providers of such a service underground and result in probably far worse terms. (Indian governments who banned micro finance might want to think about it).  At the same time, don't consumers need protection from usury. And should we not be discouraging a culture that  wants immediate luxuries and pays for it by borrowing -  the same culture that sees each nation saddled with huge debt.   But who am I to say what is a luxury and what is a necessity ? A poor man who cannot afford it, but  borrows to go on a holiday may be called an idiot. But then, he has to have some happiness in life. So, by what and whose standards should we judge. Should we allow the free market to operate and whoever wants to do whatever can happily do so, even if he is digging his own grave ?  But aren't there undesirable social trends that we should be actively fighting against - isn't that why we don't allow free drugs .... I am in a whirl.  HHEELLPP !!

Friday, 8 November 2013

Are all jobs OK ?

Are there "good" jobs and "bad" jobs ? Are some jobs inherently demeaning in nature and therefore to be banned ?  Or is the economic imperative an acceptable argument for any job where there is demand and where people do of their own free will ? Unforced prostitution is one such example. Manual scavenging is another. I find it a difficult moral dilemma, as this post on the "mule women" of Melilla will show. I came to know of this from one of the greatest of radio shows - BBC's From Our Own Correspondent. (starts from 12.25). If you prefer simply the written version rather than hearing it on the radio, it is here.

An accident of history has made two small enclaves of Spain (and therefore of the European Union) exist on the north coast of Africa. Melilla and Ceuta are located in what should be Morocco, but they are part of Spain and hence border-less with the European Union and all its goodies. The whole story arises because

a) Moroccan residents of Nador, the neighbouring province in Morocco are allowed to freely travel (but not stay) in Melilla
b) Morocco allows goods to be brought in from Melilla, duty free, as long as it is physically carried by a person - not pulled in a trolley or cart, but physically carried across the border.

Enter the "mule women" of Melilla. They are hired by Moroccan importers to cross into Melilla and then physically carry the goods across the border, thereby earning the right to be duty free. Each bale is some 60 to 80 kgs and the women can make 3 or 4 trips in a day. They are paid some 3 or 4 Euros per trip. The photo below,  courtesy of the BBC, tells its own story.



This is exploitative and tantamount to slavery - right ? Can you imagine carrying 80 kilos on your back and trudging across the border all day, and in the hot sun, like this . There is little doubt that the women are prone to injuries . If ever there was an example of back breaking work, this is it; literally. Wages are a pittance. That the workforce is almost entirely women and not men is evidence that there is exploitation, at least on wages, going on. All this due to a quirk of customs law which imposes a duty on something that is mechanically moved, but gives a duty free status if it is carried personally. The whole matter can easily be solved by a stroke of the pen - a change in the customs laws. Hey presto; exploitation of the women will stop.

But as Linda Pressly, the BBC reporter who publicised the story says, when she asked one of the women why she was putting up with exploitation, she was met with an incredulous look from her - "I have a family who must eat. I have four children and nobody to help", was the answer. If you take away their work, they will have nowhere else to go and will become destitute. Governments can give a dole or a pension, but is that better than being allowed to work ?

In my younger days, this was not a debate and the solution was clear. Nothing justifies exploitation. Any trade that exploited any vulnerable group physically or emotionally, must simply be banned. Demeaning work must be wiped off the face of the earth. Period.

Now, as I am older, and perhaps a tad wiser, it's not so clear. What do you think ?

Sunday, 3 November 2013

The US Treasury should be ashamed of itself

There is nothing more irritating than somebody who pontificates. Even more irritating is if the guy has absolutely no credentials to pontificate on the subject in question. Imagine the Pontiff (if you'll pardon the pun)  lecturing on the merits of Viagra. Or Sarah Palin extolling the merits of Shakespeare. Or even this blogger blogging about Kollywood !!

That is how I can best describe the American Treasury's criticism of Germany's economic policy. The criticism is that Germany's current account surplus as a danger to the eurozone and the world economy. Germany runs a current account surplus - that is, it exports far more than it imports. This is , according to the American Treasury, a big danger to the world economy. This blog is not meant to be a technical paper - so I will desist from explaining this , which will make it too technical. Suffice to say some "leading economists" also share this view.

