Harsh and I have co-authored a piece on the importance of absolute, unconstrained free speech:
Free speech is about preventing the state both from forcing individuals to remain silent and from forcing individuals to say something they do not want to. The right to offend is fundamental to free speech. Free speech is also about the state protecting individuals from being at the receiving end of physical attack from others.
More here.
Rising unemployment and income disparity has shaken democracies across the Western world in the last year. Unemployment among young people in particular has been persistent and pervasive — the United States saw the highest ever youth unemployment in 2011, and it has reached as high as 45 percent in Spain. Job creation has suffered not just because of excessive debt. Advanced economies have seen a massive erosion in manufacturing, and new enterprises have been too focused on driving consumption.
Internet companies have mushroomed in Silicon Valley thanks to the low cost and ease of building products for the Web. They’re able to scale globally while maintaining a relatively low employee headcount. The year 2011 was a landmark one for Internet companies, with several start-ups going public and raising over $3.5 billion in the best year for initial public offerings since 2000. Among the biggest ones to do so in the United States were LinkedIn, Zynga, Groupon and Renren, a Chinese social networking site. And Facebook’s recent filing for a $5 billion public offering could make 2012 the best year for Internet I.P.O.’s since the dot-com days of 1999.
But all these companies thrive on aiding consumption, whether it’s through gaming, social networking or group discount buying.
In contrast, production-oriented technology sectors in health care, advanced materials and energy have had limited success in America. Most ventures in clean technology have absorbed large amounts of capital and have yet to show returns for investors. Many that have managed to grow, like A123 Systems, which manufactures advanced lithium-ion batteries, and Tesla Motors, aren’t very profitable. The success of consumption-driven Internet start-ups has left production-oriented ventures behind.
It’s technology that ensures equitable growth. Think of how mobile phones are ubiquitous across the developing world: there are over five billion cellphone users worldwide. Would it have been possible for all of them to have landline telephones instead? Would there be enough copper in the world to draw wiring to even the poorest day-wage laborers in India and China who today use cellphones? Even if the world had enough copper, could it all be mined quickly enough with limited environmental impact, and could it be devoted to laying telephone lines for a customer of meager means? Almost every modern day convenience that the West takes for granted will have to be re-engineered to make it cheaper and better for large-scale use in the developing world.
There’s a dichotomy here. The advanced Western economies aren’t able to create jobs partly because of their inability to compete with Asia when it comes to large-scale manufacturing, and this has in turn limited their ability to scale production-oriented technology companies. In the East, the emergence of manufacturing — and in India’s case, I.T.-outsourcing — has created higher incomes, a stronger consumer culture and the need for energy and resource efficiency. Rapid urbanization and industrialization in the developing world are irreversible trends. There are suddenly billions of consumers in Asia who can now aspire to the standard of living in advanced economies, and meeting this demand will require a giant leap of innovation across sectors like energy, chemicals, health care, transportation, water and materials.
But emerging markets lag in innovation because their entrepreneurship ecosystem, higher education institutions and research infrastructure are far less robust. Above all, entrepreneurship is celebrated in American culture and business failures aren’t looked down upon. Silicon Valley is the product of this culture — like French cuisine and Indian classical music, it cannot be cloned. As the world’s innovation engine, Silicon Valley should lead the way in commercializing game-changing technologies that can ease constraints on the world’s resources and enhance production. Instead, it has found more success in ventures for the consumer market.
But start-ups must be close to their customers, and there’s a case to be made that industrial and clean-tech start-ups in Silicon Valley have been hard-pressed for success because their real customers are in emerging markets. From an economic standpoint, climate change and resource efficiency are more the problems of developing nations. Moreover, as the bankruptcy of American clean-energy start-ups like Solyndra has shown, innovation that needs to be propped up by governments is difficult to sustain.
Similarly, consumer Internet ventures in emerging markets are only able to clumsily copy ideas from abroad. Though there is a rapidly growing middle class with Internet access in India and China, the United States still has the world’s largest and most affluent consumer base, making it a natural pioneer for consumer Internet innovation.
The Internet is challenging the hegemony of nations. An Internet start-up in any country can reach consumers worldwide because of the platform’s openness. But the same isn’t true for production-focused start-ups. Greater economic integration and free trade will help them globalize more easily. To foster innovation in production-oriented sectors, nations need to champion the freer flow of technology, labor and capital and create institutions and laws that promote the same openness. There needs to be a symbiosis between entrepreneurial talent, investment capital and sectors that are in need of transformational innovation. Only then will global economic growth be truly inclusive and harmonious.
