The Proposed Division of Uttar Pradesh

I have to be honest here. I never thought that Mayawati could do any good to her state or the country when she assumed command as Chief Minister of Uttar Pradesh in 2007. Even though she had achieved a remarkable feat by obtaining a simple majority in the legislative assembly (the first time such a feat was achieved after the Rajiv Gandhi era) I remained skeptical of her.

And until yesterday I carried the same feeling with me. How did my opinion of her change?

Mayawati officially proposed the plan to divide Uttar Pradesh into four smaller states so as to achieve efficiency in basic governance areas like law and order, bureaucracy, public services and similar other avenues in which Uttar Pradesh has been historically backward compared to even other backward states like Rajasthan and Madhya Pradesh. The four states would be named Paschim Pradesh, Poorvanchal, Bundelkhand and Awadh Prant

While some people would look at this announcement with skepticism as it came before a crucial state election in March 2012, I think that this might be the single greatest event in history of Uttar Pradesh since independence.

Why?

It’s quite simple. Uttar Pradesh is the one of the largest and most heavily populated states in India with a population of nearly 20 crore (200 million). With that kind of a figure it has a greater population than the whole of Brazil! Clearly, this makes Uttar Pradesh one hell of a challenge to be managed effectively. The current scenario is proof of that with Uttar Pradesh trailing in almost all development indicators from poverty, unemployment, industrial growth, new investment, crime, women’s education…. The list is endless. It is clear that the sheer size of this state makes it unmanageable coupled with the already comparative backwardness of the state to all other large (and even some smaller) states in the country.

Skeptics of this proposal would no doubt question the timing as this proposal comes in the wake of state elections in Uttar Pradesh due in March 2012. Mayawati and her Bahujan Samaj Party (BSP) evoke a mixed feeling in the state with allegations of corruptions and reverse caste discrimination in the favour of ‘lower’ castes. Her so called ‘grand gestures’ of building large and expensive monuments of herself and her now late former party boss Kanshi Ram at the expense of the state exchequer have attracted allegations against her of creating a caste based (mostly lower caste) Cult of Personality of herself. During her tenure, crime which has always been a serious problem in Uttar Pradesh compared to any other has skyrocketed in certain areas making her draw even more criticism especially from the ‘urban’ types and the liberal media. A strong nexus of crime, political patronage and violence and corruption have scared away most new investment projects from the state in addition to the already existing ones. Infrastructure shortages from horrible roads, a bipolar electric grid and low quality (and in some cases completely nonexistent) public services have done nothing but to abate the flight of investment and industry from the state.

While I agree with that, it does not make a political Einstein to understand what benefits this division will give to the people of Uttar Pradesh and India.

The division would enable the newly created smaller four states to achieve a level of competency in governance and public services which are just not possible in the current single behemoth state. The division would create a lot of new government jobs in the new states as certain institutional structures of government will have to be created for each state. The most important benefit to the national scene will be the disproportionate power that Uttar Pradesh has always had since independence. The power of strongly influencing politics at the Central Government with 80 Lok Sabha seats. This disproportionate power has always led to the saying that “The road to Delhi goes through Uttar Pradesh”. This power will cease to exist by the division as no one state would then possess the power to have undue influence on Central politics.

My answer to the division skeptics who say that Uttar Pradesh will not improve after the division is to look at neighbouring Uttarakhand. Uttarakhand (formerly Uttaranchal) was separated from Uttar Pradesh in 2000 as a separate state. Since then, the difference between the two states can only be explained by the word “stellar”. Uttarakhand rose from a muddy backwater region of Northern India to become one the best governed states in North India after Himachal Pradesh. Today, Uttarakhand ranks above Uttar Pradesh in all major development indicators from poverty and healthcare to women’s rights.

Those are my two cents on this issue. I will like to hear from all of you.

Mitul Choksi

16-November-2011

Ahmedabad, Republic of India

Steve Jobs and the "Think Different" Perception of Apple

To steal a line from Stanley Wolpert about the founder of Pakistan, Muhammad Ali Jinnah, I would like to quote a line that explains what Steve Jobs meant to the field of computing.

"Few individuals significantly alter the course of history. Fewer still create a groundbreaking technology. Hardly anyone can be credited with creating an industry. Steven Paul Jobs did all three."

Most people know Steve Jobs and recognize him as the “Apple Guy” or the guy who made the iPod, iPhone or iPad. That’s most people for you with their general description of even the most iconic of figures.

But I recognize Steve Jobs for something else. I recognize Steve Jobs as the man who basically took an idea that he had and changed the world as we know it.

I recognize Steve Jobs as someone so passionate that he infects others with the passion for his work. Nowhere else have I seen people lining up for days in front of a store to buy a newly launched phone! Nowhere else have I seen people line up for days to buy a touch screen computer which by technological standards was more than ten years old! Nowhere have I seen users of products literally fight with users of other products over a discussion of who has the better product (Mac v PC)!

Nowhere have I seen normally sane and sophisticated people behaving like perspiring teenagers in a technology conference to the arrival of a company’s CEO!

Nowhere have I seen the resignation of one man from one of the largest companies in the world to lead to a 5% drop in share prices!

Incredible you may say. I say it is iNcredible.

That is Steve Jobs at work.

Love him or hate him, Steve Jobs will always be irreplaceable. He brought that charisma, that passion and that special “Jobs” factor to the table. Everything intangible in him brought tangible gains to his company and an unprecedented change in the perception of people towards entertainment, communications and computing. That in itself was revolutionary.

Now, Steve also had a nasty side like his over bearing nature towards subordinates when it came to perfection and performance. His overemphasis on positioning Apple products as superior and premium to everyday run of the mill products made Apple stay a tiny player in the personal computer market.

But in the end he did prove to everyone that he stood for what he said and preached – Think Different.

Apple, today is different from the rest and probably the best at what it does due to one man – Steven Paul Jobs.

Thank You Steve.

Mitul Choksi

Ahmedabad, Republic of India

Steve Jobs @ Apple

Apple Inc., the maker of the famed iPod, iPhone, iPad and of course the Macintosh computers announced today that its long time CEO, the charismatic Steve Jobs has resigned from his post yesterday. Mr. Job’s reason for leaving were not specifically cited but is widely believed to be due to his medical condition. He has nominated Mr. Tim Cook, the Chief Operating Officer to replace him as CEO.

