Tuesday, February 28, 2012

Where the Supreme Court covered itself with shame

While legal luminaries will doubtless have many more incidents to recall, the recency effect limits me only to cases I've stumbled across. To avoid any contempt of court action(!), let me just say that this is a critique of the judgements, not of the institution itself which has delivered several landmark verdicts over its lifespam, especially in the last few years. The reason I'm stating this is to show that nobody is infalliable
  1. SDM Jabalpur Case:- This was an Emergency era case which dealt with the rights of the Government to subject a person to preventive detention. And contrary to its stand before and after Emergency, the Supreme Court then sided with the Government in curtailing individual liberties.
  2. RTI appeal before the Supreme Court:-A petitioner had sought information from the Supreme Court via RTI. The Chief Administrative official of the Supreme Court('Registrar') opposed that, lost the battle before the chief RTI authority(CIC), and then took up the case before the Delhi High Court, fully aware that even if he lost, it would come up before the Supreme Court. The fact that the judges even allowed this to happen, does not reflect well on them.
  3. Delhi 'illegal premises' sealing case:-While the Supreme Court took the moral high ground of taking a stance against illegal realty development, that order came as a shocker, and later it was revealed that the sons of the Chief Justice gained substantially in their realty holdings because of the sudden supply constraint. Again, this was a case where appearances mattered, and the least the judge could have done was to have excused himself from the case. 
  4. Raj Narain vs State of UP(the election fraud case): The UP HC judge had held Indira Gandhi guilty of misusing government machinery(therefore 'election fraud') and debarred her from contesting elections for 6 years. The following furore partly stoked unrest and Emergency was declared in June, 1975, with Indira Gandhi still the Prime Minister. Yet, the Supreme Court did not seek an independent atmosphere/status quo before reversing the verdict and confirming Indira Gandhi's prime ministership. Without going into the legal merits, it is doubtful how a verdict against the incubent prime minister under Emergency conditions, could have been 'free and fair'.
These are just 4 stray cases in 60yrs, so I guess we should consider ourselves lucky compared to other countries. 

Monday, February 27, 2012

Where speed money is legal/regularized-examples from India

When Kaushik Basu(then Economic Advisor to the Prime Minister) suggested that small bribes could be legalized, those remarks caught a lot of flak and invited adverse editorial comments. But as Ms Sreemati Remnath, a guest lecturer for the Inter Cultural Communication Course(ICC) pointed out, there are quite a few instances where speed money is actually regularized in India. When I refer to 'speed money', I define it as paying a fee to have your service delivered in a manner other than first come first serve.  The first two examples were suggested by her, the remaining examples and analysis are mine. Purists may quibble that changing the time dimension alone makes the service different for which a different fee is appropriate. While that argument is logical, not everyone sees it as fair/equitable since we do feel in some places that money has no right to displace FIFO in the merit hierarchy. 
  1. Tatkal for railway tickets:-Instead of bribing the clerk/TTE to bump up the person in the waiting list(it still happens but much more difficult), tatkal fee is a legal way to charge people in a hurry, akin to the fare buckets in airlines/buses/cinema tickets and other perishable inventory cases
  2. Special darshans in temples:-Though all devotees are supposed to be equal in the eyes of most religions, many Indian temples have the practice of special darshan(paid for)/VIP darshan(where the custodian may get non monetary benefits/donations) for those in a hurry
  3. Fee for publishing patent application earlier:- For those in a hurry to get their patent application published and scrutinized faster, the Indian Patent Office charges an extra fee for that.
  4. Officially Higher fee for management/NRI quota students in colleges:-Management Quota students find it harder to get loans(not having got it on academic merit) while NRI students pay more fees. Often, both do not get scholarships/subsidies/soft loans or grants, maybe on the presumption that they got in other than the regular way. This is not really speed money, but can be analogized to that.
I'm sure the reader can think of many more such examples. This post is not to critique any of the above time honored practices, which are often 'international practices' too,but just to connect the dots.  

