Mall(ed)!

I spent the weekend walking along the waterfront at Georgetown in DC. I crossed state borders across the Key Bridge, walked into an enormous Barnes and Noble and ate Ethiopian food for lunch — which reminded me suspiciously of Dosai and Chicken Currey. Georgetown is a beautiful part of DC, it has cobbled streets and the air of old colonial occupation.

An interesting observation by a friend struck me, amidst all the picture taking, eating and such. The English language has the most unusual capacity to fit word meanings to the times. My friend noted, for instance, that what we really mean when we say “I shopped at the ‘mall’” is that we shopped at a plaza. A plaza is really the original mercantile establishment with landscaped shops, eating places, sometimes a movie theater and so on. A ‘mall’ on the other hand is a reference to the open space surrounded by buildings, a place for the pedestrians- what we would call a ’sarai’ in India. Which is why, for example the traditional ‘mall roads’ in hill stations in India are wide open roads, not building stuffed with shops. In Washington the ‘National Mall’ is also an open space surrounded for the large part by the Smithsonian museums.

Fascinating isn’t it? Ironically the new age ‘Sahara Malls’ in Gurgaon, the Indian capital’s satelite township has increasingly indoor provisions and the township itself is called the ‘mall city’, where the malls are is a very good question!

In Defense of Water Markets

The Williams Lake Tribune just carried this letter on water privatization. The letter is a pretty good summary of what most people find ‘horrible’ about the idea of water privatization. Granted most water privatization attempts especially in Latin America have gone terribly wrong but to turn that into a feature of water privatization is almost like attributing incorrect causation. Sample some arguments from this letter- it goes like this;

Surveys have indicated that 88 per cent of Canadians want a national water policy that recognizes clean drinking water as a basic human right, and ban bulk water exports”

I’m not sure what such a statement means. One could have a national water policy that encourages investment in water or the operation of water utilities by private entities. If private provision could provide for clean drinking water would that make it less of a human right? Does a human right to a commodity mean that the humans have no right to a choice in the provider of essential services?

One more interesting tidbit that popped out at me while I read was this:

Recognizing water as a human right is a vital first step toward ensuring equal and adequate access to water for all people. Water privatization and commodification are imminent dangers to our public control over water. Water scarcity is a reality in Canada. And who’s poised to make obscene profits from water shortages? Giant transnational corporations.”

How does one legislate over human rights? India (a common law country for a very long time) is still grappling with a rights-based approach to law. Also it is a good thing if public services quality rises in fear of losing out to privatization, this is one of the key benefits of competition- and indeed an increasing trend in publicly operated water utilities in North America. More and more public operators and owners are deciding to go the ‘management reform’ way, if the threat of competition could yield such results – what wonders could complete privatization do if implemented correctly with safeguards, regulatory frameworks and a competitive basis. Water scarcity is a reality in most places, which is why it is a great investment opportunity for everyone not just ‘giant’ corporations!

Finally, water is a commodity. A ‘commodity’ is not a bad thing, for god sake- it provides value, utility, pleasure- what have you, how could it be a bad thing? A commodity has a price because it is valued highly, and it earns rents because of that too. There would be a big problem if something as important as ‘water’ was not a commodity, because it would mean it had (in a non-economist philosophical way) no value- or that people do not value it enough. Incentives would be terribly distorted, all over the world we pay for other essential infrastructure and don’t complain about these being ‘human rights’!

We are told “but people can live without infrastructure, not water”, but what about food? Can people live without food? But wait! Haven’t we priced food as a principal commodity for millenia? Besides nobody is saying people should live without water- water privatization is only the suggestion that adopting a particular model of ownership and operation of water utilities can actually bring better quality water to more people.

Sometimes I wonder what is actually being opposed? Private monopolies or the free market? They are two different things, and I am definitely on one side.

Would Libertarians Vote for Guns?

I’ve always had the uneasy feeling that I am placed on rather awkward footing as far the traditional political spectrum goes. For instance, I believe that markets have tremendous potential to tackle poverty, I believe liberty is fundamental to a good life and that people are largely self-interested and that this works out for everybody perfectly well. That places me to the right, but then again I am also anti-war, anti-nuclear weapons and anti-religious fundamental- that takes me to the left and then again think ‘environmentalism’ is over-hyped which also takes me to the right again.

So while I would like to celebrate the “arms rights victory” in Washington DC here with the liberty-loving folks I find myself unable to do it.