This little piece of news has shaken the tech industry and tech users alike. Steve Jobs cofounded Apple Computers in 1975 along with his friend the lesser known Steve, Steve Wozniak and thus gave birth not only to a company or a technology, but to an industry.

Steve Jobs was responsible for launching the famous Macintosh in the mid 1980s which even then was known for its “different looks” which made it stand apart from the rest of the competition. Mr. Jobs also introduced the concept of the mouse based Graphical User Interface (GUI) which he borrowed from Xerox Corporation at the time and brought it into the public sphere. What happened after that to the personal computer (yes, the Macintosh for all uses and purposes except marketing is a personal computer) industry is history.

After being booted out of the company in 1985, Mr. Jobs founded NeXT, a computer platform aimed at the higher education and business markets. He was also responsible for the incredible rise to fame of Pixar Animation Studios which was subsequently bought by The Walt Disney Company.

But Mr. Jobs’ greatest fame came after his return to Apple in 1997 when he was appointed as the CEO in a then floundering company badly in the need of his iconic vision. He was criticized in the beginning of his second tenure by hardcore pro-Apple anti-Microsoft loyalists when he secured Apple’s financial health by asking Microsoft for a cash infusion of $150 by investing in non-voting stock. Little did everyone know that that was the beginning of Apple’s Golden Decade.

In 1998, Mr. Jobs helped Apple launch an “extraterrestrial” looking desktop – the iMac, which integrated the CPU and monitor into a single box.

In 2001, Mr. Jobs launched Apple’s groundbreaking MP3 player – the iPod which took the then highly fragmented portable digital music player by storm. Mr. Jobs’ iconic vision was in display when he tied the iPod to Apple’s new music management software iTunes, which not only managed one’s music but also incorporated a new music store which enabled users to download individual songs at rock bottom rates ($0.99 a track then). Thus, in a single stroke, Mr. Jobs’ not only launched a legendary product, but also tied it to an innovative service which enabled Apple to have a monopoly on all media added on to the iPod and also played a tremendous role in curbing then rampant online music piracy.

In 2007, Mr. Jobs launched the now legendary iPhone which integrated an iPod, a phone and a breakthrough Internet communications device. Mr. Jobs did an iTunes like move with the iPhone by tying it to the Apple App Store which gave Apple a monopoly on the type and content of applications that can be installed on the iPhone. It is now one of Apple’s juiciest cash cows. The iPhone as of today is in its 5^th avatar (I count the iPhone 3G and 3GS as separate avatars) and is awaiting a 6^th avatar in form of the 5^th generation iPhone.

And in 2010, Mr. Jobs helped redefine computing and computing ergonomics yet again with the launch of the iPad, a tablet computer loaded with a powerful version of the iPhone Operating System or iOS. The iPad was also tied to the Apple App Store which gave it complete control of the entire hardware-software ecosystem for the device, just like the iPhone.

Mr. Jobs tenure from September 1997 to August 2011 saw Apple going from what people called a nearly bankrupt one hit wonder like company to the largest software company (by market valuations) in 14 years. In the process he not only beat giants like Microsoft and Google, but also in the process literally changed the world by changing our perceptions about entertainment, communications and computing. That’s a giant feat by any standards.

Steve Jobs will always be missed.

Thank You Steve.

Mitul Choksi

Ahmedabad, Republic of India

Anna Hazare and CopyCat Gandhism

The mood of the entire country seems to have changed drastically in the last couple of days with Mr. Kisan Baburao Hazare (popularly known as Anna Hazare, where Anna means "Elder Brother") and his supporters taking on the juggernaut that is the Central Government of India.

Regarding Anna Hazare and his so called India Against Corruption movement, I am not a supporter of it. The word "Mass Hysteria" that can be used as appropriate to describe all the happenings in this "movement" since April.

Anna Hazare's demands for the passing of the Jan Lokpal bill or the Lokpal bill, a corruption watchdog with legal superpowers to arrest, prosecute and imprison every corrupt official in the country would obviously lead him into a collision course with the government. Mr. Hazare demands that the Lokpal should be empowered to nab anyone and everyone who is accused to be corrupt right down from yours truly up to the Prime Minister of India has sent shivers down the spines of the power houses in New Delhi (and yet our previous theory that politicians were spineless creatures has lay to the dust!)

Duplicating the Police Forces, Investigating Agencies and other agencies which already exist in some other form would be a futile exercise in tackling corruption as there would be issues arising as to which case should be tried in which agency (the existing one or the newly formed Lokpal system), issues regarding jurisdiction of the respective systems and issues arising out of issues raised by the competing agencies regarding what sort of exact power do they have the right to exercise.

Anna Hazare has obviously found great support and admiration among the masses, especially the middle class who is routinely plagued by corruption in many and most government offices. Mr. Hazare has decided to adopt the nonviolent "fast unto death" satyagraha against the government to force them into signing the bill with conditions as laid down by himself and his team of civil society activists.

I call this "CopyCat Gandhism".

I have tremendous respect for Mohandas Gandhi and most of his principles but I have always thought that the so called "fast unto death" threats known as satyagraha was and is a form of blackmail. The reason it has been glorified is that it was the tool that enabled Mr. Gandhi to boot the British peacefully from India. In his "special case" the ends justified the means but it also had the residual effect of giving people a new method in which to blackmail the government into giving into their demands. This method is being used by Mr. Hazare today. And No, I do not consider this movement of Mr. Hazare as a "special case".

Although the media is to be thanked for exposing many scandals in recent times and getting the involved people prosecuted and arrested, it has turned into a populist tool to forward the momentum in this "India Against Corruption" movement. I must admit that I have re-started watching Indian news channels somewhat after a lull of almost 3-4 years on a somewhat regular basis due to this "media activism". I must say that the debates that many news channels (notable mentions: TIMES NOW and NDTV 24x7) broadcast in the Prime Time slots are good but at the same time they are structured so as to portray a heavy bias towards Mr. Hazare's movement. The debates on the Lokpal have members from the Congress and the BJP which is understandable as they are the two largest parties. Then you have someone like Anupam Kher and Kiran Bedi who have taken up key roles in this "movement" and some other members of fringe parties and what I like to call "Fringe Society" (includes people like film stars etc. who hardly have to deal with corruption. Their presence is only to add glitter value).

