Desicritics Category: BizTech: Globalization

Swiss Bank Accounts

Blokesablogin — Wed, 12 Nov 2008 09:57:02 EST

This small article in the Washington Post brings yet another angle to the economic crisis that the US is facing. Hopefully, part of the money salvaged from these accounts can reduce the bailout money put up by taxpayers.

According to Transparency International, an anti-corruption agency, the estimated value of Indian individuals' worth of "funds" stashed away in Swiss Banks are to the tune of over $ Trillion. It is not surprising that the poor and rich divide has increased in the past few decades.

Reading these articles makes me wonder what anyone can DO with these "ill gotten" wealth? We all have an expiration date invisibly stamped on us. So, we cannot carry any material wealth along with us. The Reliance story is one of many that shows how money, left behind, creates schisms amongst the most cordial of relations.

Why, then, the insecurity of wanting to stash funds away for whatever purpose? Like the story of Tolstoy reminds us, at the end of the day, all we need is 6 feet of land (not even that if you are cremated!).

I sincerely hope that people who have these mysterious accounts put that money in circulation. If auction houses like Christie's existence are to be validated, many of these account holders use grand sums to buy art and such that have very little value in the "real" world and are "dead" investments. A vacation, on the other hand, would help support the tourism business including travel, stay, food and other activities.

Sometimes, when I see the pro-rich agendas of law and policies, I wonder if it is not a bad idea to ensure the demise of the poor by starving them or working them to death and the few remaining rich can have the earth to themselves- It sounds like a good plan. A perfect epilogue to the small-scale genocides we are reading about world-wide. And someone like me will not be there to write such a blog either!

Expansion of IIMs - Credibility At Stake

Moid — Tue, 21 Oct 2008 15:16:51 EDT

Of late, we have been hearing a lot about government's vote-bank politics entering into the education domain as well... an area which was hitherto left to the scholarly and the academia to sort out.

First came the shocker about the IIT cut-offs which are bound to ensure that an applicant with absolutely no sense of physics would still get into IITs with some remarkable performance in Math and Chemistry... while his classmate who was in the top rung of the class with a balanced and excellent performance in all 3 subjects will still not make it to IIT.

This news was only a precursor of things to come... everyone knew that the other schools of repute would not remain untouched... and so here came the R C Bhargava Committee Report on the IIMs... I understand that there are some very pertinent issues that have been addressed in this report which is always a good thing but then... the mediocre polity also has reared its ugly head in there. The vote bank politics again in play... increasing the number of IIMs and increasing the student intake @ IIMs.

However, being an IIM graduate myself and having experienced the educational system prevalent in the IIMs, I have serious reservations against the recommendation of expanding IIMs... personally, I've myself seen the value eroding through the years with increase in intake. One must understand that IIMs draw their credibility partly from the exclusivity... an eliteness that they bring to the corporate world.

And this "value" that the global economy sees in IIM graduates can erode very easily through this expansion for the following reasons:
1. Skewing up of the faculty-student ratio... we have to accept the fact that we cannot find additional faculty (qualified and experienced) to manage the increase in student intake... so even if we end up with more participants in the program, there wouldn't be any good faculty to teach
2. The lower you go in the merit list to pick candidates for admission, the lower goes the quality of the program participants. And I have seen this happening with the recent batches... the same as what is happening to IITs right now
3. One bad fish can dirty the entire pond... so is the risk that IIM graduates carry. One IIM graduate not being able to deliver adequate value to the industry would tantamount to IIM graduates in general losing their credibility... and that is what happens when lower caliber applicants also make it to the business school... this will be the death-knell... the value eroded would never be reclaimable.

I think a better alternative would be to create new management institutions (non-IIMs) on the lines of NITs in the under-grad domain but keep the IIMs distinctive and untouched. Plus the second issue of governance... should again be kept autonomous for the IIMs... I think that is one of the key factors that have kept the IIMs to maintain the leadership in the industry.

Wall Street - Cold, Flat, and Broke

C R Sridhar — Mon, 6 Oct 2008 11:40:33 EDT

“Dreamed about AIG and the stock market, woke up with the urge to stock up on canned goods and shotguns.” - Michele Catalano of Long Island, an angry blogger.

The month of September was cruel for Wall Street. Stormy winds blew away the venerable institutions of Wall Street and they collapsed one by one like a pack of cards. Lehman Brothers, the 158-year investment global investment bank, went belly up. Merrill Lynch was swallowed up by Bank of America. American International Group (AIG), a $1 trillion insurance company, had to be rescued by $85 billion dollar deal by the Federal Government on the ground that it was too big to fall. Capturing the mood of panic in Wall Street Mike Whitney, a widely quoted freelance writer, wrote ‘Lehman gone; Merrill Lynch swallowed up; AIG Going… Who’s Next for Madam Defarge?’¹

Madam Defarge and the tumbrels were kept busy while heads rolled in the basket in a grisly fashion. Fannie Mae and Freddie Mac, the biggies of Mortgage lenders, became terminally ill requiring a massive bail out at a cost estimated to be in the region of $5.3 trillion. Washington Mutual went bust followed by Wachovia. Earlier in March, Bear Stearns became insolvent after bad bets turned into bad debts requiring Fed intervention. The concept of Wall Street investment banking was blown sky high when the remaining Goliaths Morgan Stanley and Goldman Sachs haemorrhaged sustaining huge losses and took the unprecedented step to covert themselves into low risk and tightly regulated commercial banks. The pervasive mood of despair and anger of Main Street was reflected by the black humour on Wall Street, one of the most popular being-“Question-What is the difference between a pigeon and an investment banker? Answer- Only a pigeon can make a deposit on a BMW.”

The dour looking, Harvard educated economist Nouriel Roubini was one of the early sceptics to predict the financial meltdown in Wall Street when he dropped the bombshell way back in 2006 that US would be heading towards the most serious financial and banking crisis since the Great Depression. His dark prophecies were met with derision and disbelief earning him the epithet- the prophet of doom. But Roubini had the last laugh when the US financial system melted down as he had predicted and he became an instant celebrity on media channels.

A bipartisan blunder

One of the contributing factors for the financial meltdown was the reckless financial deregulation that led to financial concentration and inefficient markets. The perception of regulation as hampering the animal magnetism of Wall Street bankers was a dangerous delusion that fostered the irrational drive to take unacceptable risks. As the economist Arthur MacEwan explains-“When financial firms are not regulated, they tend to take on more and more risky activities. When markets are rising, risk does not seem to be very much of a problem; all—or virtually all—investments seem to be making money. So why not take some chances? Furthermore, if one firm doesn’t take particular risk—put money into a chancy operation—then one of its competitors will. So competition pushes them into more and more risky operations.”²

Moreover, the extent of deregulation reached dangerous levels with the repeal of Glass- Steagall Act of 1933, which was passed after the financial debacle of 1929. This act separated investment banking from commercial banking and protected the investors from risky speculation of investment banking. Thus a commercial bank could not be in both insurance and/or investment business.

Hectic lobbying for Wall Street by Phil Gramm -the Republican Senator from Texas and the economic advisor for John McCain - and Robert Rubin in the Clinton administration were the guiding forces for the repeal of the act. This repeal became law when it received President Clinton’s assent in 1999. In 2000 another nail was driven in the regulatory coffin when Gramm introduced the Commodity Futures Modernisation Act, which excluded the scrutiny of counter derivatives, credit derivatives, credit defaults, and swaps, by regulatory agencies. Many economists hold the view that the repeal of the Glass –Steagal Act was instrumental in causing the 2007 subprime mortgage crisis.

The crucial point is to note that Wall Street enjoyed the support of both the Republicans and the Democrats for the repeal of the act. Even today both the presidential candidates Obama and McCain receive campaign money from Wall Street bankers and executives. This prompted Ralph Nader, the consumer activist, to acidly comment that there are no significant differences between Democrats and Republicans on major issues pertaining to Wall Street.