For Indian readers–  The District of Columbia V. Heller is a landmark Supreme Court decision in which the   United States Court of Appeals for the District of Columbia Circuit became the first federal appeals court in the United States to rule that a firearm ban was an unconstitutional infringement of the Second Amendment to the United States Constitution, and the second to expressly interpret the Second Amendment as protecting an individual right to possess firearms for private use.  The libertarian argument and therefore consequent celebration runs along the idea that banning anything is a constraint on personal liberty, does nothing to make cities or places safer (there is empirical data) and in fact infringes on the capacity for self-defense.

This is the same argument that I and several others make when we argue for the legalization of ‘prostitution’ (for the lack of a more dignified word) in India or an amendment to section 377 which is used to harass homosexuals in India. In theory and perhaps in practice too (in America) it is an extraordinarily valid line of argumentation. Gun control though is something that I am not convinced about and I could make an argument for its existence from a free-market perspective too. The role of the government, limited as it may well be, is to enforce rule of law. It is probably the only thing the government should do- enforce contracts and rule of law. Small but vital nonetheless because none of these free market things would happen without people who followed law.

One of the first things that struck me in America was how the average person crossed the road. Most people here scrupulously watch the red stop sign, and cross in strange angular ways as designated by designer footpaths. No one ever seems to cross diagonally. Indians do not cross roads that way, in fact in most cases we run across roads weaving through cars and cycles. Lack of rule of law in some sense.  Imagine a country where you had the right to arms but saw no value to not randomly go on a killing spree.  Imagine a country where laws were not even secure enough to make a bus conductor return your change- hello Cameroon.

Would libertarians still vote for the right to bear arms? While I support the right to defend personal liberty I think in transition economies developing property rights, the enforcement of contract and rule of law supersedes considerations of gun freedom. In fact it could even be a disaster, as we increasingly see in India- especially in those parts where rule of law rapidly earns rents in the form of bribes, delivers gun licences and has children shooting each other because they saw it happen on ‘television’.

Metronomics

Its taken me almost ten days of travel on the Washington metro to realize that it is a public transportation system that actually uses peak-load pricing rather effectively. Traveling from Crystal City to Dupont Circle everyday at office hours (between 8 a.m. and 10 a.m.)  in the morning, for example, costs $2.16. Coming back the same way not at office hours (sometime in the afternoon) costs $1.60.

The difference between prices seemed curious at first and I was baffled how someone would potentially calculate and plan their expenditure for the week on transportation if the prices changed so arbitrarily. For a while I even thought it was gas prices causing the price to go up till I discovered the lower price on a fine Thursday afternoon, only to feel stupid when I realized that these metro trains run on electricity not gas. That would be all too unreliable in India where electricity outages are an everyday phenomenon, not true here though.

Prices change depending on the time of the day you travel. Rush hour tickets are more expensive than taking an empty yellow line to Georgetown in the afternoon. Peak-load pricing is a great example of how economics uses incentives to better everyday existence. At office hours in the morning, a train on the metro line is a scarce commodity with a lot of people competing for space on it. Those who ‘really’ need to get to work on time pay the premium and access the metro, those who can wait- do, and get the benefit of lower price when the commodity is not so scarce and therefore not so fiercely competed for.

In some sense this is the market allocating a scarce resource efficiently through prices as the signaling system. Its also a great de-congestion method, providing a disincentive to travel on the metro on peak times- the higher costs mean that at least some people will look for alternate ways to travel- by road, bus or walk. I sometimes wonder why heavily congested roads in India aren’t just converted to toll roads with peak-load pricing. Electricity too is a commodity that responds well to the idea of peak-load pricing and actually encourages the conservation of electricity well.

In India peak-load pricing works beautifully for the Internet and Telecommunication- most Indians’ are familiar with free calls from 9 p.m. to 6 a.m. schemes on cellular services and free night-time surfing from Internet Service Providers. Watching peak-load pricing work in a public transportation system that I use everyday is fascinating and makes me wonder why this powerful tool isn’t used more often in Indian infrastructure and public utility provision.

Quick Geek Tip

If you’ve ever run out of space on the critical C: drive on windows and tried everything including junk cleaners and still failed to create substantial space- do something simpler instead. Try editing your system environment variables- change where windows stores TEMP to a different partition that does have space, change where your paging file is stored and delete the folder that stores your drivers (on my computer this was swsetup) after you have backed them up. And there you have it-  see Giga bytes of space free on C: again.

