To Do Business in India, Bureaucrats Still Must Be Bribed

TataRatan2011-04-18.jpg “In the twilight of his career heading Tata Group, Ratan Tata says he was thwarted in his homeland by arbitrary regulatory decisions and corruption.”

(p. B1) NEW DELHI–Ratan Tata has transformed Tata Group into the world’s best-known Indian company, the owner of Jaguar cars, the Pierre Hotel in New York and Tetley tea.

But in the twilight of his career as chairman of the $67.4 billion conglomerate, Mr. Tata, 73 years old, is frustrated that he hasn’t been able to expand more in his native India. He says bureaucratic delays, arbitrary regulatory decisions and widespread corruption have thwarted his domestic ambitions in such sectors as steel, power, aviation and telecommunications.
. . .
. . . 20 years after . . . reforms began, New Delhi still exerts tight control over large swaths of the economy. All too often, Mr. Tata and other critics say, regulators are picking winners and losers through their decisions, either by delaying certain projects and green-lighting others or by freeing up natural resources for some companies at the expense of others.
“Economically it is a much more open environment. It’s one that fosters a fair amount of free enterprise until you need approvals or some kind of sanction to get something done,” Mr. Tata said during an interview at the Tata-owned Taj Mahal hotel in New Delhi. “Then you still have problems, and maybe more acute then you did before.”
. . .
As chairman, one of Mr. Tata’s first goals was to get Tata back into the airline business. The company’s former airline had been nationalized to form Air India. He planned a venture with Singapore Airlines. But, he says, aviation ministry bureaucrats held up his application for years despite his constant prodding. An aviation ministry spokeswoman didn’t respond to a request for comment.
In 1998, after seven years of government inaction, Mr. Tata withdrew the application. “We went through three governments, three prime ministers, and each time there was a particular individual that thwarted our efforts,” he said in a TV interview last fall. He recalled a conversation with a fellow industrialist several years ago. “He said, ‘I don’t understand. You people are very stupid…. Why don’t you just pay?'”
Paying bribes isn’t his style, Mr. Tata says. “Maybe I’m stupid or old fashioned, but I really want to go to bed at night saying I haven’t succumbed to this.”

For the full story, see:
AMOL SHARMA. “India’s Tata Finds Home Hostile; Chair of Nation’s Best-Known Company Says Bureaucracy Slows Domestic Growth.” The Wall Street Journal (Weds., April 13, 2011): B1-B2.
(Note: ellipses added, except for the one after the word “stupid” which appears in the original.)
(Note: in the online version of the article, the final paragraph quoted above reads: “Mr. Tata says paying bribes isn’t his style. “Maybe I’m stupid or old fashioned, but I really want to go to bed at night saying I haven’t succumbed to this,” he says.”

“Elites Like Bad News”

(p. 101) Many elites love writers such as Jean-Paul Sartre, who viewed all human action as meaningless, or Thomas Pynchon, whose novels, such as Gravity’s Rainbow purport to present hard-science arguments that ours is a pointless universe doomed to meaningless demise. Pynchon’s grasp of physics is debatable; what matters is that when he claimed to have found scientific proof the universe is pointless, many of a certain ilk were eager to believe him. Eighty years ago, elites of the United Stares and Europe gushed in praise over the social historian Oswald Spen-(p. 102)gler’s work The Decline of the West, which argued not only that American and European civilization “one day will lie in fragments, forgotten” but that the downfall of Western civilization was imminently at hand. Similarly, William Butler Yeats in the early twentieth century was praised by Western intellectuals for predicting pending social disintegration through his famed phrase, “Things fall apart; the centre cannot hold.” Spengler even maintained that the collapse of Western civilization would be a beneficial development, because America and Europe were contemptible. Eight decades later, the West is far stronger, richer, more secure, more diverse, and more free than when Spengler declared it a decaying relic about to vanish. Nevertheless, his work and similar predictions of impending Western collapse are still spoken of reverentially among intellectual elites, a portion of whom delight to hear anything American and European called bad.