Sunday, February 26, 2012

Do a top MBA abroad for a better chance of marrying an Indian tycoon heir

Firstly, let me clarify that this blog post does not imply that people(either male or female) do MBA for the sole purpose(or even an explicit purpose) of finding their life partner. However, it does happen, be it at Indian campuses or foreign campuses. The reason for this blog post is that I'm yet to read/come across any example of an Indian business scion meeting their life partner at an Indian college. Maybe the tough admission standards(only academic merit not your surname/personal attributes/social savviness) are to blame for this, but whatever the reason, India's heirs tend to pursue their post graduation abroad rather than in India. This is anecdotal and not supported by detailed statistics, but rather the best data I have. That said, the below examples are insightful
  1. Nandini Piramal(Stanford Business School 2004-06)-Tim:-Ms Piramal married her Stanford classmate a few years back, and now they are proud parents. He even left Blackstone to join the family firm Piramal Healthcare(this is an example where family managers can be better than even any other 'professional' managers in terms of pedigree.
  2. Aditya Mittal-Megha(Wharton)-They met during the MBA program there, and are now proud parents to 2 daughters.
  3. Vanisha Mittal-Amit Bhatia(Cornell)-One of the most lavish weddings, held in Paris.
  4. Akshata Murthy-Rishi Sunak(Stanford Business School);-Narayan Murthy's daughter met her husband when they were at Stanford.
Maybe I'm making a mountain out of a molehill by connecting non existent dots. But given that many of the Indian families are quite reclusive, the above was the best examples I had. Readers may add examples/counter examples below. 

Sunday, February 5, 2012

Greed is good because the journey itself is the reward

“The journey not the arrival matters.” – T. S. Eliot 
Ever since Gordon Gecko's famous words 'Greed is Good', that phrase is used as a club to accuse bankers and other high paid finance professionals of being greedy, and putting their self interest ahead of society. Indeed, reading the articles on that theme, you would think that to aspire to earn money for the sake of it('greed') instead of just for fulfilling needs, is a crime. But in this post, I argue that for many of those money, greed is good because they see the process of earning money(trading, closing deals etc) as the reward in itself. It is like a game which you play for the fun of it, and get your high from winning certainly, but also from the game itself. To use the Olympic motto, the game is more important than winning! That may explain why billionaires/others work even when they have no monetary need to do so. While even other professionals can do so,  mostly only finance professionals can earn plenty early on to be able to afford to retire early on-hence this post focus on finance.

Without the greed, people would not compete actively in markets and may instead choose the easy way out of remaining small, setting up ventures in SME reserved areas etc. While the idealistic perspective would take the view that social service motto/greater good fuels entrepreneurs, the fact is that economic security is necessary before any such larger good. And to reach economic security, that is where a rational amount of greed works.

Thursday, February 2, 2012

Competition is great for others-not for oneself and rarely for business!

Listening to regulators, lawyers, CEOs sing the praises of competition, and that it is the holy grail of business. But, what they really mean is that their raw material suppliers should sell cheap, they should benefit from subsidized state utilities, that the distributors should be barred from defecting, that intellectual property rights should preserve monopoly etc. In other words, competition is fine as long as protective mantle available of labour/IPR/pricing/export cartels etc that allow making super profits.

The source of this thinking is not hard to phantom. Right from bschool strategy classes onwards, aspiring leaders are taught the importance of keeping the competition out(brand, IPR, legal battles, competitive moats, entry barriers etc). Depending on the state of evolution of society/cultural mores, the State may circumscribe these methods by insisting on open access, infrastructure sharing, arms length dealings between vertically integrated units, term limits for IPR, competition laws etc. In response, the incubents push back via lobbying, using special interest groups etc and trying to take the moral high ground. And as often happens, the voice of a concentrated few losers is heard louder than the diffused voices of a mass of new/potential entrants, and that is why regulation globally rarely favours new entrants. While legitimate grounds like consumer safety, economic stability etc inform some of those regulations, it is often irrational why many regulations(India or abroad) and business practices(bank lending margins, leading conditions, credit ratings) directly disadvantage new entrants. Business lobbying can explain some of these reasons. However, the rare instance where business welcomes new competition is when a nascent business needs scale/building awareness which it cannot do itself. Hence, market expansion is a rational argument for incubents to proactively seek out new entrants, so that they can piggyback on the efforts of the latter. 

But lest we individuals bash Big Business for its oligopoly conspiracy against the laity, lets take a hard honest look at ourselves. As Adam Smith once said, all professions are a conspiracy against the laity' in the sense that at some point, they lose the sense of public purpose and seek to enrich themselves at the cost of public good. For example, the public service motto of law/medicine/accounting is increasingly difficult to identify, and many professions are more concerned with increasing the variety(and fees) of their credentials, and carving out exclusive niches/posts for their members, while couching those efforts under the moral high ground standpoint of improving governance/health etc.  Any labour union(including by definition professional association) routinely lobbies to keep others out(immigration checks, making pass rates harder, opposing titles of similar named organizations etc).

So while competition DOES make those exposed to it tougher, few genuinely wish for competition. While students/new graduates may aspire to selective/competitive schools/employers, that is also more from the aspect of personal gain/branding rather than the desire to be whipped by their peers! So the next time anyone signs the virtues of competition, take a hard look at the knowing-doing-saying gap.