Once this debate gets going you find that only the member of the Congress party is opposing the Lokpal bill and all the others in one way or the other support it (including the fellow of BJP-NDA who mostly agrees on everything Lokpal). This inevitably makes the ruling party member look like the bad guy and the government completely corrupt and what not. These debates never have anyone from the smaller parties, "Fringe Society" and other members of civil society who oppose the Lokpal bill.

This amounts to classic media bias in favour of populism which is once again a blot on the so called "independent media". The Indian constitution clearly states that while the majority wins principle is applicable in a democracy, it is the duty of the democratic system (the system includes everyone from the government, and other public institutions and some private institutions like the media etc.) to listen, understand, tolerate and protect the views of the minority points of view. This principle is being clearly violated here.

Coercing the government is not a good idea neither is it democratic. Just because Mr. Gandhi did it does not make it right. Napoleon, Hitler, Mussolini, Stalin, Idi Amin were considered heroes at the time when they came to power bolstered by "Mass Hysteria". But we all know the end result of what happened in each case. While, it would not be correct to compare Mr. Hazare to either of these villains, it should be noted as a matter of principle and in the long term interests of the nation that this "movement" be taken with a pinch of salt and be properly understood by anyone and everyone who intends to be involved in it before raising any war cries.

A good start for everyone would be to read the Constitution of India.

Think About It.

Mitul Choksi

Ahmedabad, Republic of India

August 17, 2011

Implications – Libya vs. The West

I must say one thing before starting this article. I have been waiting for more than three months to write something about the NATO (North Atlantic Treaty Organization) led assault on Libya to allegedly “free its people” from the tyranny of Muammar Gadaffi and his minions.

The reason I did not write anything on the topic till now is due to hope. Yes, hope. Hope that NATO would route the already teetering country led by Gadaffi in a matter of weeks. This hope stemmed from my now apparent overconfidence in the military strength of NATO. I was initially jubilant after the passing of Resolution 1973 of the United Nations which authorized military use (although it did not use the word regime change in any way) to liberate the Libyan people from oppression by an autocratic tyrant. The resolution passed after a lot of drama with the usual suspects, China and Russia (and some unusual ones like South Africa, Brazil, India and even Germany!) abstaining to vote on the resolution, signifying implicit opposition to such an operation.

Yet, I hoped the principles of Western idealism and belief in universal freedom and human rights was going to be upheld in a matter of weeks as NATO (primarily led by the UK and a resurgent and aggressive France) would send Gadaffi and his fellows packing into the sunset. My hopes were boosted with another unprecedented event when the Arab League decided to support NATO in Operation Odyssey Dawn with countries like Qatar and the UAE even promising logistical and military assistance. The UAE even promised air strikes in addition to aerial recon. Encouraging news indeed.

But where are we now. The initial objective of creating a No Fly Zone which basically meant the destruction of major Libyan air strike capabilities and the destruction of anti-aircraft capabilities has turned out to be a resounding success. But there has been little progress afterwards. Dare I say, there has been some regress! NATO has lost some credibility due to a surge in civilian casualties in the last month. There are no signs of clear progress. Gadaffi is still holding his ground in the West with the capital Tripoli and the oil town of Misrata still under his control. The rebels, after their initial advances have been pushed back as Gadaffi’s men still have superior firepower, especially the heavy weapons which the rebels can’t match.

NATO is reluctant to provide them with equalizers fearing a future “destabilization” of the region and the thought of even sending in ground troops is a taboo like none other, especially in the UK who still maintains a strong contingent in Afghanistan (they pulled out of Iraq some time ago). The British public support for the Afghan war is already waning and the ruling Tory led government knows that sending in ground troops would be political suicide. The French are even more against sending in ground troops. The presidential elections are coming up next year and the already politically cornered Mr. Sarkozy would think twice before taking up any such operation in a dangerous foreign theatre. America, NATO’s biggest sponsor and fan wants to stay as far away from the war as possible. A wise decision Mr. Obama.

There have been constant rumours since the last few months on multiple occasions which speculate on the “imminent departure” of Mr. Gadaffi and his near agreement on getting a “political solution” to the crisis. But they have been just that – rumours.

So where does that leave the war? In a stalemate? I think so.

The West needs to weigh in its options very carefully right now. After the “jasmine” revolution in Tunisia, Egypt, Syria, Bahrain and the “mini jasmines” in places like Jordan, Oman and Morocco it is imperative that the West stop this contagion from spreading further into sub-Saharan Africa which houses some of the most brutal dictators and repressed populations, who if inspired by these events in their neighbourhood could start a more bloody variety of “African Jasmines”. The recent separation of South Sudan from the North could inspire others in the region to follow the Sudanese example. Given that Africa is one of the biggest and most important suppliers of mineral wealth (including oil) and the most rapidly developing market for exports from all over the world, any destabilization of the continent (or even a reasonably sized chunk of it) could lead to significant global implications, the primary of which could be a rise in global commodity prices and inflation. A not so pretty picture emerges.

Therefore, it is of paramount importance that the NATO led operation make a stand on this decision for a change (unanimous decisions in Brussels are increasingly rare) and put an end to this to war and get on with the much difficult to task of rebuilding Libya.

One ponders whether if the West would succeed in getting rid of Gadaffi and successfully rebuilding Libya with a functioning democratic government, it would inspire the other repressed people of Africa to revolt against their leaders in hope of a better future. Will they expect similar help from NATO and the West? A question only time will answer. And perhaps oil too!

Mitul Choksi

July 10, 2011

Ahmedabad, Republic of India

Are we giving the press too much independence for our own good?

News of the World and the Phone Hacking Scandal

Are we giving the press too much independence for our own good?

The concept of “Freedom of Speech” and “Freedom of Expression” are two basic principles enshrined in our country’s constitution. These principles are constitutionally guaranteed in almost all nations of the free world and are recognized by the United Nations as “inalienable human rights”.

