Tagged: Economy

Language Emotions and Economic Loss


I came across a LinkedIn post and discussion thread today about Tamil vs Hindi (for people who do not know, both are Indian languages).

The original post was by a Chennai-based IT recruiter who complained that North Indians assume that he speaks Hindi when he calls them up, instead of responding to his English queries in English. He even goes on to mention that he teases the potential candidates by occasionally speaking in Tamil!

There were more than 10,000 comments by the time I came across this post, and thousands of “Like” (LinkedIn should also provide an easy button for “Dislike”).

Haven’t we heard this kind of topic before? Of course, we have, especially in Tamil Nadu.

Tamil Nadu and Tamilians apparently have not yet got the 1960’s imbroglio with the Central (Federal) Government on the then hot topic of imposition of Hindi on all States of India, against the Constitution of India and the regional peoples’ will, out of their heads even after 50 years. They are very emotional whenever the topic comes up.

Hindi is sparsely spoken in Tamil Nadu even today, though there are many Tamilians in Tamil Nadu who can speak Hindi rather well. It is not an accepted form of communication, however. Tamilians prefer English, even to talk to other Tamilians. Such is the impact of those old days when Tamil Nadu erupted in violence against Hindi. That misstep also led to the successful emergence of the Dravidian Political Parties of Tamil Nadu, which have been feuding even amongst themselves ever since. The result has been that the national political discourse and national political parties have been locked out of Tamil Nadu for all these past 5 decades.

The bad thing which came out of this anti-Hindi feeling has largely been detrimental to the overall economic interests of the State and its people, though many will argue (even now) that it was the best thing that could have happened for Tamil Nadu (apart from reduced plan allocations and constant challenges, I don’t know what we gained – if someone can elaborate, I would be more than happy to listen without a murmur). In the Sixties and Seventies, when Tamilians educated in Tamil Nadu purely in Tamil and English travelled to Delhi or Mumbai or Calcutta, they were at a big disadvantage. Those days (and even now), the Northern and Western regions of India had the biggest economic investments (both by governments and private sector), and offered more economic opportunities to job seekers. While English was the business language, more often than not it was not the spoken language in the office – it was almost always Hindi.

Who lost out?

Tamilians and Tamil Nadu. India is a country with more than 28 official languages and over 200 dialects. But, 70% of the populations (that is 900M as of now!) speak Hindi in almost a native fashion, or they learn the language from primary school onwards. Another 10% of the population (that is, another 130M people!) understand Hindi well, and would respond in Hindi if spoken to in Hindi.

So, a Billion people can operate in Hindi.

How about Tamil Nadu? It has 68M people only, just 5% of India’s population.

While I am not saying it is compulsory for everyone in the country to learn Hindi or speak Hindi, look at the advantages which I lacked as a non-Hindi speaker. One’s acceptance is higher at business offices, in government offices, in industrial environments and surely in society. Further, one would not need English sub-titles while watching Hindi movies! I survived with extremely half-baked and poor Hindi, and had to mostly depend on others to get my way through. I got into several tricky situations because I insisted on speaking only in English (you cannot blame me, apart from Tamil, English was the only other language that I know!).

I suffered quite a bit during my sojourn in Mumbai for some six years. I always felt left out, and my rather late attempts to learn Hindi did not work out as I just could not recall the right word at the right time. If only I had had the opportunity to learn Hindi even as my third language in my primary school, I would not have had any problems.

At the end of the day, it is the business and social acceptance across the country, notwithstanding any perceived language or cultural supremacy. Tamil is rarely spoken outside of Tamil Nadu in India – except in Tamil communities spread around the country which also speak Hindi fluently as they have settled in the so-called Hindi heartland due to economic or job necessities.

Why take up a fight against Hindi and waste precious time now? What is it going to produce in terms of benefits to Tamilians?

