Inquilab Zindabad ? No ! _____ (fill in the blanks) Murdabad .

What is common between a park demolition and a raise in bus fares. Well, something profound , I believe. Because in the last one month, I dare suggest that these were the two most important events in the world (NSA be damned ; as if that was a surprise)

The park issue was the first and it happened in Istanbul, Turkey.  The government had planned to demolish the Taksim Gezi Park and use the space to reconstruct the historic Taksim military barracks. About 50 environmentalists occupied the Park in protest. The police , predictably evicted them. That snowballed into massive nationwide protests and a huge Occupy Taksim Square movement started.  The issue of demolition of the Park has now given way to a protest against all sorts of unrelated issues and drawing crowds numbering in the tens of thousands. It is now an anti government protest without a coherent theme or leaders. A big section of the population is just protesting without a clear understanding of what they are protesting against and what the solution is. This mind you, in a country where the President Erdogan has won repeated elections with a strong mandate.

In Brazil, the government decided to raise some bus , train and metro fares. A few protested, notably the  Movimento Passe Livre (Free Fare Movement). The police broke up the protests. Again this has snowballed into a nationwide protest movement, involving millions of people. The government quickly withdrew the bus fare hike, but the protests have snowballed into something bigger - a whole range of issues, including protests against the Football World Cup and the Olympics all scheduled to be held in Brazil in the near future.  If Brazilians are protesting against football, something serious is happening. Again this is in a country where Dilma Rousseff won a resounding mandate in the elections and is the chosen successor of the extremely popular Lula.

As of today, both these protests are going on. You can see parallels with the Occupy Wall Street movement in the US and a few other places. In all these protests, there is no coherent theme, there is no leadership organising the protests. But these protests have been massive, cover a whole range of grievances and are significantly aided by social media.  They largely cover the middle class, not the poor. They tend to die down because they are not coherent and not "organised". But they are symptoms of a deep underlying problem.

This is a profound sociological change and one that should be researched deeply.  I believe the underlying issue is economic. Despite a big economic improvement globally across the last two decades, there is deep resentment. Large swathes of the population do not believe that there is a bright economic future ahead of them. This, despite the fact that the future is significantly brighter than what our parents, grandparents and forefathers ever had. And that is the problem governments and societies cannot ignore. There is no easy solution, and aspects of the solution will be different for different societies. But the root of the solution is economic. We have to have economic growth.

PS - In the title of the post - Inquilab Zindabad means Long live the revolution, in Urdu, a favourite phrase of protests of the past in the Indian subcontinent. Murdabad means "Down with".

Black yoga pants that "showed too much"

Some businesses I can completely relate to. Most businesses I understand,. But there are some that completely fox me .

Take the case of the quaintly named company,  Lululemon. I was, of course, blissfully unaware of its existence until I read a news item that its CEO was leaving (polite term for being fired). Naturally, with a name like that, I couldn't but help read up. Apparently this Vancouver based company is  in the business of "yoga inspired" athletic gear , whatever that means. They are fast growing , but reportedly had a product problem recently which led to the CEO's exit.

The "product problem" made further interesting reading, Apparently, their Luon range of black Yoga pants was getting too many customer complaints - the product was too sheer and ,er, "showed too much" ! A particularly sensitive topic when when doing yoga which involves stretching and contortions !! The outcry was so much that they had to pull the product from the shelves in March.  The CEO stayed long enough to resupply the product, hopefully this time,  not "showing too much", but then had to go.

What amazes me is that this company makes a margin of 50%, selling yoga pants and the like.  Products include "Wunder Under pant" priced at $92 

and "Om pant" also priced at $ 92

If you want more gems such as the above visit their website here.

What foxes me is this. Who on earth wants to pay $ 92 for a "Om pant".  Do yoga by all means, but concentrate on , well, the yoga. Does it matter an iota whether your pant is "om" or "not om" ?? There are many places on earth to make a fashion statement, but I doubt if a yoga session is one of them .

