Saturday, January 24

Bimaru states in India

States and regions also become sick besides companies and human beings. When they become sick, you get a doctor, then you dose the patient with some foul smelling medicine, and then you get better, and to stay better, you keep on doing good healthy things so that you do not fall ill. But then, there are some fellows who will smoke, drink, eat fatty foods, then get a heart attack, and then continue on with being a bad old egg.

But what's with Bimaru in the title? It is a play on words, the word itself stands for 4 Indian states, Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh. When you select those letters together, they mean sick (Bimar in Hindi means sick). And yes, Sir, they are sick in terms of almost every socio-economic indicator that is going.

Obviously, the reasons are multifarious, but mainly is because of the venality of the politicians of all stripes. Corruption is rife, illiteracy rampant, health is poor, economics horrible, generally a sad old reflection of what India's missed opportunities are. What makes it even worse is that these are poor states in a poor country, but other states have done much better. I realise that somebody has to come bottom, but when we are talking about poverty levels which are at or below starvation levels, then being at the bottom has severe implications for rest of the country. It does not also help that these states are some of the most populous in the country.

One would expect that every state would be hell bent in trying to improve its investment climate so that jobs are produced and better quality of life is achieved. But no, most of the leaders of these states are too busy being corrupt and feathering their own nests. By and large, they are a venal lot, seriously. And having had experience of living, studying, working, running firms in these states, I can personally say that the situation isnt improving fast. For entrepreneurs, it is tough, really tough. When you have borrowed money from your father's General Provident Fund (pension fund), and have invested in the anticipation that you will provide sufficient returns so that your old man is not left on the street, the last thing you need is your own government and its officials being like vultures, bent on capturing your hard earned money. Well, perhaps it is too much to expect, but what exactly are the problems facing entrepreneurs?

The World Bank recently released a paper comparing the investment climate in 16 Indian states for which they had data. Here's their main graphic which shows the investment climate in the 16 states.

So what did the author evaluate to make up the index? This is what I mean by saying that the issues with these states are simple but implementation needs just simple hard work. Nothing magical, just keep on plugging away at it. Here are some of the factors relating to infrastructure: Hours of power outages last year, Hours of telephone outages last year, Percentage of sales lost in transit, percentage of sales lost due to power outages, Days of inventories kept for main input (proxy for quality of transportation). What about inputs? Excess labor, Cost of finance: value of collateral required to obtain a loan, Proximity to raw materials (share of inputs bought by domestic sources) Proximity to domestic customers, Share of firms using new technology, Trade credit: share of sales sold on credit, Trade credit: share of inputs bought on credit.

Finally institutions make a huge amount of difference to the investment climate and the authors included security cost, losses due to theft , Manager time spent dealing with regulations, Days spent with officials to deal with regulations, consistent interpretation of rules, Tax evasion (% of sales not declared), Days to obtain a telephone connection, Days to obtain a electric connection, Days to obtain a construction permit, Bribes to "get things done", Share of firms reporting officials request gifts etc. etc.

While one can only exhort the states at the top to do much better, but its the stogy lump of undigested mass of states at the bottom which is the issue. Not only do the good state's get their tax revenues diverted to support these Bimaru states, the diversion of tax revenues is then not invested in productive matters. So, all in all, these are giant holes where a significant proportion of productive wealth generated by India disappears.

The concluding paragraph from the author is particular important but would not be particularly surprising.

The analysis of 46 investment climate variables shows that power, transportation, corruption, tax regulations and theft
remain the major bottlenecks policymakers need to address in order to improve the business environment in India.

Same old, same old. Long way to go, my friends, long way to go.

Sunday, January 18

Gordon Brown, The Fencepost Tortoise

I have to quote this, absolutely brilliant.

While stitching up the hand of a 75 year old Devon farmer, who cut it on a gate while working cattle, the rural doctor struck up a conversation with the old man. Eventually the topic got around to Gordon Brown and his appointment as Prime Minister.
Well, you know," drawled the old farmer, "this Brown fellow is what they call a fencepost tortoise." Not being familiar with the term, the doctor asked him what a fencepost tortoise was. The old farmer said, "When you're driving along a country road and you come across a fence post with a tortoise balanced on top, that's called a fencepost tortoise."
The old farmer saw a puzzled look on the doctor's face, so he continued to explain, "You know he didn't get up there by himself, he definitely doesn't belong up there, he doesn't know what to do while he is up there, and you just have to wonder what kind of idiot put him up there in the first place.