While governments of free countries throughout the world make It their mission and habit to extend these principles of free speech to countries around the world that do not recognize these rights as fundamental to the existence of their citizens, we as citizens of the free world must also ponder around the question “Are we giving too much leeway to the media?” in our own backyards on the basis of these very principles of “Freedom of Speech” and “Freedom of Expression”.

The answer to that question has always been a contentious one in free societies around the world. While it is generally believed that censorship is something that is eventually detrimental to the interests of society, the question I (and people like me) pose is whether there should be curtailment at times on the media’s power when interests of the public can be threatened by such a freewheeling press.

Like I pointed out earlier, these questions have been there for a long time and have always have been a rather controversial issue. But I am raising these questions in the light of the recent Phone Hacking Scandal in the United Kingdom. It has been alleged that the editors of the 160 plus year old tabloid News of the World (owned by Rupert Murdoch) had authorized private detectives and investigators to hack the phones of rape and murder victims, children victims of pedophilia, victims of the 7/7 London Bombings and even families of soldiers who had died fighting for their country in Afghanistan and Iraq.

This piece of news has just gone so viral in the public in the last few days that the British House of Commons (equivalent of India’s Lok Sabha) called a special discussion on the issue with major parties (the ruling Conservative-Lib Dem coalition) and the opposition Labour Party going at each other’s throats. British politics, being how it is today cannot be predicted as regarding to the specific actions they will take against this whole situation. But “censorship” remains a taboo word in Britain which has one of the freest presses in the western world.

The British PM has guaranteed that the guilty will be brought to justice. But, he made an even deeper point. He said in the House of Commons that the media industry has become used to these kinds of questionable tactics in the hunt for publicity of their papers in what is a highly competitive environment. Former Labour Deputy Prime Minister Lord Prescott made clear in an interview with the BBC on July 7th (ironically the sixth anniversary of the London Bombings of 2005) that he has produced evidence in collaboration with British intelligence about the involvement of 300 odd reporters of different media houses that have been involved in such questionable and invasive techniques to garner information for “cheap publicity”. The politicians, I believe will love going after the media for once this time rather than the usual other way round scenario.

But the happenings in Britain are in my humble opinion a warning signal for all free governments in the world that give the media a free hand in reporting basically anything (including unfounded doubts and rumours about people which may tarnish their reputation without any of their wrong doing). While “censorship” is too heavy a word to use in given its association with repression, there has to be a way in which the media can reined in to behave in a more civilized manner. The threat of media as a blackmail tool against people who have done no wrong needs to be stopped while at the same time its edges need to be sharpened against people who are involved in activities which are in essence against social good (corrupt politicians, the evil side of business and commerce etc.). That is what an ideal media organization is supposed to do anyway. It is the premise on which any media organization is found upon. If they don’t behave that way, isn’t it the job of the public to enforce their “moral constitution”?

The media will most likely scoff at these suggestions. But as an old saying goes “Too much of anything is a bad thing.” That includes too much independence.

The process of reining the “freewheeling” press has to be decided in a democratic manner with something like a joint government-media-civil society body debating and deciding as to basically “where the line should be drawn?” Such a debate and democratic decision process in itself signifies that it is not media censorship but rather “civilization of the media”.

All this internal restructuring of media rights and duties should not at the same time become a detriment to the free world’s major cause of promoting free speech in the repressed and less fortunate parts of the world that really suffer from some or the other form of censorship of individual freedom and expression.

I would like to hear the views of the readers on this issue as I think it is something everyone will have an opinion on. You have the “Freedom to Speak”!!!

Mitul Choksi

July 8th 2011

Ahmedabad, Republic of India

The need for a Uniform Civil Code in India

A recent observation by the Supreme Court of India regarding the failure of every post-Independence government to adopt a Uniform Civil Code (UCC) which applies to all religious communities equally across the spectrum has made headlines in many regional and national dailies.

The observation was made during hearing petitions of the National Commission of Women’s Delhi chapter.

Provision for UCC is incorporated in Article 44 under the Directive Principles chapter of the Constitution, which says, “The state shall endeavour to secure for the citizens a Uniform Civil Code throughout the territory of India”.

The Supreme Court went on to remark specifically that the majority Hindu community has been more tolerant and receptive of changes brought in their personal law but the government has failed to replicate that success in upgrading the personal laws of minorities.

The other major issue is the contradictory provisions laid down in various personal laws when it comes to issues like marriageable age. For example, the legal age of marriage is 18 for girls and 21 for boys. But the Hindu Marriage Act and the Prohibition of Child Marriage Act 2006 render different interpretations on what constitutes the legal age for marriage. Under the 2006 law the marriages of girls below 16 are void and marriages in the 16-18 period is voidable. Needless to say, this leads to confusion.

It takes no genius that by using the term “minorities”, the Court is referring to the Muslim community which has always shown tremendous resistance to any effort made by the government (or even some members of their community) to make changes to their personal laws. A popular example of this is the Shah Bano case which achieved tremendous infamy during the tenure of Rajiv Gandhi.

In my humble opinion the personal laws need to work side by side with a newly drafted UCC which is applicable to all communities except in a few matters regulated by the applicable personal laws. This sounds simple enough on paper but in reality this would be a monumental task keeping in mind the convincing required to be done to various communities and their religious leaders. Also because of the overwhelming political will required to undertake such a monumental effort which would affect every citizen in one way or another.

“Upgrading” ourselves to the UCC would enact the principle of “The Law is One” for all communities irrespective of cast, creed, sex, colour or religion. This would also smoothen inter-community disputes on various issues like inter-faith marriages, inheritance etc. whose cases form a large chunk of pending matters in all levels of judiciary.

Whether such a day will come when all this rings true is questionable. But let us hope anyway like we do about a lot of other things…..

Mitul Choksi

10-February 2011

2:05 PM Indian Standard Time

Why has the Crescent fallen behind?

A report authored by a group of Arab scholars in 2002 has pointed out broadly, the reason why the Middle East and the Islamic world by extension had fallen behind the West in the last few centuries. The chief culprits as stated by the report were the deficits in knowledge and freedom. A salutary debate ensued. Now Timur Kuran, a Turkish-American economist has come out with an equally if not more bold book entitled “The Long Divergence: How Islamic Law Held Back The Middle East”. Let us hope that another equally salutary debate ensues once again.

