The Only Workable Way

Dilip D’Souza, 29 January 2008:

Among other interesting jobs he held in the Indian bureaucracy, my late father was Mumbai’s municipal commissioner – the equivalent of a mayor – from 1969 to 1970. Low-cost housing was always his great interest, and for the last 14 years of his life, he ran a low-cost project in Mumbai’s northern suburbs founded on the cross-subsidy principle. It has about 5,000 subsidized flats, plus about 1,100 others and commercial space for sale at market rates.

My father died last September, but the project goes on. Why does it work? Because the subsidy is small, so residents pay close to market rates for their little flats, and because it has taken so long to complete – nearly 25 years. The slow progress troubled my father and his colleagues greatly. But they understood that in the convoluted world of Mumbai, this remains the only workable way to provide livable, sustainable housing for the poor.

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Tariffs for a Growing Country

The second post on the Globalization Institute blog links to a book which contests the idea that protectionism is good for developing countries.  Yes, the currently rich countries imposed heavy tariffs when they were in the growing phase. But this does not mean that the tariffs were good for them. Rather, the tariffs themselves are evidence that a lot of trade was occurring. Note that an isolated country does not need to impose tariffs, because no one can import or export to that country anyway. It is only when the country is exposed to the outside world that domestic producers start lobbying for tariffs on imports. In the 19th century, something similar happened. New transport technologies reduced the costs of trade so much that imports suddenly became possible. It was to stop those imports that tariffs were imposed. But…

On balance, it appears that the new transport technologies were so cost-reducing that that their effects swamped those of rising European and American protectionism. 

So, nope. Trade is not bad for you, whatever your level of development.

Remaking of Mumbai Federation

This is interesting. A builder wants to redevelop a 200 acre area filled with chawls in South Central Mumbai. The way he wants to do it is by forming a business partnership with all residents. All stakeholders will become stockholders in his company (I am not exactly sure what the legal structure will be, but the idea is good.)  He still wants the government to help, which is bad, but this is a refreshing change from the slum rehabilitation boondoggles run by the government.

Fading Away

In the entire history of corporations, has there ever been one whose CEO said something like the following to his shareholders? 

Your company is in a declining industry.  Your company is currently profitable and will remain profitable for some time. But eventually, the forces that are causing the decline of the industry will catch up with it. While we could attempt to keep the company alive by trying to make a new product or catering to a different market, we have determined that it would be exceedingly difficult to do so, and attempting it would be a waste of your money. Your interests would be much better served by liquidating the assets of the company in an orderly fashion and returning your money to you. This we will do over a period of 10-15 years. Our employee strength will decrease over time, we will make every attempt to provide for a reasonable career transition for all of them. While they are at it, our employees will be judged, not by how much they contribute to the growth of the company, but by how well they manage its decline.

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