A flawed business model

The reward system is skewed in favour of brokers who make money for their Wall Street employer and not how well the client portfolios perform. As Pam Martens, an insider of Wall Street, says “A Wall Street broker receives remuneration that rises from approximately 30 to 50 per cent of the gross commission based on their cumulative trading commissions with zero regard to how well the clients’ accounts have done.” This attitude is responsible in her words for “ the industry to be irreconcilably incentivized to corruption just as brokers have been socialized to silence.” This is on account of the fact that the broker receives more commission on investing junk bonds in client portfolios rather than investing in safe treasuries.

The other questionable practice is housing a trading desk inside the same company that is supposed to give unbiased research to the public. As Pam Martens points out “For example, let’s say that XYZ Brokerage buys a big stake in ABC Company on its proprietary trading desk (the desk that trades for profits for the firm) on Wednesday afternoon. On Thursday afternoon, it could almost guarantee profits for itself by issuing a research report upgrading the stock. Conversely, it could short the stock on Wednesday and issue a negative report to drive down the price on Thursday, also guaranteeing itself a profit. Other than a fictional Chinese Wall, there is absolutely nothing to stop this type of public looting.”³

Perils of a casino economy

While greed, corruption, and an excessively deregulated financial market offer interesting explanations about the systemic collapse of Wall Street, they remain unsatisfactory as they not explain or explore the deeper malaise afflicting the US economy. For a rigorous and conceptually sound analysis, one must turn to the series of extraordinary essays written by Harry Magdoff and Paul Sweezy in Monthly Review during 1970 and 1980’s.

The main thrust of the articles was to show that the general economic tendency of mature capitalism is toward stagnation. The main challenge of capitalist economy is surplus capital, which has diminishing opportunities for profitable investment. Deploying investment in the mature productive economy yields fewer returns as the markets are saturated. A number of strategies such as military spending, government spending, consumer spending, exploitation of third world economies as sources of cheap labour, raw materials and markets are used to counter stagnation in capitalist economies but do not resolve the problem of stagnation. As the authors point out “The tendency to stagnation is inherent in the system, deeply rooted and in continuous operation. The counter-tendencies, on the other hand, are varied, intermittent, and (most important), self-limiting.”⁴

The problem of surplus capital finding suitable avenues for profitable return is sometimes solved by key inventions and technologies, which provide economic stimuli. The invention of automobile in the “early twentieth century led eventually to huge developments that transformed the U.S. economy, even aside from the mass ownership of automobiles: the building of an extensive system of roads, bridges, and tunnels; the need for a network of gas stations, restaurants, automotive parts and repair shops; the efficient and inexpensive movement of goods from any location to any other location.” But the new information technologies such as computers, software, and the Internet do not appear to provide the same epoch making long-term economic stimuli as automobiles did.⁵

In the productive economy, money is used to purchase raw materials, machines, and labour to produce commodities, which are sold, with the capitalist receiving back money (M-C-M). While in speculation, money makes more money directly, represented as M–M. A significant change in the way banks and financial institutions operate today as opposed to the past lies in the fact that the massive borrowed money goes into speculative finance and very little is invested in the productive economy. There is practically no stimulatory effect on the economy as there are few jobs created as there are relatively fewer people employed in the speculative economy. The profits generated by speculation are rarely invested in factories or the service sector but finds its way for financing more risky financial schemes creating speculative bubbles.

This sorry state of affairs is evident when one examines the failed financial institutions of Wall Street. One common denominator linking these institutions is that all were under capitalised and over leveraged. As Mike Whitney points out “when Bear Stearns went down, it was levered at a ratio of 26 to 1. When Carlyle capital blew up, it was levered at 32 to 1. And when Fannie and Freddie were finally taken over by the US Treasury; the two behemoths were levered at 80 to 1, which is to say that they had a one dollar cushion for every $80 they had loaned out.”

With huge quantity of money sloshing around the world and being invested into financial speculation there has been an explosion of speculation. One mind-boggling figure is “the daily trading on the world currency markets, which has gone from $18 billion a day in 1977, to the current average of $1.8 trillion a day! That means that every twenty-four days the dollar volume of currency trading equals the entire world’s annual GDP!” Moreover, “Today financial analysts frequently pretend that finance can levitate forever at higher and higher levels independently of the underlying productive economy. Stock markets and currency trading (betting that one nation’s currency will change relative to another) have become little more than giant casinos where the number and values of transactions have increased far out of proportion to the underlying economy.”⁶

This flight of investment from the productive economy to the casino economy is made worse by the availability of easy credit to persons who are least credit worthy. Many Americans who had little financial stability to buy houses took on mortgages, which were attractive on the face of it but carried a heavy debt burden. As real wages declined for the American household, it took on more debts for meeting the consumption needs. Total household debt stood at the end of March 2006 at 11.8 trillion.

Prudence in lending money to credit worthy persons was thrown to the winds as the banks encouraged people to borrow more and spend more. As the report in Wall Street Journal says “The banks are more aggressive because they rarely keep the loans they make. Instead, they sell them to others, who then repackage, or securitize, the loans and sell them to investors in exotic-sounding vehicles, such as CLOs, or collateralized-loan obligations. Every week brings announcements of billions of dollars in new CLOs, created by traditional money-management and hedge funds, which then sell them to other investors.”⁷

The toxic power of optimism

The belief in alchemy led mankind in the futile quest of converting base metal into gold. The bankers and traders in Wall Street were the practitioners of the alchemy of finance, which was the elusive quest of converting junk bonds into real wealth. There was an incorrigible optimism and conviction that ordinary people were meant to be rich. There was also goodwill for the captains of finance whose investment schemes were magic wands to transport investors to prosperity. Such a feeling of trust, as Galbraith reminds us, is essential for the boom.

The media played its role by lulling us into a false feeling of comfort by assuring that the fundamentals of the economy was strong and invincible. Critical views were suppressed in debates as the effusions of malcontents. A financial disaster was merely technical correction and there was more money to be made in depressed stock prices. As the financial pillars collapsed in Wall Street last month, a pie hit the glum faces of the financial analysts. The malcontents were right. As Galbraith again reminds us wisely-“when people are cautious, questioning, misanthropic, suspicious, or mean, they are immune to speculative enthusiasms.”⁸ In the aftermath of the melt down, the sceptics were rehabilitated quickly and became instant celebrities on talk shows. They taught us an important lesson, which the financier Bernard Baruch learned during the Great Depression: “ Any one taken as a individual is tolerable sensible and reasonable- as a member of a crowd, he at once becomes a blockhead.”

Plus ça change, plus c'est la même chose.

From the financial bubbles of the Mississippi scheme and South-Sea Bubble to the delusions of Tulip mania and the Great Depression nothing much has changed. As Charles Mackay says in his book Extraordinary Popular Delusions & the Madness of Crowds, “Money, again, has often been a cause of the delusion of multitudes. Sober nations have all at once become desperate gamblers, and risked almost their existence upon the turn of a piece of paper.”

But there is very little that one learns from speculative disasters, as human memory is short and unreliable. The Great Depression taught the American public the perils of unregulated market and the elected representatives passed the Glass- Steagal Act to protect the ordinary investors from financial ruin. The Act was repealed in 1999 when the memory dimmed about the Great Depression. Then another financial disaster hit Wall Street. Now there is talk of imposing controls on financial markets again.

“Wall Street”, a cynic once said, “ is a Street with a river at one end and a graveyard at the other.” Perhaps it would be appropriate to inscribe on the tombstone the words, Plus ça change, plus c'est la même chose. The inscription in French simply means, the more things change, the more they're the same.