The world is moving fast, and India is moving very fast. Tamil Nadu should worry more about keeping its #3 rank in the State-wise rankings of GDP, it is in a good position to overtake Uttar Pradesh which has three times its population. Let us focus on bread and economics, and jobs and wealth creation for Tamil Nadu. That is a more important fight (in a positive manner, competing with other States of India) than spending an inordinate amount of time on language issues. If Tamilians wish to proceed and establish strong working relationships with Northern and Western regions of India, I would say learning Hindi is a good place to start – a positive thing to progress economically, rather than a negative thing which will impact Tamil. Tamil will never be impacted, it is a language which has stood the test of time over 30 centuries or even more.

Let us make language-based fights and issues a thing of the past, and focus on what is best for our people.

Cheeers,

Vijay Srinivasan

29th November 2017

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Great Truths


1. In my many years I have come to a conclusion that one useless man is a shame, two is a law firm and three or more is a congress.

John Adams

2. If you don’t read the newspaper you are uninformed, if you do read the newspaper you are misinformed.

— Mark Twain 

3. Suppose you were an idiot. And suppose you were a member of Congress. But then I repeat myself.

— Mark Twain

4. I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.

— Winston Churchill 

5. A government which robs Peter to pay Paul can always depend on the support of Paul.

— George Bernard Shaw

6. A liberal is someone who feels a great debt to his fellow man, which debt he proposes to payoff with your money.

— G. Gordon Liddy 

7. Democracy must be something more than two wolves and a sheep voting on what to have for dinner.

— James Bovard, Civil Libertarian (1994)

8. Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries.

— Douglas Casey, Classmate of Bill Clinton at Georgetown University 

9. Giving money and power to government is like giving whiskey and car keys to teenage boys.

— P.J. O’Rourke, Civil Libertarian

10. Government is the great fiction, through which everybody endeavors to live at the expense of everybody else. 

— Frederic Bastiat, French economist (1801-1850)

11. Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

— Ronald Reagan(1986) 

12. I don’t make jokes. I just watch the government and report the facts.

— Will Rogers

13. If you think health care is expensive now, wait until you see what it costs when it’s free!

— P.J. O’Rourke 

14. In general, the art of government consists of taking as much money as possible from one party of the citizens to give to the other.

— Voltaire(1764)

15. Just because you do not take an interest in politics doesn’t mean politics won’t take an interest in you!

— Pericles (430B.C.) 

16. No man’s life, liberty, or property is safe while the legislature is in session.

— Mark Twain (1866)

17. Talk is cheap…except when Congress does it.

–Anonymous 

18. The government is like a baby’s alimentary canal, with a happy appetite at one end and no responsibility at the other.

— Ronald Reagan

19. The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery.

— Winston Churchill 

20. The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.

— Mark Twain

21. The ultimate result of shielding men from the effects of folly is to fill the world with fools.

— Herbert Spencer, English Philosopher (1820-1903) 

22. There is no distinctly Native American criminal class…save Congress.

— Mark Twain

23. What this country needs are more unemployed politicians.

— Edward Langley, Artist (1928-1995) 

24. A government big enough to give you everything you want, is strong enough to take everything you have.

— Thomas Jefferson

25. We hang the petty thieves and appoint the great ones to public office.

— Aesop

FIVE BEST SENTENCES

1. You cannot legislate the poor into prosperity, by legislating the wealth out of prosperity.

2.What one person receives without working for…another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else. 

4. You cannot multiply wealth by dividing it.

5. When half of the people get the idea that they do not have to work, because the other half is going to take care of them, and when the other half gets the idea that it does no good to work, because somebody else is going to get what they work for, that is the beginning of the end of any nation!

I think there are some good truths in the above sentences. It is funny that many of these truths are in play today in nations big and small. I thought this is a good education for my blog readers. Enjoy but also think about these truths. Aren’t these relevant even today?

Cheers,

Vijay Srinivasan

16th September 2017

 

The India Experience……..continues…….


