Mumbai the Day after,Dont blame politicians!

The fallout of the Mumbai Terror attack has definitely made people ask questions, the amount of venom and invectives that are spewed on our politicians is quite understandable, however an analysis in to what is wrong with the system? Makes me conclude that the real villain is not the politician, not we the people, not even the terrorist, but infact is our administrative class and the system that they propagate.
Pay commission Bureaucracy Vs The Armed Forces

A retired civil servant once told me that India is a great democracy and will never get into a Pakistaniske dictatorship situation since It is to the credit of Indian civilian and military leaders and to our burgeoning democracy that the concept of civilian control of the military has been maintained in independent India. Unfortunately, its exact contours still remain unclear, leading to unavoidable incidents of civil-military confrontation.

The Armed Forces argue that while they accept political control, they rightly feel that "bureaucratic interference" is unacceptable. That much of the civilian bureaucracy—particularly the Indian Administrative Service—is seen as conniving and scheming, concerned only with furthering its parochial interests(which is actually fine by the theory of public choice), further inflames the Armed Forces' sense of injustice. As seen in the imbroglio on the recommendations of the Sixth Pay Commission, this resulted in a confrontation between the bureaucracy and the military brass

Angry over what they describe as a deliberate attempt by the bureaucracy to erode the parity of the crucial middle-rung officers — army lieutenant colonels
and their equivalents in the air force and the navy — with the civil servants, the three Defence services decided not implement the new central pay rules, notified on August 30.

The defence services pointed out that four successive pay commissions, including the recent one, had placed lieutenant colonels(The next rank that the NSG Commando Late Major Unni Krishnan would have got on promotion ) on a par with directors(selection grade) from the Indian Administrative Service(Equivalent of State HOD's and takes about 12 years to achieve and who can indefinitely delay passing the reward cheque that Unnis Father has been promised by the political class ). Expressing surprise at the decision of the committee of secretaries, which reviewed the Sixth Pay Commission report to change the award, the services have said that the civil officers of 'group A' services and the central paramilitary forces have also been placed in the higher pay band.

According to the burgeoning bureaucracy, the military's attitude towards the civil service stems from a fundamental misunderstanding of its nature and role. German thinker Max Weber believed that bureaucratic organizations were an attempt to align the decision-making process to "calculable risks", as rationality was inseparable part of the bureaucratic order. While Weber's rather romanticized vision of bureaucracy has been modified by later-day thinkers, the concept of "rational bureaucracy" has continued relevance in an era of increasingly complex decision-making process.

Bureaucrats are believed to act as a bridge between legislative intent and implementable policy—they are supposedly involved with all three functions of formal policymaking: agenda-setting, policy formulation and its implementation.

The civil servants have convinced the system that the tasks of modern governance are too complex, technical and enormous to be left either to the legislature or political heads of departments. Moreover, the political executive and Parliament may lose sight of the broader and serious questions of national importance if they were to enter into the details of routine administration.' The Devil in the Detail'

Therefore, the argument put forward by the armed forces that civilian control of military is restricted to politicians thanks to the prevailing bureaucracy has been made to look as blithe ignorance of basic tenets of public policy as well as the provisions of the Indian Constitution which provides an explicit constitutional basis to bureaucratic services—India's parliamentary form of government is enmeshed intractably with the support of the civil bureaucracy

Where did the civil service go wrong? Was it inheriting the British legacy?

When the country attained freedom, a major concern of our visionary founding fathers was to ensure that there was no disruption in administration and that the unity and integrity of the country was not undermined.

The task was not easy with over 600 Princely States spread all over the country, and each State having an administrative structure of its own. Besides achieving the integration of Indian States, the country had to face the aftermath of Partition
and look after millions of refugees who had to flee Pakistan.

To add to the problems, the country had to fight a war in Jammu and Kashmir, with a depleted Indian Army. The British Indian Army as it existed in colonial India was divided between India and Pakistan, and British Officers left India. So also the
officers of the Indian Civil Service.

Remember this, the so called administrators (Government servants) had an adversarial relation with the national political parties during the fight for Independence the travesty was that post independence it was the same class of adversaries whom the political founders used for implementing the policies of the national government.