----------------
1 The Tumbrils Roll at Dawn- Mike Whitney
2 The Greed Fallacy- Arthur MacEwan-Dollars & Sense.
3 The Wall Street Model: Unintelligent Design- Pam Martens- Counterpunch.org
4 Stagnation and the Financial Explosion- Monthly Review Press.
5 The explosion of debt and speculation- Fred Magdoff- Monthly Review
6 The explosion of debt and speculation- Fred Magdoff- Monthly Review
7 Wall Street Journal, March 3, 2006.
8 The Great Crash 1929-J.K.Galbraith- Pelican Book.

The Fall of Capitalism

Blokesablogin — Fri, 26 Sep 2008 06:21:04 EDT

When the USSR fell, all the headlines screamed the Fall of Communism. Today, after a week into the mess that is Wall Street, the high priest of Western-style capitalism aka globalization, there is not a single headline that says so: Fall of Capitalism. Interesting observation, don't you agree?

Last month, a friend of mine emailed me a talk given by a Chartered Accountant (CPA, US style) and I promptly emailed him wishing that he wrote a book on the subject. He promptly emailed me a copy of his book published more than a year ago titled Global Imbalances and the Impending Dollar Crisis, published August 2007.

His premise was simple enough. He shows the ridiculous consumption of the US (consumer debt) factored with huge trade deficits. He explains the "Savings Glut" as described by Ben Bernanke and how Asian savings have fueled capital markets in the US as many Asians believed that they would get better returns from a "solid" bet like the US than their own countries. This prevented improved infrastructure in their own countries, rather supported US to improve Uncle Sam's. Uncle Sam built more homes than actually improve his bridges and roads.

My friend temporal from Desicritics referred us to a blog by Spengler; using the imagery of America being a huge casino. As much as that is quite valid, he errs in believing that the "locals" fund the casino. The Asians and others have funded it thus far. However, these very Asians saw the wastefulness of Wall Street and slowly removed their money from there. This has led to a severe crunch in available credit for the MBAs to play with and we are now seeing this "Crash".

The Japanese were happily buying homes, especially here in California, Southern California to be more specific and for the past few years, even they have stopped "investing" in the US housing markets.

Let us face it, capitalism promises a "higher quality" of lifestyle that is the greatest myth perpetrated in the world. Yes, it is true that more people are "enjoying" consumer benefits like Televisions and Computers today than ever before in human history.

However, when we see this "material prosperity" against the background of ecological stress and global warming, we need to revisit the "idea" of "higher quality" of life. Yes, the Ambanis of the world can afford to build multilevel fortresses and import their water supply from the Alpine region, but they still have to deal with the filth and squalor lining the streets of Mumbai when they go to their parties.

As for the outright swindling that was legitimized as salaries and bonuses in Wall Street for decades, much of it will be found safe in a Swiss account, no questions asked. Do check out the website www.transparency.org for greater details on how much of national wealth have been stashed away in tax havens around the globe.

The dumb taxpayer, is left with getting double whammed- once for "investing" and once again for "bailout". It does not matter where he or she is from. All these "international" investors have ensured that there is no "caste system" where money is concerned.

I am beginning to believe in a people's economy, aka black money.

MTN Walks Out on Reliance Communications - Family Feud

Aaman Lamba — Fri, 18 Jul 2008 17:18:22 EDT

It is one of the strange vagaries of modern Indian business that some of the largest companies exhibit concentration of captial to an extent not dreamed of by even the robber barons of the 19th century. Even with publicly listed companies, the mostly rubber stamp board allows significant decisions to be taken by the CEO, who in many cases is accountable to pretty much no one. While the institutional investors might not object as long as their interests are protected, there is an insidious effect of long-term erosion of capital and confidence that goes beyond even what one might expect with neo-liberal economies. The bull run of the last few years has emboldened the corporate satraps to disregard even their erstwhile political cronies.

The acrimonious Reliance conglomerate break-up and continuing feud has been reported in the business pages much like a celebrity hatefest in the gossip columns. The growing potential for irreparable damage to a significant tranche of capital due to impulsive decisions derived more from personal animosity than business rivalry has been ignored, or overlooked in the heady period of a bull market.

Recent events might mean it is time for greater regulation of the fragmented conglomerate, if only to preserve Indian credibility in global markets. The Mukesh Ambani-founded Reliance Communications went to Anil Ambani under the terms of the breakup agreement, currently controlling close to 66.75% of the company's shares, The company is now the second-largest mobile carrier in India, The Ambani zest for growth had led Reliance Communications to bid for 67% of Hutch in 2007, before being pipped at the post by Vodafone. It went on to acquire global companies like Yipes to further increase its global scale.

Reliance Communications entered into 'exclusive' talks with the MTN Group after the South African company ended dialogue with India's No. 1 mobile provider, Bharti Airtel. The two companies would have a combined worth exceeding $70 billion and over 116 million subscribers, making it the sixth largest telecom company in the world. Various options were explored by RelCom and MTN, including a reverse buyback, and the exclusivity period extended.

Matters were complicated when Reliance Industries, headed by Mukesh Ambani, raised the possibility of invoking their 'right of first refusal' under the terms of the break-up agreement. Anil Ambani and Reliance Communications questioned the validity of this clause, and refused to engage with Reliance Industries on the matter. Matters reached a head Thursday when Reliance Industries initiated arbitration proceedings against RelCom.

The MTN Group and Reliance Communications announced today in identical statements that they were ending their talks and the exclusivity period, with the statement

“Owing to certain legal and regulatory issues, the parties are unable to conclude a transaction, Accordingly, it has been mutually decided to allow the exclusivity agreement to lapse.

The news was greeted by concern in both Indian and global circles. Future negotiations between Indian and foreign companies could be overshadowed by the risks that affected the MTN-RelCom talks, and this could affect the global standing of Indian companies.

All the same, everybody loves a winner, and it is not unrealistic to expect Anil Ambani to bounce back soon enough from this debacle. The global appeal of Indian markets and incumbent players may overcome the fears of litigation, and at best, a higher risk premium might be applied to future deals.

It is unlikely the government will intervene, letting the markets take their own course. A market dominated by a few large players with ever-increasing concentrations of wealth (and risk) is not quite a free market, though, and may require some fresh air or new rules to level the playing field.

Infected by Inflation

Shantanu Dutta — Sun, 29 Jun 2008 10:39:06 EDT

One can sure meet some strange people these days at weddings and funerals. A couple of months ago, attending the wedding of a niece, I heard the story about one of my aunts. She had been invited to the wedding but was unwell. So she had sent her two sons to attend the wedding on her behalf –with a letter. The letter came with an intriguing stipulation – that it had to be handed to the bride’s mother – her sister-in-law or to the bride herself and no one else. The two sons who made a somewhat hurried exit from the wedding left the letter with the bride’s mother as they hurried out. They stayed quite a distance from the wedding venue and had to return.

In the busyness of the wedding, the letter remained unopened. The wedding guests departed slowly one by one and the letter remained buried in the purse where it was randomly tucked in on the wedding night. There it remained until the news arrived a few weeks later of the death of the aunt in question. At that point, memories were juggled and someone remembered the forgotten letter and after a lengthy search, the letter was finally found and read.

To say that the contents of the letter shell shocked my middle class family is to put it relatively mildly. For in that final letter, my departed aunt, unable to come herself to the wedding and meet anyone had poured her heart out in a letter which she had obviously hoped would be read in her lifetime.

My aunt’s letter described the effects of inflation far better than an economist would be able to, for if inflation is a pandemic, a contagion, then my aunt was one of those felled by it, much as dengue or cerebral malaria or cholera might claim its victims. She described in detail how the modest poultry business her two sons were running for a few years was ruined, first by the onset of bird flu and then the subsequent panic leading to reduced demand in the city. Just when they were beginning to recover and get back on their feet again, inflation began rising and once again the demand failed.

The only steady income in the family was a meager family pension due to my aunt on account of her late husband’s government service. Of late, it was not just the only steady income; it was the only income with her sons’ business in liquidation. The family was faced with a Hobson’s choice - was the pension money to be used to buy provisions and groceries for the family or to buy medicines for my aunt’s several age related ailments.