If elites like bad news, then the eagerness of intellectuals, artists, and tastemakers to embrace claims of ecological doomsday, population crash, coming global plagues, economic down fall, cultural wars, or the end of this or that become, at least, comprehensible.

Easterbrook, Gregg. The Progress Paradox: How Life Gets Better While People Feel Worse. Paperback ed. New York: Random House, 2004.
(Note: italics in original.)

Monster Mao


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(p. 11) After Mao comes to power, Chang and Halliday show him continuing his thuggery. This is more familiar ground, but still there are revelations. Mao used the Korean War as a chance to slaughter former Nationalist soldiers. And Mao says some remarkable things about the peasants he was supposed to be championing. When they were starving in the 1950’s, he instructed: “Educate peasants to eat less, and have more thin gruel. The State should try its hardest . . . to prevent peasants eating too much.” In Moscow, he offered to sacrifice the lives of 300 million Chinese, half the population at the time, and in 1958 he blithely declared of the overworked population: “Working like this, with all these projects, half of China may well have to die.”

At times, Mao seems nuts. He toyed with getting rid of people’s names and replacing them with numbers. And discussing the possible destruction of the earth with nuclear weapons, he mused that “this might be a big thing for the solar system, but it would still be an insignificant matter as far as the universe as a whole is concerned.”
Chang and Halliday recount how the Great Leap Forward led to the worst famine in world history in the late 1950’s and early 1960’s, and how in 1966 Mao clawed his way back to supreme power in the chaos of the Cultural Revolution. Some of the most fascinating material involves Zhou Enlai, the longtime prime minister, who comes across as a complete toady of Mao, even though Mao tormented him by forcing him to make self-criticisms and by seating him in third-rate seats during meetings. In the mid-1970’s, Zhou was suffering from cancer and yet Mao refused to allow him to get treatment – wanting Zhou to be the one to die first. “Operations are ruled out for now” for Zhou, Mao declared on May 9, 1974. “Absolutely no room for argument.” And so, sure enough, Zhou died in early 1976, and Mao in September that year.
This is an extraordinary portrait of a monster, who the authors say was responsible for more than 70 million deaths.

For the full review, see:
NICHOLAS D. KRISTOF. “The Real Mao.” The New York Times Book Review (Sun., October 23, 2005): 22.
(Note: ellipsis in original.)
(Norte: the online version of the review has the title “‘Mao’: The Real Mao.”)

Book reviewed:
Chang, Jung , and Jon Halliday. Mao: The Unknown Story. New York: Knopf, 2005.

To Paul Ryan, More Market Incentives in Health Care Would Reduce Costs and Improve Care

(p. B1) . . . Medicare’s long-term funding gap — . . . is by far the biggest source of looming federal deficits.

. . .
(p. B13) Some health economists believe that a combination of higher taxes and more Medicare cost controls can solve the problem. Mr. Ryan does not. And his skepticism is healthy.
To him, the only way to reduce Medicare’s cost growth is to stop shielding people from the consequences of their decisions. If they want almost limitless medical treatments, they won’t be able to foist the bill on taxpayers, as they do now. They will instead have to buy a generous insurance plan, partly with their own money. The resulting market forces, Mr. Ryan argues, will eventually bring down costs and leave most people better off.

For the full story, see:
DAVID LEONHARDT. “Economic Scene; A Lopsided Proposal for Medicare.” The New York Times (Weds., April 6, 2011): B1 & B13.
(Note: ellipses added.)
(Note: the online version of the article is dated April 5, 2011 and has the title “Economic Scene; Generational Divide Colors Debate Over Medicare’s Future.”)

