Keynes versus Friedman: three-card monte?

 I'm seeing the online debate heat up as the US economy stubbornly refuses to get revving. Most Americans are divided on their support of Keynes or Friedman(and Hayek) broadly on party lines. Republicans and Libertarians favor Friedman, and Democrats and left-wingers favor Keynes. I think that something which most people arguing this point don't get is the fact that we do not have a solid period of time when either of the economists' theories were actually put to the test sufficiently that relatively absolute conclusions could be extracted. Instead, it seems that elements of both theories were implemented based on the need to accelerate or decelerate the macro economy, or repair damage or provide room for expansion, lately not just of the US but of the global economy.

 This is obviously my own thinking, obviously, but I feel that my opinion cannot be any worse than most of the dogmatic gibberish I find out there! So here's my opinion, and then I'll expand on that a bit: the US monetary policy is determined regardless of whether Republicans or Democrats control the Treasury or the Federal Reserve, while ordinary Americans are misled into this diversionary argument and made to believe that settling the Milton v Friedman debate is at the core of what is good for America. It is integral to the two-party system which divides Americans into easily-controlled "left" and "right" while still serving the purpose of necessary diversion. Economic policies are handled by a network of hoary and influential institutions whose members form "advisory groups" to each administration, but implement policy that is independent of governments and even countries. Increasingly, they are becoming advisers to "developing" countries as well, shaping their monetary policies too in what is rapidly becoming an integrated global financial system.

 When you look at the various economic cycles, you find that the US prospered under both Democratic and Republican presidents, under policies of more government and less government, with high taxes and low taxes, with higher interest rates and lower interest rates, and it likewise suffered too. There were billionaires when the top nominal federal income tax rates were over 70%, and without the massive financial investment "instruments" of today. During the 1950s, with rates between 20%(for the lowest taxable bracket) and 91%(for the highest), the nation witnessed a historic economic expansion. The "job creators" weren't stuffing money in the mattress. As an interesting contrast, when the rates were very significantly reduced in 1925, it was followed by the greatest global economic depression we have witnessed. Cause and effect? I don't think so. You see, the wealthy(and not necessarily only those at the very top, but those who have substantially more income than their expenses or lifestyles demand) have avenues to protect their income from taxes, which is why the income tax rates are called "nominal", unlike other taxes such as sales tax. That is why you find the anomaly, despite the progressive tax rates, of wealthy people often paying at a lower rate than middle-class people, and occasionally less than poor people. I believe the Great Depression was foreseen a long way off, and even anticipated at the time the income taxes were lowered. Game theory, I strongly believe, existed and was used much prior to John von Neumann formalizing it.

 So if nominal tax rates don't necessarily affect economic growth and expansion, why is there such heated debate on tax policy, especially on the very wealthy(like the top 1% who have unadjusted income averaging $2 million)? I believe it is a policy of diverting peoples' attention from what is actually taking place, like a very sophisticated game of three-card monte. While the plebeians are led to argue among themselves on what is a "fair" tax on the rich, the rich themselves are huddling with their accountants, lobbyists, investment advisers and government policy wonks to figure out the best way of not only sheltering their income, but how to make even more. I have nothing against people making money, even undreamed of riches, but they do need- and this is again my personal opinion- to have a social conscience, and not pursue riches regardless of the cost to ordinary people. In this context, I am reminded of how Walmart, for example, tried to prevent workers in Bangladesh from receiving a few more pennies an hour, literally. There are millionaire shipbreakers in western India who discard their dead and dying workers, instead of providing them with the proper work tools and medical care in the first place. Freemarket capitalism at its finest? You betcha, as Sarah Palin would say!

 And what exactly am I going on about? In a nutshell, we the people are furiously arguing the pros and cons of the macro effect on the economy of top marginal tax rates, and about "job creators", while after every boom and bust cycle, you will find that the gulf between rich(the real rich, mind you, not those making mere 6-figure incomes) and the poor is ever widening. The top tax rates simply don't matter, you could put it at 100%, and the wealthy would privately just shrug even as they urge the plebes to argue even more furiously. If you really want to do something to stimulate the economy and create American jobs, stop sending your discretionary money to Germany, Italy, Japan, Korea and China. Start buying American, even if it costs a bit more or you have to buy less. Talk to your Senators and Congressmen about removing the unfair trade advantages that America's major trading partners have, which effectively block American exports(or put them at substantial disadvantage) while permitting unfettered access to the American consumer. In short, be proactive. Arguing about Friedman and Keynes, and left and right, isn't going to do diddly squat.