The decision was made more complex by the fact that the meager family pension would continue only as long as she lived but she finally cast the die and decided that she would wither away so that her sons could live as the little pension money would not allow her to buy any medicines after the groceries were bought. A couple of months later, she was dead. Unlike the many farmers in Maharashtra and else where who need to commit suicide when life becomes unlivable, she was spared that expense. Crude oil prices set somewhere in the New York Stock Exchange and the spiraling inflation took care of that.

Inflation has always been presented to us in newspapers and business media as an economic phenomenon. All the inflation-related fire fighting has been done by macro-economic bodies like the Reserve Bank whose tools are graphs, tables, prediction and politically-laced policy inputs. But these erudite economists need to know that while globally, inflation may be studied as an economic phenomenon, in India’s huts and homes, it is a rapidly spreading infection and potentially fatal among the particularly vulnerable.

In the absence of a prescription, the casualties are rising.

Stale Wine With Mouldy Cheese - The 'French' Experience

in search of sanity — Sun, 8 Jun 2008 00:49:33 EDT

Sinead, my friend from work, gushes about the French. They have such great taste in everything, their fashion sense is superior, their food is superior, their culture is better, their architecture awesome. In fact they are better at every conceivable thing you happen to mention. As I was up to my eyeballs in veneration for the French, we decided to take a weekend break there finally.

The French embassy in Edinburgh is about an hour and a half’s drive away. After a couple of days of researching, we found we needed – Originals and copies of our passports, resident visas, application form, employment confirmation, bank statements for three months, payslips for three months, return flight booking, hotel booking, travel insurance, marriage certificate, passport size photos where your face was no more than 30mm etc etc…You get the gist - taking into account both our papers, this was a tree worth of paperwork!

Looking at the Embassy website, it seemed they were open 2 hours five days a week, so after juggling a few things at work, we managed to get away precisely in between those hours.

On sound advice, we actually arrived there an hour and a half before opening time and found a queue of people already assembled.

Anyway, a gentleman in a pink shirt came out and gruffly demanded everybody’s passport. So far so good. He then instructed the guard on the door to make sure the elderly gentleman in the front, who at this point looked decidedly unsure of what was being said in strange accents, ‘stayed behind the line’. I should have known. If a man does not have the decency to make a polite request to an older man, and instead chooses to flex his muscles, his sensibility and intelligence is definitely in question, as far as I am concerned.

Anyway, we went in. Another gentleman checked our papers, asked us if this was the first time we’d come to apply, and then at the very next paper, nodded his head in disapproval. ‘This should be on a covering letter’, he said, pointing to my job contract. ‘But your website said to bring proof of employment and this is standard proof of employment I’ve always used, for every other country’s visa’ – this is me, thinking my smooth, cultivated voice always works. Not here – ‘you need a covering letter.’ End of conversation. The moment I tried to explain further why he was making such a big mistake, and why my document with the official seal and full contract of employment, was in fact more authentic than what he was asking for, pink shirt appeared again. Now, he said, ‘you don’t call the shots here, I do. So, you have to leave’. ‘But you should at least look at what I have’ – me again, voice neither suave nor cultured this time. ‘Okay’ – he glances at my document for one and a half nanoseconds and drops it with a flourish – ‘I can’t accept this, now you have to go’. The next time I try to open my mouth, the guard is called for. The poor chap, looking frankly embarrassed and flustered , looks from me to the pink shirted demigod.

On the way home, the conversation in the car is cryptic. I’m still seething and raging while hubby, ever the shining beacon for the dejected soul, takes a more pragmatic view. ‘I’ve been told by friends, nobody gets a visa the first time from the French Embassy…one of the guys in that queue was there for the fourth time.’ Does that make this episode acceptable? I can’t understand how that man could be so rude? Afterall, we were there for a tourist visa, weren’t we? France's economy thrives on tourism, doesn’t it?

‘Hmm. Did you look around you? Every person in that queue was from a so called ‘third world’ country. European Union citizens don’t need a visa to travel to France. The embassy staff are used to being arrogant and behaving badly.’ He recounts more stories from friends/colleagues who’ve been similarly mistreated. People forced to travel umpteen times to the Embassy from distant cities and towns after applications being rejected on flimsy premises. Very rarely does one get a visa first time. So, it’s the fact that I was born in the wrong post code, a la god man, that I have to be treated in a certain manner?

We both rushed back to our respective workplaces. But something at the back of my mind kept nagging. Does my Indian passport make it easier for people to be rude to me? Is an assumption (right or wrong) of a person’s respectability on the basis of his/her nationality a ‘done’ thing?

It’s a wider issue. People, (usually uninformed empty-headed morons) taking for granted their superiority over anyone from the ‘non developed’ world.

I’m immensely proud of my Indian heritage, always have been. I’ve always considered myself fortunate for being born in a land which gives me deep seated roots, anchors me, at the same time instilling in me a strong sense of awareness and jest to achieve whatever the world has to offer.

What do you do though with snotty nosed bureaucratic officials who do not deign to talk in the first place, assuming you have nothing useful to say?

The delightful aroma of fine French wine has certainly turned acrid for me. While I figure how and where to complain about the man’s obnoxious behaviour, my husband has obviously moved on and is in the process of organising a ‘custom made’ letter to the French Embassy. Having considered dropping the whole plan, I have conceded we need to go, more in order not to waste the hundreds of pounds already spent on hotel and flight bookings….But this does leave a bad taste in the mouth.

The World Congress of Information Technology 2008, Malaysia

Dr Bhaskar Dasgupta — Fri, 6 Jun 2008 13:28:10 EDT

I had the honour of attending and speaking at the WCIT 2008 conference in Malaysia and here are some rather disjointed notes that I had while listening to the speakers. I tried to clean it up, but again, apologies for not being able to make this very professional indeed.

Monday

The conference center is big! And I got lost in the exhibition hall. Quite an impressive setup. So then finally managed to extricate myself from poking into the guts of various exciting electronics bits, went looking to find the plenary hall, and found myself sitting in the hall looking at an ant hill of activity. I could not imagine how on earth will they manage to fit 3200 people and assorted volunteers and managers into this hall but they sure did.

Typically, there was the media scrum when a Prime Minister arrives....We were welcomed by 40 children welcoming us in 40 languages representing 90 odd countries here, but the language used through out the conference is English. Curious, no? the prevalence of English in the world?

He also said that UK and South Korea are behind Malaysia in the World Competitiveness Index, and I can well believe it. Although checking the Global Competitiveness Report here seems like the results are different. Perhaps he is talking about this report. Anyway, mere quibbling. And now the PM has left and literally the front 1/4th of the hall has emptied! Some more speeches about WITSA.

Then Dr. Craig Bennett, Chairman of Intel, started talking about how we have a billion people on the Internet and now we have to get the next billion on the Internet as well. He said that four factors are important for knowledge based economic development

Physical access to technology
connection to internet and connectivity
content targeted at local population
education on how to use the tool

He said that a well educated teacher is the magic and not the PC in the classroom. He showed a video about a Nigerian school which has embraced technology but said technology again is not really the only answer.

He talked about taking a holistic viewpoint, what's the point of giving a $200 PC while the monthly connectivity costs are $250 per month in many countries, 100kb monthly cost in Japan is 6 cents, 50 cents in USA and more than 80 dollars in Sub-Saharan Africa. Now you can get an idea how tough it will be to get these people on the intranet or to roll out the broadband revolution to them (more about the exception being that of India later on).

