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What exactly is Modi saying regarding state funding of elections? He has not provided a detailed proposal.

Now that I understand what Modi has been saying re: state funding of elections, he is not saying much, really.

All he wants is a debate.

But what is HIS proposal?

Let me say this in brief:

a) State funding as proposed by Indrajit Gupta was a terrible idea.

b) State funding must be simple and clean: each valid vote must return Rs.20 (or so) to the candidate (not political party). Period. That’s we need. And how hard is that for people to understand?

I have detailed this at length in BFN and also in SBP’s manifesto.

JUST READ THESE, AND DO IT THE RIGHT WAY. NOTE THAT IT WON’T BE ENOUGH TO IMPLEMENT STATE FUNDING, EVEN IF DONE THE RIGHT WAY. THE FULLY SUITE OF REFORMS IS NEEDED.

Let me reproduce the section regarding electoral reforms:

===extract===

While Equality (socialism) and corruption are lifelong buddies and room-mates, Freedom (capitalism) and corruption are arch enemies. A free India can’t condone even the tiniest bit of corruption. We must become the least corrupt country in the world if we want to be called free. The following four actions will help to eliminate political corruption and also dramatically improve India’s governance:

  • Raise the wages of MPs and MLAs at least by a factor of ten while simultaneously getting rid of all of their ‘perks’. Let us pay the Prime Minister of this great nation at least what a middle level business executive of a very large multi-national firm gets, say Rs. 1 crore per year, and MPs Rs.20-30 lakhs each. As it is unpopular for politicians to raise their own salaries, we can help them by setting up an independent commission that would determine their wages. There is also atendency among politicians to add to their perks if their wages are kept low by public pressure – this is a significant problem for India. In India some MPs also allegedly sell some of their perks, such as their free air tickets. That is surely criminal. Perks are also expensive to administer. Let us therefore get rid of all perks once salaries are raised, and only reimburse actual expenses incurred on the job, for instance, eligible travel expenses. Let openness and transparency on such basic matters prevail in India; a free society can’t expect anything less than that.
  • We must fund our elections differently – through state funding. The purpose of the wages of MPs or MLAs is not to cover the expenses incurred during elections, but to pay them competitively for their responsibilities. Even if wages are hiked, we will still need to find a way to make the electoral expenses manageable. We can do so by state funding of elections. A simple and effective method that will pay Rs 25 or thereabouts, at current values, for each valid vote cast in favour of a candidate is outlined in Box 3. A system similar to this operates successfully in Australia, where about $2.10 (about Rs 66) is paid at present by the government for each valid vote polled by a candidate.[i]
Box 3 
State Funding of Elections
Let us revert to Mr Harishchandra’s original calculations. A small payment made for each vote polled by a candidate radically alters the expected financial burdens on candidates. It makes it viable for a much larger number of people to participate. The field of candidates changes from less than 1 per cent of the eligible population at present to potentially the entire adult population. Here’s how:
Let a payment of Rs X be made per vote polled, with n = 6 and θ = 0.02, as before.[ii] Mr Harishchandra expects 10 lakh voters to cast their vote at the election. His expected PVreturn now becomes:
      
With a government payment (X) of only Rs.8.39 per vote cast in his favour, Mr Harishchandra can expect to break even after spending Rs 20 lakhs of his own money on the election. This still leaves him with no income after repaying his loan. A payment of around Rs 25 per vote will make it practicable for Mr Harishchandra to contest the election, even with six serious candidates flanked against him. He is empowered by this method to take a calculated risk. The electoral fray now becomes a genuinecontest, not suicide.
Mr Harishchandra may, of course, still hesitate, since corrupt candidates will continue to spend huge amounts of black money without any accountability and threaten honest people should they attempt to contest. With strong auditing systems, anyone found using black money will be thrown behind bars. Further, over time, the new incentives created by state funding will allow many more honest and competent candidates to contest. There will finally come a turning point when morally challenged candidates will be shut out completely by the public which will only choose to vote for good candidates.
  • Third, we need to abolish election expense limits while simultaneously building extremely strong audit systems for monitoring the contributions received and expenditures made during elections.
  • Finally, a wider set of reforms of the electoral system will be needed, such as making public the property returns of our candidatesin the interest of greater transparency. These and other such reforms are touched upon in Chapter 6.