Italy’s Dynastic Capitalism “Is Built Around Loyalty, Not Performance”

AltomonteCarloItalianEconomist2011-03-12.jpg“Carlo Altomonte, an economist, says that “Italy’s problem isn’t that we have a lot of debt. It’s that we don’t grow.”” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 6) “I know that in the States, all Mediterranean countries get lumped together,” says Carlo Altomonte, an economist with Bocconi University in Milan. “But Italy’s problem isn’t that we have a lot of debt. It’s that we don’t grow.”
. . .
“There is no sense of what a market economy is in this country,” says Professor Altomonte. “What you see here is an incredible fear of competition.”
. . .
FIVE years ago, Francesco Giavazzi needed a taxi. Cabs are relatively scarce in Milan, especially at 5 a.m., when he wanted to head to the airport, so he called a company at 4:30 to schedule a pickup. But when he climbed into the cab half an hour later, he discovered that the meter had been running for more than 20 minutes, because the taxi driver had arrived soon after the call and started charging for (p. 7) his time. Allowed by the rules, but to Mr. Giavazzi, utterly unfair.
“So it was 20 euros before we started the trip to the airport,” recalls Mr. Giavazzi, who is an economics professor at Bocconi University. “I said, ‘This is impossible.’ ”
Professor Giavazzi later wrote an op-ed article denouncing this episode as another example of the toll exacted by Italy’s innumerable guilds, known by several names here, including “associazioni di categoria.” (These are different from unions, another force here, in that guilds are made up of independent players in a trade or profession who have joined to keep outsiders out and maintain standards, as opposed to representing employees in negotiations with management, as a union might.) Even baby sitters have associations in Italy.
The op-ed did not endear Professor Giavazzi to the city’s cab drivers. They pinned leaflets with his name and address at taxi stands around Milan and for the next five nights, cabs drove around his home, honking their horns.
“This is a country with a lot of rents,” says Professor Giavazzi, sitting in his office one recent afternoon, . . . “You need a notary public, it’s like 1,000 euros before you even open your mouth. If you’re a notary public in this country, you live like a king.”
For Mr. Barbera, as is true with every entrepreneur here, the prevalence and power of Italy’s guilds explains much of what is driving up costs. He says he must overspend for accountants, lawyers, truckers and other members of guilds on a list that goes on and on: “Everything has a tariff, and you have to pay.”
. . .
Italians, notes Professor Altomonte, are among the world’s heaviest consumers of bottled water. “Do you know why? Because the water in the tap comes from the government.”
The suspicion of Italians when it comes to extra-familial institutions explains why many here care more about protecting what they have than enhancing their wealth. Most Italians live less than a mile or two from their parents and stay there, often for financial benefits like cash and in-kind services like day care. It’s an insularity that runs all the way up to the corporate suites. The first goal of many entrepreneurs here isn’t growth, so much as keeping the business in the family. For a company to really expand, it needs capital, but that means giving up at least some control. So thousands of companies here remain stubbornly small — all of which means Italy is a haven for artisans but is in a lousy position to play the global domination game.
“The prevailing management style in this country is built around loyalty, not performance,” says Tito Boeri, scientific director at Fondazione Rodolfo Debenedetti, who has written about Italy’s dynastic capitalism.

For the full story, see:
DAVID SEGAL. “Is Italy Too Italian?” The New York Times (Sun., August 1, 2010): 1 & 6-7.
(Note: ellipses added.)
(Note: the online version of the article is dated July 31, 2010.)

BarberaSpaForYarn2011-03-12.jpg“The clothier Luciano Barbera in his family’s “spa for yarn,” where crates of thread rest for months. Economists fear that such small-scale artisanship cannot sustain Italy’s economy forever.” Source of caption and photo: online version of the NYT article quoted and cited above.