He talked about how Pakistan is being used as an example of pushing broadband and network connectivity out into the sticks. 60mm dollars is the budget, rolling out in untouched areas in Pakistan, he invited a Pakistani chap to the stage who is the CEO of the public company which is helping to push this (didn't catch the name). Connectivity is a challenge. Satellite is way too expensive. Fiber is the only way. Rolling out fiber is tough, so tehsils where its not remunerative for private companies, this company gives money and offers seed capital, it helps to improve the business case for the private firm. This was a good step. The Pakistani chap said that Govt should not be involved that much in this business, put power to public private consortiums or just private firms, give them a stake in the business and then it will work. But I am not holding my breath, I want to know whether connectivity actually helps or would more investment in say better teacher training help?

He video conferenced a doctor from Brazil into us, how location differences for patients versus diagnostics versus doctors versus care had disappeared, and this tele-medicine actually is helping far more people than medicine and doctors were previously. Then there was some corporate stuff with some kids brought on stage and it ended. It was a bit too slick and the questions with the kids was too obvious and that left a bit of a bad taste in my mouth. Such a senior chap shouldn't need such kind of gimmicks to play around with such an important topic, we are all adults, you don't have to take us to be children or idiots to play that game.

I was a bit impressed with what he had to say, but what he had to say was crucial (leave aside all the silly posturing and even more silly marketing of Intel stuff). His point was, throwing money at technology and expecting better performance from students was wrong, the idea is to teach the teachers to be better, that will provide better results than thousands of PC's and laptops.

Nothing much to note for the next few sessions. The post lunch session for the Ministerial panel was a bit interesting. Mainly because you could see how various governments approached this entire idea of information technology. You know what was the most disappointing? It was the Philippines MP. She came across as a complete Neanderthal, saying that in many parts of her constituency, there is no electricity power anyway, forget about PC's, and it was a whine. The Philippines government should really have thought that through. The Malaysian government minister and other ministers were smart, they obviously were pushing their countries and with due reason, telling us, the corporate folks, what we wanted to hear..., but Philippines? Pathetic. She is a blot on that country's face.

The next wireless broadband session made me go to sleep. Pure and simple, those two Romanian scientists, bright as they were, made me doze off specially when they started talking about antenna design, and specially after that excellent lunch.

Woke up to an excellent presentation by Professor Takenaka. He talked about how he was made the Minister for Finance in Japan by a certain Lionheart PM of Japan. Fascinating tale of how he took on the entrenched might of bureaucrats and financial institutions and won. And I well believe him, given some down sides, generally that time was brilliant, it still shows that even in a consensual driven society such as Japan, you can still have mavericks who hire mavericks who really make a huge difference! Brilliant fellow. Unfortunately he was not allowed to fulfill his destiny and do all that he wanted to do but there you go, he literally broke the back of the Japanese economic stalemate. I was personally quite impressed but I suspect that quite a lot were not as he was talking more about economics and finance than IT. The IT piece came way afterwards, a little bit and as an after thought.

Then we had Bill Gates in a hologram talking about Microsoft and then Dr. Zhang also, not very clear about what, was flagging badly by that time.... and then we went off back to the hotel, did some more emails and then some calls back home and then off to dinner, again, dinner was brilliant, and pigged out and came back and went to snore, i mean sleep.

Tuesday

The day started with perhaps one of the most interesting panel discussions I have ever attended. It was to do with how to produce innovation and creativity and what can be done to enhance it. These were the people there.

- Arnold Gay, Anchor, CNBC - Moderator
- Kamil Othman, Vice President, Multimedia Development Corporation
- Fritz Attaway, Executive Vice President, Motion Picture Association of America
- Terry Thoren, Chief Executive Officer, Rocket Fish Studios

You cannot get a better collection of people talking about the most creative of industries, motion pictures and a very educational and interesting debate happened. Terry said that the world is changing, Malaysia has twin towers now while USA no longer has it. Who knows what's going to happen in the future? He has severe distaste for politics but great admiration for tech, people, process, creativity, etc

Kamil went into deep details on how to build an innovative industry? Animation in Malaysia. Disappointing take up, long way to go, to make a Walt Disney, you need to start with one million children drawing in grade 8. You cannot create a flash laboratory, shove people in there and wait on the other side of the Lab waiting for Toy Story or Cinderella to drop out of the other side. It has to be started from the very basic levels, people cannot look down on the arts which they do at this moment.

Monetisation of opportunities and content is a challenge, how do you do it? look around you, all countries are pushing people to get educated and into the knowledge sciences, but not all people are thus inclined. Many people simply do not like mathematics or technology. Some people want to study arts, or paint or simply do not have the mathematical skills. What do you do to them? Those who want to write poems? How does he get paid? or fed?

There were conversations around how to create a movie or animated film, quite interesting to see how Hollywood and Silicon Valley literally took decades to develop, you cannot do that just by throwing technology at it. Quite thought provoking indeed. Perhaps one could question whether it is possible to force people to become creative? Or can you just provide the infrastructure and let them get on with it? or is it just let people be, and trust in them to come up with the goods?

---------------------

The next session had more ministers but I was quite interested and taken by A Raja, Minister of Communications and Information Technology, India. I have to admit, I was quite cynical at first knowing about Indian politicians, but was very impressed to see what he had to say about it all, how they are powering ahead with the licence's, what mistakes they made, how the process of governance is happening, who gets to approve what? and so on and so forth. Pretty good and well, I will think that what he is saying is right, because I have experienced the mobile phone revolution in India.

As usual, it has to be different. Rest of the world goes through scientific revolution, industrial revolution, then wars then dial up then broadband and mobile, India starts off with revolutions in 3000 years BC, then has fun, then goes into decline, then starts off with a revolution in Y2K and then the next revolution is mobile and mobile internet and mobile commerce is bigger now, how strange and unique... Very curious, loads to think about there. The technology trajectories of these two countries, based upon what Dr. Jiren of China said, are so different. One wonders what will happen in the future.

Incidentally, there was a gentleman from Saudi Arabia who made me think of the previous session. He spoke on about how much money has been pumped into the industry in Saudi Arabia, the emergence of knowledge cities, and the like. Not impressed at all. Not at all impressed. Setting up a knowledge city and throwing money at it does not solve the problem of creativity or having knowledge industries. For that, you need to have creativity at the school level. They have to inquire and challenge everything. Can you imagine something like that happening in Saudi Arabia? Which is the reason why I couldn't take it any more and went outside to grab a coffee. Perhaps the organisers should have kept coffee on tap, this was crazy, they dont want the participants to keep awake? dont they know we drink coffee by the gallon?

------------------

The next topic was rather dry, Dr. Mobius talked about where the next hotspots will be. And I lost my notes on this lecture so this part is a bit vague. I remember him showing loads of graphs about where and when returns are made. It was an asset management view, so was a bit dry. Still, was a bit interesting, specially around the returns of the various sectors in the Asian economy. That is much that I remember... if and when I get my hands on his slide deck, and have time to read it again, will comment...

--------------

For the next session, I went to the "Asia, the destination of choice for Shared Services and Outsourcing" session.

- Dato’ Narayanan Kanan, Senior Vice-President, Multimedia Development Corporation – Moderator
- Michael F. Corbett, Chairman of the International Association of Outsourcing Professionals
- Dr Ganesh Natarajan, Chairman, NASSCOM
- David Wong, Chairman, Outsourcing Malaysia
- Stephen Braim, Vice President Governmental Programs, IBM Asia Pacific

Very interesting, Michael spoke about the impact of the US elections on international outsourcing. I was, frankly a bit puzzled by that kind of emphasis. For two reasons. The first aspect is that the actual number of jobs which are dependent upon the classical aspect of outsourcing is reducing, and the second aspect is, did he really think that the elections will make a tiny bit of difference? Obviously yes, but I am rather disappointed that it was more American rather than International. Also, I was a bit saddened that there was no discussions about international aspects, taxation, technology which allows remote working, etc.

