Tag: india

Decongesting Bangalore’s Roads: An Analysis of the BDA’s Detailed Project Report on the Proposed Flyover

In response to public demand, the Bangalore Development Authority (BDA) has finally released the Detailed Project Report (DPR) for the proposed steel flyover in Bangalore.

In this article we’ll attempt to address (using points from the DPR), the key question of whether the flyover will be of any use to commuters.

The DPR contains a study of traffic volumes at each of the intersections, and summarizes its findings in the following three diagrams (page 58) which are very easy to understand.

dpr_530dpr_531dpr_532

The Numbers

The numbers in the diagrams are peak hour traffic numbers at all junctions affected by the project in terms of PCUs/hr.  PCU stands for Passenger Car Unit.

So, the first diagram says for example, that at peak hour traffic, there is the equivalent of 6175 cars entering from Hebbal and 6949 cars exiting at Rajbhavan Road in one hour.

The second diagram shows the impact of the flyover on ground-level traffic.  It shows that the number of cars entering at ground level from Hebbal will drop to 3088 while the number of cars exiting at Rajbhavan Road will drop to 4122.

The excess traffic (3087 incoming at Hebbal and 1393 outgoing at Rajbhavan Road) will be carried on the flyover.

The incoming numbers add up (3087 + 3088 = 6175) as expected.

The outgoing numbers don’t add up (1393 + 4122 < 6949)!

The outgoing traffic numbers don't add up because there will no longer be a right turn at Basaveshwara Circle.  So, a part of the traffic volume decrease has nothing to do with the flyover!

Anyways, these calculations, if assumed correct, point to a reduction in traffic by 20% to 50% at the ground level.

Travel Time Calculations

Will the reduction in traffic lead to a corresponding decrease in travel time?

Not necessarily.

The DPR contains no estimate of reductions in travel time.

There are three reasons for doubting there will be huge reductions in overall travel time:

  1.  The impact of the constriction of the road leading to and from the flyover because of the ramps of the flyover needs to be taken into account.  The bottlenecks at the ramps could lead to traffic piling up at the entrances and the exists of the flyover.
  2. If the total capacity of the roads carrying traffic away from the flyover is too low, it could lead to traffic queueing up on the flyover itself.

Those who prepared the DPR should have run a simulation of the traffic on the flyover, below it and on the roads leading into and out of the flyover to determine if any savings in travel time would result or if serious backups on the flyover and around it could cancel any benefits.

A case in point is the flyover from the Electronic City software technology park (STP) to the Silk Board.  It might allow traffic to move fast on it, but it might be slowing down traffic inside the STP and on the road below it at its exit.

Flyover Effectiveness Conclusions

We don’t know if the travel time will decrease significantly unless the required simulations are done.

Public Transportation Conclusions

However, it is possible from the DPR to draw conclusions about the effectiveness of public transportation.

We see from the study that only 2% to 3.5% of the vehicles on the roads are city buses (pages 42-46).

So, if we doubled Bangalore’s bus fleet (which you can for the cost of the flyover) it would not increase the traffic on these roads by much but could replace almost all the private vehicle traffic not just on this stretch but all over the city (assuming people make the switch from private to public transport, and each bus carries 100 passengers).

Explanation & Calculations

Here’s how we can calculate that.

The proposed flyover will cost approximately 1800 crore rupees.

A TATA bus costs about 20 lakhs rupees.

So, you can buy about 7000 buses (and hire drivers/conductors for a year and build facilities for them) for 1800 crore rupees (or get 9000 buses without drivers/conductors or facilities).  I’m assuming that a quarter of the price of a bus will get you facilities and pay for the driver and conductor.

Now the BMTC runs around 7000 buses today.  So, for the price of the flyover, one could double the bus fleet.

We can show that doubling the fleet can drastically decrease the volume of traffic on these roads.

Let’s say that 10,000 vehicles used that stretch of the road.  We know that 2% of those vehicles were buses.  That’s 200 buses.  Let’s assume that all the other vehicles carry on average 2 passengers.  So, except for the 200 buses, the remaining 10,000 – 200 vehicles carry 20,000 – 400 passengers.  If we double the buses, we have 200 more  buses.  Now each bus can easily carry about 100 passengers (50 seated and 50 standing).  So, that means we can carry 20,000 passengers just by adding 200 buses (doubling the bus count).  That is the entire carrying capacity of all the other vehicles on the road!

So with a negligible increase in traffic (from 2% of current traffic to 4%), we can accommodate all the passengers of the remainder of the traffic using that stretch of Bellary Road today.

More Benefits of Public Transport

But it’s not just that!

For the cost of the flyover, we’d have doubled buses all over Bangalore!

So, we’d have added an equivalent carrying capacity to all the private vehicles on all the roads in Bangalore for the cost of this flyover!

That’s what this BDA DPR tells us!

Environment Benefits of Public Transport

But that’s not all!

There are still more benefits!  Think of the reduction in pollution.  Replacing all those private vehicles with equivalent buses would reduce pollution by 95%.

Assumption

In the above calculations, I’ve assumed that everyone will give up private transport for public transport.

That won’t happen in real life unless you get the same convenience from public transport.

It could happen if, like with the metro, bus passengers are:

  1. assured of getting a bus from a known key location to a desired key destination every ten minutes or at a known precise time (with bus tracking) and
  2. assured the buses are not overcrowded (the pleasantness of the travel is comparable to the pleasantness of private transport).

If you can get that sort of predictability, and comfort, then for those travelling on those routes to work, it would make more sense to use public transport than to use private transport.

So, it may need a lot more than doubling buses (mere capacity matching) to assure convenience and ensure that people prefer public to private transport.  It would also need route planning, bus tracking and highly predictable key routes.