Originally Published: The New York Times International Weekly
At the recently concluded 99th Indian Science Congress in Bhubaneshwar, Prime Minister Manmohan Singh lamented the decline of India’s scientific prowess relative to China and other nations, while listing several of the government’s initiatives to promote research and development. The press caught on to the comparison with China and largely ignored the achievements that the Prime Minister tried to draw attention to.
Scientific research and technological innovation form the bedrock on which nations build competitive economic strength in the globalized world. Research and innovation are also well-documented as engines of productive employment-generation and wealth-creation. Indeed, scientific research should have the mandate to create jobs and wealth for broader society. Moreover, scientific prowess is fundamental to national security and defence readiness – not only does it help in developing defense capacity indigenously, advanced military technology is imperative for India to play a meaningful role world affairs and to be secure given its antagonistic neighbors. In international relations, one is well advised to talk softly but carry a big stick.
In this sense, India’s national scientific strength is linked to and aligned with policies in the spheres of education and defense too. A nation’s capacity for scientific research and development (R&D) is tied closely to its higher education and research infrastructure. Without high-quality research institutions and the people to lead them, it’s impossible to have world-class research output. Manmohan Singh also claimed that Indian industry needs to dramatically increase research spending if India is to move towards spending 2% of gross domestic product (GDP) on R&D. It is true that India Inc can invest more in research – the Prime Minister can create incentives for the same by introducing more competition. Large sectors of India’s economy, such as power, mining, transportation, oil and gas, aerospace and defense could easily absorb substantially more private sector participation and increased competition. Many of these sectors are off limits to competition and are government-mandated monopolies or oligopolies. When firms have to compete for customers and profits, they are forced to innovate, and hence invest in R&D.
Manmohan Singh’s seven-plus year tenure as Prime Minister stands in marked contrast to other administrations – unlike others, he entered office when optimism was high and people looked to the future with firm expectations of a new India in the new century. India’s economy was poised for takeoff on the back of over a decade of continued economic reforms. An average GDP growth rate of around 8% since 2004 helped tax revenues almost double to nearly Rs 12 trillion for 2009-10. No government in the history of independent India has enjoyed such a financial bounty – most have had to deal with severe economic scarcity. It is in this background that the government’s record must be judged.
The UPA government’s policies in the areas of education and defence have hardly been beneficiaries of this abundance of capital in the treasury. Arjun Singh, HRD Minister in UPA 1, busied himself with increasing student quotas in central educational institutions. Where the debate should have been about capacity expansion so that there is enough opportunity for all sections of society, Manmohan Singh presided over the rationing of existing capacity first on the basis of caste, and more recently on the basis of religion, disregarding merit and capability. Ad hoc creation of new IITs is damaging their brand – no less an authority than C.N.R. Rao, chairman of the Prime Minister’s Science Advisory Council and one of India’s most distinguished scientists, has strongly criticized this policy. The reality is that without deregulating higher education and building privately-operated universities, India will never be able to meet domestic demand for higher education.
More recently, UPA 2 put forth the Right to Education (RTE) Act under the new HRD Minister Kapil Sibal. Besides enforcing quotas in private schools, RTE has put such draconian restrictions and regulations that many private schools will be forced shut. Study after independent study has shown how India’s poorest have rejected government schools and choose to enroll their children in private schools – but the government has ignored them all and enacted laws that hurt the poor the most. Separate from RTE, Kapil Sibal has tried to offer affordable computing to the poor by pouring public funds into the creation of a low-cost tablet computer, which recently failed conclusively in its first field trial. Despite consumer rejection of their misconceived pet project, the Minister and his bureaucrats have gone back to the drawing board, vowing to return with a better tablet by April. Does the government care about learning outcomes or is it simply too short-sighted to realize the grave damage its flawed priorities are causing by denying basic schooling to millions of children?
With millions of our citizens either denied access to effective schooling or divided on identity when entering universities, can we nurture the human capital needed to lead in science?
There is evidence to suggest that investment in defense research can spur scientific and technological advancement. In the United States, 55% of federal R&D spending goes to the Department of Defense, which has been a pioneer of several technologies born from scientific research that have had substantial impact outside of the defence sector. The Internet and GPS navigation are two such technologies.
Integration and cooperation between universities, research institutions and private industry can dramatically grow the pie and multiply quality output manifold. India never really had the money to make large investments and purchases for national security until recently, but it is time now that the research activities of existing institutions such as Defence Research & Development Organization (DRDO) are reformed. Recent research that DRDO has tried to commercialize include mosquito repellents, a spray that can keep clothes moth-free, body creams to keep away bugs, a high altitude toilet that was 15 years in the making, and a new fabric for bras. Clearly, India needs to rethink its defence research priorities.