First let us play the man rather than the ball - after all this blog is refreshingly free of any responsibility and therefore can attack any which way ! Of all the people, America should not be lecturing on fiscal responsibility. If there is a prize for the most fiscally irresponsible nation on earth, surely the US of A would be a prime candidate. The land of the free has many redeeming virtues, but fiscal responsibility is not one of them. The US Congress hasn't even passed a budget for the last 3 years. The last time they balanced their budget was 1998-2001 and before that  1969. They have had a President who cut taxes massively and then started two wars. They are now flirting with a sovereign default every 6 months. They have promised Medicare and Social Security to their citizens, then inadequately funded it and have no plan to defuse the time bomb.  Because the dollar is the world's reserve currency, they take on levels of debt that most other nations would shrink in horror at the very thought. And collectively as a nation, they foisted the global economic crisis of the last few years. Even India, another prime candidate for the ultimate fiscal irresponsibility award would be hard pressed to match that.

And the country they are taunting is Germany. Post reunification, they were termed the "basket case of Europe". They lifted themselves out of that by their bootstraps. Their prudence is legendary - they are so scared of inflation that they follow the most conservative  monetary policies of all. They struck a deal with the unions when they were in a mess, to hold wages and little by little built up German competitiveness back again.  When the Eurozone crisis hit, they have been the chief (only ?) lenders bailing out every nation that is in trouble.  They don't manipulate currencies (unlike another country we know which also runs a big current account surplus). Can you imagine America bailing out other nations in today's world (to their eternal credit they did that after the Second World War, but that is 70 years ago - the America of today is a pale shadow of the America of those years).

What is the prescription. The Germans must stimulate their economy. They should take more debt. They should consume more and save less. Great.

The Germans have been more peeved at the newsy bugging of Angela Merkel's phone. They haven't reacted with fury  at the American Treasury. They should tell them to piss off and take their pontification elsewhere.  Perhaps the best way to do it is for "Mutti" to whisper on the phone that the US Treasury is a greater danger to the world than Al Qaeda (probably true) and leave it to the NSA spooks to relay that upwards.




Sunday, 27 October 2013

Big Mac, but no Heinz ketchup

Corporate battles are usually hard fought, but this really is the limit. McDonald's is blacklisting Heinz because they had the temerity to appoint the ex chief of Burger King as their CEO. Sure, some rivalries are legendary - Coke vs Pepsi, P&G vs Unilever, Apple vs Microsoft, Walmart vs every other retailer, and indeed McDonald's vs anybody else who sold burgers. But isn't this a step too far ?

HJ Heinz, the makers of Heinz Ketchup were recently bought out by Warren Buffet's Berkshire Hathway. The new owners appointed Bernando Hees as the CEO. The trouble is that Bernando is the ex CEO of Burger KIng. Apparently McDonald's is finding this objectionable. So the next time you buy a Big Mac they wouldn't give you those sachets of Heinz - one if you buy in in India, two in China and a fistful in the US !  Presumably it would be somebody else's - maybe Hunt's or whatever.

Yes, corporate rivalries are taken seriously. If you work for Pepsi and are seen drinking  Coke, well, let us say your career is not going to zoom. A long time ago, this blogger was invited to a Pepsi dominated party and thoughtlessly asked for a Coke (just as a generic term for cola) . The hush that followed , the incomprehension of what I had done wrong for a minute, the dawning realisation and then the flush of embarrassment - well; 20 years on, it is still fresh ! Equally vivid is the memory of hosting a Coke delegation at work and going to extraordinary lengths to ensure that Coke was the only cola seen for miles; only to discover one bottle of Aquafina - just one - at somebody's desk.

But that is relatively unusual in these days when corporate loyalties are somewhat passe. This blogger is a die hard alumni of one of the aforesaid mentioned companies and would really hesitate to buy the rival's products. But this is not some religious zeal - just habit formed over the years.

Which is why I am surprised at McDonald's move. They are not such hated rivals of Burger King. And ketchup is a small portion of their ingredients- after all there is a lot more to burgers and fries than ketchup. And Heinz is not doing something ridiculous of going to bed with competition. All they did was appoint somebody as a CEO. Does this warrant such an extreme reaction ? McDonald's is behaving like the proverbial school bully. Grow up, you lot.

Competition need not be a war. The other guy is not some hated tyrant who ought to be exterminated. Sure, you want to beat him, but you do not have to be a Genghis Khan. Cooperation, even with competition, is not unheard of. While Apple is slugging it out in a patent war with Samsung, they quietly buy chips from .

So shame on you McDonald's for issuing this press statement - "As a result of recent management changes at Heinz, we have decided to transition our business to other suppliers over time" . Here is my own statement - As a resulted of pig headed behaviour by McDonald's I am hereby declaring that I will not have a Big Mac ever. Anybody hahaing that statement on the grounds that I am a vegetarian will be hit on the head !