Much of the credit for the creation of the All India Services, particularly the IAS and the IPS should go to the first Home Minister of the country, Sardar Vallabhai Patel.

The administrative system was strengthened by the creation of the Indian Administrative Service and the Indian Police Service - as all-India Services. They were conceived as meritocracies. Selections were made on pure merit, on the basis of
competitive examinations, followed by interviews.

The officers were posted to different States after training. While the States had control over them, as far as disciplinary matters were concerned the Centre retained authority. This gave rise to a classic situation, a slave who had two masters becomes completely free.

The worst of the ills that followed were high level of corruption, increasing politicization and absence of accountability(read performance linked pay).The rationale for new pay commission was that these best and bright government officers needed to be benchmarked with say an IT Professional.

(Whereas during this slow down we are seeing these high paid IT Professionals being "laid of" and given "pink slips" what about the Civil Servant?)

Whereas a politician who does not 'deliver' is either kicked ( or atleast can be kicked) out by the real masters(people) or is chased by his vindictive political adversary(I am from Tamil Nadu!) and that a high paid corporate executive can be given a 'pink slip'. The civil servant neither has performance targets nor can technically ever be 'sacked' (at max only suspended or transferred).

There was a time when government servants/civil servants were universally respected. Their honesty, integrity and devotion of duty were taken for granted. This is no longer the case. They do not stand out from the rest of the bureaucracy any more; there are as good or bad as the rest of the system. Degeneration has crept into its cadre since the service no more continues to attract best of talents in the country.


The main reasons for the change that has occurred are

Overwhelmed by the constant feed of praise and adulation, the maturing entrant tends to lose his head and balance. He believes that he is infallible, thanks to his intellectual superiority and his gathered wisdom accumulated while working in different fields of government.
The rather enthusiastic diffident youngster of early idealistic years, in course of time, is transformed into an arrogant senior fond of throwing his weight around; he becomes a conceited prig.


The national emergency between 1975 and 1977. when the leadership spoke of a 'committed bureaucracy' that was running the country irrespective of the political instability.

The value systems crumbled further in the 1980s and early 1990s, when degeneration of political leadership created an ethos of unashamed corruption. The corrupt politician started working hand in glove with the corrupt civil servants and the two
blatantly threw political integrity and Service honesty completely overboard.(Remember the Lage Raho Munna bhai sequence where an old retired government employee strips himself bare to get his pension?)
The official does not realize that some time in the future the hunter would invariably end up getting hunted. This was shown beautifully in the 80's by the national award winning Girish Kasarvallis Kannada film Tabarana Kathe.

Tabarana Kathe is the story of Tabara Shetty, a government servant in the ranks of a watchman. Tabara Shetty serves the Government till his retirement period. He is a dedicated worker and respects the system that sustained him for so long. But problems emerge after his retirement. Tabara never gets his pension money(The System as of Today : A Pensioner even if from the Armed Services needs to prove every month that he is alive by submitting a life certificate collecting the pension in person is not a sufficient proof that one is alive).In his failing old age, Tabara approaches the officials he had served during his tenure. Except for a few sympathisers, nobody helps Tabara get his pension. Matters worsen when his wife and only companion in the world falls sick with diabetes. She has a sore foot which turns to gangrene. Tabara tries all means to get his pension to treat his wife(When Tabara fails to manage his wife's operation, in a moment of desperation, he goes to a local butcher and asks if he would ampute his wife's leg. This intense scene was shot brilliantly.). After a few months, his wife dies. The pension money arrives after that. Tabara curses his higher officials and the administrative system which ruined his life.
The climax was the highlight of the film as in all Girish Kasaravalli's films. Tabara finally receives his pension. But everything is over. His sole companion has left this world. Standing in front of his past government office, Tabara shouts at the office staff and holds them responsible for his wife's death.

The dilution of the original concept of meritocracy has crept in over a period of time.
The first blow to Patel's merit scheme came from the Constitution, which reserved seats for scheduled castes and tribes in the competitive examinations. Next, was the step taken by Charan Singh in 1979 when the promotion quota for the state civil
services was increased from 25 percent to 33 percent.