Age and sex employment discrimination in India

 As usual, I scan the papers every day from front to back, and I read the classifieds as well. One aspect of the employment ads which strikes me is the rampant ageism and sexism of employers. What is illegal in western countries is apparently not only legal in India, but also does not raise an eyebrow.

 A typical ad would run like this:
"Engineer needed for electric mfg co. BE/ME, must have 5 years of experience. Age under 35."

I look at something like this and wonder how exactly hiring a 40-year-old engineer would hamper this company. Generally, an older person would have more experience, is likely to be more stable job-wise and is likely to be more compliant than a younger, rolling-stone hiree.

Then you'd find an ad like this:
"Wanted junior sales manager for plastics company. Degree must, experience not necessary, preferably females under 30."

What??? Look at the job, it's selling plastics or plastic components or machinery. What difference does it make, really, if the applicant is male or female, or over 30 for that matter? What really bothers me is that these ads are seen day in and day out, and nobody appears to actually comprehend that this is discrimination. I don't know what the law is with regard to hiring people, but nonetheless this should be a cause for concern especially as more women enter the white-collar work-force, and as people relocate for one reason or another, incidentally aging along the way.

Here's an actual current ad that a private company is running:

 Facility Executive (Facility Management):
Qualification: i) Graduation (Full-Time Course Only): 60 % of marks ii) PG Degree (Hotel Management) (Full-Time Course Only): 60 % of marks iii) PG Diploma (Hotel Management) (Full-Time Course Only): 60 % of marks
Maximum Age: 30 Years as on 01/Oct/2012

Really?? A birth-date cutoff for a private sector job? If the applicant turned 31 on September 30, 2012, would it affect his/her job performance? Is there any guarantee that the 30-year-old will stay with the company for 10 years, or even 1 year? Would employment terminate on the employee reaching his/her 31st birthday? Such limitations not only make no sense, they are gross violations of the right to employment, inasmuch as age(and gender where relevant) has little bearing on the job's requirements and will have little impact, if any, on job performance. The only factor other than the obvious age/gender discrimination that I can think of which might be behind such requirements is that lower pay might be a factor. Well, in that case, put your offer on the table, and you might be pleasantly surprised to find an applicant more qualified than you had hoped for, regardless of age or sex. What do you have to lose?

India has set itself on the path to a capitalist society. However, there needs to be a social compact in conjunction with this transition, which provides sensible protections to the people. As current employment laws in India appear to stand, there is little protection for anybody outside of union jobs, when it comes to arbitrary employment practices. In any event, I should hope that people, and public interest groups, will push their political representatives to create legislation that outlaws such discrimination because, one way or the other, if not today then another day down the road, this affects everybody.

The cracked Aadhaar

 My neighbors are in a tizzy, with rumors swirling about that their gas connections are imminently threatened by their lack of an "Aadhaar" card. The Aadhaar card is India's first serious attempt at a universal identity card and, as is almost always the case in India, suffers from a host of avoidable flaws despite being spearheaded by the former head of India's IT giant Infosys, Nandan Nilekani.

 Granted, any serious thought I have given this issue is only a few days old, but that has been sufficient to revive in me the same frustrations as when I try to wade through any documentation process in Inda. "Aadhaar" is a Hindi/Sanskrit work which means foundation or basis, and is symbolic enough as a name in symbol-conscious India. I understand the thinking behind this, which potentially could eliminate the repetitive process of proving identity in order to obtain a host of services and/or documents from various public and private agencies, from your driver's license to an internet connection to, yes, your gas service.

 Here's my "first information report", as gleaned from my neighbors: You need this Aadhaar card, and that right speedily, because your gas connection will be at risk in three months(and cooking gas in India is as precious a commodity as salt in the Sahara). In order to get this card, you have to get an application form and a "token" from a "camp" that is set up for a few days in various parts of the city/state. So people line up for hours from the early morning to get this form and "token". I'm not sure what the "token" is for, since at that point no information will have been noted down. Once you get the form and token, you fill out the form and, along with supporting documentation, file it at the next "camp", at which you will be photographed, fingerprinted and iris-scanned. Then, after 20-30 days(according to the Government of Karnataka) or 30-90 days(according to the official UID Authority) or 1-2 years(according to frustrated applicants), you should receive your empowering UID card.