But overall, it was quite interesting, there was discussion about education and how that will help in various countries. What Malaysia is trying to do. What the IBM view was from the perspective of government initiatives and education and so on and so forth. But also, I was a bit disappointed that most people's perspective was the next 8 - 12 months, not more. Still, lets go to lunch, was feeling quite hungry now.

-----------

Over lunch, we had a speech by Dr. Rowe, where he was talking about how the worlds of virtual reality and real life reality meet and how they work together. Quite an interesting topic and he spoke quite a lot about his own personal experiences and the like. But not much about real life applications. I then sent him an email afterwards, and this is what I said to him.

At ABN AMRO, we used Second Life to actually recruit, it was very challenging and interesting but it ultimately failed because of lack of regulatory frameworks. Ended up with 5.5 FTE dedicated to Second Life but then scaled back.
We also used a virtual world to help mentoring. Such as when we have just 2 IT employees in Uzbekistan, then how do I get the junior chap mentored? So we setup a virtual world where mentors and mentee's can congregate in a persistent state across the world. This helps in knowledge capture and better employee retention.
My friend from BP is using a virtual world to track every employee in complex and potentially dangerous plants. This location tracking and graphical display of every employee is used for fire, safety, evacuation and training purposes.

Second life and other virtual lives have become really challenging world and are throwing up some seriously challenging questions for us, again which have not been fully explored just yet.

--------------

Unfortunately, I missed the next slot because we had to go and get powdered up for our session at 3. Not much to speak about in there, check out the slide deck. Also managed to miss out a large proportion of the next presentation from Dr. Pachauri because we were supposed to be in a room answering questions. But did manage to catch snippets of his talk. Quite interesting.

I had to take an office phone call so managed to miss out on the next one as well. So that was that. Nice dinner, watched a charity auction, observed some very nice and lovely looking ladies. This lady was standing 2 feet away from me. Very fragrant. Nice hair even.

Wednesday

This day was going to be challenging, specially since it was also the Champions League Final day.

The day started with me taking breakfast in the Trader Hotel Lounge, where I had been put up, its just next door to the KLCC so very convenient indeed. So took some pictures from the 34th floor lounge while having breakfast.

Here are the twin towers, at the base you can see the gigantic 6 story mall with two wings. It is absolutely stonkingly huge, that mall. Anyway, the twin towers, and the very well landscaped park around the buildings. The building on the left of the twin towers is the Mandarin Oriental where many other guests were also put up.

Then the day started with two debates on the future of the Internet. A deep discussion erupted over the net neutrality issue. To be honest, I have never really thought about it till I was forced to sit and listen to these two debates. Not that I have really firmed up my thoughts but the question is, who pays for the internet? It is my firm belief that nothing is free in this world, somebody will ultimately pay, either the taxpayer, stockholder, consumer, today you or tomorrow in the form of your child. Somebody has to pay. So this idea that the net is free is frankly stupid and more worryingly, it shows a childish view of the world.

Also, the idea that a communications network will or should be free is against human history. Do you think that the pigeon post was free to everybody? or the pony express allowed everybody to send stuff over? or how about the fact that letters still cost to send stuff to each other? Or the fact that we have public and private ownership over the postal system? Or the fact that we have regulations governing what can and cannot be sent over the posts? Or how about the fact that online classifieds are killing newspapers? Or how about the issue that emails are killing the postal system? So when we do not have any issues over that, why do we suddenly end up having an issue over the net neutrality aspect? Here is a good overview article. Very complicated matter, but I suspect it will end up like we have the health service. A Universal service provision which will provide some kind of a basic internet, which is slow and unreliable, while a paid for internet which is better and faster. Pretty much common compared to other industries, if you ask me.

Then there was a discussion about Silicon Valley, it started in 1940's, it took 10 years to know, 10 years to come, 20 years to investment, etc. etc. Takes a heck of a long time to start developing an industry. See what Taiwan did, took them decades to get to it but get to it they did. Now they are the champions, and almost every PC in the world has some Taiwanese components in it.

============

Next session I had to miss, then popped into the Mexico session for a few just to realise that they were talking about near shoring. I mean, d'oh, get on with the programme, people are now in the 5th generation of out sourcing and we are still in the terminology of the 1st generation. Crikey! that made me so depressed that I went back to the room and started my calls. Also had a quick bite to eat in the room itself, couldn't’get out of the calls but went back to catch the next great debate.

----------

Not much to report on other than the fact that one of the guests (I told you, lost all my notes because my stupid My Documents folder decided that it wants to forget all about my previous history and start afresh to synch...). said that the adoption of energy efficiency standards by California means that the energy usage per citizen has now leveled off compared to other states. But if you think about it, the lesson from this is to start imposing energy standards more and more, get people challenged to be smarter about their energy usage. So while the usage will rise, but it will level off at some point!, interesting, no?

So I went looking for some data. What does this tell you? Well, it did make me go hmmmm. We are actually seeing a dip in the energy consumption per capita in North and South America, albeit from a relatively high level. Delving deeper into North America, Canada and Mexico are showing an increase while, very surprisingly, USA is dipping down and decreasing. How curious. 40 countries out of 134 countries actually showed a dip in energy consumption between 2000 and 2003. Some of them were obviously banana republics which were facing economic downturns such as Zimbabwe, or contractions such as Argentina, Ivory Coast, Bolivia, Eritrea, etc.

But what explains this reduction for countries as varied as Belgium, Brazil, Australia, Chile, Japan, New Zealand, Singapore, UAE, United Kingdom and USA? Can it be that despite increasing populations, their energy efficiency is improving? Dont take my word for it, check out the data. It is from the IEA even, so would be ok as well. Population information from the United Nations.

The next topic was the most interesting one, so I will put up another dedicated post for it. Came out to grab a coffee before going back in and saw that the sky was cloudy, the KL Tower was nearly hidden under clouds. Unfortunately, all the photographs with the top of the tower hidden did not come out, but hope you can make out the onion dome in the back being hazy in the mist.

One of the living legends of the internet age, Dr Vinton Cerf, Vice-president & Chief Internet Evangelists, Google, spoke on the topic of "Tracking the Internet into the 21st Century". This was the final presentation of the WCIT and the entire hall was absolutely crowded, people were standing on the aisles waiting to hear that great man.

He talked about the future of the internet. Said that the internet penetration around the world is strange. Asia, Middle East and Africa are bad or low or both. Only 20% of the world is connected. He used the World Population Reports from the UN about the 2300 figures and displayed them, some interesting rises and dips. I presume he is talking about this report. See the graph on page 19 of the report. High scenario shows a horrifying 36 billion people on the planet, with a medium one of less than 10 billion. Bloody interesting report but this is not the place to go into it.

He talked about how only 20% are connected to the internet and more will grow. Incidentally, I found it much easier to observe him up on the main screen rather than watch him on the far left. Which begs the question, if this was webcast, then I wouldn't have traveled to Malaysia.... (theoretical question...). Which made me go off into a different train of thought.

My facebook, orkut, myspace, etc. accounts are nothing but very primitive clones of myself. I cannot be everywhere, so my primitive clones operate on my behalf. Just like my email system does and my voicemail system does. As a matter of fact, my home is also a sort of a clone. It has an address which is independent of me. People can communicate with me on an asynchronous basis and I can get back to them whenever. So when people are writing something on my facebook wall, are they communicating with me? or with my clone?

Say I have an active Second Life account. Is that me or is that my clone? Or both? I feed those clones with information and they act/react based upon my preferences. So I can be in another place via my robot/clone and get back information to me when it is convenient to me. I do not have to be face to face with you to get information. You can email/voicemail me and I can pick it up at my convenience.