This was followed by the Late V.P. Singh(who infact died on the 2nd day of the Mumbai terror attack) who brought the total reservation to 50 percent by reserving seats for a new category of 'other backward classes'. Further additions to the list were made by the 'humble farmer' Deve Gowda who proposed to slash the percentage of direct recruits, and Dr Manmohan Singh who has declared reservation of three percent for physically handicapped persons.

The Service lost the habit of taking initiatives and became blind executors or "Dilbert's" of policy, perhaps because a larger proportion of the annual intake drawn from technical disciplines and premier engineering institutions(yours truly a Chemical Engineer) found itself incapable of intellectual initiative and people skills.
They were excellent test takers who could beat by hook or crook any psychometric test(Again Remember Munna Bhai?) but unlike their courses they did not have an exam to be graded end of the year.Blind execution without any application might be good but it also gives rise to comical situations.

The British bureaucracy had a post for a person to climb the cliff of Dover daily and report if Napoleon was coming The post was abandoned in 1946!

The Degeneration has continued unchecked, the service has reached such a deplorable stage that the government and the people would (if not already) refuse to accept it as the premier service if the 'real' truth got out .
Hence the whole strategy has been very cleverly evolved to blame the political class for all ills that ails the system wait for events like these terror attacks stand back and wait for the emotionally charged gullible public (who just want to give vent to their feelings for about 48 or in this case 62 hours) to further make the politicians look like villains, when infact Politicians are really simpletons, puppets who have always been frustrated with the Sir Humphry Appelbys and Bernards of the Burecrautic class.

The Great Britain as a standing Example.

If it can be done in Britain the birthplace of 'using the art of game theory by bureaucrats we can try to do it as well right here in India'.

The British Political class thought that they achieved significant progress by trying to make the civil service considerably streamlined and efficient atleast however it was just another classical case of government servants gaming the theory of public choice.


Public choice in economic theory is the use of modern economic tools to study problems that are traditionally in the province of political science.
In particular, it studies the behavior of voters, politicians, and government officials as (mostly) self-interested agents and their interactions in the social system either as such or under alternative constitutional rules

All these theories tended to support the beliefs of what were then fringe economists such as Friedrich von Hayek, whose economic models left no room for altruism, but depended purely on self-interest, leading to the formation of public choice theory.
The economist James M. Buchanan decries the notion of the "public interest", asking what it is and suggesting that it consists purely of the self-interest of the governing bureaucrats. Buchanan also proposes that organizations should employ managers who are motivated only by money. He describes those who are motivated by other factors—such as job satisfaction or a sense of public duty—as "zealots".

This( as well as works of other leading social engineers like Laing (who was infact a shrink) led to a widespread popular belief that the state created by these bureaucrats was purely and simply a mechanism of social control which calculatedly kept power out of the hands of the public and made it appear to the public that all the powers was with the political bosses and that the bureaucrat was infact a humble public servant. Documentary maker Curtis in this three part Documentary The Trap, shows that it was this belief that allowed the theories of Hayek to look credible, and underpinned the free-market beliefs of Margaret Thatcher, who sincerely believed that by dismantling as much of the British state as possible—and placing former national institutions into the hands of public shareholders—a form of social equilibrium would be reached. This was a return to the mathematician Nash's work, in which he proved that if everyone was pursuing their own interests, a stable, yet perpetually dynamic, society could result. The documentary ends with the suggestion that this mathematically modeled society is run on data—performance targets, quotas, statistics—and that it is these figures combined with the exaggerated belief in human selfishness that has created "a cage" for Western humans.

Way ahead.

'The First step in solving a problem is accepting there is a problem'-Anonymous Alcoholic! We cannot fight terror, with a pathetic back up system.

It must be recognized that a complete overhaul of the civil services structure at this time is neither feasible nor possible and hence the best alternative is to scrape the system completely and start out with a new system of administrative governance with proper checks, balances and performance linked pay.

