This data on the annual global cost of providing the following goods and services is slightly dated (from 1998... and may not be exactly accurate either, perhaps), but I don’t think the proportions would have changed drastically:
$780bn: Military spending in the world
$400bn: Narcotics drugs trade in the world
$105bn: Alcoholic drinks in Europe
.$50bn: Cigarettes in Europe
.$35bn: Business entertainment in Japan
.$17bn: Pet foods in Europe and the United States
.$13bn: Estimated cost of basic health and nutrition worldwide
.&12bn: Perfumes in Europe and the United States
.$12bn: Estimated cost of reproductive health for all women globally
.$11bn: Ice cream in Europe
..$9bn: Estimated cost of water/sanitation worldwide
..$8bn: Cosmetics in the United States
..$6bn: Cost of basic education for everyone in the world
One can also add that India's military spending is $16.73bn
...it is always good to be aware of such trivial absurdities of our times - even if one can't do much about them :(
Sunday, February 27, 2005
This data on the annual global cost of providing the following goods and services is slightly dated (from 1998... and may not be exactly accurate either, perhaps), but I don’t think the proportions would have changed drastically:
Thursday, February 24, 2005
Here is a formulae for making an explosive - and suicidal - social cocktail:
This posting is about the 2nd point:
Are B-Schools bad for Society/ Business/... Students?
A recent item in The Economist quotes Sumantra Ghoshal from his forthcoming article (to be published posthemously) that the:
"...worst excesses of recent management practices have their roots in a set of ideas that have emerged from business-school academics over the last 30 years."... The article goes on to note:
"These include supposedly simplistic models of individual human behaviour (rational, self-interested, utility-maximising homo economicus) and of corporate behaviour (the notion that the goal of a firm should be to maximise shareholder value). These assumptions... were simple enough to allow business-school academics to develop grand theories of management supported by elegant mathematical models and empirical analysis that appeared scientific, and thus earned their subject academic respectability, but were, in fact, a pretence of knowledge where there was none."
To quote from an earlier posting on Alternative Perspective blog, Sumantra Ghoshal had noted:
"...that agency theory, created by Michael Jensen at Harvard, taught MBA students that managers could not be trusted to maximize shareholder value and therefore managers' and shareholders' interests had to be aligned through incentives such as stock options.
At Berkeley and Stanford, students were taught transaction cost economics, developed by Oliver Williamson, which argues that the only reason companies exist is because managers can exercise authority to ensure all employees do what they are told. As a result, managers must ensure that staff are tightly monitored and controlled while creating individual performance incentives.
Michael Porter has argued that to be profitable, a company must actively compete not only with its competitors but also with its suppliers, customers, regulators and employees, striving to restrict or distort competition, "bad though this may be for society."
Ghoshal concludes that "by incorporating negative and highly pessimistic assumptions about people and institutions, pseudo-scientific theories of management have done much to reinforce, if not create, pathological behavior on the part of managers and companies. It is time the academics who propose these theories and the business school and universities that employ them acknowledged the consequences."
On a similar theme, a couple of years back, Robert Simons, Henry Mintzberg, and Kunal Basu had published this Note to CEOs about the 5 Half-Truths of Business. To quote excerpts about two of these five half-truths:
"...As business leaders and academics, we need to challenge what we do and what we teach. For some years now, we've been captured by a questionable set of beliefs -- assumptions about business that are, at best, half-truths.
Think of this as the first law of business: In our finance classes, we are teaching a view of the world that says that each of us is obsessively self-interested and intent on maximizing personal gain. Economic Man, we tell our students, has one goal: more. And to get more, each of us is willing to do anything.
It is, of course, a half-truth. To some extent, we are all self-interested. And today, perhaps more than ever, there are plenty of people - business leaders, financiers, consultants, athletes, professors - who are willing to sell their integrity for a price. There are people who just want more and who are willing to do whatever it takes -- and take whatever they can get.... But here's the problem: The half-truth of Economic Man drives a wedge of distrust into society. If we truly believe that each of us is nothing more than a calculator, then we become a society of calculations. Business simply won't work if each of us is only in it for ourselves. While we need to have individual initiative, we survive in a context of social engagement.