If I communicate with my son online in Second Life via both our avatars while we are both across the world, am I still his father? to what extent? How about love? Can I show my love to him? via that medium? How does he know that it is me? Or if I was seeing Dr. Cerf across the world on a webcast, how would I know it is him? Just because somebody said so? identity problems galore. Does this mean that more friends you have, more your identify is confirmed? Like an amazon or ebay seller, more positive recommendations, the better is the identity and better is the trust. What do I do when I am dealing with a financial institution? Curiously, microcredit or microfinance rests on this premise, it lends money to people on the basis of guarantors from their community. So a person has to be social and know people and be trusted by them in order to get money. Bit different from my neural network Kohonen map based credit scoring model, eh? But I digress.

He talked about IPv6 (a network address for every device on this planet and then some, even some for your socks..), better search engines. He said something that I will come back to, he said that the monetisation and earning potential online will be less and the current business models will have to change.

He also talked about BIT rot, how on earth will you manage to open a Powerpoint 1997 file in Windows 3000? Forget about that old a problem, here is my problem. I wanted to dig out some research that I had done way back in 1990. I did not have the files here in London so had to wait till I got back to home and went to poked through my old cupboard. Besides the nostalgic kick, I finally found the floppy disks. 5 1/4 inch floppy disks to be precise. I have also operated the 8 inch floppy disk but well, the data that I had was in two formats, Lotus 1-2-3 and dbase. I remember sitting back on my haunches, looking at the dusty pile of floppies, and thinking back to those hours and days that I spent in typing in the financial data of the companies and did the basic analysis. Do you know, I even managed to calculate multiple regression on the damn things in there? Anyway, for all purposes, that data is now lost to me. I do not have a floppy drive anywhere near me, none of the 4 home pc's have it. I have an old laptop which has a floppy drive but it is 8 1/2 inch drive, not the older 5 1/4th inch drive. So I am stiffed.

Fast forward today. Financial institutions are supposed to keep data for up to 10 years. So your transactions and your records are supposed to be kept nicely and carefully within the firm for 10 years. Now the transactions are processed, on an average, via 10 odd applications. There can be many more depending upon the country and product but just think about it, 10 applications, multiple operating systems, multiple upgrades, multiple hardware requirements, multiple network systems, multiple servers, so many different types of technology stacks, and we have to maintain a record of this. Within 5 years, it becomes a major issue to keep up to date with technology, we are talking about 100's of years? No bloody way.

Museums are now struggling with electronic art. I could have taken those disks to a museum but they are also facing problems. Here's a great paper written in 2001 and the problem has become even worse now.

He also talked about the inter-planetary internet. That just blew my mind away but it needs much more thought before I can write more about it, its not fully comprehended yet. Anyway, he got a standing ovation at the end. I ran to attend his Q&A after getting distracted by an email, but still managed to get to the hall to ask him a question. I asked him, you have talked so much about what will happen in 2035 and 2300, the physical shape of the internet, the devices, the penetration rates, and and and. What do you think would be the value system, the monetary framework, the price formation or who will pay for it all? It was obvious that I had asked a wrong question immediately because it did not go anywhere fast. I did ask some follow up questions, but he is a great man, he had to rush off to meet somebody else.

This is my problem. I am supposed to think about what's going to happen in 5 years time in the financial world. This is what I am seeing currently. People who are in the 15-25 years of age category, the great unwashed herd who will be our future employees and customers, are not that well versed in value creation online. And why would they be? Look at what kids do online these days. He watches movies, plays songs, plays games, chats with people, participates in joint coding, and so on and so forth. Almost all of this is free or stolen. His email is free, his programming language is free, songs and movies are free, his video is from YouTube, his chatting is free via text and messenger, his voice is free over VoIP. So all these assets that these kids are using, they are all free at this moment.

So I am most certainly not surprised that they do not know the value of online assets. So when you ask them, how much are you worth? or how much will you work for? or how much do you wish to charge for your ideas? or how much funding will you need for your great online idea? no idea. And that is the issue that I am struggling with. In 5 or 10 years, the link between physical work, money and online assets will be inextricably broken. So how much would I pay a coder? How much would Microsoft pay a programmer when most online assets are free?

My son said something to me today that completely blew me away. He said that he will go create some online jewels and armour in World of Warcraft as birthday gifts for his friend who lives 5 houses down. No money, no nothing, just pure and simple virtual asset formation, entertainment and happiness increased but with no reference to money at all. Deeply worrying.

So to go back to Dr. Cerf, on what basis will anybody pay for a book in 2300? or a share in the company making Windows 3000? or the ability to write code? Or to create a powerpoint presentation? I do not have an answer, but I didn't get one either. I will be struggling with this as part of my job as well, but I am seriously not sure what the answer is. We saw some amazing valuation modeling during the internet boom. But they did put a value on an intangible asset, no? It was a bad value, but a value none the less. Also goes to the heart of what Mark to Market is all about. If this is all too philosophical, think about this, my son is happier getting a World of Warcraft spell rather than an intricately carved wooden box which I got for him.....Should I have gone to the local electronic fair in Kuala Lumpur and bought a user-id/password for him instead? How would I judge what is a fair amount to pay? I have no idea whatsoever. No reference points at all.

That brought me to the end of the conference. The last day, Thursday, was a trip to Cyberjaya and Putrajaya, the IT and administrative hubs of the country, but dont think that fits in here, so you can see some pictures here. I have also written another essay on my observations on Malaysia and that should be published soon as well. End of the day, fascinating indeed and perhaps it was appropriate that that brought my professional career stint with technology to an end, now its moving back into the front office. But technology will remain with me, either with my shareholder, customer or employees. Food for thought, will try to attend the next one in 2010 in Amsterdam.

Technorati Tags: Technology,Internet,Web 2.0

Book Review: The Post-American World - Fareed Zakaria

Ms. Anona — Tue, 20 May 2008 11:58:51 EDT

One of the most common complaints about the media is that many journalists do not have the appropriate background to comment on economics and complex political issues in detail. Those who believe this, however, have probably not encountered the likes of Fareed Zakaria, a Harvard grad and well-known American journalist. Lately Zakaria has been stirring up a lot of attention and can be seen shaking hands with Henry Kissinger and other dignitaries as he rapidly rises the ranks from journalist to political advisor. With his latest book, The Post-American World, Zakaria delivers a new twist on a common and slightly menacing message, that America’s hegemony is waning.

'The Post-American World is not a story about America’s fall, but instead about the rise of ‘the rest’, states Zakaria. Countries like China, India, Brazil, Singapore and Indonesia have been ‘catching up’ to the economic status of the United States and for the last twenty or so years America’s status as a sole superpower has been challenged. The innovation and growth coming out of Asian countries has been somewhat surprising and has left America’s monotheistic approach toward globalization and capital in the dust. In a way, the United States can be seen as victim of its own success. America has been forcing open the doors and vexing the constraints of open market forces in untapped economies all over the world since it’s inception, but somehow America has forgotten to globalize itself and allow for the multitude of cultures to penetrate its core.

The new global economy looks more like Bollywood, Zakaria writes, and the United States may be left to grapple for depleting market shares. Surprisingly, Bollywood’s total revenue and number of tickets sold worldwide has actually surpassed that of its counterpart, Hollywood. The film industry is just one of many that signifies the changes in a new world approach to business that is more multi-faceted and not solely dictated by American ideals. Traditional developing nations, in general, no longer feel it is necessary for the West to act as an intermediary in their commerce. Smaller countries in Asia and Africa, for example, have of late formed their own connections unilaterally. This has allowed for profits in these countries to soar. The newly affirmed capitalistic powers of China and India have been the most successful in this way and are most prominently laid out in Zakaria’s book. China has one of the most booming economies in the world with growth that is unsurpassed and India is not far behind. “Indians easily speaks the language of globalization”, Zakaria writes. India is able to prosper in this age because they understand what it means to thrive in the new market economy.