Why Ad Hominem is Bad Strategy…

It never is pleasant to wear your political stance on your sleeve. I started this morning with a diatribe from someone (not named for the sake of civility) who I am sure has not even an iota worth of political clarity.  What could possibly prompt this? Most likely the fact that I am spending the summer working for an organization that ostensibly ‘Mr. Diatribe’ disagrees with.

This is what I was told in response to my ‘libertarian leanings’:

just checked on xxxxx foundation. am amazed. people like you work for free market shit in and for america and still wanna call urself indians and pretend to be theatre lovers and major book readers and god knows what other. really sad. human rights activism? u must be joking. you shud be in irag then – or palestine. but then u need the american breast to suck. sorry for this.

Spellings retained as in original!

Its taken me a while to stop laughing at this, but I have succeeded. Tearing these arguments apart is not really the focus of this post- though I shall say this:

Working at an ‘American’ think-tank is not the same as working for America. In fact, I’m not even sure what someone ever means by the phrase  “working for America”. Is a country just one giant monolith? What was the allusion to? – All capitalists in general, the entire population of Americans (who I assure you, hold a wide variety of conflicting views on most subjects- just as entire populations do in any country), the government of America? Now this is what a political philosopher would describe as a classical example of the ‘methodological individualism’ fallacy. I, of course, do not  work for any of these groups- I work to advance the cause of liberty.

The next argument is the ‘free market’ problem. This is definitely the result of misguided thinking, a corporate monopoly is NOT an example of the free market! The free market is about choice, liberty and competition- it is not about one large corporation taking over! More importantly free markets are not the same thing as ‘privatization’ (which also gets unfairly abused by quasi-uninformed- fashionable-activist cum socialists) or even liberalization or globalization – its more like a blend of all three that works in the best interests of everyone. Its a commitment to freedom.

The next argument is my favorite argument; its called the ‘Let’s kill all the Non-Resident Indians’ argument. Of all Mr Diatribe’s arguments this is probably what disturbed me the most, and that is so not just because it is completely out of context or because as a tiny aside I am not an NRI. The problem is two-fold I think. Actually manifold – but i think I will stick to two.

My first response to this is that nation-state boundaries are human constructs and human society has spent  millennia in war trying to defend them. War is probably the most counter-productive phenomenon that has plagued human productivity. I’m not sure I appreciate a sense of ‘nationalism’ that arises out of being ‘Indian’ because I was born within the boundaries of a geographical territory I had no choice about. Also globalization and free trade is probably the surest path to peace, nothing is more obvious to people: “I am better off making money as opposed to killing you”.

At a lower level of argumentation; what does being ‘Indian’ mean, and what on Earth does my place of residence have to do with being ‘Indian’?! There is a more serious objection I have to this however- prosperity spreads through voluntary exchange and therefore trade. Anyone who has even in the passing read about comparative advantage knows that. One of the reasons why India, for example, prospered through the golden ages was because we have had a history of immigrations. Immigrants brought opportunities to trade, therefore immigration is a good thing for everybody.

Why can’t we understand the NRI phenomenon the same way? NRIs (though I do have a problem with this kind of classification of people) add value to the economic system, both the Indian system and the American system and doing so ensure that their existence is a positive sum game! NRIs are not an example of capital flight. Farmers in India will not be better off if NRIs did not do business abroad and farmed instead. Bastiat is far better at explaining the phenomenon of What is Seen and What is Unseen, than I am, and this is a classical example of how that effect works.

Productivity stems from being employed in or engaged at doing what an individual is best at doing- and if that is entrepreneurship so be it! This is probably why I am not in Iraq or Palestine (though I would love to be) yet! To illustrate Mr Diatribe’s line of argumentation a little better: If you love ice cream you better only be employed at Baskin & Robbins. Hell no! Just because I love ice cream it does not mean I should narrow down my options in terms of career choices to working with ice cream firms all my life.

Here is another argument that a uninformed quasi-socialist can throw at you.  They will yell at you saying thus “someone who believes in markets is necessarily anti-human rights”. Not true. This to me represents the pinnacle of ignorance. Markets are super-efficient mechanisms that work for everyone’s benefit, if and when, they exist for everyone! The problem, as most development economists know, is not that we have too much market- but far too little.