U.S. Citizens Choose Cars for 99% of Trips

(p. 92) America is a car culture and has been for almost a century, the phrase “traffic jam” dating to 1910, meaning we’re stuck with car culture for the time being. In the United States, the number of trips taken on public transportation has since 1998 been rising more rapidly than trips taken in cars. But public transportation nevertheless cannot be a cure-all for traffic congestion, since only a total of 1 percent of all U.S. trips occur on public transit. Double the share, which would require notable effort and capital expense, and it’s still only 2 percent. A car culture with a rising population and rising prosperity has little choice but to keep investing in roads and parking.

Easterbrook, Gregg. The Progress Paradox: How Life Gets Better While People Feel Worse. Paperback ed. New York: Random House, 2004.

Some “Professors Are Oblivious to the Costs of Complex Procedures”


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(p. 30) Champions of the market can turn up in the oddest places. At the same time that bankers and businessmen are acknowledging the downsides of unregulated capitalism, college and university reformers are urging the academy to more closely embrace the marketplace.

Amid the raft of new books on the failings of higher education, some challenge the longtime separation between ivy-covered idealists and real-world demands. Scholarly disdain for getting and spending, they argue, has caused serious trouble both in the classroom and in the budget office.
In his slim book “The Marketplace of Ideas,” Louis Menand, an English professor at Harvard and a Pulitzer Prize-winning author, offers to answer a few questions about the humanities, like why professors all seem to have similar politics and why it is so difficult to implement a core curriculum.
. . .
Mr. Garland also wants to bring some market discipline to the culture of academia. While professors tend to be progressives, they are stubbornly conservative when it comes to change. Indeed, as Mr. Menand points out, early reformers argued that the only way to elevate excellence above profits in a capitalist society was by protecting the profession from the market’s insistence on cash rewards.
The result, Mr. Garland maintains, is that professors are oblivious to the costs of complex procedures, drawn-out debates and layers of committees; appeals to increase efficiency and productivity are routinely scorned.

For the full review, see:

PATRICIA COHEN. “Books; Reform; Embracing the Marketplace.” The New York Times, Education Life Section (Sun., January 3, 2010): 30.

(Note: ellipsis added.)
(Note: the online version of the review has the date December 29, 2009.)

First book discussed in review:
Menand, Louis. The Marketplace of Ideas: Reform and Resistance in the American University. Edited by Henry Louis Gates Jr., Issues of Our Time. New York: W. W. Norton & Company, 2010.

Second book discussed in review:
Garland, James C. Saving Alma Mater: A Rescue Plan for America’s Public Universities. Chicago: University Of Chicago Press, 2009.


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Socialism Is “Morally Corrupting”

On balance, Stephen Pollard believes that Claire Berlinski’s book on Thatcher is poorly written. But he does believe that Berlinski got one important point right:

(p. 22) She is quite right, . . . , to stress that Thatcher’s crusade against socialism was not merely about economic efficiency and prosperity but that above all, “it was that socialism itself — in all its incarnations, wherever and however it was applied — was morally corrupting.”

For the full review, see:
STEPHEN POLLARD. “Thatcher’s Legacy.” The New York Times Book Review (Sun., January 18, 2009): 22.
(Note: ellipsis added.)
(Norte: the online version of the review has the date January 16, 2009.)

Book reviewed:
Berlinski, Claire. There Is No Alternative: Why Margaret Thatcher Matters. New York: Basic Books, 2008.

For Rand Money Was a Reward and a Noble Means, But Her Vision Was the End


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For Rand, adopting the dollar sign as a symbol was an ironic gesture–an elegant and graceful way of thumbing her nose at those who attacked the innovation and creativity of capitalism. They criticized a caricatured version of capitalism, and she threw the caricature back at them.
But at her most serious, money was never an end-in-itself for her, but rather a reward for achieving creative innovation, and a means for accomplishing even more ambitious creative innovation.
Remember that in Rand’s pure and lyrical Anthem, the hero is willing to give his invention away, and even be killed, as long as the Council agrees to allow the light he invented to keep shining.
In that wonderful moment with Bennett Cerf, Ayn Rand lived up to the hero she had created:

(p. 8) When Bennett Cerf, a head of Random House, begged her to cut Galt’s speech, Rand replied with what Heller calls “a comment that became publishing legend”: “Would you cut the Bible?” One can imagine what Cerf thought — he had already told Rand plainly, “I find your political philosophy abhorrent” — but the strange thing is that Rand’s grandiosity turned out to be perfectly justified.

