Sunday, May 27, 2007

The state of Indian Roads

This weekend my family and I travelled 610 Kms(380 miles) by bus saturday night and after spending the day in Shirdi came back by the same bus sunday night (enlarge the map and look for Hyderabad and Shirdi). The bus journey was 12 hours each way and terrible for my back. I used to take such trips pretty frequently and it never bothered me, maybe I have become too American, or am looking at things from a different perspective. It did make the plight of Indian roads pathetically clear to me. Except for the undeniable fact that cities are bursting at their seams, 60 Kms outside the cities everything is just barren land. People are as dirt poor as before, and the Gods are as dominant as ever. It was single lane traffic (both directions) most of the way. Sure, much of the route does not need more than one lane there isn't much traffic. However, these roads are in terrible need of repairs. They are potholed most of the way and my poor back felt every single one of them. There were several private toll roads and I was surprised that even these were in disrepair. Goes to show that there is much corruption even in the private sector. Accountability is the key issue, and people just seem to be happy with things the way they are. We did cross a small section that was part of the Golden Quadrangle project, even that stretch wasn't great, and these roads are new and this whole project consumes several billion dollars. These roads are the lifeline of the country and that is painfully obvious. Civilizations begins and ends at these roads. The National Highway routes were built in the 50s and 60s just about the time when the US Interstate system was being built. There seems to have been no planning for future traffic patterns. Now reclaiming lands along these routes that are sprawling with squatters is proving to be politically tricky. The highways need a complete revamping and the solution does not lie with the government. It is high time road routes are taken off the critical sector list so that private companies can come in and develop the sector.

Friday, May 25, 2007

Cost of Medical Diagnostics

A few months back I had an emergency room visit in Fairfax which set me back by a few thousand dollars. Since my insurance does not cover a lot I did not follow up my visit with further diagnosis. I wanted to wait to go to India to get it done because I was sure it would be cheaper there, and I was right (read about my experience here). Medical services do cost a lot less in India than in the US. I wonder what the reason is!! The machines are imported from abroad, so setup costs are the same I guess. There is certainly a labour component. But there were only two technicians in the procedure room. How much could that alone be? I guess there are a lot of regulatory hurdles in the US that add to the costs. Even so, there is some other component which is adding to costs in the US. With such huge price differences (MRI consultation $500, procedure $500 in the US, consultation $1, procedure $100 in India) and similar quality treatment no wonder medical tourism is becoming more and more popular. Even if the $2000 round trip ticket was added to expenses it would work out cheaper in countries like India. So, arbitrage would bring prices closer. But we do not observe that either which implies there is something missing from this picture. People do have the elephants and naked saints impression of India. They fail to realise how modern we are. That could be a reason why they do not want to travel here. Americans at least know that Indian doctors are pretty good, since several Indian born and educated doctors have made their mark in American hospitals. There is an information component to this lack of arbitrage. However, seems to me that there is an interesting economic phenomenon here that deserves some scrutiny.

Wednesday, May 23, 2007

Why Perestroika failed?

I did not read this book till two days back, but my final paper for my Austrian class echoes the ideas in this book. The biggest difference is, Pete quotes like crazy and I had zero references in my paper. Also, the book is about Russia and my paper was about India's economic reforms. The main idea in my paper was the failure of the reforms in India due to lack of credible commitment form the very unstable political sector inspite of the great potential. If I can as much as repeat a similar story as the book for my dissertation it would be amazing. A lot remains unsaid with transition economies yet and I hope to tap into this little explained field in economics. This summer is my feeler toward my final dissertation. I need to progress from the 'I think this' stage to 'I can prove this' stage. I have a daunting reading list of most of Hayek's works and a couple of Don Lavoie books in addition to my local literature survey. There are only 24 hours in a day, and hopefully I will be able to fit in all my reading and research assignments and intrrspace them with some fun with family and pals.

Contradictions in India

FM Chidambaram made at least two contradictory statements as usual in a public address. On the one hand he said that government policies were hampering innovations and then on the other hand he said that the corporate had to do better in motivating innovation and have to provide more employment to disabled people. I don't get the connection, but then again I could just be dense. How can businesses correct a government failure? Sure, there is political action, but then again when the incentive for every government in power is only to fill its pockets there is very little opportunity for businesses to do much.

Everytime I am here I am assailed by more and more regulations. This time I was stopped longer at the customs point and the officer tried to make me pay for electronic items I already own and plan to take back with me, for example my two year old refurbished laptop, and my three year old battered digital camera were all recorded. I had to show him my I-20, and Thank God I knew the laws on importation. If I had not mentioned that I knew what was allowed and what wasn't he would have made me pay duty on stuff I am allowed free into the country. These laws are deliberately written to fool common people. Besides, people have been used to such oppressive laws for such a long time that they do not even know that these laws have changed. In addition the officials themselves do not know these laws for the most part. It is a contradiction of sorts that people who spend so much money going abroad to study and work do not spend five minutes to read the laws on a website that would save them atleast 30% of the money value of the products as duties.

There is only one way to improve innovations, create incentives. We are a very smart population. After all even during the most oppressive days of licenses we found ways to be entrepreneurial, why wouldn't we be willing to do so now given the changed economic climate?

Wednesday, May 16, 2007

What I have learned from my Professors

Prof.Cowen told us his thirs law in class almost two years ago, "There is a literature on everything.." Right now I am looking for literature that could lead to a good dissertation. I have been working on this missing entrepreneur idea for a while now and it is hard to get it out of my system. The more I read the more literature I unearth, and I believe the paper has progressed significantly since the first draft more than 8 months ago. Now I am beginning to understand what Pete always says about a good paper project taking about a year or so from start to finish for him. I used to wonder why it took him so long. The more you read the more you discover how much you do not know. But reading is not enough. Like Prof.Wagner always says, "Reading and Thinking without writing is like day dreaming..". This summer hopefully I will not just day dream but do productive work.

The last time I visited family, one of my relatives who manages a big organisation mentioned something interesting. He said that recent academic stuff seems more relevant to business environment than stuff a decade ago. That set me thinking into the kind of books being published. This was also part of a question I had to answer for my Austrian II class. Most of the readings we had in that class were books that had Austrian style arguments for the most part, without calling the theories explicitly Austrian. Here is a success story of ideas. Who cares what the field is called. I have shied away from being branded hard-core Austrian. I believe in the ideas and not the idols. It has been the bane of many movements, that have lost steam after the founders passed away, that they faded away because they concentrated on their idols and not the ideas. So the books we have read this semester make me believe that there is a strong future for people like me, after all these authors are from MIT and such hardcore mainstream places.

Getting back to my point about entrepreneurs, my main contention is that business schools still study entrepreneurs not only because they try to teach entrepreneurship, but also because of their research strategy of using case studies. Analytical narratives and case studies in economics are becoming fashionable only now with the success of Professors like Willam Easterly. The winds have shifted in favor of people like us and I am glad to have had Prof.Cowen drum his third law into me.