Sunday, 17 March 2019

Monopolies are good for monopolists only

America’s first Gilded Age began in the late nineteenth century with a raft of innovations—railroads, steel production, oil extraction—but culminated in mammoth trusts run by “robber barons” like JP Morgan, John D. Rockefeller, and William H.Vanderbilt. The answer then was to bust up the railroad, oil, and steel monopolies. We’re now in a second Gilded Age—ushered in by semiconductors, software and the internet—which has spawned a handful of hi-tech behemoths and a new set of barons like Facebook’s Mark Zuckerberg, Amazon’s Jeff Bezos, and Google’s Sergey Brin and Larry Page. The answer now is the same as it was before: Bust up the monopolies. 
  • Nearly 90% of all internet searches now go through Google. Facebook and Google together account for 58% of all digital ads. They’re also the first stops for many Americans seeking news (93% of Americans receive news online). Amazon is now the first stop for a third of all American consumers seeking to buy anything.
  • With such size comes the power to stifle innovation. Amazon won’t let any business that sells through it to sell any item at a lower price anywhere else. 
  • Google uses the world’s most widely used search engine to promote its own services and Google-generated content over those of competitors. Facebook’s purchases of WhatsApp and Instagram killed off two potential competitors.  
  • Contrary to the conventional view of America as a hotbed of entrepreneurship, the rate new job-creating businesses have formed in the United States has been halved since 2004.
  • Such size also confers political power to get whatever these companies and their top executives want. Amazon—the richest corporation in America—paid nothing in federal taxes last year. Meanwhile, it’s holding an auction to extort billions from states and cities eager to have its second headquarters. It also forced Seattle, it’s home headquarters, to back down on a plan to tax big corporations like itself to pay for homeless shelters for a growing population that can’t afford the sky-high rents caused in part by Amazon. 
  • Facebook’s Mark Zuckerberg, who holds the world’s speed record for falling from one of the most admired to the most reviled people on the planet, just unveiled a plan to “encrypt” personal information from all his platforms. The new plan is likely to give Facebook even more comprehensive data about everyone. If you believe it will better guard privacy, you don’t remember Zuckerberg’s last seven promises to protect privacy.
  • Google forced the New America Foundation, an influential think tank it had helped fund, to fire researchers who were urging antitrust officials to take on Google. And it’s been quietly financed hundreds of university professors to write research papers justifying Google’s market dominance.
  • Regulating the tech mammoths like utilities or common carriers would put government into the impossible position of policing content and overseeing new products and services. A better alternative is to break them up. That way, information would be distributed through a large number of independent channels without a centralized platform giving all content apparent legitimacy and extraordinary reach. And more startups could flourish. 
  • The combined wealth of Zuckerberg ($62.3 billion,) Bezos ($131 billion,) Brin ($49.8 billion,) and Page ($50.8 billion) is larger than the combined wealth of the bottom half of the American population. 
Some of the robber barons of the first Gilded Age were generous philanthropists, as are today’s. That didn’t excuse the damage they did to America. Monopolies aren’t good for anyone except for the monopolists. In this new Gilded Age, we need to respond to them as forcefully as we did the first time around. 

In a democracy, no one should be allowed to grow beyond the reach of competitors.