I saw Gordon Brown in Israel on TV. Just what on earth was he doing there? I realise we were the colonial power but when will our politicians learn to keep our noses out of stuff that does not concern us? Didn't Suez teach us? He is such a publicity hound. Esphoks. What a disaster. BTW, what exactly is Tony Blair doing?

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Letter to my MP complaining about their expenses.

The problem relates to this issue. Extraordinary. Why on earth are they hiding their expenses? So when Scotland can do it without any security or administration issues, why is Westminster doing this? Truly disgraceful.

Gareth Thomas MP
Harrow West
Sunday 18 January 2009

Dear Mr. Thomas,
I was astonished to hear that the MPs have voted to hide the details of their expenses from being revealed to the general public. I fail to understand why you are doing so. I do not know if you also voted to so so, but I would hope not.
You see, I have to do that, every pence I spend of my company's money, I have to justify. If I dont, then the claim is rejected. If I had to put it in another way, it would be called as stealing. Now you dont do it, but why on earth are you allowing the name of the British Parliament to be besmirched? Over such a trivial issue? Why would you and your colleagues hide this?
It IS our business, your colleagues have, over and over again, shown an alarming lack of probity relating to spending my money. So why on earth is your party's ministers trying to hide this basic economic and business practice? Surely you all do not have anything to hide, do you?
And please tell Harriet Harman that her excuses of administrative expense (do you think rest of the business world does not do so?) or security (what security? I dont want to know security details, keep them, I want to know what you spend your money on) wash? No they do not.
In this time of everybody belt tightening, it is really very unfair to hear about the fact that the parliament is now voting to keep its spending secret.
Yours sincerely,
Dr. Bhaskar Dasgupta

Does Palmistry Work?

The answer is yes. You can predict behaviour based upon certain medico-engineering facts based upon your hand measurements. But a bit of history before this. Once upon a time, in the dim and distant past, I was laid up on a hospital bed for months on end. At that time, I was handed a copy of Cheiro's Palmistry book. As it so happens, its available on Project Gutenberg as a free downloadable e-book. Knock yourself out. At that time, I was a spotty teenager and soon got into it. Besides the obvious benefits of getting to hold women's hands and saying profound but totally BS stuff that spotty teenagers do to impress girls, it was fun.

But I did dig around a bit about this palmistry business. Did you know this stuff emerged from India from our old friend, Valmiki? Who wrote a treatise on this subject. But two things sort of made Palmistry a bit of sense to me. The first was that after my accident and being on crutches for well over 18 months made the lines of my hand change. I had a different palm line structure in 1987 and by 1988, the lines on my right hand were significantly different from what they were before.

Second was a scientific explanation. Did you know that the palm area is one of areas of the skin which has the highest density of nerve endings? Given that you and your behaviour is driven quite significantly by your nervous system, it made sense to understand that the lines made on the palm have something to do with the nerve endings and thus have some predictive ability.

Also, let us not forget the fact that the development of the opposable thumb is one indication of the difference between us and the animals. The very fact that we have opposable thumbs means that we have fine motor skills and our intellectual development path has diverged from the animals. For example, the fact that we have a thumb means that writing is possible. So, our hands and digits do have "stuff" to do with our own personal development. But I am slightly drifting from the point.

But its a childish pursuit, fit only for people who are not confident enough to rely on their own skills but require confirmation from others. That's what I thought about the range of studies relating to jewels, palmistry, astrology, numerology and the like (even though I ended up studying them way too much, but then, you dont have much option when you are stiffed inside the hospital bed for months on end).

But others do believe in it. My own marriage came nearly to a cropper when my father in law spotted the length of the fingers on my right hand. See above on the fingers of my right hand (its on the left) (and no jokes on hairy hobbit hands and feet, I have heard them all!). The middle and ring fingers are roughly of equal length, in fact, the ring finger is slightly longer even than the middle finger as is the case on my right hand. Guess what he said? He said that people with that condition are great gamblers. He gave me a very suspicious look and mumbled something about how his daughter will be married to a gambler and how that's not good and and and. Close shave, I tell you, I had to talk very quickly. But he still gives me a pained look whenever we meet.

So since then, I spasmodically do the palmistry stuff, usually when I am drunk or when I am drunk. But you know what I mean, its only for a bit of a laugh and fun. But not true.

Here's an experiment which you can do. Go grab a ruler or a scale. Measure the length of your index finger from the knuckle to the tip and the same with your ring finger. Then divide the 2 numbers. The higher the ratio, the bigger is your ability to do do profitable trades. This ratio is called as the 2D:4D ratio. I quote:

Traders with the lowest 2D:4D ratios had an average annual income of £680,000 – 11 times higher than those with the highest ratios. The ratios, measured from photocopies of volunteers’ hands, ranged from 0.90 to 1.02.