I am a sports nut, as regular readers of this blog would know. I have spent an insane amount of money on sports. But for rackets, bats, balls and the like which help me to play better. Not for looking like an Adonis on court (well, that would be an impossibility anyway, but you get the drift ... ). I thought the purpose of getting on to a training room, or a sports field, is, er, to train or to play.

Yeah, I know lots of people who dress up for the evening walk. This is a disease that especially affects the female of the species. The sight of a Rajalakshmi - she of the ample proportions - trying to look fashionable while huffing and puffing at 1 kmph, I can assure you, is not a sight for the Gods. You can spot a true sportsman or sportswoman from a mile away - just from their dress. Although I admit, that Pete Sampras, one of the all time greats hit new lows in dressing, wearing what I can only describe as a Kachha which a Sardarji would be proud to wear as an underwear !

Even I would blanch at that !

But seriously, you can run a very successful business by peddling yoga pants at outrageous prices ! While being called Lululemon !!

Now , that's a business I can never understand :)

Who won the Cold War

I sometimes wonder, who the real winner of the Cold War was. Traditional wisdom is that capitalism won over communism, right ? The Western world over the Soviet bloc. Freedom and liberty over authoritarianism and government control. Etc Etc. But I wonder if this is really true ?

Take the capitalism versus state enterprise debate. Today capitalism is a four letter word to much of the world. The fastest growing economy in the world and the second largest, China,  is significantly  state enterprise driven. Government expenditure as a % of GDP is 53% in France (surprise surprise), 47% in the UK, 43% in Germany and in supposedly the bastion of free market capitalism, the United states, 39%. Government spending has propped up the global economy for five years now and bailed out financial institutions when they were mired in the quicksand.

What about freedom and liberty. After the revelations over the last couple of days from a certain Edward Snowden, we may have to redefine the word liberty. If I told you that the government listened to your every word, read every e mail and tracked every movement of yours, you would naturally think that the government in question would be Russia or North Korea. Instead we now know that it is the US of A and that their snooping is not not just restricted to US nationals, but literally everybody in the world (the fact that there are howls of protest in the US about snooping on US citizens , but perfect acceptability of snooping on an Indian citizen like me is an interesting definition of the word liberty in America). That this revelation is met with a big yawn in China, where this is just routine practice further annotates my point.

Force feeding prisoners in Guantanamo, keeping them in detention forever without a trial is not very different from what the gulags did in the Soviet Union.  Even at the height of its powers the Soviet Union did not kill citizens of another country from the air with impunity as the US does today with drones. If the Soviet Union brutalised Afghanistan invading it needlessly and tyrannically, you could perhaps make the same point with the US and Iraq.

The citizens of the Soviet Union could never get out and go elsewhere. Those in the  West were blissfully free to go where they pleased. Is that really true now ? Anybody from any country who has to get a visa to go to another country , just to visit (forget emigrating), might have a different point of view with regard to freedom of movement.

What about the West over the Communist bloc ? Well, if you define the communist bloc widely enough to include China, the verdict might be closer to a draw than a clear cut victory. 

Of course, this post stretches the facts, but only to make a point. The scale of what happened in the Communist Bloc during the Cold War may have been beyond anything you see today. But then, although the Soviet Union collapsed, aspects of its ideology are thriving in many places around the world.Perhaps they lost the battle, but haven't yet been defeated in the war. 

Yes, they may never be a winner in the capitalism versus communism debate.  As indeed in the democracy versus totalitarian debate. Alas, what a pity, at least in the case of the former.

Ramamritham infiltrates Al Qaeda

I think we have found the way to destroy Al Qaeda, or for that matter, any terrorist organisation. Don't send the Navy Seals or the National Security Guard or Special Forces. Send in Ramamritham instead !

This post has no place in what is ostensibly a business blog, but this writer could not miss the opportunity to ridicule Ramamritham anywhere and everywhere. So , with apologies , here's the story.

When the French forces recently retook much of Mali from terrorists, the press who followed them found a detailed letter and a number of documents in a building which was a base or Al Qaeda. The letter was to a thug and hoodlum called Moktar Belmoktar. It throws light on how Ramamritham has wormed his way even into Al Qaeda.