Saturday, 16 March 2019

The myth of meritocracy

Meritocracy represents a vision in which power and privilege would be allocated by individual merit, not by social origins. According to the meritocratic ideal, jobs should go not to people who have connections or pedigree, but to those best qualified for them, regardless of their background. Reservations allows for exceptions – for positive discrimination, to help undo the effects of previous discrimination. In moving toward the meritocratic ideal, we have imagined that we have retired the old encrustations of inherited hierarchies. But that is not the real story.
  • Meritocracy is an ideal in which riches and rule were earned, not inherited. Democracy would give way to rule by the cleverest - not an aristocracy of birth, not a plutocracy of wealth, but a true meritocracy of talent.
  • Education mattered as a means of mobility, but also as a way to make people more forceful as citizens. Wealth reflects the innate distribution of natural talent, and the wealthy increasingly marry one another, society sorts into two main classes, in which everyone accepts that they have more or less what they deserve. 
  • The eminent know that success is a just reward for their own capacity and their own efforts. Nearly all parents try to gain unfair advantages for their offspring. When you have inequalities of income, people with extra money pursues that goal. If the financial status of your parents helped determine your economic rewards, you would no longer be living by merit.
  • Higher education in the US and Britain was seen as a great equaliser. But higher education is a great stratifier. Elite US universities – including Brown, Dartmouth, Penn, Princeton, and Yale – take more students from the top 1% of the income distribution than from the bottom 60%. Yale law professor Daniel Markovits argues - American meritocracy become precisely what it was invented to combat: a mechanism for the dynastic transmission of wealth and privilege across generations.
  • Emerging cohort of mercantile meritocrats who had achieved advancement not on their own merit but because they were, as somebody’s son or daughter, the beneficiaries of nepotism. The newcomers believes they have morality on their side and there is almost no block on the rewards they arrogate to themselves. The carapace of merit had only inoculated the winners from shame and reproach.
  • In US, liberal elites look down on ordinary Americans, ignore their concerns and use their power to their own advantage. Working-class men often think that middle-class and upper-class men are unmanly or undeserving. American white working class has been persuaded that they do not deserve the opportunities that have been denied to them.
  • Talent is capitalised efficiently only in high tax brackets and that we have simply failed to achieve the meritocratic ideal. If you were upholding meritocracy, then your equation was sponsoring a larger inequality.
  • The central task of ethics is to ask what it is for a human life to go well. A plausible answer is that living well means meeting the challenge set by three things: your capacities, the circumstances into which you were born, and the projects that you yourself decide are important. Because each of us comes equipped with different talents and is born into different circumstances, and because people choose their own projects, each of us faces his or her own challenge. There is no comparative measure that would enable an assessment of whether your life or my life is better. What matters in the end is simply that we do our best.
  • The capacity for hard work is the result of natural endowments and upbringing. So neither talent nor effort would determine rewards in the world of the meritocracy. People who have been repeatedly labelled ‘dunce’ still have capacities and the challenge of making a meaningful life. The lives of the less successful are not less worthy than those of others. There is simply no sensible way of comparing the worth of human lives.
  • Money and status are rewards that can encourage people to do the things that need doing. A well-designed society will elicit and deploy developed talent efficiently. The social rewards of wealth and honor are inevitably going to be unequally shared, because that is the only way they can serve their function as incentives for human behavior. But we go wrong when we deny not only the merit but the dignity of those who were unlucky.
  • People will inevitably want to share both money and status with those they love, seeking to get their children financial and social rewards. But we should not secure our children’s advantages in a way that denies a decent life to the children of others. Each child should have access to a decent education, suitable to her talents and her choices; each should be able to regard him- or herself with self-respect. We need to apply ourselves to something we do not yet quite know how to eradicate contempt for those who are disfavored by the ethic of effortful competition.
  • Most CEOs of big corporations, Wall Street mavens, and high-priced lawyers got where they are because they knew the right people. A prestigious college packed with the children of wealthy and well-connected parents is now the launching pad into the stratosphere of big money. Elite colleges are doing their parts to accelerate the trend.
  • Jared Kushner (Ivanka Trump's husband)'s father reportedly pledged $2.5 million to Harvard just as young Jared was applying, in 1998. The young man gained admission, despite rather mediocre grades.
  • The monstrous concentration of wealth in America has created an education system in which the rich can effectively buy college admission for their children. It has created a justice system in which the rich can buy their way out of prison. It has spawned a political system in which the rich can buy their way into Congress and even into the Presidency. (Donald Trump, perhaps Starbuck’s Howard Schultz). And a health care system in which the super-rich can buy care unavailable to others (concierge medicine). Ditto in India also - even more blatant. It seems, everything is for sale. 
We live in a plenitude of incommensurable hierarchies, and the circulation of social esteem will always benefit the better novelist, the more important mathematician, the savvier businessman, the faster runner, the more effective social entrepreneur. We cannot fully control the distribution of economic, social and human capital, or eradicate the intricate patterns that emerge from these overlaid grids. But class identities do not have to internalize those injuries of class. It remains an urgent collective endeavor to revise the ways we think about human worth in the service of moral equality. 

We live in a system that espouses merit equality and a level playing field 
but exalts those with wealth power and celebrity however gained. - Derrick A. Bell

In India, a typical entrance test for medical admissions is competed by over 200,000 students for 2,000 seats i.e. 1:100. Almost all successful students belongs to wealthy, well-connected and attended very expensive & unethical coaching classes. Any system that ignores level playing field for poorer sections must be disbanded. The present entrance exam could be used as a qualifier test to select 20,000 merit students i.e. top 10%. And the final 2,000 students (among the qualified 20,000) should be selected purely on lottery basis, with no weightage for skewed merit. This would enable elimination of non-merit candidates and disbanding of all kinds of reservations. Women reservations (among merit qualified only) may continue for some more time. Aspiring poor candidates need not go through expensive coaching classes route to get into merit list of 20,000 because a real merit student could easily get qualified with self preparation. Thus coaching classes would lose their sheen and exploitation of aspiring students will come to an end.

Thursday, 14 March 2019

Meritocracy is a myth invented by the rich

If US universities truly implement "merit order admissions" in letter & spirit - more than half of Indian students (estimated at 100,000 every year) wouldn't get admissions and about 25 universities will go bankrupt. Indian and Chinese students support about 100 universities in USA. All the exams TOEFL, GRE, GMAT etc are just humbug. I haven't come across a single Indian student who failed to get into US university during the past 25 years. More important - every rich man's child, even with average credentials, invariably gets admission into one of the top 20 universities. Of course the left out seats will be filled strictly on merit.