For the period since the beginning of Islam up to 17th century, the Middle East was a dynamic place comparable to the Europe of today. Muslim traders flocked various parts of the region trading in items ranging from spices and silk to imported prostitutes and slaves. But somehow, the Middle East’s share of world economic activity has gown downhill since the year 1000. At that time, the Middle East Gross Domestic Product (GDP) was 10% compared to Europe’s 9%. By the year 1700 the Middle East was a paltry 2% compared to Europe’s 22%.

The standard explanations offered for this have mostly till date been unsatisfactory. It is widely believed that Islam by its very nature is hostile to commerce. But if anything, Islamic scripture is more business friendly than Christian or Hindu texts. The prophet Muhammad was a merchant and the Koran is full of praise for commerce. The second perceived reason is that Islam bans usury. But so do the Torah and the Bible. A third widely perceived belief is that Islamic countries fell behind as they were victims of Western imperialism.

Mr. Kuran’s work goes down to the very core of the problem. He reasons that the principle underlying reason for the fallback of the Islamic countries was because these countries failed to build commercial institutions – most notably Joint Stock Companies which are capable of mobilizing large quantities of productive resources over a period of time.

Europeans on the other hand inherited the Joint Stock Company from Roman Law. They built on this concept to form the modern day corporations of the 19th and 20th centuries. Islamic law on the other hand has queasy rules when it comes to managing commercial institutions. For example, according to the Islamic partnership law, a partnership can be dissolved simply by the whim of another partner. Obviously, these kind of quirks cannot work in a modern day business environment. Moreover, the widespread practice of polygamy led to the dispersion of wealth among many inheritors descending from the same paternal ancestor.

None of these things mattered when business was simple. But as business grew with more advances in technologies and the resultant technological and legal complications, these laws became a thorn in the path of developing the business. While the western concept of the joint stock company evolved along with time, the concept in Islamic law didn’t adapt itself to the changing conditions.

From the 19th century, the Middle Eastern rulers with a more outwardly looking take on things started to adopt Western style companies and institutions at home. They imported the concepts, the technologies, the people and in many cases even the style of government. The most notable example of this is the Ataturk’s introduction of a secular legal system in Turkey in the 1920s. Countries whose rulers adopted similar importation of business ideology from the West have benefitted the most (notable examples include Turkey, Egypt, Iran and the UAE).

Still, the Middle East has a lot of catching up to do. Its income per capita still remains less than 30% of Europe’s, the infrastructure in many countries is quite weak, economies are heavily dependent on export of commodities like oil instead of value adding industries and political stability is but a rarity.

Business remains complicatedly intertwined with the state as the region lacks strong commercial institutions. The Global Entrepreneurship Monitor suggests that rates of entrepreneurship are particularly low in the Middle East and north Africa. Transparency International’s corruption-perceptions index suggests that corruption is rife: in 2010, on a scale from one (the worst) to ten, Western Europe’s five most populous countries received an average score of 6.5, whereas the three most populous countries in the Middle East averaged 3.2 (Turkey scored 4.4, Egypt 3.1 and Iran 2.2)

Culture’s long shadow

The “long divergence” also helps to explain some of the Islamist rage against capitalism. Traditional societies of all kinds have been uncomfortable with corporations which, according to Edward Thurlow, an 18th-century British jurist, have “neither bodies to be punished, nor souls to be condemned”. But that unhappiness has been particularly marked in the Middle East. Corporations and other capitalist institutions were imported by progressive governments that believed the region faced a choice between Mecca and modernisation. Local businesses—particularly capital-intensive ones such as transport and manufacturing—were dominated by Jews and Christians who were allowed to opt out of Islamic law.

Mr Kuran’s arguments have broad implications for the debate about how to foster economic development. He demonstrates that the West’s long ascendancy was rooted in its ability to develop institutions that combined labour and capital in imaginative new ways. The Protestant work ethic and the scientific revolution no doubt mattered. But they may have mattered less than previously thought. People who want to ensure that economic development puts down deep roots in emerging societies would be well advised to create the institutional environment in which Thurlow’s soulless institutions can flourish.

Mitul Choksi

31-January-2011

2:37 PM Indian Standard Time

Rise of the 'redback'

IN 1965 Valéry Giscard d’Estaing, then France’s finance minister, complained that America, as the issuer of the world’s reserve currency, enjoyed “an exorbitant privilege”. China’s president, Hu Jintao, does not have quite the same way with words. But on the eve of his visit to America this week he told two of the country’s newspapers that the international currency system was a “product of the past”. Something can be a product of the past without being a thing of the past. But his implication was clear: the dollar’s role reflects America’s historical clout, not its present stature.

Mr Hu is right that America’s currency punches above its economy’s diminished weight in the world. America’s share of global output (20%), trade (only 11%) and even financial assets (about 30%) is shrinking, as emerging economies flourish. But many of those economies, such as South Korea, still sell their exports for dollars; many, including China, still peg their currencies to the greenback, however loosely; and about 60% of the world’s foreign-exchange reserves remain in dollars.

This allows America to borrow cheaply from the rest of the world. Its government has been able to overspend, secure in the knowledge that its IOUs will be bought by foreign central banks, which are not too fussy about price. America would show more self-discipline, many Chinese believe, if the dollar had a little bit more competition.

Could the yuan become a rival? China’s economy will probably surpass America’s in outright size within 20 years. It is already a bigger exporter. It is prodding firms to settle trade and even acquire foreign companies in its own currency. That is adding to a pool of “redbacks” outside its borders. These offshore yuan are, in turn, being tapped by borrowers, issuing “dim sum” bonds in Hong Kong (see article).

But as the dollar’s history shows, economic clout is not enough without financial sophistication (see article). If foreigners are to store their wealth in yuan, they will need financial instruments that are safe, stable and easily sold. Dim sum makes for a tasty appetiser. But the main feast of China’s financial assets is onshore and off-limits, thanks to its strict capital controls. The government remains deeply reluctant to let foreigners hold, buy and sell these assets, except under tight limits. Indeed, it is barely ready to give its own people financial freedom: interest on bank deposits is capped; shares are largely owned by state entities; and bonds are chiefly held by the banks—which are, in turn, mostly owned by the state.