If there is a mantra that CEOs today have learned to repeat almost mindlessly, this is it. Analysts, the media, and institutional stock traders rate, reprimand, and reward companies and their CEOs based on this single standard of performance.... What's remarkable about the current worship at the altar of shareholder value is that it's a reversal of our prior beliefs and behaviors. We used to say that corporations exist to serve society. After all, that was why they were originally granted charters - and why those charters could be revoked. We used to recognize corporations as both economic and social institutions - as organizations that were designed to serve a balanced set of stakeholders, not just the narrow economic interests of the shareholders.... Of course... shareholders need a fair return on their investment. But there is a larger truth to this half-truth: Maximizing shareholder value at the expense of all of the other stakeholders is bad for business and bad for capitalism. It drives a wedge between those who create the economic value -- the employees -- and those who harvest its benefits..."
...So, given the profile of aspirants/students (consumerist/ self-interested/ insular) which the MBA progams attracts (point 1)- who are driven by personal selfish goals, a utilitarian attitude , a self-focued ambition and superior intelligence... but ignorant/insensitive etc....
do B-Schools promote and reinforce these tendencies?...
...or as Mintzberg noted: do the B-Schools help developing:
"...dangerous people, especially in this hyped-up society, are... those whose confidence exceeds their competence. These are the people who drive everyone else crazy. MBA programmes not only attract significant numbers of such people but encourage their tendencies."
[postscript: A couple of months back, I had posted a note about the "Socialist" countries (alive and thriving) on this blog - which led to a personal mail exchange (not very pleasant, to be honest) with a IIT/IIMB student, who vehementaly and emotionally differed with that viewpoint. I admired him for his intelligence - he was, in fact, selected for the exchange program to Texas A&M - was extremely well-read and intellectually sharp... what stuck me was his parting comment in his mail:
"I don't give a shit about this country or any other country in the world, I am just a simple good old greedy person who wants to become the richest person in the world and create and exploit discontinuities so please don't ascribe your motives to me (and if my actions indirectly result in wealth creation and benefit to society well that is a side effect I can live with :)."]
...Is this the archetypal MBA we - me included - produce in B-Schools??!!!
Monday, February 21, 2005
Interesting Report from Salon about the Conservative Political Action Conference (Ronald Reagon Building, Feb 19, 2005, Washington DC)
A popular poster image of President Bush as Uncle Sam that was for sale at the Conservative Political Action Conference
Michelle Goldberg writes: "It's a good thing I went to the Conservative Political Action Conference this year. Otherwise I never would have known that, despite the findings of the authoritative David Kay report and every reputable media outlet on earth, the United States actually discovered weapons of mass destruction in Iraq, vindicating all of George W. Bush's pre-war predictions..."
This "revelation" - that US actually discovered WMDs!!! - was made by U.S. Republican Congressman Christopher Cox of California, while welcoming the US Vice President, Dick Cheney, who was one of the speakers at the Conference. "America's Operation Iraqi Freedom is still producing shock and awe, this time among the blame-America-first crowd," he said, "We continue to discover biological and chemical weapons and facilities to make them inside Iraq."
Apparently, Christpher Cox is a pretty high-profile congressman.His official site informs us that he is: "the first Chairman of the House Committee on Homeland Security, with primary jurisdiction over nation’s third largest cabinet agency, the Department of Homeland Security. In addition, the committee has responsibility for government-wide homeland security policy and the most significant responsibility for homeland security policy of any House or Senate committee.... In the 109th Congress, he will develop the first standing committee legislation to help the Department navigate the most significant reorganization of national security authority since 1947."
In this above congreggation of believers, he was joined by similar high-profile speakers, including:
Chairman of the House International Relations Committee, Henry Hyde
...and Sen. Rick Santorum, Newt Gingrich, Ann Coulter, Oliver North and Michelle Malkin, among others...