Corporate Social Responsibility

Corporate social responsibility (CSR) is a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders. CSR is the integration of socially beneficial programs and practices into a corporation's business model and culture. CSR makes the companies be conscious of the kind of impact they are having on all aspects of society including economic, social, and environmental. The four types of Corporate Social Responsibility are environmental sustainability initiatives, direct philanthropic giving, ethical business practices and economic responsibility.
  • Prevent financial ramifications: Compliance with the spirit and letter of the law through self-regulatory processes will prevent fines, put your business low on regulators' radar screens, and lower legal expenses.
  • Increase employee loyalty: Treating employees fairly and generously as a part of corporate social responsibility encourages high professional and moral standards increases employee loyalty and by procuring only those overseas products produced at factories where workers were treated ethically, you gain support among "Fair Trade" advocates.
  • Maintain a positive reputation: Demonstrated consciousness in a variety of areas can garner publicity and give a business tangible proof of their conduct. These include
  • ➢ Environmental consciousness: Reducing waste, recycling, minimizing carbon footprint, producing only sustainable products, lowering energy usage, and supporting environmental causes.
  • ➢ Social Concern:  Donating to humanitarian causes that fight poverty, help the victims of epidemics, assist those displaced by natural calamities etc.
  • Local Community: Involvement in local community projects, through donations, employee participation, connecting your customers, promoting the project through advertising and fundraising etc.
CSR is a concept with many definitions and practices. The way it is understood and implemented differs greatly for each company and country. Whatever the definition is, the purpose of CSR is to drive change towards sustainability.

Wednesday, 13 March 2019

Tourism's negative effects

Travel and tourism is one of the world's largest industries. There are 1 billion tourist arrivals in the world every year. This industry generates one out of ten jobs worldwide. In 2015, travel and tourism constituted 9.8% ($7.2 trillion) of the world’s GDP. Tourism is usually regarded as a boon to a region’s economy. Tourism brings prosperity to the region and provides employment to the locals of the region. When tourism becomes unsustainable, it can have disastrous consequences on the environment. Tourism can cause all kinds of environmental issues from roadside garbage to polluted water to ugly beaches covered in flotsam and jetsam. It might be the locals doing the littering but they are only a part of the problem. 
  • Tourism brings jobs, investment and economic benefits to destinations. But overtourism occurs when tourism expansion fails to acknowledge that there are limits. 
  • Tourism is a fascinating, invisible export industry. Tourism inevitably brings with it environmental and cultural degradation. Tourism can disrupt or destroy ecosystems and environments.
  • Tourism adversely impacts the environment by producing massive amounts of pollution. Increased movement of people across the globe (1186 million international tourist arrivals in 2015 up from 25 million in 1950), means that transport by plane, car, and train is continuously expanding. Air travel for tourism is responsible for a substantial part of global carbon dioxide (CO2) emissions. A single transatlantic return flight emits almost half the CO2 emissions produced by all other sources consumed by an average person yearly. 
  • Extreme differences of wealth and lifestyle between locals and tourists in some areas can cause resentment.
  • Tourists often, out of ignorance or carelessness, fail to respect local customs and moral values causing irritation and stereotyping.
  • Drug and alcohol abuse is one of the biggest problems facing the tourist’s hot spots around the world. Prostitution is rampant in places where the tourists arrive in hordes.
  • The commercial sexual exploitation of children and young women has paralleled the growth of tourism in many parts of the world. Though tourism is not the cause of sexual exploitation, it provides easy access to it.
  • Tourism leads to loss of traditional jobs when workers move from farming, fishery, mining etc to service jobs in tourism.
  • Tourism often leads to overuse of water. Golf courses require a lot of water daily and an average golf course in a tropical country such as Thailand needs 1500 kg of chemical fertilizers, pesticides and herbicides per year and uses as much water as 60,000 rural villagers.
  • Tourism contributes to more than 5% of global greenhouse gas emissions.
  • Tourists as a group consume a tremendous amount of natural resources and produce an equally tremendous amount of waste.  
  • The 'mega resort'  has been one of the most economically successful and environmentally destructive additions to the tourism industry.  Large corporate owned resorts rarely give back to the local communities on which they depend and thrive.  Only lower level positions such as maids, cooks, waiters, and bellhops are available to the local residents while upper level and management positions are reserved for corporate immigrants. 
  • Large resorts are very rarely environmentally friendly, and in turn do not normally attract an environmentally conscious clientele. 
  • Overtourism is defined as the excessive growth of visitors leading to overcrowding in areas where residents suffer the consequences of temporary and seasonal tourism peaks, which have enforced permanent changes to their lifestyles, access to amenities and general well-being. 
  • Overtourism is a symptom of the present era of unprecedented affluence and hyper mobility, a consequence of late capitalism.
  • Overtourism harms the landscape, damages beaches, puts infrastructure under enormous strain, and pricing residents out of the property market. 
  • If tourist arrivals to a destination decline suddenly and dramatically it would likely have considerable economic repercussions for those who rely on them. Prioritising the welfare of local residents above the needs of the global tourism supply chain is vital.