PS - Actually this post has taken somewhat extra liberties with journalistic licence. Heinz has been acquired by Berkshire Hathway and 3G Capital. 3G capital are also the owners of Burger King. So there is more to it than pig headedness. But then , a post is a post is a post and a blogger has to survive ....... :)

Tuesday, 22 October 2013

The war of the old on the young

The old have declared war on the young. Few dare say this, but the other day Alan Milburn did just  that. This is an emotive issue and there are bound to be strong and passionate feelings. But this blogger, who is himself more in the old category rather than the young,  is in agreement with this premise.

Alan Milburn,  a former UK government minister and an advisor to the current government,  has said that there is a fairness deficit between generations. He thinks that the elderly should lose some of their benefits to make life easier for the young.  It might sound callous, but if you sit back and reflect, there is much merit in what he is saying.

In the West, much of the budget deficits and the debt problem is because of  disproportionate spending on the elderly. Health care costs which are largely consumed by the elderly, are a huge burden on the economies of most nations. Ditto pensions - promised very liberally a long time ago. Medicare and Social Security are the greatest ticking time bombs in the US - and both mostly concern the elderly. Same is the situation with the NHS in Britain. Pensions are a millstone around the neck in France and Germany. Unionisation  and labour laws in Europe protect and coddle the existing workers (mostly older) and keep out the prospective workers (mostly younger). And where do the cuts come ? On education, on infrastructure, on employment - all directly affecting the young. All this while, the debt burden of countries keeps getting ratcheted up which our children have to pay back some day. We are now a civilisation that cares for the elderly and cares two hoots for the young.

Consider the vexed issue of pensions. We are blessedly able to live longer. We all seem to have appropriated pension schemes long ago, that pay out pensions based on the last drawn salary when in service. This is then adjusted for inflation. None of it is funded from our savings - its all funded out of the contributions of the young who are currently working. Frequently we draw more in pension than we drew when in service. If you think this is a particularly European phenomenon - think again. The pension for government and public sector retirees in India follows the same pattern. And after the person dies, his or her spouse continues to get it. If you retire at 60 and die at 90 and your spouse outlives you by 5 years, then you draw pensions for some 35 years. You didn't even work that long in the first place.

Its not just pensions or medical care. All sorts of boondoggles are given to the elderly. Free bus passes. Subsidised transport. Higher interest on savings, discounts and freebies of all kinds. And if you ask them just to work that bit longer before retiring , there is such a furore that governments are terrified of even thinking so.

The future of any civilisation depends on the investment it makes on its youth. Each succeeding generation must build and improve on the previous generation. For the first time, we are faced with a generation which might actually have a lower quality of life than the earlier one.And why is this so ? Simple. Because there are more older people and they vote. Try even making a small cut in benefits to the old - the government will fall. The young ?? Who cares about them. They don't vote en bloc and bring down governments. Many of them don't even have the right to vote - they are not yet 18 or 21. They are old enough to take a crippling debt to go to college but not old enough to vote.

So, we the elderly, ought to pause and reflect rather than continuing to corner all the money. We should provide for old age ourselves - save and create a nest egg for pensions and health care when the time comes when we are too old to work. Fund our own pension schemes  and  not depend on the government to give handouts. We should politely return all subsidies and ask the government to spend it on the young. We have had our time in the sun - let the youth of today enjoy a better quality of life. And pray that the Good Lord will take us into his lap in a timely fashion, and not let us live till 100. When I go to my grave, I would rather go with the knowledge that I sacrificed to make life better for the children, than with the curse that I appropriated all the goodies and left the children to rot.

I know its harsh. But think about it.

Sunday, 20 October 2013

IPO yourself !



Initial Placement Offer (IPO), is the first sale of shares in a company to the public - remember Facebook's IPO and now coming on, Twitter's IPO. It is when successful entrepreneurs who have built a good business cash their millions, along with those who invested early in their company. We've heard of company IPOs. But have you heard of an individual IPOing himself ! That's is what is about to happen - where else ? in the US of A.

An American Football player (remember this is American football; not soccer), is trying to do just that.  Arian Foster is a running back with the Houston Texans, a NFL team. NFL players are paid a fair few millions - being considered more valuable than surgeons or distinguished professors (Profs J and Khe please note !). Now football players are better known for exercising their brawn and are not necessarily top notch in the brains department. Enter financial advisers, brokers, agents, managers and all sorts  who want to touch and feel all that money. Being very bright, they cook up all sorts of ingenious ideas and schemes. The latest is to IPO yourself !