The letter was a "warning letter" to the said terrorist castigating him for not filing expense statements !!! It also was expressing displeasure at his skipping meetings which he was to attend !! He was also castigated for pricing below Head Office instructions - apparently for release of a kidnap victim he agreed to a price of 700,000 Euros when the going rate was  3 million. He was also censured for making a "business trip" to Libya without having taken approval in advance.

Moktar was also revealed to have complained that he was not being promoted and that somebody less qualified was instead given the job. He sulked for a while , refused to take phone calls and complained in his PDP ! Still not being promoted, he then quit and started his own rival murderous gang.

If Al Qaeda monsters have to file expense statements and take prior permission for foreign travel, we have nothing more to fear from them. They are doomed.

I shall make a few more suggestions to Ramamritham to further help him in his noble quest

• Impose a detailed dress code on terrorists. They have to wear a tie between Monday and Thursday. Friday, they have to wear  T shirts to show that they are cool
• Instruct them that not displaying their ID card while carrying out a terrorist attack is an offence and if found so, they will be sent back home
• Display the pick up and drop schedule every day. Moktar has to catch Innova No S-47D. He will be dropped only at end of his road and not in front of his home
• He can browse his personal email only between 12.41 and 13.04 every day . Facebook, Twitter, etc are banned. All Jihadist sites of Al Qaeda are open, but rival sites are banned
• Moktar has not filled last month's self appraisal form, demonstrating that he has adhered to the values of Al Qaeda (with examples). Therefore he may be asked to report to the HR manager for a dressing down.

All hail Ramamritham, for helping defang Al Qaeda.

Tax evasion is a crime. Tax avoidance is a .... ?

In the good old days, this was an easy cliche. Tax evasion (breaking the law) was a crime. Tax avoidance (minimising paying the tax within the law) was something you were duty bound to do. Whether you are an individual, company, whatever. Period. Now it isn't so clear cut an answer.  And that says something about our times.

Witness the case of Apple. It does aggressive tax planning (all within the law). It has a big subsidiary in Ireland and has done a deal with the government there for a low tax rate. It does not bring overseas profits into the US, because it is double taxed then; so it leaves all its overseas profits overseas. All very legitimate. And yet there has been a huge outcry and a Congressional hearing where Apple is accused of not paying "its fair share of taxes".

Similar accusations are levied on Amazon, Google and Starbucks in the UK and indeed in many other countries. Nowhere are the authorities claiming they broke the law. They are just angry that these companies pay a low or zero tax despite large businesses in those countries.

From a public's point of view, there is no difference between evasion and avoidance. The expectation is that all companies must pay lots of taxes irrespective of the law and facts. Equally all rich people must pay big amounts of tax even if the law does not require them to do so. But for each individual himself, it is perfectly OK to evade tax (breaking the law). Queer set of values.

Almost everybody in India breaks the law when it comes to taxes. And before you protest too much, please answer if you have disclosed your savings bank interest as income in your tax return and if you have done no cash transactions above Rs 10,000. The less said about professions like lawyers, doctors and the like, the better. The salaried class is one of the worst offenders - their salaries are caught by the taxman under the withholding tax regime. Everything else, in the eyes of the salaried man or woman is not to be disclosed as after all they are paying "lots of tax" on their salaries.

Why does this work like that. Why is it OK for us to evade tax, but not for others even to avoid it. Is it just pure jealousy against the rich ? Is it just one law for everybody else and one law for us ? What is going on ?

For corporates and rich individuals, there is an expectation of  social responsibility at play here. It is not enough to follow the law. It is now required to be seen as "being fair to society" everywhere. This is a woolly concept ; after all what is the concept of fair.  But each company has to make its own "contract" with society. The more successful you are, the more demanding the contract.

Social responsibility has gotten an altogether new meaning, A far more challenging meaning. Companies have to be seen as "good citizens, whatever that means. Notice that the public's definition of a good citizen is "I break the law, but you shall do over and above the law". "

Its a tough world out there.