In fact, any editor certainly would cut the Bible, if an agent submitted it as a new work of fiction. But Cerf offered Rand an alternative: if she gave up 7 cents per copy in royalties, she could have the extra paper needed to print Galt’s oration. That she agreed is a sign of the great contradiction that haunts her writing and especially her life.
. . .
Yet while Rand took to wearing a dollar-sign pin to advertise her love of capitalism, Heller makes clear that the author had no real affection for dollars themselves. Giving up her royalties to preserve her vision is something that no genuine capitalist, and few popular novelists, would have done.

For the full review, see:
ADAM KIRSCH. “Capitalist With a $.” The New York Times Book Review (Sun., November 1, 2009): 1 & 8.
(Note: ellipsis added.)
(Note: the online version of the review is dated October 29, 2009 and has the title “Ayn Rand’s Revenge.”)

Book reviewed:
Heller, Anne C. Ayn Rand and the World She Made. New York: Nan A. Talese/Doubleday, 2009.

Here is what the hero says in the key passage of Anthem:

“Our brothers! Your are right. Let the will of the Council be done upon our body. We do not care. But the light? What will you do with the light?” (p. 72)

Rand, Ayn. Anthem. Caldwell, Idaho: The Caxton Printers, Ltd., 1946.

Cars Increase Our “Personal Area”

(p. 89) Cars are the primary reason for the ever increasing “personal area” of Western life. As Jesse Ausubel of Rockefeller University has shown, “personal area”–the volume of territory through which someone moves in a typical day–has risen tenfold in the West since 1950, mainly because “personal speed” has tripled. Before general ownership of cars, most people were limited on most days to destinations to which the could walk, or that were close to bus or streetcar lines. Now most people head to whatever destination they wish, so long as traffic jams don’t intervene. Ausubel has found that the “personal speed” of typical Americans has been rising at about 2.7 percent per annum for a generation; at that rate, the “personal area” the typical individual covers per day doubles every twenty-five years. Racing around from one destination to the next–job, school, stores, gym, restaurant, church–may be stressful. But the fact that people are increasingly able to choose where they want to be, and choose when they want to be there, ┬ís an addition to personal (p. 90) freedom. Cars are what make “personal speed” and “personal area” possible, and we wouldn’t love them so much were they not so damn convenient in this regard.

Aspects of car culture are unsettling, however. Speed and convenience in transit, for example, don’t necessarily translate into a more pleasing life. “The mobility of the private car has the paradoxical effect of lengthening how far people go rather than saving them time,” Alan Durning has written.

Easterbrook, Gregg. The Progress Paradox: How Life Gets Better While People Feel Worse. Paperback ed. New York: Random House, 2004.

If Countries Have Souls “Then America’s Is the Patent System”


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(p. 46) [Julia Keller] discusses Lincoln’s little-known interest in personally testing new Army weapons and, in a brilliant passage, rhapsodizes about creativity and the Patent Office: “If a country can be said to possess a soul, then America’s is the patent system: the simple, fair method of staking claim to a new idea and getting the chance to make money from it.”

For the full review, see:
MAX BYRD. “The Bullet Machine.” The New York Times Book Review (Sun., November 9, 2008): 46.
(Note: bracketed name added.)
(Note: the online version of the review is dated November 7, 2008.)

Book reviewed:
Keller, Julia. Mr. Gatling’s Terrible Marvel: The Gun That Changed Everything and the Misunderstood Genius Who Invented It. New York: Viking, 2008.