 

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Notes from my meeting with Frank-Jürgen Richter on 9 December 2016

It met Frank – the CEO of Horasis – yesterday. He had come to Melbourne as speaker at a major conference.

Frank is a keen observer of India, having edited three books on India and organised numerous Horasis India meetings. He visits India four to five times a year, and from what I could gather, he knows a lot of people who matter in India.

He is next visiting in January then in February. First he is going to Gujarat and then to Mumbai (if I recall correctly).

The main thing I’d like to note is that he is willing to consider my suggestion to merge the sessions on youth and education, sol there is space for a potential session on the governance system and policy making in India.

I will speak at the opening plenary as part of a panel of 4-5 persons (around 300 people will be in the audience). Thereafter, four separate sessions are held before and after lunch, followed by a closing plenary. If a session is held on India’s governance system and policy capability, then I may have something useful to say in that session, as well.

To ensure we have suitable representation from the Indian government, I suggested he invite Jitendra Singh for the governance session , so the Modi government can directly comment on any reforms it is taking in this direction (e.g. state funding of elections). If Jitendra Singh is not available, maybe Jayant Sinha can be invited.

If a governance session is held in Horasis 2017, it would be a great opportunity to show the participants why India continues to have severe malfunctioning governance despite a change in government in 2014. The key is the solution – and thereafter people can pursue various options to push the solutions.

I presented him my copy of James Tooley’s Imprisoned India and a copy of BFN as reading material for his return journey. Imprisoned India is important since it is a story of the real India – an India so bleak one shudders to think of how the average India lives his/her life.

I mentioned to Frank that Tooley has done the most important work – ever – in the field of education. He has proven that education works, and works better, without government. That is a brilliant empirical proof of something I have written about at length in BFN.

It will be great if Frank can get in touch with Tooley. It will be even better if Tooley can be invited to the Horasis session and speak both about his experience and about private school education in India.

I told Frank that regardless of my many concerns about Modi, SBP would support any good policy that Modi seeks to implement, e.g. Modi is now talking about state funding of elections. This is an absolutely essential reform (if done properly, of course).

 

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No, Prof. James Tooley, DON’T pay the bribe demanded by criminal Indians. And PLEASE stay away from my shameful “motherland”.

I’m so deeply sorry and ashamed about what India has done to Prof. James Tooley. If anything could be done to reverse the torture and agony imposed on him by my CRIMINAL “motherland”, I’d do it.

It all starts with a Deputy Superintendent of Police who wants to get back some of the bribe she had to pay to get her own promotion. She is like a monstrous black spider who sits and spins a careful web to trap Tooley. After months of pre-planning she has him, and she latches on to ALL possible powers (which are ABSOLUTE) in the Indian system to first put him in jail and then harass the hell out of him from 2 March 2014 to 23 June 2014 – nearly four months.

How he escapes her clutches – but she remains as brazenly predatory as ever, fully protected by the criminal governance system of India – is a story that will remain etched in the minds of all readers of Imprisoned in India, a book I received yesterday evening and have finished by now.

Trumped up case, harrowing Kafkaesque nightmare. Even Kafka would not be able to imagine such a nightmare.

Fortunately, at the end, Tooley was able to escape India.

The demand for bribe still remains – and from MODI’S HEADQUARTER IN THE CENTRAL SECRETARIAT. The crooks that govern India will not close the trumped up case against him till they are bribed Rs.8 lakhs.

I say to Tooley – DON’T EVER PAY THESE CROOKS. THEY SHOULD ALL GO TO HELL. AND THEIR SKIN STRIPPED AND BURNT ALIVE – WITH THIS PUNISHMENT REPEATED FOR EVER.

And STAY AWAY FROM INDIA – THE GHASTLY COUNTRY I WAS UNFORTUNATE TO BE BORN IN.

The book comes close in some ways to Rana Ayyub’s Gujarat Files, both being first hand real life accounts of India’s total corruption and criminality. (Looks like I didn’t get time to write about her book in detail on my blog – but Ayyub’s is a book I STRONGLY recommend everyone read – it gets very close to the truth about Modi – who is a mega criminal – as I’ve explained at length on this blog.)

I won’t go into details about Tooley’s book – it should be personally read by everyone for only then can you understand the true horror and sense of helplessness of those who are trapped by the criminals who rule India.

The book adds nothing new to my knowledge of India. The problems that James Tooley has identified which have led to the creation of the private school system in India – are exactly the SAME problems that he directly faced in 2014.