The report continues: "Apparently, most of the hundreds of people in attendance already knew about these remarkable, hitherto-unreported discoveries, because no one gasped at this startling revelation.... And why would they? Like comrades celebrating the success of Mao's Great Leap Forward, attendees at CPAC... invest their leaders with the power to defy mere reality through force of insistent rhetoric. The triumphant recent election is all the proof they need that everything George W. Bush says is true...."
Monday, February 14, 2005
This issue has often been discussed, though not in public forums and media: That the difference between the the FDI inflows between China and India is just due to different ways in which the two countries calculate their FDI.
A news item in Times of India (Feb 10, 2005) points out that:
"India is likely to get FDI of $15 billion in 2004-05, but even that is an under-estimation of what the actual figure would be if it alters its traditional method of calculating FDI inflows... India considers only equity capital as FDI. Since 2000-01, however, the FDI statistics have also included re-invested earnings. China in fact includes imported equipment in its FDI calculations, whereas India includes these in its trade data."
In fact, FDI inflow calculation appears to be an art. Though, India gets just about $5-6bn as FDI (compared to $60bn in China!), if India follows the same method of FDI inflow calculation as China, Indian FDI will be close to $50bn!!!
The IMF definition of FDI includes 12 different elements:
China includes all these in its calculation of FDI, while the Indian FDI reports only equity capital as FDI.
Similarly, China reports improted equipments as FDI, while india includes these imports in its trade data.
Moreover, China also includes domestic money coming through Macau, Taiwan and HK in calculating its FDI inflows (often called "round-tripping" - i.e., domestic money routed through these destinations to be reinvested in mainland China, to avail concessions, tax breaks etc.). Estimates show that this can be as large as 40-60% of China's total FDIs.
These two research papers give more detailed picture of how this difference in accounting practices completely changes the reality:
Saturday, February 12, 2005
... such are the wages of the liberal economic growth!!!
Excerpts from an interesting article in The Guardian
Behind New Europe's Facade
Neo-liberalism has delivered unemployment and lower living standards for the majority in eastern Europe. But opposition is growing
Thursday February 10, 2005
Visitors on cheap weekend breaks to Budapest, Prague, Warsaw and other capitals of "new Europe" may well return home believing the standard western orthodoxy: that the former communist nations of eastern Europe are vibrant, thriving places, populated by increasingly prosperous people, reaping the benefits of their country's integration in Euro-Atlantic structures. If, however, tourists strayed beyond the main boulevards and city-centre attractions, they would see a very different picture - one which the enthusiasts for economic reform are less keen to be highlighted.
The statistics speak for themselves. GDP in the former communist states fell between 20% and 40% in the decade after 1989 - an economic contraction which, in the words of Budapest economist Laszlo Andor, "can only be compared to the Great Depression of the 1930s".
Only Poland had managed to return to its 1989 level of output by the end of the 20th century. Hungary, considered by many the most "advanced" economy of the region - and certainly the one most open to foreign investment - had to wait until 2002.
While a minority have seen real wages rise, for the vast majority in the countries in question, the transition process has witnessed a spectacular fall in living standards. In Hungary, average real wages fell by 24% in the first six years of transition; in the Czech Republic it was only in 1997 that average, real wages reached their 1989 level.
Inequality has risen sharply. Countries that not so long ago prided themselves on their egalitarianism now challenge Britain at the top of the European income inequality tables. Unemployment is widespread, particularly among the young: in Poland, 39% of under-25s are without a job - the highest figure in Europe; in Slovakia, 27%. Faced with such grim economic prospects, thousands have voted with their feet, preferring the uncertainties of a new life abroad to pauperisation at home.
Reformers blame problems on the legacy of 40 years of communism. But could it be that the reform process itself is responsible? Far from being a panacea, as claimed by eastern Europe's political elite, following the IMF-EU economic prescription has caused hardship for millions.
