Monthly Archives: June 2008

US and the World Oil Prices

The recent oil price rise comes as a shot in the arm for the US as it continues to allege the growing economies of China and India for the rise in price of oil. Rising to $142 per barrel, the oil price hit the highest level for the previous season. One of the reason for this price rise is Libya’s proposed cut in crude oil production as a response to the bill before the US Congress that would empower Washington to sue OPEC members for cutting supplies*.

As I mentioned in a previous post, China & India constitute 9% and 3% of the world oil consumption as against 25% of US. Despite the fact that the growth in these countries is pulling millions out of poverty, US wants these countries to curb their demand. Oil not only gets consumed as a final product, it is also an essential ingredient in many production processes. Thus, higher oil consumption is an inevitable outcome of growth. By asking China and India to curb their demand, we are indirectly asking that they slow their growth. And all this so that we can continue with our high levels of consumption!

I think its high time the government stopped using power to control actions of other nations just because they threaten our comfort zones. Will it really hurt if next time we want to take a vacation, we hop on a Peter Pan or a Greyhound, instead of driving the gas guzzling SUV? Let trade be really free and hence, refrain from using political power to change the terms of trade in our favor.

Its indeed true that OPEC benefits a lot from hoarding supplies. But if we take a step back and think about it a bit harder, then this monopoly may not be all that inefficient. It keeps our already high level of oil consumption from shooting up and in the process allows other growing countries some leeway. It forces us to develop cleaner technologies and thereby reduce our oil dependence. So, in the process of ensuring reserves for their future generations, the OPEC countries may be actually ensuring sustainable development for all countries!

And then if US is indeed able to sue the OPEC countries for cutting oil supplies, it might turn out to be a stab in the back of all future generations.

*See this article from the Financial Times for other possible reasons and related news analysis.

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Ashis Nandy and the tragedy of the Argumentative Indian

Ashish Nandy is an influential political psychologist and has written sensibly so far. However, he is being legally persecuted for writing an allegedly provocative piece in the Times of India. His article is been touted as an assault on national integration and hence, its claimed, that he should be tried under the Indian Penal Code. An NGO claiming to deal with civic liberties has filed the case.

First question is where was this NGO during the riots? We do not have to go into the details of who started the riots and for how much of it is Modi government responsible. It would be reasonable to expect that a NGO which finds Nandy guilty of writing a provocative piece should also find Modi government guilty of not being able to control the riots or mishandling of the relief work post riots. Is this failure of Modi government not a violation of civic liberties or detrimental to national integrity? And does not it deserve the same treatment as has been doled out to Nandy?

Well, we know that when actions are politically motivated it is kind of hard to expect fairness. Having said this the important question still remains. Is Nandy’s article detrimental to national integrity? It is definitely not. Is it provocative? I think the only thing that it provokes is thought! But isn’t that is what the written word is supposed to do?

It is indeed high time we question the divisive politics that seems to be catching a significant number of people by fancy. So yes there is a need of continuous efforts to educate people about games that the politicians play. And to this end we need thousand times more of Ashis Nandys writing in all sorts of languages and forms and debating on all sorts of forums. Through reason we progress and see things which emotions try to cover up or at least color up.

If you still disagree with what Nandy has written put your thoughts in words. There is a reason why the system of writing to the editor of a news paper came to exist. With internet it has infact become even easier to use. You can comment then and there itself. The fruits of technology should be used to harbor social cohesion and not division. And cohesion will arise only through dialogue and exchange of views. It definitely cannot come through frivolous lawsuits launched by even more frivolous organizations. I would be more than happy to see BJP condemning the law suit and hope that it sincerely does so. It should do it despite the fact that Nandy accuses most of Sangha Parivar for the divisive politics. It would signal that it is open for dialogue and arguing its case rather than flexing muscles through organizations like Bajrang Dal.

Even I do not agree with some points that Nandy makes. In having a penchant for voilence he clubs Bengali babus, Maharashtrian Brahmins and Kashmiri Muslims together. While mentioning countries as maneaters he forgets to mention Chinia (we have not forgotten Tianmen square) and USSR. He also fails to mention the Maoist factions of left having a penchant for violence. By blaming Sangh parivar for radical Islam he absolves all the fundamentalist Islamic groups in India of any responsibly for their actions. I think these are good examples of gross simplification and selective empiricism. It can actually amount to distortion of history and Nandy of all the people should not be engaging in it.