For example, in India the formal credit market is terribly under-developed. Witness the fact that women are not a part of the formal banking system, neither are several millions of the poor. These people are also incidentally thwarted by the government in every effort towards entrepreneurship through yards and yards of regulation. Also notice that these people are called ‘pre-bankable’ in micro finance parlance (which all the uninformed quasi-socialists love), they are ‘pre-bankable’ because they hope to build up a credit history through micro finance that allows them to get into the formal credit market. But why?, yells the uniformed quasi-socialist, because micro finance loans are costly, they have higher interest rates than regular credit markets that rely on markets! What is micro finance really achieving? Its creating a market where none existed earlier, and people want to move onto more developed markets.

Markets are good, being excluded from them is bad. Markets are not mean for fairness, justice and equity- that is for the uniformed quasi-socialists. Why? Because people who understand markets know that every policy helps one group at the expense of another- we know fairness is a subjective value. We also know that efficiency works, we know prices are great signaling devices unless distorted by taxes or subsidies, we know that there is no such thing as a free lunch because opportunity costs exist and we know incentives matter. We therefore believe that the only ideological position one can legitimately take is to not justify waste (read inefficiency, not consumption waste!), so why should an ‘Indian’ with so many starving hungry people work in America for free markets? Because such Indians care about poverty, they care about allowing people to empower themselves through new markets, better trading opportunities, lesser regulation to do trade!

This is a far cry from the uninformed quasi-socialist who believes that government failures for 60 years of independence is forgivable, but not market inefficiencies (which by the way are the result of too little market, not too much!), who sits and yells about the environment degradation and rising food prices in the same breath without understanding that underpricing natural capital might actually be the cause. It is also a far cry from the uninformed quasi-socialist who for the lack of brains resorts to rhetoric and more often to abuse. Free markets are for free people who believe in liberty, for everyone. Not forced equality or a subjective standard of equity- but the opportunity for everyone to be prosperous through free trade.

Finally, the jab about culture, theater and books. I suppose it might hurt Mr. Diatribe to look at history and tell me the why the most ‘bourgeois’ nations of Europe are home to some of the world’s greatest art? Hungry people do not really make good artists, do they?  Sub-altern art in communities even in Africa and India was the result of well-fed people.  There are similar trends in history for theater and literature.

Strangely enough, I am hard-pressed to find any member of the ‘uninformed quasi-socialists’ tribe who have actually read the Das Kapital in original! Activists like Mr Diatribe above, are the torch bearers of the new pretentious half-baked hand-me-down socialist tradition who base their perceptions on doctored summaries and the most horrifically prolific Vandana Shiva. Small wonder though, considering how disastrous state-monopolized education systems are.

All this brings me to the point of this post which is rather simple. Deciding to be nasty in conversation with someone especially about political issues is probably the most unhelpful thing to do. To begin with it prompts nastiness in response, or complete silence or in some cases– a patient detailed response, like this one, which is highly unlikely. Two it is extraordinarily presumptuous to assume that one knows everything, and far worse to assume that the other person is poorly-read, stupid or just plain wrong. In my experience, I find most people have very good reasons to believe what they do- its usually ‘us’ on the other side who decide to be aggressive and nasty that need to learn common courtesy and therefore need to attempt to figure out the rationale behind the other individual’s thought process.

The writer of the diatribe of course, would attribute ‘motive’ to such a suggestion and he would be absolutely right- after all I too get to do well in a nation, country and world where most people are prosperous!

And I quote…

 Washington has thunderstorms, dishwashers, mile long walks to metro stations and the odd person with neckties..”

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The American Panoply

On balance I like what I’ve seen so far. I’m awed by the enormous amount space, the lack of people and the profusion of trees. I like the sidewalks too and the fact that average car drives by the traffic signal. I also find the accuracy of directions, colour-coded metro lines and GPS guided cab services fascinating.

In the last week I’ve decided that Walmart is palatial, Starbucks is overrated but makes for an excellent landmark for just about anything.  I also think the Churchill sleeping system is meant for tall people and contains one too many duvets for the ordinary soul.

I’m now a Tom Palmer fan and am utterly convinced that is one of the world’s most fascinating people and perhaps one of the best teachers of history. I also like the efficiency of the average day in DC, though I think the claim that American society is flat is a rather bogus one- hierarchies are invisible which doesn’t mean they don’t exist.

I also find the obsession with the classification of intellectual traditions slightly odd, my understanding and therefore concern stems from a focus on what works in the policy world not necessarily from what forms an artificially constructed set of coherent belief systems.

With these trivial observations I shall now sign off. More later.