In return for enduring 15 years of austerity, the average Czech has received the equivalent of 29 euros of aid - compared to the 437 euros per capita Greece received on accession in 1981. The average Hungarian (49 euros) and the average Pole with (67 euros) have fared little better.
For those countries determined to join the euro by 2010, the economic cost will grow even higher. The EU's 3% budget deficit rule for euro members means that a fresh wave of deflation is on its way for populations which, since the late 1980s, have known nothing else. While spending on healthcare, education and welfare continues to be slashed, one item of government expenditure is, however, allowed to rise with the neo-liberals' full approval.
Membership of Nato - the other western club that eastern Europe's reformers were so desperate to join - means that member states must spend at least 2% of their GDP on defence, regardless of the impact on overall state expenditure. At the same time as the Hungarian government insists that there is no alternative to the "economic reorganisation" of the country's public health service, the Hungarian defence ministry announces it will spend an extra £7.7m on new medium-range, air-to-air missiles from the US arms manufacturer Raytheon. This is on top of a further £34.5m earmarked for training reforms to "adapt" the armed forces to the demands of Nato and EU membership.
In Poland, a country where 17% of the population now live below the poverty line, the government has recently spent $3.5bn on new fighter planes and $250m worth of anti-tank missiles.
Throughout the region, groups and political parties who have opposed the Euro-Atlantic integration process are portrayed as extremists by the predominantly western-owned media. In reality, the extremists are those who have surrendered the management of their economies to the dictates of foreign capital and unelected western institutions.
Did it all have to be like this? Thirty years ago many European progressives believed that the cold war would eventually end with the western European social democracies becoming more socialist, and the eastern socialist states becoming less authoritarian. We would all, they argued, meet in the middle in the best of all possible worlds - part Kreisky's Austria, part Kadar's Hungary.
Global capital and its political emissaries made sure this never happened. Instead of morphing into 1970s Austria, with its mixed economy, welfare state and minimal disparities in wealth, new Europe has instead become 1980s Latin America.
But, however bleak the immediate vista, not all is lost. An alliance between the liberal nationalist Fidesz party and the Marxist Workers party in Hungary would have been unthinkable a few years ago. But both parties recently joined together to campaign for a referendum to stop the government's proposals to privatise health care. The Fidesz leader, Viktor Orban, has also conceded that for many, life was indeed better under communism.
It's only a start, but if opposition groups can come together and form effective popular fronts against the tyranny of neo-liberalism, new Europe can revive, and become an attractive place not just to western tourists on weekend breaks, but to its own populations as well.
Friday, February 11, 2005
As part of sweeping "economic restructuring" implemented by the Bush Administration in Iraq, Iraqi farmers will no longer be permitted to save their seeds. Instead, they will be forced to buy seeds from US corporations - which can include seeds the Iraqis themselves developed over hundreds of years. That is because in recent years, transnational corporations have patented and now own many seed varieties originated or developed by indigenous peoples. In a short time, Iraq will be living under the new American credo: Pay Monsanto, or starve.
...A new report by GRAIN and Focus on the Global South has found that new legislation in Iraq has been carefully put in place by the US that prevents farmers from saving their seeds and effectively hands over the seed market to transnational corporations. This is a disastrous turn of events for Iraqi farmers, biodiversity and the country's food security. While political sovereignty remains an illusion, food sovereignty for the Iraqi people has been made near impossible by these new regulations.
"The US has been imposing patents on life around the world through trade deals. In this case, they invaded the country first, then imposed their patents. This is both immoral and unacceptable", said Shalini Bhutani, one of the report's authors.
In 2002, FAO estimated that 97 percent of Iraqi farmers used saved seed from their own stocks from last year's harvest or purchased from local markets. When the new law - on plant variety protection (PVP) - is put into effect, seed saving will be illegal and the market will only offer proprietary "PVP-protected" planting material "invented" by transnational agribusiness corporations. The new law totally ignores all the contributions Iraqi farmers have made to development of important crops like wheat, barley, date and pulses. Its consequences are the loss of farmers' freedoms and a grave threat to food sovereignty in Iraq. In this way, the US has declared a new war against the Iraqi farmer.