However, I do agree with his objection to the role of the media. News papers in general and regional news papers in particular have failed to play their role as educators of the society. In catering to market demand they seem to be more than happy to role out pages of crap, bland and sterile psycho babble.

With all these agreements and disagreements the point still remains-pen it down and let people respond to it! Common man, as is often supposed, is seldom a fool.

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Fast Food Nation!

I have to admit that I stumbled on this book just recently, though it was published in 2001. But it is so disturbing that I had to write something about it. Eric Schlosser does a wonderful job in bringing out the implications of the way we eat food today in US. It is not only the story of the quality of food, but it is also one of the unfettered greed of giant corporations and hence of the murky side of market forces.

It gives a lot of other information along with the story of greedy corporations determining what you eat and how will it be made. For example, I did not know that one of the American car companies bought the rail network in the west and destroyed it completely to create demand for their cars. These companies were later tried for monopolistic practices but the damage was already done. It was also interesting to know how various corporations use the state to grow. For example, many franchisees of a well known fast food chain have been developed through concessional state financing meant for small business development. Corporations have threatened to leave a particular state and bargained for reduction in taxes. They have lobbied for least regulations by financing election campaigns and in the process have taken consumers for a ride.

If all this is not enough, some of them have been regularly hiring illegal immigrants as they are cheaper than US citizens. They also do not have any legal standing and hence the hiring companies do not have to worry about insurance and other legal benefits. Much of the description of how they handle the poor immigrants reminds us of barbaric industrial towns of Europe from the earlier times that reeked of anarchy, disease and filth. It is hard to believe that a significant number of workers here in US have to face such hardships amidst all the glitter and sanitized psycho babble of violation of human rights in the rest of the world.

Even more disgusting are the details of how the meat packing industry functions. The scale and speed with which it currently functions is overwhelming and I leave it to the readers to discover the details. Suffice here to note that the meat packing industry not only has resisted any food safety regulation up till now but is also responsible for mindless perversions and meddling with course of nature. Cattle which is by nature is meant to be herbivorous has been fed for decades with dead cattle, cats, dogs, horses, pigs and chicken. Even chicken is fed with dead cattle and of course dead chicken.

I do not have enough scientific knowledge to comment on the biological and environmental implications of these actions, but it certainly does not feel right. At least I know for sure that our bodies are designed to digest certain types of food and that’s certainly the case with animals. In a normal course will a dog or chicken eat beef? Will a cow eat a horse or a pig? More importantly will a cow eat cow or chicken eat chicken? If this is taken to its logical end will we ever consider it normal to eat dead humans? I am inclined to answer in negative but you are entitled to your opinion. At least after reading the description of what all goes in that burger patty, I am happy to recommend a glass of orange juice for lunch. With it you will only starve for a while but definitely not die!

The development of American capitalism thus raises far more fundamental questions than just the selfishness of corporations as evident in the brutal denial of basic human courtesy to fellow human beings. Corporations built to serve human beings seem to have grown so larger than life that they deem some human beings completely expendable. And this disease is spreading to other countries as well, as these corporations open shops there and more and more people around the world yearn for a fast life style.

What do I say more here? Read it for yourself. After all some body aptly said- read and be wiser!

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Blame it on China and India!

There has been a lot of talk recently about how everything from world food prices to world oil prices is caused by increased consumption by China and India. For example, see this article. This is a good example of flawed economic but mass appeal reasoning and the government as well as the media seem to be more than happy to cling to it.

A closer look at the consumption of oil statistics (CIA factbook
), is an eye opener. Oil consumption of US is 26% of the world oil consumption whereas Chinese consumption is 9% and that of India 3%. With such small numbers, oil consumption of India and China will have to grow more than 100% to compete with US consumption and significantly affect world oil prices. This also makes the question of reducing the oil subsidy by these countries a non issue.

Comparison of per capita consumption figures is even more revealing. US consumes 11 liters of oil per capita per day while China and India consume 0.8 and 0.3 per capita per day. Given this, one could easily argue that reduction of US consumption will contribute more to reduced oil prices than that by China and India.

Coauthor: Devayani Tirthali

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Has trade worsened the wage inequality in US?

There has long been an arguement that since US’ trade with poor countries like China has increased, demand for domestic low skill jobs has reduced. This is because imports from poor countries displace goods produced in US by the low skilled workers. In effect the wage gap between the skilled and unskilled workers has gone up and trade is obviously to be blamed for that.

The evidence is at best mixed. This article in The Economist gives a good summary of what economists have to say on the issue.

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