China has managed to build scientific strength because it has made thoughtful and substantial investments in building universities and defense capacity. For India to witness a renaissance in science, it will also have to encourage symbiosis between defense spending, educational and research institutions, and private industry. Without such a holistic approach, comparisons with China will prove to be facile, and India’s tremendous potential to be a world-leader in science and technology will not be realized.
(Co-authored with Harsh Gupta.)
Originally Published: http://navam.in/1m5jZFh
Harsh and I have co-authored a piece on technology as the solution to climate change:
Incremental technological advances are already getting us smarter flats, more efficient cars, cleaner natural gas, yield-enhancing genetically modified seeds. We need technology and markets rather than summits and accords at Kyoto or Durban. Innovation is the key here, not artificially slowing conventional energy production.
More here.
Harsh and I have co-authored a piece on how liberalization brings structural dislocations with it. The solution is counter-intuitively not to stop liberalization, but to liberalize deeper and faster:
The fable of The Shop Around The Corner rings true in all market-oriented economies. Customized clothing makers in London’s storied Saville Row found themselves unable to compete with the onslaught of ready-to-wear high-street fashion, and many of them closed down. The street once famed for its bespoke tailors recently saw the opening of American casual wear chain Abercrombie & Fitch.The catch is that the economies of London and New York are open and dynamic enough to absorb such change, since they are far more free from government control. This is simply not the case in India, and also why the government must design and sequence its reform policies correctly, following through with more market reforms if it indeed manages to push through FDI in retail.
Harsh and I have co-authored a piece on how government interference across industries hamstrings India’s economic performance:
The irony is that farmers and billionaires alike suffer the same fate at the hands of a nosy government that wants to needlessly interfere in economic activity. Farmers, of course, have it even worse – the government retains so much influence over their industry that they can’t even price their products themselves. The romanticization of poor farmers prevents us from thinking of them as private sector participants. Various agricultural commodities in India are still subject to strangulating regulations on aspects such as pricing, transportation, packaging and point of sale. Labour and energy markets for farmers continue to be distorted. Inefficient employment schemes make labour expensive during harvest season. Power availability remains inconsistent because most states – Gujarat being a notable exception – do not have the political courage to say no to free electricity. Of course, the effective price of something which is not available is not zero, but infinite.
More here.
Harsh and I have co-authored a piece on the Indian government’s irresponsible spending spree:
“My appetite is infinite and my greed is more.”These words were uttered not by a banker or CEO from the top 1% of the income pyramid, but by finance minister Pranab Mukherjee. He was exhorting his officials to ramp up tax collection, according to a June report by the Press Trust of India. His government’s addiction to ever-increasing spending is decimating the nation’s balance sheet.
Harsh and I have co-authored a piece on why India should expand the participation of domestic institutional investors in the equity market:
India’s economic growth has been achieved on the back of sustained investment and improved capital allocation in the economy made possible by structural reforms. However, we are once again approaching a scenario where India may be heading into an investment famine, which would then translate into sub-par growth.But India is being starved for investment just when several domestic institutions have significant investible capital but are barred from deploying this capital in the economy as equity investors.
In 1997, Apple, pioneer of the computing industry, was floundering. It turned to its co-founder, Steve Jobs for direction and impetus, and the rest, as they say is history.
Jobs took the company back to its roots in innovation, building tools that help people change the world.
Jobs was instrumental in championing the vision of the personal computer when computers were considered useful only for governments and large businesses. Not only did he succeed in realizing his vision back then through the Apple II, Jobs went on to define the post-PC era with the introduction of mobile computing devices. Apple’s revival post-1997 is an amazing and insanely great story, to borrow some of the words that he frequently used to describe his company’s products.
Over three decades, Jobs transformed several multi-billion dollar industries on a global scale through his work at Apple and Pixar Animation Studios. But Steve Jobs will not just go down in history as one of the most successful entrepreneurs of all time.
The message of his life is deeper. In Pixar’s 2007 animation film Ratatouille, Chef Gusteau used to say that anyone can cook. Gusteau was a renowned chef in Paris who invited much derision from others in his community for believing that anybody could become a great cook.
Steve Jobs showed that anyone can build. With passion, focus and a commitment to innovate, entrepreneurs can beat the odds and build great companies. There’s tons to learn from Steve Jobs’s work for anybody trying to solve technological problems in a business context – in this sense, Jobs is a Dronacharya to countless entrepreneurs worldwide.
Silicon Valley has seen dozens of luminaries come and go over the decades, but the name and work of Steve Jobs shines the brightest in this august gallery of the crazy ones. The man has left us – but his legend will live on for centuries to come.