Over time China will relax its financial grip. But even if it could usurp the dollar’s role as the world’s currency, it will not replicate the American set-up. The United States takes advantage of the dollar’s position to borrow cheaply from the rest of the world, selling its assets in return for goods. China is a mirror image of this. It runs a trade surplus, selling goods in return for financial claims on foreigners. Its firms, households and government save more than they can invest at home.

A different kind of perk

Rather than seeking to borrow in its own currency, China may harbour the opposite ambition: to lend in its own currency. The exorbitant privilege it may covet is a lower foreign-exchange risk on its savings. On top of the trillions China has lent to America’s treasury, it also holds stakes in Australian mines, African farms and Swedish car companies. But because none of these assets is in yuan, China suffers a capital loss whenever its currency strengthens. It would no doubt like to share some of this risk with the rest of the world. The model is not America, but Germany, an international creditor which holds 70% of its foreign assets in euros.

There is a catch, though. No one will want to borrow in a currency that is only ever going to strengthen, increasing the value of their debts. So if China wants to “yuanify” some of its claims on the rest of the world, it will need a currency that can go down as well as up. To make people believe the yuan can fall tomorrow, China will have to loosen its currency’s peg and let it rise faster today. China is different from America: it is a rising economic power and a thrifty one. But one rule still holds: China will have to open its financial system to the world if the yuan is to be the dominant currency.

Mitul Choksi

24-January-2011

8:31 PM Indian Standard Time

PC Models That Sound Like Alphabet Soup

Does it ever seem like PC manufacturers are clueless when it comes to actually selling products? or that they have no interest in making their products seem desirable, interesting, or fun? Let’s say that you’re in the market for a laptop. You do your research, and you narrow your choices to just a few likely candidates. “Hmmm,” you think. “Which one sounds best? Well, i could get a toshiba satellite L645D-s4036, an HP Pavilion Dv4-2173nr, or a Dell Inspiron iM501r-1459MrB.”

Don’t those model names just roll off your tongue?

Um, no. They’re a garbled grab bag of inharmonious numbers and letters. Can anyone really get excited about a product whose name can’t be recalled, much less repeated, without a teleprompter?

The products that i mentioned above aren’t exactly obscure items either; all three are best sellers at Amazon. so that means someone is buying them, even if their names have all the sizzle of a Microsoft security Bulletin code.

Why do PC names have to be so deadly dull? Consider the names of the latest phones: Droid incredible, iPhone 4, Samsung vibrant—simple, direct, zippy names all. Maybe this is one reason why throngs of buyers line up to snag the latest phone, whereas you never see a news report about people queuing up for a hot new notebook.

Sure, phone makers have it easier in some ways: fewer products in the line, fewer configuration options. But simplifying a name just requires a little discipline, creativity, and maybe—gasp!— even plain old fun. it works for car manufacturers, why not for PC makers?

Some manufacturers might argue that these unwieldy names are highly descriptive, giving an accurate representation of the internal options a buyer can expect. Te problem with that argument: PCs, both desk- and lap-bound, are now so configurable that no label can hope to encapsulate what’s really inside. Within any given line of laptops, you can chose from a panoply of processors, storage options, and more. Tat kind of choice is great; there’s just no need to call out every combination of options in the machine’s name.

Designed to Confuse

A cynic might say that computer manufacturers design their naming conventions to produce confusion. obfuscation isn’t accidental; it’s the point.

If a big-box store advertises a Widgettech Huzzah 5097B-15iJ laptop, it does not have to worry that a consumer may demand that the store match the price that a retail outlet across town is offering on the Widgettech Huzzah 5097B-15iK. in reality, there may be virtually no difference between the two units, but the consumer doesn’t know that.

Complex names also make online price comparisons impossible. Dozens of models; thousands of configurations; indecipherable, protean prices? Don’t sweat it; just click the ‘Buy Now’ button.

Still, i find it hard to believe that in - creasing customer confusion is an effective marketing strategy. Most manufacturers these days are selling a computing “experience,” not just a bundle of components. so why can’t they pick a name that conveys that experience and lose all the follow-on letters and numbers.

Customers would rejoice—and maybe even ask for products by name.

Mitul Choksi

7-September 2010

11 AM Indian Standard Time

Landmark decision: Vedanta denied mining rights

The Indian Government's decision not to permit the British company Vedanta to mine bauxite in the Niyamgiri Hills of Orissa is a landmark decision. The company has been known to publicly flout the local laws namely the Forest Rights Act and the Environment Protection Act, 1986.

The company has also been issued a show cause notice regarding its alleged non compliance with the provisions of the Environment Protection Act at its Lanjigarh refinery. The Government's decision insists that even the biggest companies must strongly adhere to the law of the land and not take it for granted.

It would be even more fruitful if the Government, in the interest of upholding the law and delivering justice punish the Government officials who helped Vedanta to break the law. It has been argued by some and accepted by the Government that the officials were acting in the best interests of the state and the nation at large. So in effect, they have been given a 'clean chit'. This decision raises the question whether this selective adherence to law involves some politics on part of the Government.

If the Government imposes this kind of punishment retrospectively then India will surely turn into an industrial wasteland as much of Indian industry has thrived in a similar fashion as Vedanta was attempting to.

Had Vedanta succeeded in acquiring this land the Government permission for mining it, it would have left the tribal people of the hills without their land which they consider sacred and as important to their livelihood as their arms and legs. It is in essence "the only place they can call home". They cannot migrate to nearby towns and villages as their lifestyle is totally different than those of people residing in urban and even "modern" rural centers. These tribes are in fact protected by the Schedule V of the Indian constitution and are entitled to some special rights which include the right of not being driven away from their land even in lieu of "suitable compensation".

The failure of Vedanta can be attributed to many reasons, the primary being its inability to create a warm image in the minds of the tribal people through its CSR (Corporate Social Responsibility) initiatives. The primary motive of any CSR initiative is to build positive long term relationships with its stakeholders (which include the surrounding community which it operates within).

If Vedanta had done its CSR properly, it might not have come to this. Thats a very big IF....!