I spent the past few days in Chennai, the Capital of Tamil Nadu, visiting relatives and finishing off some personal work which was waiting for my visit for the past 4 months.

Every time I visit India, my perception of the environment has kept going up – I mean, increasingly positive. The improvements that I see all around should have come about couple of decades ago, keeping in tune with global enhancement to living conditions. But India faltered on its way to economic growth, led by ineffective leaders who were always subject to political pressures and vagaries, and who made decisions not always keeping the welfare of the country at heart.

However, notwithstanding the huge delays which have cost dearly, finally things are shaping up. I am not going to be positive about most things, however. In a very large country like India, it is very tough and almost impossible to get every section of the society aligned with economic growth imperatives and the sacrifices that are sometimes necessary to achieve equitable growth for all. There are people who are always against the central government and its initiatives. There are state governments not ruled by the same party which rules in the centre (federal). There are religious factions, there are minorities and then there is the “silent” majority who do not care about anything.

With all these challenges, India is moving fast forward, which is a rather surprising development over the past year or so. It will take considerable time, but it is not inconceivable for India to reach a 9 to 10% GDP growth rate, and a per capita income of USD 3,000 in the next 5 years, which should lift the size of the GDP to more than twice what it is today. It is also entirely possible (given the trajectory and assuming minimal disruptions) to achieve a per capita income of USD 5,000 in about 10 years’ time, which would be roughly three times the size of the economy today.

Well, good to read. On the ground, things move slowly however. Corrupt practices continue, albeit with reduced intensity. I pick up feedback from cab and auto rickshaw drivers, who are rather articulate and voluble when it comes to criticizing everything around us. I also collect inputs from folks that I meet, because invariably the talk turns towards the ineffectiveness of state governments and economic growth, etc.,

One thing which worries me is that what you hear about the English capability of Indians is actually not true. Most people are more comfortable in their mother tongue or in Hindi, the de facto national language which 70% of India speaks and understands. When I called a central government agency in New Delhi which is responsible for the national bio-metric ID cards, and chose the option to receive instructions in English and to speak with someone in English, I could not get the right person despite multiple attempts. I was able to get only Hindi speakers, who were baffled that I could not converse in Hindi, and struggled to understand what I was trying to say. It was incorrigible that the senior management of that agency has not addressed the issue, as everything in Central Government in New Delhi (and elsewhere in the country) is supposed to deal with all parts of the country, not just with Hindi speakers. Further, I tested the basic English language of OLA and UBER drivers in Chennai, and they consistently demonstrated lack of grasp of basic English communication.

So, what are we talking?!!!

It is not adequate for just the IT workers and Financial Industry workers to speak English. India needs to do something urgently to rapidly enhance English literacy. The most popular language in China today is English! Is it surprising? No. China has repeatedly demonstrated that if it sets its mind and heart to achieving something, it will achieve that, come no matter what. India does not follow this tenacity in thinking to achieve and then achieving the target with heart and mind.

Another parameter that I use to measure improvement is the ability of the economy to maintain capital assets to ensure maximum utilization and productivity of the asset. India has repeatedly failed to maintain its assets. Simple examples include MIG fighter jets (“flying coffins” as these are called), roads, power plants, water supply, railway stations and rail tracks, airports (improving finally), and infrastructure in general. Faulty lifts (elevators) and escalators abound. Attention to detail is completely lacking. Maintenance discipline which is an essential and critical component of economic productivity does not exist. How then can India compete with China?

In a large metro city like Chennai, with a population of 8M (50% more than Singapore), the upkeep of public facilities and roads are found to be seriously in disarray. I dread the upcoming monsoon season when the number of potholes in roads will multiply rapidly. It is apparent that public money is not being spent wisely in the interest of the public. Many arterial roads do not have pavements, or have pavements which are occupied by hawkers. The city municipal corporation does not seem to be taking strict action on violators. All legislators are afraid of voter backlash, but they view the voters in pockets. The silent majority goes without a say.