The economics of spot fixing

Yeah Yeah, I am that sort of a nerd. While much of India is agog with the spot fixing scandal that broke yesterday, this blogger ruminates on the economics of it. Yes, he is a weirdo !

Having got that out of the way, a few words on the scandal, for the 3 million non Indian readers this blog gets :)  There is a nonsensical game (anybody who suggests the word cricket in this connection will be personally bashed up by me) in which there is a cash machine called the Indian Premier League. Yesterday three players were caught, allegedly  hand in glove with bookies, manipulating results. That's all you really need to know.

What is baffling me is the economics of it. There are all sorts of reports, but I think it is safe to say that at least Rs 20 lakhs (some $40,000) was allegedly paid to the players to give away a minimum number of runs in an over. Let us say, for this to be profitable to the crooks who are betting on it, they must wager at least an equivalent amount at odds of say 5:1, otherwise its not worth it.  For this sort of betting to be accepted by the bookies and to remain valid, there must have been others betting at least 5 times this amount. So all in all some Rs 1.2 crores ($ Quarter a million) must have been bet.

All this simply on one over !!!!  An over, for the uninitiated, is of 6 balls and takes 3 minutes or so to complete. The way this scam seemed to have operated, there was about 2 or 3 minutes notice to the crooks that it was going to be fixed in that over.

What I want to know is who are these blokes who are prepared to gamble quarter a million dollars in 3 minutes on something as arcane as the number of runs given away in an over in an inconsequential match. And there are 40 such overs in one match and there are some 70 or so matches. The arithmetic is mind boggling.

Who are these jokers ? What do they look like and which planet do they come from ?

PS. Just for the record, the GDP per capita of India is $1,492.

Everybody bashes the Taxman

If you have been following the news in the US, you might have noticed an almighty hullabaloo over the the IRS (their tax man) having targeted Tea Party and Conservative groups. Much hot air and righteous indignation is being spouted and Obama has fired the IRS chief yesterday. Almost everybody on earth loves to bash the taxman (rightfully so !) and this is all good fun.

Except that I believe that in this case the bashing is wrong. Or at least much exaggerated.

What happened is this. The IRS admits that it subjected groups which bore the name tea party, or patriot to extra scrutiny. The fact that such groups are exclusively Republican and that the President is a Democrat seems to indicate political targeting. That is, of course, against the law. Hence all this noise.

But why did the IRS do this - after all, they are not fools. If you try and answer this question, a different picture emerges.

The problem all started with, in my view,  the appalling judgement by the US Supreme Court in the Citizens United case in 2010. In layman terms the Supreme Court decided that organisations were people and had the same right of free speech as you and me. Therefore there could be no curbs on their political activities and donations.

Overnight, all sorts of action groups sprung up and the money started being being poured into US elections of all kinds.  Many of these outfits do not want to disclose who really gives them money. The way to achieve this is to register as a social welfare organisation under the tax code which then grants you tax exempt status - something called Sec 501(c)(4) exemption !! You are not prohibited then from indulging in political activity - its just that the primary activity has to be social welfare in nature. The main purpose of these groups is not to avoid tax (for they do not really seek to make a profit). The primary purpose is to avoid disclosing who is giving all the money.

It is probably a safe bet to say that the majority of these groups (Republican or Democrat) have zero interest in social welfare and are primarily there for  political activity.

From 2010 to 2012, the number of such organisations doubled to some 3400. A large number of them were "tea party" or "patriots". Do you really expect the IRS to sit tight and watch all this. After all, it is their job to check whether these outfits really were primarily involved in social welfare. 

The IRS did not prosecute them or withdraw their status. All they did , in true Ramamrtiham style, is to harass them with lengthy requests for information, do audit reviews, delay decisions on their applications and commence painstaking procedures. In this my sympathies are entirely with the said groups as we all know what the incredible capabilities of Ramamritham are.

The real culprit is the political donations sloshing around consequent to that awful Supreme Court verdict.  In true US politics style, this will not be addressed - instead the IRS will be hauled over coals. Yuk !

I never thought I would ever write a post in defence of Ramamritham, but there you go ... !