Mitul Choksi

August 26, 2010

2:56 PM Indian Standard Time

To Save Africa We Need to Ignore its Nations

NOTE: PLEASE VOTE IN THE POLL ON THE RIGHT SIDE OF THIS PAGE

Yes, I know the title sounds a little odd. How can we ignore the nations of the "Dark Continent" in order to save it. Diving directly into the topic I explain how.

For years we have known African nations to be under the clutches of its so called "Big Men", ruthless dictators who have held on to power despite of anything and everything. These men led African nations to ruin economically, socially and politically.

Most African nations achieved their independence in the 1960s (in fact 17 nations celebrate their 50th year of independence in 2010). These nations gained independence with great hopes and aspirations of ridding their poverty and developing a sustainable standard of living.

Unfortunately, all but one nation fell under the clutches of ruthless power hungry dictators who did anything and everything in their power to hold on to power including repression, extreme press censorship and even genocide. Needless to say, the economies of these countries suffered along with its population who became more poor in the years after independence than they were before. The only notable exception is Botswana (in Southern Africa) which has a stable multi-party electoral system and regularly holds free and fair elections. Its economy is also an exception as it has a rapidly developing economy and is considered to me a middle income country with per capital GDP exceeding US$ 6000.

African nations have been able to survive for so long with so much impunity primarily because of two reasons, 1) Recognition by Western governments and 2) Foreign Aid from these nations

All this "help" from Western nations was basically to ensure that Africa does not get attracted to the Soviets in the Cold War.

But the Cold War has ended and there is no major need for the West to continues supporting Africa like it did before the end of the Cold War. The first thing that these donor countries should do is to stop keeping these nations afloat with all their aid money. To do so, the international community should join hands in coming together and de-recognizing these nations and expelling them from the United Nations. This will force the African leaders to look for support inwardly as they will no longer have the support of the rest of the world.

This suggestion might sound radical but these type of actions were taken in the 1970s in Taiwan. The loss of recognition for Taiwan meant that it had lost support of the West in its fight for survival against China. The reigning Kuomintang party had no option but to liberalize the economy, legalize political parties, abolish martial laws and bring in a truly democratic system. The results are for all to see today is Taiwan is a major tech hub in the global economy today.

But what does this de-recognition mean in practice? It means that the international community will tell oppressive regimes like the ones in Chad, Rwanda, Sudan, Equatorial Guinea, Gambia, Togo and others to extract their populations from horrors that their governments have put them in and provide them with at least the basics of life like food, shelter, security and basic rights to begin with.

The logistics of derecognition would no doubt be complicated. Embassies would be withdrawn on both sides. These states would be expelled from the United Nations and other international organizations. All macroeconomic, budget-supporting and post-conflict reconstruction aid programs would be canceled. (Nongovernmental groups and local charities would continue to

receive money.)

If this were to happen, relatively benevolent states like South Africa and a handful of others would go on as before. But in the continent’s most troubled countries, politicians would suddenly lose the legal foundations of their authority. Some of these repressive leaders, deprived of their sovereign tools of domination and the international aid that underwrites their regimes, might soon find themselves overthrown.

African states that begin to provide their citizens with basic rights and services, that curb violence and that once again commit resources to development projects, would be rewarded with re-recognition by the international community. Aid would return. More important, these states would finally have acquired some degree of popular accountability and domestic legitimacy.

Like any experiment, de- and re-recognition is risky. Some fear it could promote conflict, that warlords would simply seize certain mineral-rich areas and run violent, lawless quasi states. But Africa is already rife with violence, and warlordism is already a widespread phenomenon. While unrecognized countries might still mistreat their people, history shows that weak, isolated regimes have rarely been able to survive without making significant concessions to segments of their populations.

For many Africans, 50 years of sovereignty has been an abject failure, reproducing the horrors of colonial-era domination under the guise of freedom. International derecognition of abusive states would be a first step toward real liberation.

NOTE: PLEASE VOTE IN THE POLL ON THE RIGHT SIDE OF THIS PAGE

Mitul Choksi

13 June 2010

12:57 PM Indian Standard Time

Rant - American Double Standards

US Attorney General Eric Holder categorically went on the record saying that the American government will be comprehensive and aggressive and will not rest until justice is done in respect the oil spill caused from the collapsed oil rig of British Petroleum (BP) in the Gulf of Mexico. The spill has reportedly caused tremendous loss to the coastal economies of the United States along with incalculable damage to the ecological environment and marine life.

The Attorney General even announced a criminal as well as a civil investigation into the disastrous oil spill in the Gulf of Mexico. The administration of Barack Obama has vowed to hold the oil giant BP accountable for the disaster caused by its collapsed rig for billions of dollars.

However the world's worst industrial disaster was the in Bhopal in 1984. It has believed to claim up to 15000 lives and damaged the lives of thousands others. When asked if the US government will put more pressure on Dow Chemicals which bought Union Carbide Corporation a decade ago for cleaning up the site and extraditing Union Carbide executives including former CEO Warren Anderson who fled India just a few days after the accident and is absconding ever since the State Department officials diplomatically said "No".

The judgment given of two years in prison and fines of a few thousand dollars with no mention of Anderson is a travesty of justice which has left even American lawyers aghast.

Had this entire situation been the other way round and had an Indian company (or any other non-US company) been responsible for a similar disaster in the US, I am sure that the Americans would have left no stone unturned in getting their hands around the necks of the foreign company's management. If the management would have fled the US just like Anderson fled India, the US would have used "big brother scare tactics" to get them extradited to the US. If this seems far fetched then let me point to an example of what the US did in Pakistan. The Pakistani authorities have regularly been apprehending "terror suspects" on their soil and handing them over to the Americans even though an overwhelming majority of Pakistanis disdain these acts.

America was not likely to extradite Anderson even if he was convicted in absentia in India. The possibilities are even less now at a time when the US is keen to sell nuclear technology to India and the Indian government is facing a lot of heat from its allies as well as the opposition for agreeing to a "limited liability" clause in the nuclear agreement which absolves American corporations from paying astronomical amounts of damage in case another Bhopal like tragedy ever occurs in the future.

Its time we stood up to this double standard of America and at the same time kick our government in its derriere for taking this softly and sitting back like towards.