Tooley makes an attempt to understand the causes of this extreme rotten state of affairs. Unfortunately he only skims the surface and misses the key incentives which cause corruption in India. No, it is not about the regulatory regime alone. Yes, that creates the opportunity, but it is the incentive for corruption that is created by the system that is the cause.

Hint: Mrs. Mantra the head spider of this story paid a bribe to get her promotion. She also told you everyone from top to bottom pays a bribe in the police to get a promotion.

Why do they do that? That’s not a regulation issue, is it? So you need to ask more questions.

I have detailed all the reasons in BFN.

Btw, you know Gurcharan Das – he recommended that all Indians read BFN.

Unfortunately, Gurcharan Das has a VERY SUPERFICIAL understanding of India’s governance system. He has not understood its BASICS, and seems to be immune to new learning (at least from my very recent email experience with him – I showed him why his opposition to state funding of elections is so very wrong, but never heard back from him). He not only read BFN but I’ve explained things to him at great length on his visit to Melbourne and on numerous occasions when I’ve met him in Delhi. Also, he attended the governance reforms conference I had organised in IIPA Delhi (extract of my talk here).

I know you care a lot about India. I hope that your good will for India continues despite your horrible experience.

I would urge you to carefully (and I mean carefully) read BFN, particularly chapters 4, 5 and 6. These might be boring, but they get to the bottom of the problems of institutional design in India, and provide a detailed pathway to get out of this mess.

If people like you can understand this, Prof. Tooley, you can help spread the message more widely – since the Western press is EVEN MORE IGNORANT than Gurcharan Das about the causes of India’s huge corruption problem.

And do read SBP’s manifesto – it contains a complete privatisation solution for schools (among a vast number of other reforms).

Swarna Bharat Party is India’s ONLY hope. There is ABSOLUTELY NO OTHER CHOICE if India is to be transformed from a goonda state, a goonda republic, to a civilised land.

You can help by understanding things – unlike the vast millions of ignorant “intellectuals” across the world (including in India).

And DON’T go back to India till Swarna Bharat Party has come to power and fixed things (it will take three years of being in absolute power to change things – things are so horrendously bad).

KEYWORDS

Imprisoned India

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Bill Bonner is right about an impending collapse of the global credit system. Could happen six months into the Trump presidency.

Someone shared this 2015 video (don’t watch the link, watch this youtube so you can skip it rapidly)

His booklets on the topic are available here (Part 1 | Part 2). His key argument is available in his article of May 2016 (Why I Think there Will Be a “Dollar Panic”) – below:

if you look at M2 money supply – which measures coins and notes in circulation as well as bank deposits and money market accounts – America’s money stock amounted to $12.6 trillion as of last month. But there was just $1.4 trillion of physical currency in circulation – about only half of which is in the US. (Nobody knows for sure.)

What we use as money today is mostly credit. Banks profit – handsomely – by creating this credit.

Short-term interest rates are already close to zero in the U.S. (and less than zero in the Eurozone, Switzerland, Denmark, and Sweden).

And according to a study by McKinsey, the world’s total debt (at least as officially recorded) now stands at $200 trillion – up $57 trillion since 2007.

At some point, a debt correction is inevitable. Debt expansions are always – always – followed by debt contractions. There is no other way. Debt cannot increase forever.

And when it happens, ZIRP and QE will not be enough to reverse the process, because they are already running at open throttle.

The value of debt drops sharply and fast. Creditors look to their borrowers. Traders look at their counterparties. Bankers look at each other. And suddenly, no one wants to part with a penny, for fear they may never see it again. Credit stops.

Now, debt corrections are inevitable. Credit is an essential part of the functioning of any business (capex, working capital). There are, however, two key problems with government-managed credit based systems:

  1. Tampering by the government (I’m including central banks here) through artificially low rates or legislating that banks lend to those who are unable to repay; and
  2. Limited liability of banks, which creates a strong incentive to misbehave. Rule of thumb prudential regulation helps but may not succeed in keeping a lid on bad loans.

It is a rule that unless there is unlimited liability and free banking, banks will ALWAYS try to make bad loans (since bankers’ pay is linked to loans) and will cheat. In 2008 bad housing loans were packaged by banks (I’m including a wide range of financial institutions here) and sold as good loans. Called financial engineering, it was effectively fraud. Banks will ALWAYS try to commit fraud under a limited liability system (in my view, unlimited liability is essential for an honest banking system).