Zakaria’s book offers a historical analysis at the rise and fall of world powers and the reasoning behind each and suggests that the United States acting as the last remaining superpower may go the way of Great Britain in the last century. Britain found itself bankrupt and stretched thin after World War II that resulted in the ceding of its colonies financially, while still regaining political control remotely. America may have the opposite problem, but with the same consequence. Due to its recent preemptions in Afghanistan and Iraq, the world has mostly turned away politically but there is something intrinsically valuable in the message it offers to the world in an economic sense. The world can’t rally behind China’s economy the way it can that of the US, Zakaria writes, but these economies are overall threatening America’s long-term viscosity. In any event, the state of the world will not change overnight. “Great world powers are like divas”, Zakaria exclaims. They don’t enter or exit the international stage without great tumult.

Ordinary Americans aren’t normally accustomed to analyzing the world in the way Zakaria has laid out for them here. Americans tend to take for granted their superpower status as inherited and everlasting and are surprised at the towering rate of development seen in places like Dubai or Malaysia when they become aware of it. Zakaria’s book is not meant to alarm, but ends with almost a plea to the American people asking them in essence not to use fear and lack of world knowledge to persuade them from creating the “inviting and exciting” world as it once seemed to Zakaria as a young and emerging foreign student from India.

The state of affairs of the current world is not an easy ground to walk on and writing about it can make even the most conscience writer feel without adequate footing in a land where nothing is ever nearly as cut and dry as it seems. Zakaria is able to explain these things and more with ease. The result is a piece of literature that will shape even the most expansive worldviews while creating a palpable and interesting mosaic of global influences that shape the present state of the world and show us a glimpse of the future as well.

Book Review: The Global Food Economy by Tony Weis

C R Sridhar — Mon, 19 May 2008 08:28:57 EDT

The corporate images of the food economy are full of deceptive advertisements of a mythical cornucopia of contented animals waiting for their disposal as someone else’s meal. The other images, which reinforce the intrinsic ‘fun and plenty’ of the food economy, are of supermarkets catering to the affluent sections of society, with food products stacked in shelves procured from far off places.

Beneath the illusion of plenty, there are other contradictory images of starved babies with distended bellies in famine stricken Africa, coexisting obscenely with obese people from the developed world. Starved farmers in agriculturally dependent economies who eke out a miserable living out of cash crop economy offer a harsh contrast to the bon vivant life style of CEOs of Transnational Corporations.

Tony Weis, an Assistant Professor of Geography teaching at the University of Western Ontario- Canada, has written a book called The Global Food Economy, which is a searing indictment of Big Agri-businesses destroying small farmers and the delicate eco-systems devastated by modern capital-intensive modes of production. Going beyond the platitudes of corporate PR, the author ‘examines the human and the ecological cost of what we eat.’

At the heart of the problem, the author argues, lies the role of TNC agribusiness, especially the grain-livestock complex, in adopting industrial methods, which are inimical to the eco-systems and the condition of human beings in general.

Ecological footprint

The ecological footprint left by Industrial Agriculture is a negative one and exacts a mounting toxic burden. In the past the long-term viability of farms depended on a sensitive relationship with respect to the ecological limits of growing food. It was recognized that there must be functional diversity in crops, soil species, trees, animals and insects to maintain ecological balance and nutrient cycles. This was maintained in traditional farming methods by multi-cropping, rotational patterns, green manure, fallowing land, careful seed selection and the integration of small animal populations.

In contrast modern farming transformed by capitalism and industralisation represented ‘a movement toward the radical simplification of the natural ecological order in the number of species found in an area and the intricacy of their interconnections’. This was made possible by the development and rising use of synthetic fertilizers, agro-chemicals, enhanced seed varieties/genetically modified seeds, farm machinery, concentrated feedstuffs, animal antibiotics and hormones, and the expansion of irrigation systems, which allowed industrial techniques to override previous ecological constraints. Moreover, embedded in industrialized farming is the new dependence upon fossil fuel consumption in the twentieth century, not only on transportation costs involved in bringing the food from the place where it is grown to the plate of the consumer and the demands of the machinery used for agriculture instead of animals, but with the petroleum demands of proliferating synthetic fertilizers and agro-chemicals. With the price of oil reaching $120 per barrel (expecting to touch $200 per barrel) it is certain that food prices would shoot upwards.

Rejecting simplistic notions that the industrial transformation in agriculture has resulted in high yielding crops, which are also yield stable, the author points out the inconvenient truth that it leads to chronic toxicity. This is evident as crops grown in industrial monocultures are prone to pest infections- a threat that is suppressed by the use of pesticides leading to greater pest resistance to the pesticides and involving greater use of pesticides in a never-ending cycle. The excessive use of pesticides results in pesticide poisoning which afflicts nearly three million suffering every year leading to 2,50,000 deaths. The other problems that arise with mechanized tillage are that the soil is drained off its nutritive power. The quick fix in the form of technology is a mere illusion as more and more use of inputs serves to mask the problems while creating fresh ones, one of which is the increasing use of fresh water for agricultural purposes, which is becoming scarce and a flash point of conflict.

Hoof prints left by livestock

The increased meatification of diet offers fresh challenges to the eco-systems as the increased demand for consumption of meat products leads to large-scale supply from feedlots. There are also health problems associated with increased meat intake as it increases the risk of strokes and cardio-vascular diseases.

In the factory, the dense livestock population is the major consumer and polluter of water. It is calculated that in excess of 3000 litres of water go into producing a single kilogram of US beef while a factory farmed pig requires about 132 litres of water for drinking and flushing of its wastes. A typical slaughterhouse in US uses in a day the water used by 25000 people.

The faecal matter of the cattle and pigs creates problems of waste disposal, as it is a gigantic task to get rid of 1.4 billon tons of animal manure (US) without polluting the rivers and streams. Added to the problems of sink function, there are health hazards arising out of over crowding of poultry birds in production factories which exposes the public to the dangers of a virulent strain of H5N1 which is capable of mutating and jumping the species barrier to human beings. The WHO warning led to hundreds of millions of birds getting culled in China, Thailand, Vietnam and Indonesia. The feeding of neural tissues, bone meal and blood from cattle carcass to essentially herbivorous cattle created the mad cow disease (BSE), which could transmit to humans when they eat the infected meat. Thus the hoof prints left by livestock production leaves an intolerable burden on eco-systems and public health.

An Uneven Playing field

The human cost of the food economy is a heavy burden disproportionately resting on developing countries- where overwhelmingly large sections of the rural people depend on agriculture for livelihood. TNC Agri-businesses, which are subsidised by rich developed countries (especially US) flood the world market with cheap grains/ cereals, driving the poor farmers of the developing world out of the market leading to destitution and poverty. They are driven to cities in search of jobs in Urban areas, where they constitute the under class found in Urban ghettos living in abject poverty and filth. Most of the poorer countries are still trapped in neo-colonial relationship with centers of Metropolitan capital as they increasingly depend on cash crops grown for export to the affluent people of the world and face the daunting prospect of not able to feed themselves out of their dwindling export earnings. The producing countries simply do not control the international price for their commodities- they take what they get. The export earnings are insufficient to buy finished goods from the developed countries and they face the dreary prospect of increasing the volume of export of cash crops without increasing the value, which is just not enough to pay for the imports.

The author’s book is a sane and compassionate plea to reorder the global food economy to serve human needs and not the diktat of corporate agriculture with its obsession of profit maximization. In the last chapter of his book called the future of farming, he passionately calls for moving agricultural systems off the chemical and fossil energy treadmill and towards lower-input, labour-centered intensification and more bio-diverse agriculture. That this vision is not that of a Luddite who wants to turn the clock back to a romantic past, is borne out by the fact that there is an urgent need for agro-science to be shaped by more scientific research for more humane ends like empowering the small farmer and not for mindlessly enriching the corporate coffers of the few.

For people of India, especially the middle class, who are enthralled by the IT service economy, it may be a wake up call to know that even today two-thirds of its one billion plus population still depend on agriculture as source of income. The author’s book, which pleads for a socially just, ecologically rational and humane food economy, should find a place in our bookshelf.