Thursday, February 03, 2005
A couple of months back, I had made a posting here about the reasons for likely Collapse of the US$ Economy. Now it seems that the day of reckoning is arriving faster....
The following are the excerpts from Bloomberg News, published in International Herald Tribune today (February 3rd, 2005).
"The world's two richest men have joined the ranks of the dollar's detractors, a stand that is raising eyebrows in Asia. Last week, for example, Bill Gates told the television host Charlie Rose, "I'm short the dollar."
Gates, the chairman of Microsoft, called the record $7.62 trillion U.S. federal debt "a bit scary" and lamented that the United States is in "uncharted territory" fiscally.
And he's right. Just ask Warren Buffett, the world's No. 2 moneyman, who has been buying foreign currencies since 2002, citing concerns about the U.S. deficit. The bet is paying off, too. Berkshire Hathaway, his company, reaped a $412 million pretax gain on the trade in the third quarter of 2004.
Gates and Buffett may not be reading from the same playbook as the financier George Soros, though their investments bear similarities. Soros has long given up on the world's reserve currency, and on President George W. Bush's competence on economic matters.
Yet the United States is managing to run afoul of an even more powerful force than wealthy individuals: the world's fastest-growing major economy. China, it seems, has had just about enough of Washington's bickering about its currency policy.
"Please leave it to us," Li Ruogu, deputy governor of People's Bank of China, said in Davos, Switzerland, when it was suggested that a stronger yuan would help China.... "The U.S. should take the lead in putting its own house in order," said the Chinese central bank adviser, Yu Yongding.
It is remarkable to see the United States being chastised by Chinese policy makers....
....The issue is coming to a head days before officials of the Group of 7 wealthy industrialized nations meet in London. The dollar's weakness, and the euro's resulting strength, is likely to be the center of attention. The European Central Bank president, Jean-Claude Trichet, has voiced concern about the dollar.
Until now, the United States has been able to influence currency traders with its deficits-don't-matter poker face. Yet it is losing its ability to keep investors - and central banks - in check. If central banks in Asia turn on the dollar, the United States is in for some very turbulent times as bond yields surge....
....Gates and Buffett, meanwhile, are warming up to China. Despite the nation's fragile financial system, inadequate transparency, lack of democracy and failure to halt the piracy of goods, Gates, speaking at Davos, described China as a "change agent" for the next two decades.
In September, Gates's $27 billion foundation received approval from China's foreign-currency regulator to invest as much as $100 million in yuan shares and bonds. Buffett, who visited China with Gates in 1995, made his first investment there in 2003, buying a stake in PetroChina.
Still, the biggest challenge for the United States is not to keep Gates or Buffett happy; it's persuading the central banks of Asia not to dump their roughly $1.1 trillion of U.S. Treasury holdings. If the banks do make such a move, the world's two richest men may also become two of its most prescient currency speculators."
Tuesday, February 01, 2005
This is an interesting news item from New York Times (Sept 4th, 1967, page 2) published during the Vietnam War:
U.S. Encouraged by Vietnam Vote :
Officials Cite 83% Turnout Despite Vietcong Terror
by Peter Grose, Special to the New York Times (9/4/1967: p. 2)
WASHINGTON, Sept. 3-- United States officials were surprised and heartened today at the size of turnout in South Vietnam's presidential election despite a Vietcong terrorist campaign to disrupt the voting.
According to reports from Saigon, 83 per cent of the 5.85 million registered voters cast their ballots yesterday. Many of them risked reprisals threatened by the Vietcong.
The size of the popular vote and the inability of the Vietcong to destroy the election machinery were the two salient facts in a preliminary assessment of the nation election based on the incomplete returns reaching here.
...A successful election has long been seen as the keystone in President Johnson's policy of encouraging the growth of constitutional processes in South Vietnam....
...as Mark Twain had once observed: "History does not repeat itself, but it rhymes."