The Fed has kept interest rates excessively low for too long and despite improved regulation, I don’t think that the incentives of bankers to cheat the public have been adequately addressed. Banks continue to be unaccountable cowboys.

The combination of these two government-created factors has saturated the system with a lot of bad loans. Of the $200 trillion in global, maybe around $20 trillion is in bad or marginal debt. Under the circumstances today, it is likely spread across a range of assets, not necessarily focused in housing as was the case prior to the 2008 GFC.

These bad loans are not visible today since repayments are manageable. But the moment interest rates rise (as they necessarily must), these bad loans will be exposed and a LOT of companies and banks will go bust.

The risk of a financial system collapse is real. However, much would depend on the extent of bad loans in the system and how quickly the Fed increases rates. It is also true that the longer the Fed avoids raising interest rates, the bigger the problem will become over time.

Free markets (in this case free banking systems) allow bad companies to collapse as soon as the problem is detected; they clear out bad debt quickly. Government managed systems do not allow bad companies to go bust; they exacerbate the problem.

SO WHEN IS THIS COLLAPSE GOING TO OCCUR?

I’m afraid there is no certainty about timing.

It is possible that heavy handed intervention by Donald Trump could compound the already severe problems in the system. He may kickstart inflation (through trade barriers, thereby making goods really expensive; and by government funding of really bad American companies), forcing the Fed to increase interest rates rapidly. That would then bust the credit bubble, causing the credit system to seize up.

So maybe six months into the Trump presidency.

I’d need to review this assessment after Trump becomes President.

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Background notes on Horasis and Frank-Jurgen Richter, author and head of the think tank

Thanks to six persons who’ve chipped in, I’ve been able to confirm participation in the Horasis India meeting in Interlaken, Switzerland in June 2017 [See my initial notes here].

I’ll be meeting Frank-Jurgen Richter later this week (he is on a trip to Melbourne). Some background info regarding this institute and Frank.

Horasis: http://www.horasis.org/. Horasis is ancient Greek (ορασις) and means ‘to see, as in a vision’. [Horasis’s youtube channel]; mention in Harvard International Review.

Horasis India meetings: Report of 2009 meeting in New York Times | Youtube record of the 2011 India meeting | 2014 meeting | 2015 meeting. Minutes of the 2015 meeting (report in Economic Times) | minutes of 2016 meeting (VK Singh’s speech)

Frank-Jurgen Richter

Key ideas:

a) free trade

 

Frank (born 1967 – around 49 now), has a Doctorate in Business Administration from the University of Stuttgart. He also studied in France, Mexico and Japan. He is a fluent Mandarin and Japanese speaker.

Receiving a major award in Mumbai, India, in September 2016

Biodata on Horasis website and here.

Linkedin profile | Twitter | Wikipedia | Speaker

Frank on youtube

RELEVANT INTERVIEWS

At indiainfoline.com

At 4psbusinessandmarketing.com

Forbes: Europe Has A Superiority Syndrome

Mention in Harvard Business Review

ARTICLES

“He is an active scholar and has authored and edited 37 books and numerous articles on global strategy and Asian business” (Source)

In Singapore’s Business Times

He has a number of write-ups on the Horasis website.

Books edited by Frank

INDIA SPECIFIC

GENERAL AND ASIA RELATED

  • Tigers Leap: Asian Business Goes Global (Wiley, 2004)
  • Enabling a New Era of Changes (Wiley, 2003)
  • Asia´s New Crisis. Renewal through Total Ethical Management (Wiley 2004)
  • Corruption and Governance in Asia by John Kidd, Frank-Jurgen Richter (1998)
  • Infrastructure and Productivity in Asia: Political, Financial, Physical and Intellectual Underpinnings by John B. Kidd, Frank-Jurgen Richter
  • Development Models, Globalization and Economies: A Search for the Holy Grail? by John B. Kidd, Frank-Jurgen Richter (2006)
  • Asia’s new crisis: renewal through total ethical management, by Frank-Jürgen Richter, ‎Pamela C. M. Mar, ‎World Economic Forum – 2004
  • The East Asian Development Model (MacMillan, 2000) by Frank-Jurgen Richter
  • Trust and Antitrust in Asian Business Alliances by Frank-Jurgen Richter
  • Redesigning Asian Business: In the Aftermath of Crisis, Frank-Jurgen Richter
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