I can go on and on, but the key point that I observed is that people are optimistic and the general economic environment is improving (notwithstanding President Trump).

I hope that one day, not in the too distant future, at least some Indian cities will reach the status of global cities which attract talent from around the world.

The Indian story continues……….

Cheers,

Vijay Srinivasan

13th August 2017

 

 

India needs Free Internet


More than any other country on this planet, I would say that India needs free access to the internet to help it leapfrog to the next stage of its already large economy (the Indian GDP just surpassed that of the U.K.). In order to sustain its economic growth, remove system inefficiencies, open up new opportunities for entrepreneurs and alleviate poverty levels, India needs to subsidize access to the internet for citizens earning less than USD 10 per day.

That figure is a mind-boggling 500M people in my estimate, mostly based in rural towns, and villages. Even large cities have huge populations of people with no access to electricity, or even potable water. Given this situation, is it not laughable that I am suggesting internet as a free (or almost free) utility for the people to use ?

No, it is not a matter to be sniffed at. Given that tablets are now available at less than USD 50 (though not great looking), access to the internet utility becomes the major constraint for those masses of people who are at the fringe of the Indian economy which is still slated to grow @ 7.5% or more this year. The key enabler for these people is going to be knowledge and application of knowledge to their vocations and school learning. And, how is India going to deliver knowledge and actionable learning to the masses when its educational infrastructure is so weak ? How is India going to develop its intellectual capabilities beyond the IITs ? There are many questions but it is unquestionable that people provided with opportunities at the right times in their lives make it to a successful life later in their lives. Opportunity is critical and the Indian economy would not be in a position to deliver opportunities to the roughly 10M people coming into its workforce every year, most of them waiting for a job. That is close to 1M people every month!

Facebook and Google are opening up the airwaves in India by offering WiFi access in railway stations and other public places. While their goals are not entirely philanthropic, such initiatives by private corporations have to be commended when the national resources are tight to deploy access throughout the rural areas of India. I believe that India stands to benefit in a huge manner when all its villages and rural population are connected via satellite-based internet. Already 400M Indians are connected to the internet via their mobile phones.

India is not only a huge consumer market which is becoming more knowledgeable about the products the people wish to consume. It is also a melting pot for all kinds of experimentation that companies would like to pursue in the interest of testing their offerings. India is also an entrepreneurial nation of youngsters rushing to launch their new ideas or adaptation of ideas which have worked elsewhere. Given that the government is pushing the idea of a “Digital India”, it is not surprising that the population is warming up quickly towards the concept of all time and real time connectivity to test ideas, consume products, evaluate anything and everything. This is nothing short of a revolution in the making.

The good thing about India is that there is space for everyone. With its English-speaking workforce and modern orientation, India will become the third largest economy of the world by 2030, if not by 2025. It is critical that India offers opportunities to its aspiring people via the concept of free internet. Such an offering can even be positioned as free for 3 years, followed by USD 1 per month thereafter, for segments of the population which has an annual per capita income of USD 2,000 or less. For people earning above this figure upto a cap of USD 5,000 per capita, the rate could be fixed at USD 3 per month. People outside this cap would have to pay the commercial price. Such a subsidy scheme would go a long way in facilitating internet access to the teeming millions of Indians, transforming the country towards a Digital India.

I do hope this happens for the benefit of all Indians.

Cheers,

Vijay Srinivasan

11th June 2017

 

 

A negative vote today in French Elections


Will France follow Donald Trump’s unexpected victory in the U.S. Presidential Elections and the Brexit philosophy endorsed by millions of British voters to get Britain out of the European Union (EU)? Will the French voters elect an untested nationalist, against a well-established urbanite with a global outlook?

How France decides today in its Presidential Elections (7th May Sunday) will have far-reaching ramifications around Europe and the world. It will determine if the EU survives as a political and economic entity.

