India

India Pollution

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In the US we hear frequently about the environment and how we are doing so much damage to our environment. It would be good for people to visit India to see actual pollution in action on a large scale.

As we drove around Delhi, the smog was amazing, even with all the vehicles that converted to CNG from diesel (in this picture you can see a tuk tuk in “CNG” yellow and green colors). In this photo there are a couple of huge office buildings right off the road but you can’t even make them out in the smog. We asked our guide if the CNG over diesel made any difference and he said that in the days before the conversion “if you wore a white shirt outside it would be colored grey from all the soot in one day”.

This photo shows a jet flying over a famous minaret in Delhi. You can see the smog there, too.

I felt like one of those cartoon characters where when you cough “dust” flies out of your mouth. One of my close travel mates blew her nose and it just came out black. And we were in a tour bus much of the time that was just from being outside seeing the monuments (and then getting herded back in the bus).

With the CNG and investments in public transport it seems that India is trying but the current state seems unimaginable to a Westerner. I really don’t think that I’d be able to survive in Delhi for an extended period of time since I have allergies unless I never left the house.

Cross posted at LITGM

India Driving

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I recently was in five major cities in India. I was struck by driving in India and how different it was than driving in the western countries.

Photos And Observations

They have vehicles in India that I haven’t seen before. This is a “tuk tuk” or auto rickshaw as they are formally called. They are 3 wheelers with a motorcycle in the front and a seat in the back for passengers. Note that the streets are empty because this is a secured area – the India Parliament is in the background – you cannot linger here – and this was about the only light traffic area I saw in India except on some of the major tollways (briefly).

The tuk tuk is yellow and green because that is the color of vehicles that have been converted from regular fuel to Compressed Natural Gas (CNG). This was done in order to make the air cleaner in major Indian cities such as Delhi.

One item that makes Indian driving so much more complex than in first world countries is the bewildering array of vehicles on the road from horse and camel drawn carts to bicycles to rickshaws to tuk tuks to scooters and everything else. There are vehicles barreling down the road as fast as they can and those that can’t move hardly at all, sharing the same space.

Scooters and motorcycles were everywhere, mixed in with the cars. We saw a family of five on one scooter, with a child in front, the male driver (with a helmet), another child, his wife (sitting sideways), and then another child on the very back.

In India they don’t use lanes, they just crowd together and cut each other off, honking their horns to signal all the while. To Westerners it looks like chaos but it obviously works in that an entire country is getting where they want to go. I heard of a campaign called “Lane Driving is Sane Driving” trying to change behavior but I could see no evidence of it at hand.

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Stay Classy, India

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Only the finest in India. The author drinking a Miller High Life sold only in Haryana with a henna tattoo (a whale, I think). Note that the straw is in the other beer so that girls can drink while their tattoos on the inside of their hands dry.

Cross posted at LITGM

India Power Market Article Shows NY Times Doesn’t Understand Capitalism

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This post is an intersection of my research on the power industry around the world and a lack of understanding of the power of capitalism that I see reflected around me in Chicago and in many news outlets.

India’s Power Industry

The NY Times recently had an article titled “Scandal Posts a Question: Will India Ever Be Able to Tackle Corruption?“. The article described a scandal about India’s coal mining industry, a critical element of their power generation since India has heavy reliance on locally sourced coal.

Coalgate, as the scandal is now known here, is centered on the opaque government allotment process that enabled well-connected businessmen and politicians to obtain rights to undeveloped coal fields.

Why is this important? Per the article, 57% of India’s power is generated by coal. The industry is hobbled for lack of coal. 300 million Indians are without electricity, and a recent blackout effected huge areas of the country.

The Indian government used a bureaucratic process to assign out rights to these coal fields, instead of an overt capitalistic auction process (a fact that the NY Times article fails to mention), and many politicians and their cronies of course received the rights, likely due to overt or covert bribery and connections.

(the) $34 billion coal mining scandal that has exposed the ugly underside of Indian politics and economic life: a brazen style of crony capitalism that has enabled politicians and their friends to reap huge profits by gaining control of vast swaths of the country’s natural resources, often for nothing.

Why does this matter? When property rights are doled out in this manner, the people who receive them aren’t the BEST POSITIONED to develop the assets. If a profit seeking company paid for an asset in a public auction, they would be paying cash from investors (or out of their own pocket) and would need to “monetize” the asset in order to achieve a proper return back to investors. You don’t go into the auction without a plan to develop the asset, since you would be bidding against actual competitors who were motivated to do so and they’d likely pay more than you would. Per the article on India, this is the type of behavior that you see, instead:

Investigators now say that some of the favored applicants, having acquired the coal fields free, quickly sold them for tens of millions of dollars to steel or power companies. Others simply kept them as an asset and have not yet developed them, even as the country faces blackouts and coal shortages.