Remember, we will not be able to blame people in Bhopal for chanting "Death to America" if this sham justice goes through just like another run of the mill industrial accident.

A single currency is not required for economies to prosper

The recent crisis in Greece has exposed the inherent problems of the Euro. A currency adopted by 16 separate countries of the European Union (EU), more commonly known as the Euro Zone countries, the Euro has been through an almost unblemished and prosperous existence in the last 11 odd years since it came into being when the Euro Zone countries relinquished their own sovereign currencies and adopted a single and unified currency under the Euro.

During the global financial crisis of 2008-2009, it was widely believed among a large majority of people ranging from laymen to hedge fund managers that the Euro was a haven of safety where people could park their savings and investments without any fear of degradation of the currency and thus shield them from the depreciation of their money. This was a time when the fall of the US Dollar was considered imminent (along with the end of American hegemony in the world economy). Oh, how the times have changed!

It is now evident that the kind of crisis that has occurred in Greece and is feared to occur in Portugal, Spain and even Italy was inevitable.

The reason why this kind of crisis was bound to happen is that the Euro has been adopted in a situation where the countries that have adopted it have done so in a semi autonomous economic fashion where the European Central Bank (ECB) holds the power to issue and regulate the currency but the member nations themselves hold the authority to regulate their own sovereign finances which are merely monitored at the Euro Zone level but not regulated by questionable and ineffective laws. The second reason is a mere extension of the first. The Euro has been adopted by an economic "Super State" (the Euro Zone) while the politics of the member states is still an internal matter of the member countries. Thus, while there is an economic union there isn't a political one.

The introduction of the Euro with a low common rate of inflation (the law of averages is at work here) caused sharp declines in the rates of interest in many of the member countries which until the adoption of the single currency, had high borrowing rates. This resulted in these countries succumbing to the temptation of increasing government borrowing at the now lower interest rates resulting into ever rising rates of debt to GDP ratios. The debt to GDP ratio is as high as 115% in Greece and Italy.

Until recently before the crisis most debt issued by Euro Zone countries was treated as equal resulting in maintenance of the low interest rates of high debt countries. This continued until a default seemed clear in the near term for countries like Greece which might now have to go for a massive debt restructuring (read: refinancing) with help from other rich Euro Zone countries (read: Germany) and the International Monetary Fund (IMF).

Even after the crisis has surfaced, Greece does not have the adequate tools to fight it as it is locked into the Euro. If Greece still had its own currency - the drachma, it would be able to fight this situation by devaluing its currency and thus help boosting exports and reducing imports. This is one of the biggest if not the biggest drawback of a single currency. Greece also loses the ability to control interest rates and use monetary policy effectively.

Economic blocs around the world have a unified mechanism for increasing inter-regional as well as intra-regional trade but do not have a single currency precisely because of the reason mentioned above. The North American Free Trade Agreement (NAFTA), the East African Community (EAC), the Association of South East Asian Nations (ASEAN) are examples of economic blocs with members agreeing on trade mechanisms but maintaining separate currencies.

Despite all these problems the Euro still looks resolute enough to survive this on going crisis but from the looks of things the Euro Zone may lose some of its members with only countries fiscally strong enough remaining in the zone with perhaps a resurgent and strong Euro. Looking back one can say that countries which were fiscally weak and having high debt-GDP ratios were allowed to join the union which ultimately lead to this crisis.

Even if the union manages to frame some sort of policy to control fiscal irregularities amongst members in the future, the problems of having a single currency will still remain.

Mitul Choksi

30th May 2010

11 PM Indian Standard Time

3G Auction Madness

While it is true that the introduction of 3G (3rd Generation) Mobile Services will change the way how me perceive the marriage of the cellular phone and the Internet the way the 3G services and its insanely precious spectrum is being treated by the government and telecom companies is sheer madness in my opinion.

The first thing that comes to my mind is how the exorbitant price of the spectrum can be justified by telecom companies in such a cut throat competitive market. This question becomes even more difficult to answer when one realizes that telecom companies do not have a proper business model in mind for attracting and maintaining 3G subscribers. Another complication added to the mix is the recommendation from Telecom Regulatory Authority of India (TRAI) to companies having more than the floor 6.2 MHz of spectrum to pay up.

If this recommendation comes to fruition then companies like Vodafone Essar and Bharti Airtel will end up paying around 18000-19000 crore rupees for 2G and 3G spectrum. Add to this capital expenditure of 8000-9000 crore rupees for establishing and launching 3G services and capital costs at around 12-13 percent or Rs. 3000 crore and you get a stock market panic in the telecom sector. The market rightly questions these extremely high costs for 3G services as it fears whether these companies will be able to get a sufficient number of customers who are willing to pay significantly higher fees to access high speed Internet services on their cell phones.

If this does not happen then the telecom companies will have no other option but to use the free portion of the 3G spectrum to provide 2G service (voice and text services ) which is already a very cut throat market and ultimately end up being big time losers.

This basically means that these companies will require one out of every five subscribers to generate a revenue of at least Rs. 500 (this is something Reliance Communications and TATA) are currently earning with their 3G Internet cards). But even they do not have the magic one out of five number. Converting 20% of their subscribers into 3G users in a relatively short to medium period seems quite unlikely for these telecom companies.

And then there is the big question of state owned telecom companies namely MTNL and BSNL.

Both companies have agreed to take 3G spectrum a year ago but haven't made much headway in getting subscribers, so their 3G revenues are minimal. The problem though lies in their agreement to pay the auction price for the 3G spectrum. MTNL could end up paying 6000 crore rupees for Delhi and Mumbai circles while BSNL will have to pay 9000 crore rupees for the rest of India (the total price for a pan India license is Rs. 15000 crore). Thanks to TRAI recommendations MTNL may also have to pay up Rs. 2700 crore for the extra 2G spectrum whereas BSNL will end up paying Rs. 3100 crore if the recommendation is accepted by the Department of Telecommunications (DoT).

The only hope for these two state owned companies lies in the hands of the government coming out with some sort of special dispensation for them. Whether private telcos will take that lying down and whether the Competition Commission of India (CCI) will cry foul remain unanswered questions.

Mitul Choksi

18th May 2010

7:57 PM Indian Standard Time