While I have no personal views on the French Elections, I am debating if  young, disillusioned French voters will swing in favour of Marine Le Pen, against Emmanuel Macron. If that swing happens in a wild fashion, it is not inconceivable for Le Pen to claim the French Presidency and that would turn Europe upside down. Le Pen is against all established norms in French and European society – against trade, against immigration, against globalization.

In the U.S. Presidential Elections, I bet against Hillary Clinton and won my bet. I thought that she did not really appeal vigorously to the male, white, Christian, rural base of the middle America – and she didn’t, apart from all the other issues which plagued her campaign (like the email server problem, et al). I was not entirely in favour of Donald Trump, but then there was no other credible alternative, and he easily won the elections against Hillary Clinton, though he missed out on the popular vote count.

Can something like that happen in the French Elections?

Why not? A negative vote is entirely possible.

France is in a crisis. Its political and societal divides have engulfed its core to such an extent that radical outcomes cannot be thrown out of the door. France is under attack by immigrant extremism, or terrorism. Economy is in a turmoil and youth unemployment is rising. France has so many problems today that a traditional, globalized, suave and urban President will not get far into his presidency. Macron could prove himself otherwise, but it is highly unlikely he can fix France’s problems, as he does not have enough political and economic management experience. If he fails in his first year as President, it is almost a given that Le Pen’s supporters will revolt and her base will increase dramatically. And, let us not forget that Macron does not even have any party’s support – in fact, he has no party! Yes, he is coming on the strength of a people movement, not a political party!!

Can Le Pen fix the problems of France?

Even less likely than Macron. Her party has always been on the fringes, and most people are shocked she made it to the final leg of the Presidential Elections. She has no experience managing a large country or economy. She would need a lot of management help if she ever gets close to the seat at the Elysee Palace.

So, in a nutshell, it is going to be a huge challenge for France. May be Macron will win as he has a 25 point lead over Le Pen, but then one never knows. But France has to blame itself for any fiasco, as both candidates have never held elected posts and have hardly got any experience, and may not win parliamentary elections scheduled for June this year. How can this happen? How will a President govern without the support of the French Parliament?

All this points to a hugely challenging time for the French people.

The implications for Europe and the larger world community are huge.

Watch the news today and tomorrow closely to see how France votes for its President.

Cheers,

Vijay Srinivasan

7th May 2017

Anti-Elitism and De-globalization


The world is rising against elitism, which is just another word for “learned segmentation”. It means that elitists are rather segmented folks – like a specific group of well-to-do people, a set of people who do certain things with a unique taste, a group of alumni from prestigeous institutions, a bunch of guys who drive Ferraris, a group of ultra-orthodox religious folks, a caste group (in the Indian context), and generally a bunch of well off folks who do similar things and think almost in the same manner, to the exclusion of almost all other people.

Personally, I have tried to stay away from any group with a label stuck on it. I exited the IIM-B Alumni activities as my socialist leanings are not compatible with an entrepreneurial or corporate money bags kind of people, though they may be my class mates. I have rarely seen any one of them doing charity, or engaging in philanthropic work for the downtrodden. They may well wish to do so, but evidence is limited. I even avoid brands – I don’t want to be seen driving a Mercedes or BMW or Audi; I do not wish to have a Rolex watch; and so on and so forth. I was without a Mont Blanc pen for a long, long time and could not say no when my children decided to gift one for my last birthday. When I am seen on the road, I just want to be a normal guy with no accessories which could define me in some way or the other.

The reason why young people are rising against elitism is the strong perception that they have about the relationship which exists between elitism and wealth, almost in an unholy manner, which in turn leads to inequalities in income. Wealth generates more wealth and income for the elitists or the rich folks. Others are excluded, and the exclusion is almost surreal. Things go on as though nothing has changed, everything is hunky dory. People who make obscene money on Wall Street continue to make that money year after year. Similar groupism and exclusions can be cited in almost every scenario. The insidious reach of money and networking power has to be seen to be believed.