 Not ever having been fond of standing in line for anything after my teen experience of huddling on a Madras sidewalk overnight in the fond hope of scoring a ticket to Jodie Foster's "Taxi Driver" at the Madras Film Festival, I decided to try doing it online. Which should not be a bad idea, since the whole thing is not only data-driven, but headed by an IT whiz, and it should be a "whizbang" experience. The first thing I discovered was that the forms were anything but standard. The forms being handed out at the "camps" are different from the forms the Central government is making available, and those are different from the State government's, and the state's is different from those available at various websites claiming to be informative about the whole process.

 Multiple issues confound this process. First, there is the discrepancy in forms. Forms should be in one language only, the language preferred by the applicant. They should be standardized with relation to their content and fields. They should also be issued only by designated government offices or available from designated official websites, not from a multiplicity of private websites using the issue to drive traffic to their advertisers. One would think that Nandan Nilekani, the man in charge of the effort, would make uniformity his number one priority. Secondly, there is the issue of supporting documentation. Acronyms are used in the instructions with little explanation:EID, PoI. PoA, PoR. The acceptable documentation for Proof of Identity contains little, if anything, that a migrant cook from Bihar, for example, can provide in Bangalore. This scheme is supposed to benefit ordinary(poor) people more than the affluent who usually have sufficient documentation, and the means to obtain it if they don't. Furthermore, the instructions fail to match the form. For example, the instruction for Field 4 is for the address, whereas on the form, the address is Field 6. Such laxity seems to be symptomatic of the entire process.

 Here's how I think the process should have been simplified and streamlined.
Firstly, the central government should have implemented a mandatory process of recording births, marriages and deaths, for the tens of millions born, marrying and dying each year, to provide a reliable, secure database at least for the future.
Secondly, all forms and procedures for the UID scheme should have been standardized, only varying in langauge, and eliminating any bilingual forms. People should be able to pick up or download the forms in their language of choice.
Third, permanent field offices should have been set up(doing away with these ridiculous "camps") which alone would have the authority to accept and process applications. It doesn't make sense if any public or private entity should make it mandatory in order to obtain their goods or services- and obtaining it is supposedly "voluntary"- but you have to run around in circles and wait for "camps" to dispense your paperwork and process your application.
Fourth, passport holders(who have already been subjected to the same verification procedures) should be fast-tracked for the UID card, possibly even with same-day service. I'm sure most of them wouldn't even object to a modest fee for the speed and ease of service.
Fifth- and this assumes that Mr. Nilekani has made the most of his IT background- use existing fingerprint and iris-scan databases to weed out duplicate/fraudulent applications, and make those a criminal offense. That would also have the effect of discouraging attempts at fraudulent duplication or identity theft, if it can be detected and stopped at the biometrics phase.
Sixth, eliminate all documentation requirements which would facilitate bribing a gazetted officer or any other official to provide a "certificate" not backed by any other documentation. They are not in a better position to determine what your name is, when you were born or whether you are lying. Furthermore, they don't particularly have a reputation for honesty, and they already have plenty of avenues to make that illegal buck on the side.
Finally, place ALL relevant information, links and forms on one single website, and eliminate the confusion and the diffusion from the profusion of official and pseudo websites. Now you'd be ready to provide quick, efficient service and be a credit to the nation.

 For now, though, the aadhaar(foundation) seems to be cracked.

Update: while the Supreme Court and the Government of India have both stated that the Aadhaar card will not be mandatory, the GoI has, through its monopoly of gas services, mandated the use of the Aadhaar card to get the same subsidy on household cooking gas that consumers were previously getting. If you don't have one, you will have to pay "full price", which was recently and conveniently raised by 50% just ahead of this mandate. Full price is almost three times, the subsidized price, as opposed to twice the price just six months ago. This is a typical example of Indian bureaucracy, speaking out of both sides of its incompetent mouth: claiming that the Aadhaar card is not mandatory, and then making it mandatory to obtain services and subsidies.

Update 2: My housekeeper went recently to "seed" her bank account with her gas account, and presented her Aadhaar card as proof of identity. She was told to return with an additional proof of identity document. Wtf?