This is how it works, A company has been formed whose only business is the income streams associated with Arian Foster.  They are issuing 20% of the shares of this company for $10 m. He already has a $23.5 million contract with the Houston Texans. In addition he may get endorsement deals and after he retires, hopefully some broadcasting deals. Investors can get a 20% share of all this. If you believe Foster is a huge star, this will be a nice worthwhile investment. If you believe he is a dud, then well .........

This deal sounds strange, but actually is a fairly straightforward affair. The future income flows of a NFL Player can probably be predicted with greater certainty than those of a company. For starters he has a guaranteed $ 23.5 m contract - so a $4m share at 20% is assured. Knowledgeable sports buffs (like yours truly !) can make informed predictions of the future for players. So, this can be an easier evaluation than many others.

I should admit is that this is not the first instance of somebody doing this. The British rock star David Bowie famously did this a while ago. Some other, less famous people have also attempted it. What is strange is all the "innovation" happening here. Surely the best brains in the land can do more productive things than dreaming of an IPO for a player. But then most of the world's innovation is going into areas such as this and not into what society might consider as more useful areas. 

The person most vulnerable in all this is Arian Foster himself. Once he signs this deal, he has virtually pledged his soul to the financial whiz kids. He cannot make any decision anymore regarding anything. If he wants to switch teams, he has to take the approval of the shareholders. If he wants to retire - then too. If he gets injured, he will be cursed and told to get on to the field even if he hobbles on one leg. They will make him do all sorts of endorsements or whatever to earn more money. They might force him to play off season in Matabeleland. And well, after retirement, he has to keep slogging, finding ways to earn more money. Is all this worth a "mere" $10 m.

 Prof Khe might want to to consider IPOing himself too. He can become an instant millionaire. This blogger is prepared to "invest" 24 million manat for a 10% stake in him  !!

Tuesday, 15 October 2013

T I N A

If there was, the dollar would be kaput. But there is really no alternative. So it has to be the dollar as the world's reserve currency.

It would be useful to go back to basics and understand what a currency really is.  A currency is really nothing more than a piece of paper backed by the promise of  a government. If you believe in the promise of the government , you hold that currency. If not, it is worthless. Remember the promise is only an act of faith - there is no backing of gold or a real asset behind the currency. Take out an Indian rupee note - any rupee note. It will say "I promise to pay the bearer the sum of xxx rupees" under the seal of the government of India. That's what it is - a promise.

Governments have the licence to print money. But if they simply keep printing on, it will lose its value. Beyond a point, the population will simply lose faith in that currency and resort to barter or to some other currency. That is precisely what happened in Zimbabwe sometime back - the Zim $ lost all value and the US $ became the de facto currency.

When it come to international trade and countries holding reserves, the only real currency of faith is the US dollar. Because the world had, and still has, the maximum faith in the US government above all. But that faith has been seriously eroded in the last two years thanks to antics in the US Congress. If there was an alternative, many would have fled the dollar. But there isn't. The Euro is on an even worse footing than the dollar - which country is the backer of the Euro ? Germany ? France ?  for there is no country called Europe. The Japanese Yen inspires very little confidence. The Chinese Yuan ?? - well the world has to go a long way before that happens - is everybody prepared to trust the Chinese government more than any other ?

China has called for a new global reserve currency. It has to, for after all, it is the largest lender to the world. Easy to say. But what will that reserve currency be ? And which government, or governments, will back it . And how can we trust that any more than the US dollar.

So there really is no alternative. But that should give those in the governance of the United States food for thought. The dollar retains its pre eminence only because the others are worse. Trust is hard to earn, but easy to lose. Those doing the antics  in the US for the last few weeks ( actually for the last four years) have done much to erode that trust. But the problem lies deeper. The US has been printing money like there was no tomorrow, for quite some time. It has come to the brink of default once before, and is now engaged in the same brinksmanship again. There is increasing evidence that sound economics is becoming a rare feature of the management of the US economy.

I am no economist and learned academicians ( are you there J !) have to design the future global reserve currency. But whatever that might be, it all boils down to trust. Alas, there is little to trust in today's world. Whose word can you trust when the only economy that is practiced is that with the truth.

The US dollar note says "In God we trust". I'm not sure if the irony strikes the governing class in that country.

Follow by Email

Blog Archive

Featured from the archives