One can argue about the merits of meritocracy in this context. I refute strongly the link and the necessity for any society or government to promote meritocracy at the cost of the rest of the society at large. What about the 95% of the people who cannot make it into that “special” list of people who will keep getting promotions and scholarships? In a nutshell, why would the special people be any different from their predecessors? They belong to a particular school, university, way of thinking, family, et al. That does not mean the rest of the people are stupid, or below average, or even average. There is this argument that societies and institutions prosper because a set of meritocrats has been handpicked to manage them and deliver results that are expected. While in a limited set of circumstances this may be true, in the larger context a social mix would provide better stability and sustainability with deeper understanding of societal issues and challenges.

I have not seen a huge difference between people with prestigeous MBAs and non-MBAs in the corporate context. There is only one difference – there is more structured thinking when you have some MBAs around you, and less of that when you have staff without MBAs. Apart from that, outcomes are not particularly impacted because MBAs are driving the businesses or even governments.

So, let us come now to the issue of “de-globalization”. Is there a relationship between “anti-elitism” and “de-globalization”? What do you think?

I believe that the movement against globalization has to be seen in the context of social elitism which predicates that globalization is the way to go for the world as a whole, since societies, countries and organizations can work together to produce better than average results for their combined economies. As a social theory, it is fantastic with an altruistic bent to it, no doubt. However, as a practical application of an interesting theory, it comes short as the results have been less than spectacular. The idea is not “win-win” but rather “win-some win for some time-lose-lose ultimately”. This means that not all sides are winners in a globalization effort. In the outsourcing example, India and the Philippines can be winners to a large extent, the U.S. and the U.K. are initially winners from a corporate cost-slashing perspective, but later become losers when the enhanced business competitiveness cannot continue at the cost of increasing job losses for locals.

The argument that outsourcers make the U.S. businesses more competitive does not hold water for the long term (it is fine in the medium term), as competitiveness in this context refers just to increased business profits. Competitiveness in terms of enhanced proficiency can also be obtained by training the locals to a large extent. Let us not forget the increased business profits come because of lower wages paid to foreigners as compared to the locals.

The liberal thinking is that globalization is great for increasing the volume of trade, and as more nations trade goods and service, eventually the world will become one homogeneous market. Great idea, no doubt. But it is naive and misses out on key economic fundamentals – that average per capita income across supplying and consuming countries need to be similar in order to enjoy true globalization. When India has a per capita income of USD 3,000 (on a PPP basis), and China has USD 8,000, the difference is huge between these two nations and the developed countries which have upwards of USD 40,000 per capita. So, a job loss in a developed country is going to have a major impact in its society.

For the elitists, it is okay – as they are perched on the top anyway. Armchair theorists won’t do anymore given the disarray in the developed countries. Fresh thinking is needed. The answer is not coming from anti-elitists only, but governments and economists have to think harder in terms of sustainable solutions.

Is it any wonder that social democrats such as Bernie Sanders enjoy rock star status? It is easy to jump into a movement and start shouting at the top of your voice, but harder to derive economic solutions which will stand the scrutiny of society. Anti-elitism and de-globalization are not new fads or book topics, but social forces which would make policy makers think deep and in a totally new way.

Cheers,

Vijay Srinivasan

19th February 2017

 

 

Why is Capitalism losing out?


For the past more than five decades, the philosophy of Capitalism has become well entrenched around the world. The Western world developed the concept of Capitalism, where the free allocation of capital and labour to the most demanding production jobs in the right proportion generated products required by the market, while also generating more than adequate returns to the investors (in most cases). The wealth created from the productive use of Capital led to more investments, and so on and so forth. The opposing ideology of Communism which is state-assisted labour deployment only had partial success in the predominantly Communist countries (though Israel followed the state-farming approach which yielded positive results).