Suggestions for 'transforming' the civil services into an effective instrument of good governance and hence our Society

1) make the Service politically neutral and to insulate it from political influences or interferences that distort its proper functioning.
2) Raise the level of accountability so that the performance of the civil servants in administrative delivery at every level are objectively analysed to decide their individual future. The third
3) bring about systemic changes designed for qualitative improvement of the Service and the performance of its men and women.


Angry Mumbaikars and Ms.Shobha De.
Hence Ms.Shobha De The reason why the cops dont have proper protection gear is not politicians, it is the Multi layered process which is followed by the treasury and its secretaries by which even if protection gear were available they would have to sign a register which has green colour paper and red check boxes to get that by which time.......

Forgive 'em politicians they are simpletons.

P.S: Do you blame politicians or the administrative system that shepards our pride NSG commandos in BEST Buses? Are we not missing something here and blaming the wrong side?

Bombay

Spot Gold has been going up, We have seen in recent years that Precious metal command a "Terror Premium" and we have seen rallies in precious metals during such acts of terror.

Precious metals Futures markets in New York is closed today on account of Thanks Giving wouldn't be surprised to see the Gold Market re open with a Large Gap tomorrow.

Have been reading lot of Blogs and micro blogs on the Mumbai attacks.
Cant help noticing the anger which these guys show in the form of Invectives in their messages.

I think there is only one and quite a simple approach that we as citizens of India can adopt to win this war on Terror.
Just go out and Vote,doesnt matter who you support just go out and Vote and tell all educated people you know to come out and Vote whatever be the election, councillor,legislative,Parliament....

Terrorists hate the spirit of Democracy.


Dedicate this blog to the spirit of Bombay(ya ya you can keep renaming but it will always remain Bombay) and my late dad a true blue Bombayite who introduced me to Cafe Leopold and to Shamiana at The Taj (Cannot forget the unlimited rounds of coffee refils from 200 am (after a mondegar beer,bademiya dinner) till the guys start laying the table for breakfast.


Rafi:
Aye dil hai mushkil jeena yahan
Zara hat ke zara bach ke, yeh hai Bombay meri jaan
Ha haa, ha ho ho, ho hi haa ha haa
Hm hm hm hm, hm hm hm , hm hm hm hm hm
Aye dil hai..

(Kahin building kahin traame, kahin motor kahin mill
Milta hai yahan sab kuchh ik milta nahin dil)
Insaan ka nahin kahin naam-o-nishaan
Zara hat ke zara bach ke, yeh hai Bombay meri jaan
Aye dil hai..

(Kahin satta, kahin patta kahin chori kahin res
Kahin daaka, kahin phaaka kahin thokar kahin thes)
Bekaaro ke hain kai kaam yahan
Zara hat ke zara bach ke, yeh hai Bombay meri jaan
Aye dil hai..

(Beghar ko aawara yahan kehte has has
Khud kaate gale sabke kahe isko business)
Ik cheez ke hain kai naam yahan
Zara hat ke zara bach ke, yeh hai Bombay meri jaan
Aye dil hai..

Geeta:
(Bura duniya woh hai kehta aisa bhola tu na ban
Jo hai karta woh hai bharta hai yahan ka yeh chalan)
Tadbeer nahin chalne ki yahan
Yeh hai Bombay, yeh hai Bombay, yeh hai Bombay meri jaan
Rafi:
Aye dil hai mushkil jeena yahan
Zara hat ke zara bach ke, yeh hai Bombay meri jaan
Geeta:
Aye dil hai aasaa jeena yahan
Suno mister, suno bandhu, yeh hai Bombay meri jaan
Rafi:
Aye dil hai mushkil jeena yahan
Zara hat ke zara bach ke, yeh hai Bombay meri jaan

commodityonline.com will be the number one portal for commodities by 31 Dec 2009 ?

Global Derivatives markets have gone to the next step indeed.

Organized Markets have existed to establish a fair value for a service or produce.
Now we have what are reffered to as prediction markets.

Prediction markets are sophisticated markets on which binary contracts are traded.