Walking is a virtue, tourism is a deadly sin - Bruce Chatwin

Tuesday, 12 March 2019

Capitalism is breaking down

Former RBI governor Raghuram Rajan has warned "I think capitalism is under serious threat because it's stopped providing for the many, and when that happens, the many revolt against capitalism." He said governments cannot afford to ignore social inequality when considering the economy.
  • It was possible in the past to obtain a middle class job with modest education. But the landscape has changed in the wake of the 2008 global financial crisis and the resulting austerity. Now, if you really want to succeed, you need a really good education.
  • Unfortunately, the very communities that are hit by the forces of global trade and global information tend to be communities which have deteriorating schools, rising crime, rising social illnesses and are unable to prepare their members for the global economy.
  • A S&P Global Ratings report suggests another global credit downturn is possible. Since 2008, government debt has risen 77% while corporate debt is up 51%.
  • Capitalism is breaking down because it is not providing equal opportunities. And the people who are falling off are in a much worse situation.
  • Authoritarian regimes arise when you socialize all the means of production. A balance is needed, you can't pick and choose - what you need to do is improve opportunity.
  • Governments must give people evolution, or the people will give the governments revolution. 
  • Sooner or later; capitalism will also need to absorb the fact that the planet's population cannot be allowed to keep increasing at current and past rates; to provide it with ever greater supply of consumers.
  • Capitalism has failed with only a few at the top benefiting excessively, and accountants and lawyers being perceived as more important than doctors, engineers, and scientists, who actually benefit the country.
  • Capitalism has many faults but the socialism has never worked either.
Abraham Lincoln in his second inaugural address declared that democracy is the “government of the people, by the people, for the people.” Tragically today America is of the one percent, for the one percent, by the one percent. Americans in the top one percent of earners make an average of $1.32 million per year.

Tuesday, 5 March 2019

Rat race

Rat race is a way of life in which people are caught up in a fiercely competitive struggle for wealth or power. A rat race is an endless, self-defeating, or pointless pursuit. The phrase equates humans to rats attempting to earn a reward such as cheese, even though cheese is a measly reward. It also refers to a competitive struggle to get ahead financially or routinely. The rat race typically means no work-life balance, no independence, high stress, long commutes, and general dissatisfaction with life. Work-life balance refers to a proportionate way of life. While work is necessary, its purpose is to provide the means to enjoy a satisfying life. One with work-life balance works the necessary hours but has time left to enjoy family and friends, pursuing things he or she enjoys.

Those that participate in the rat race often wish for more independence in their jobs. They would prefer to work for themselves or for a company that gives them ownership of their work. Working for someone else often means allowing someone else to take credit for your efforts and pursuing goals that have no meaning. Independence refers both to the ability to pursue a job without having to work for someone else and financial independence, the ability to support oneself without depending on a paycheck from an employer.

Escaping the "rat race" can have a number of different meanings:
  • Moving into a more rural area.
  • Retirement, quitting or ceasing work.
  • Moving to a less strenuous job.
  • Changing to a different job altogether.
  • Working from home.
  • Becoming financially independent from an employer.
  • Living in harmony with nature.
  • Developing detachment from materialistic pursuits.
  • Alienation from the norms of society.
Finally, people in the rat race are generally dissatisfied with their lives, for any of the above reasons. Getting out of the rat race may seem impossible and one may lose hope that they will ever be able to control their own life.

Our culture of consumption is often what pulls us into the rat race in the first place. At some point, the stuff you own starts to own you. Whatever you spend your money on, make sure it adds to your quality of life. Once you escape the rat race, you'll be able to move freely and appreciate the world around you without getting dizzy. Remember: Life is a journey, not the destination, and you don't want to spend that journey on a treadmill going nowhere.

"A rat race is for rats. We're not rats. We're human beings. Reject the insidious pressures in society that would blunt your critical faculties to all that is happening around you, that would caution silence in the face of injustice, lest you jeopardize your chances of self-promotion and self-advancement. This is how it starts. And before you know where you are, you're a fully paid-up member of the rat pack. The price is too high. It entails the loss of your dignity and human spirit." -- Jimmy Reid.

"Often, people work long hard hours at jobs they hate, to earn money to buy things they don't need, to impress people they don't like." -- Nigel Marsh