In every ideology, there is cause for mistakes to happen – in the case of Capitalism, the owner of the capital becomes greedy and squeezes the labour for higher returns on employed capital – so the term “greedy capitalists”. In later years, this term was used for people who tried to grab whole companies by throwing money – if you recall “Barbarians at the Gate”, who then tried to fire the employees, make the company lean and mean, and then re-list the company on the stock exchange for fat profits, or sell off the company. These are developments of the capitalist theme and nothing wrong (except on moral grounds) from a business perspective as the purpose of a capitalist is to make money at the end of the day, and that concept is not going to change.

In the meanwhile, several large countries such as India, experimented with Socialism in a democratic context (unlike Communism which always had dictatorial undertones). While the world appreciated the new ideology of India such as removal of poverty, the results from the experimentation were not pleasant, as the social investments made by the government did not reach the intended recipients in most situations, and corruption became a bugbear with insidious politicians siphoning off money meant for productive deployment. A corrupt bureaucracy was the downfall of socialist initiatives pioneered by the government. Over the past 50 years or so, socialism gained only one moniker – which is non-interference in the affairs of other nations in the Non-Aligned Movement – and no concrete economic results or benefits which could upend the surge of Capitalism around the world. Hence, socialism was largely considered as a failure, though most political parties will never acknowledge the fact.

But now, we see an upsurge of socialist movements starting with the most capitalistic countries of all – the U.S. The youngsters who I categorize as late teenagers and early twenty somethings, have become tired of the greedy excesses of the Capitalist era, which concentrates wealth in the hands of few people. A case in point is that the top 82 wealthiest people in the world have more wealth compared to 3.7B people of this world, which is just ridiculous. This scenario of excessive wealth within the top 0.01% (or even less %) of the people reduces the possibility of wealth creation for the remaining people, and the resulting gross and obscene income and wealth inequality has caused the youngsters of the world to question the status quo system which favours the rich folks. There is nothing wrong in questioning the status quo and asking governments and political parties to explain the rationale for continued patronage that they extend to the wealthiest people.

There is only one reason why a government (prime example would be the U.K. Government) would want to support the wealthiest folks from anywhere in the world – one is that they bring most of their wealth. The other primary reason is that the wealth could be deployed to create industries which would then require employment – so you would then achieve more than two critical objectives for any government – you create lots and lots of jobs via productive capital investments, the money would be in your country’s banking system, and the resulting employment and business operations would generate additional tax revenues for the government.

Looks absolutely logical, isn’t it? The flaw in the above logic is that most people who move their money do not deploy the same to generate employment and taxes. These greedy folks are looking for ease of a sanctuary location (with no questions asked) and ease of moving the capital in and out, and of course, ease of living. Several countries are greedy enough to provide all of the above facilitators and more.

More and more insight reveals that the government directly does not gain any new net revenues. This is one major reason that social agendas do not receive budgets necessary to sustain the operation. Healthcare is ignored, while defence gets huge investments to support the defence industries. Education is ignored. All put together, people do not see justice and equality in the way things have panned out over the years, and it is no secret.

Socialism is therefore coming back, not with the same mantle but in a different avatar. The key expectation now is reduction of income and wealth inequality (not exactly “redistribution of wealth”), more opportunities for job creation, fairer treatment in the hands of the government, freer and fairer elections which would allow people to better elect their representatives, elimination of corruption and lobbyism, et al. These are all noble objectives, and we all tend to appreciate the new logic which is inherent in this new socialistic approach.

While Capitalism is not going to go away, it should be fearing that the attacks on it would not subside anytime soon. It would lose substantial power in the coming years as more socialists get elected around the globe. It would be rather interesting to witness this transformation in the coming decade, when socialism would be pitted against capitalism and conservatives, as we have seen in the U.S. Elections within the Democratic Party nomination fights.

Have a good weekend,

Cheers,

Vijay Srinivasan

12th February 2017