Derivatives are financial contracts, or financial instruments, whose values are derived from the value of an underlying asset. The underlying asset on which derivatives are based can be commodities, equities (stocks), residential mortgages, commercial real estate loans, bonds, interest rates, exchange rates. Credit derivatives are based on loans, bonds or other forms of credit.

Binary contracts are double derivatives, i.e derivatives of derivatives.
Binary contracts on expiry either yield 100 or 0.

Currently one of the largest prediction market is The Ireland based Intrade(Intrade.com).


Intrade.com has created an exchange for participants to trade (speculate on) events that directly affect our everyday life, like politics, entertainment, financial indicators, weather, current events and legal affairs - these are the various trading categories.

Within each category Intrade.com lists a set of contracts, a contract is an event that will have an unambiguous result.


One trades (speculates on) what one thinks the outcome of that event will be.

For example a political contracts - Will Obama be re-elected President in 2013. There are only two possible outcomes for this contract - Yes, he will be re-elected or No, he will not.

If Obama gets re-elected that contract will close at 100. If on the other hand he fails to win the general election in 2013, the contract - Will Obama be re-elected President - will close at 0.

However, until the election is over that contract will fluctuate in value between 0 and 100 just like a stock, reacting to the news of the day and buying & selling by traders and speculators.


Other contracts listed on them included

1) Will the US economy head into a recession during 2008.(The most active contractlast traded price 91.3 on 13 Nov, this means that participants on Intrade are predicting that there is 91.3 % that US will head into a recesion in 2008, you think they are correct you buy , you think otherwise you sell (Depending on where the prevailing bid and ask are for eg in this contract it is at 91-92)
2) Will Gold close on or above 1000 on 31 Dec 2008.(currently at 15% and quite an active contract)
3) Who will win the Indian elections in April 2009? (not much liquidity)
3) will Britney spears go to the Rehab by 31st Dec 2008? (Dont wish to comment!!)

What the prices mean

Since these contracts trade between 0 and 100, One can think of the price at any time to be the percentage probability of that event occurring.
Going back to our Obama, example, lets say on December 1, 2013 the Obama re-election contract was trading at 63, meaning, traders gave him a 63% chance of being re-elected.

If you thought President Obama will be re-elected you would expect that price to go up - towards 100. In that case, if you bought one contract at 63 and Mr. Obama did get re-elected you would make the difference between your purchase price - 63 - and the closing price - 100 - or 37 points.

Who determines the prices?

Participants decide the price - along with thousands of traders around the world. Just like the price of Google stock is determined by the buying & selling activities of thousands of traders in the financial markets, the price of Intrade contracts are determined by traders,who are confident enough to back up their opinion by risking real money

How does one calculate profits and losses?
Profits are calculates in terms of PIPs, price in points, when a contract trades from 63 to 73 - that's 10 points. Each point is worth 10¢.

If you bought one Obama re-election contract at 63 and he does win the election, that contract will close, or settle, at 100. Your profit will be 37 points x 10¢ per each point or $3.70.

Settlement price – purchase price = your profit
OR
100 – 63 = 37 points X 10¢ per point = $3.70 a profit
On the other hand, if he does not win re-election that contract will settle at 0 and your loss would be 63 points.
0 – 63 = – 63 X 10¢ per point = – $6.30 a loss

Remember, One does NOT have to hold onto any contracts you buy or sell until the election, you can trade out of them any time!

Let’s take another example, you buy 6 contracts at 50 in the morning and sell them out at 73 later that day. You collect 23 points (73 – 50) times 6 contracts times $.10 for each point or $13.80 in profit.

23 points X 6 contracts X $.10 = $13.80.


Coming to contracts of our Relevance, Namely commodities contracts, there are a few active commodity contracts especially in Oil and Gold.


For serious Gold and Oil traders here is a tip, do keep checking every day these markets, they are definetly a clear indicator of the trend and also tell you what one could expect(or not expect) from the market.

Being a new market, Intrade also has a feature called suggest contracts.
And hence i plan to mail them "Commodityonline.com will be the number one portal for commodities by 31 Dec 2009" ? Any one for this bet !