I further quote:

Researchers at Cambridge university have found a strong statistical link between the profitability of male traders at a London bank and the ratio of index to ring fingers on their right hand. The longer the fourth digit in relation to the second, the more money the traders are likely to make.

This ratio, known as “2D:4D”, is affected by the amount of male hormone to which people are exposed while growing in their mother’s womb.

Previous research has shown that higher prenatal exposure to testosterone and other male hormones leads to a lower 2D:4D ratio. Finger ratios have been used to predict performance in competitive sports.

Go now you have ended up with another scientific explanation for human performance as measure by bio-engineering factors on the hand. So Palmistry does seem to work in certain aspects. Now where is the damn parrot?

UK maths failures 'cost £2.4bn'

Despite the fact that the UK is doing very well in math education, there are still a bunch of students who are not really that clued up in mathematics. I see this all the time, so many people are out there who do not look after their bank accounts, their savings, their pensions and are unnecessarily poor. And this is avoidable, we are talking about people who, due to a fear of mathematics, are unable to claim benefits or even move up the jobs ladder.

Here's an interesting story. I quote:

Accountants KPMG tracked children with poor numeracy and found they were more likely to be unemployed, claim more benefits and pay less tax. The report by KPMG estimates that the long-term costs of children leaving schools unable to do maths could be as high as £44,000 per individual up to the age of 37.

I am assisting in a small but global charitable enterprise called as SIFE. And one of the things that I do is to try to get hold of undergraduate students who have just entered into university. Research has proven that if you inculcate the right habits into the students at that point, then they are much more inclined to look after their financial health. Over the past few years, I have seen a good rise in the number of undergraduate students who are worrying about their financial future and put aside some money for investments (pension, stock market, etc.). But mind you, these are mostly business and economics students, which means that I have the self selection bias.

Few months ago, teaching at Swansea, there were about 400 students in 2 lecture theatres. One was video conferenced in, so I could not interact with them, but the one which I was, they were quite interested, and several claimed to have investment accounts. But most of the students were not interested in it for now. I can understand, neither did I when I was their age, but after the lecture, I asked around about the reason. The main reason as it turned out, was because they were scared of the whole numbers thing. They are boring, they make you have to think and financial future? who cares.

But these numbers give you an indication of the scale of the problem. When you are talking about a small country like UK, with a very good mathematics education system, and you still end up 2.4 billion pounds poorer because some are not mathematically aligned. Just imagine what it would be for other countries who are much below the scale on mathematics achievements? Lack of this knowledge costs society dearly.

So what explains this behaviour? I went to the person who knows more than me on everything, my teenage son. He likes mathematics and has shown an interest in mathematics since the beginning. Does all right in that subject. (a function off the old block? if you excuse the rather sad pun?) and helps others as well. Furthermore, he has businesses running (he buys sweets in packs and sells them individually to the students in his school, runs a garage sale during the summer, and he runs a business selling artifacts/user id's from World of Warcraft, he is also good at the stock market, although currently his positions are roughly 12% down - pretty good going, if I might say so. Mind you, he did invest £50 in Woolworths, so lets not get too excited). So both theory and practical is fine.

So what does he think of the tendency to do poorly in mathematics? His answer was curious. He said that he thinks his friends who did poorly were so because of their parents. I was very much taken aback with this statement but on reflection and his further explanation, it sort of made sense. He said, "Baba, I can come and ask you about mathematics, but quite a lot of parents hate it so they groan, roll their eyes, make excuses and many times swear at the kids/teachers for asking them about mathematics. So they come ask me". Now, this is interesting. Does this mean that if a student is weak at mathematics, and he is being given remedial education, we should make sure that the parents enroll as well? Makes sense, if you keep on tearing down maths, abuse and look down on people who do and like mathematics, they will not be very good at it, no?

Mind you, it is not that bad, Kumon Mathematics is quite popular this corner of the world. You have hordes of parents carting their kids around the neighbourhoods of UK getting them trained up in Mathematics, but there is still an element of the populace which is not doing good, and that has some pretty big impacts on society. Perhaps it would be good to reflect on what Russell said about Mathematics, "Mathematics, rightly viewed, possesses not only truth, but supreme beauty - a beauty cold and austere, like that of sculpture." Then again, how many people appreciate sculpture but unlike sculpture, if you hate or dont "do" mathematics, it will cost you.