The NY Times treats this as some sort of “scandal” rather than as a FEATURE of socialistic systems. Politicians in these systems are exactly like capitalists in a capitalist society, using their role to obtain power and riches rather than for some sort of utopian “betterment of mankind” which the NY Times would likely expect them to do. In fact, these sorts of behaviors are modeled as successful and drive out would-be capitalists since the politicians in socialist societies hold the cards in terms of laws and processes and will use them against those trying to open up the process to a fair and transparent capitalist alternative.

India has no power for 300 million people, an unreliable system with rolling blackouts, and is crippling growth BECAUSE IT RUNS POWER AS A SOCIALIST SYSTEM RATHER THAN A CAPITALIST ONE. The answer is absolutely as simple as that. The scandal and the failures are product of a socialist system as doomed to fail as the USSR’s five year plans.

The answers to this problem of inadequate power are simple and can be found in any text from Smith to Hayek.

1. Sell state owned coal fields to qualified bidders (have the capital and means to develop the fields) in an open and transparent auction process
2. Protect the property rights of power developers by ensuring that they are able to build and site transmission lines and power stations appropriately
3. Protect the property rights of power companies by ensuring that they are able to charge and collect from customers and eliminate illegal connections to their systems
4. For areas that are a local monopoly (distribution), the state should ensure that performance and reliability are monitored via clear criteria and that entities that don’t comply should be fined or the franchise put up for auction to another qualified entity

Since the NY Times fundamentally doesn’t understand how capitalism works and that it is a BETTER solution that top down central planning or socialistic bureaucratic “queuing” models” (of which this is a primitive variant) they don’t make any of these recommendations. Scandals aren’t a problem – they are a direct result of the SYSTEM and will always be present in these sorts of political environments.

Cross posted at LITGM

Two New Articles at Pragati Magazine

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My amigo Adam Elkus and I each have an article up at the newest issue of Pragati  magazine. Adam is reviewing the Sanger book on Obama and national security and I tackle the strategic implications of drones and cyber warfare:

Adam Elkus –  Confront, Conceal, Leak  

David Sanger’s Confront and Conceal is best used as a Rosetta stone for deciphering DC discourse. Its true utility lies not in its uneven discussion of Barack Obama’s national security decisions, but in the way it reveals both mundane and alarming traits of American foreign policy debate. Sanger’s obsession with a supposed “split” between values and interests, mistaken belief that international security should be conducted according to the Golden Rule, and exposure of sensitive leaks all tell a story about the state of national security debate in 21st century Washington. Although the message is muddied and the narrator unreliable, Confront and Conceal is gripping reading.

Sanger’s self-designated task is to illuminate, through judicious research and both on and off the record interviews, the Obama administration’s struggle to operationalise its new vision of foreign policy. Sanger is at his best when exploring the way high-level officials engage in bureaucratic judo. His Obama is a canny political operator that compensates for relative inexperience with self-awareness and vigor. Even in the face of strategic surprise and bureaucratic infighting, Obama keeps a firm hand on the steering wheel. Sanger aggressively promotes a reading of Obama as driven operator rather than spectator, a portrayal that rings true when compared to other popular accounts of Obama’s foreign policy leadership style….  

Mark Safranski –Drone invasions and cyber dystopias  

….Of the two, drones have the older history, going back almost a century to the Great War where experiments in auto-piloted planes were financed by the US Navy, but for much of the twentieth century, military applications for drones (or “remotely piloted vehicles”) were sharply limited. The technological capabilities of drones always lagged far behind the advances in manned aircraft and they were extremely vulnerable to modern anti-aircraft systems, or in some cases, small arms fire. While drones had some marginal utility for battlefield surveillance or as decoys, during the Cold War they were never the primary collection tools for sensitive intelligence that the U-2 Blackbird, listening posts and spy satellites were.

Several factors in the twenty-first century have pushed drones to the forefront as a weapon of choice for the Pentagon and the militaries of major powers. First, has been the relative decline of the probability of major interstate war since the collapse of the Soviet Union and the corresponding rise of irregular warfare in the form of insurgency by terrorists, guerrillas and rebellious tribes. Generally, these low-tech combatants reside in poor and remote areas and lack the capacity to detect or defend against drones except by concealment. Secondly, drones offer a tremendous economic advantage and battlefield return on investment (ROI) per enemy killed over advanced fighter aircraft.  A new F-22 costs $150 million to buy and $45,000 an hour just to fly with a pilot whose training costs the USAF $2.6 million; a reusable, propeller-driven Predator only costs slightly over $4 million. About the price of two and half Tomahawk cruise missiles….