Other Proposals

There are many other proposals for reducing congestion along the North South Bellary Road.

Here’s one:  http://www.deccanherald.com/content/561722/rail-link-kia-less-rs.html

This article says that there is an operational railway line between Yalahanka and Channasandra, and this can be extended easily till the airport up North and Baiyappanahalli in the East, taking airport traffic off the Bellary Road.

Estimated cost: Rs. 150 crores.  And it’s a public transport proposal, so it takes a lot of cars off the roads.

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The Fine Balance of FDI

Algodones_sand-dune-fence
Courtesy of the Wikipedia

Some governments, such as those of New Zealand and China have opposed FDI (Foreign Direct Investment) in various forms.

We examine in this article what their reasons might be.

  1. Do some countries reject FDI?

It appears that some do.

The Case of the USA

In the USA, there are no serious legal barriers to FDI, but there can be disapproval of and concerted attempts to block FDI.

In this article on factories set up by foreign investors in the USA, there is a discussion of opposition to Japanese manufacturers in the automobile sector decades ago.  I quote:

After Honda Motors opened the first Japanese auto plant in the U.S., in Marysville, Ohio, in the early nineteen-eighties, followed by an engine factory in nearby Anna, Ohio, the company faced an onslaught of vicious anti-Japanese ads on TV and in print, often supported by American manufacturing trade and labor groups.

The comparably subdued response to Chinese manufacturers speaks, on one hand, to changing circumstances, especially the broad acceptance of globalization in the United States and the desire, on the part of some politicians and business leaders, to create manufacturing jobs by whatever means necessary. But it also follows from a conclusion that American companies have reached about their Chinese counterparts: namely, that they are, thus far, relatively inconsequential rivals.


The Case of New Zealand

In October 2015, the government of New Zealand blocked the Chinese firm Pengxin’s attempts to buy (through a local subsidiary) a farm called Lochinver.

The government explained their decision as follows:

Land information minister Louise Upston told the BBC that its decision in September to block Pengxin’s purchase of Lochinver farm does not mean the country is not interested in attracting foreign investment.

“It’s [foreign investment’s] an important part of our economic strategy, but equally when we do have an application for sensitive land and assets – we will put it across the 21 criteria that we need to assess and make a decision based on that,” she says.

“We weren’t convinced that this particular application met that threshold, which is substantial and identifiable benefits for New Zealanders.”

Dr William Rolleston, president of the Federated Farmers of New Zealand, a group that lobbies on behalf of its farmer members, says some farmers are concerned about the scale of the purchases.

“New Zealanders don’t have an issue on ownership at a low level. No one would be concerned if 5% of farmland was owned by overseas buyers,” he says.

“But if 95% of the land in New Zealand was owned by overseas buyers, I think we would have an issue – it would reduce our strategic options in the future.”

Dr Rolleston’s sentiment echoes public concern from 2012 when Pengxin bought 16 dairy farms and sparked a debate about national identity.

During the last elections in 2014, opposition politicians stoked those fears by saying that New Zealanders risked becoming “tenants in their own land”

So, it appears that in New Zealand, the government wishes to keep resources such as land in local hands.


The Case of China

China seems to have laws that make it difficult for foreign firms to compete with local firms, making it a logical choice for them to outsource the manufacture of their goods to Chinese firms.

This is explained on Chinese Law Blog in “Building and Operating a China Factory.  Why Even Bother?

For example, if you are a Wholly Foreign Owned Enterprise (WFOE), you need to pay the government 20% of the profits of your China operations.

I quote:

First off, in your first year, you are going to essentially waste around $50,000 in just forming your WFOE, securing various government approvals, paying someone to figure out your taxes, and making up for all the mistakes you will make because you will be in, what is for you, a very strange land.  On top of that will be your taxes, which you are going to need to pay on just about everything.  Figure 20% on profits and even if you do not make profits, figure on them being imputed to you. And figure on having to pay around 40% to various of the Chinese governments as taxes on the salaries you pay your employees.

And all of this is going to mean that your costs are going to be considerably higher than whatever Chinese factory you are currently using to make your product. In Buying A Chinese Company? Why China Deals DON’T Get Done, I wrote of the way this domestic-foreign price differential works in the context of a client looking to buy its Chinese manufacturer:

I said that there is a good chance the Chinese manufacturer is paying half of its employees completely under the table and reporting to the government only half of what it was paying the other half. I then talked of how there is also a good chance the Chinese manufacturer is underpaying its taxes and of how its rent also may be paid under the table. I then said that this sort of thing may be all well and good for Chinese companies, but that if the US manufacturer were to buy this Chinese manufacturer, it would need to do so as a WFOE and it would then immediately be on a “whole ‘nother level” with respect to China’s various tax authorities.

Joint ventures with Chinese firms on the other hand apparently are difficult to retain control of.

This explains why Apple, instead of running its own factories in China, outsources the manufacturing to a Chinese firm – Foxconn.

So it appears that China, through its taxation mechanisms and through selective enforcement of its laws, deliberately blocks FDI into China.

Numbers show that in the past few decades, China received considerable inflows of FDI.

However, much of that FDI is attributable to Hong Kong (Hong Kong’s share of China’s FDI was 55% – ten times that of the USA).

The imbalance in FDI numbers can be seen in the following table taken from an out-of-print volume from the National Bureau of Economic Research in China.

china_fdi_table

So, it is evident from the above that most of China’s 1990s FDI came from Hong Kong and therefore was not really Foreign DI.

So, what benefits does blocking FDI give to a local area?


  1. Might barriers to FDI help economies?

In the case of China, the advantage seems obvious.

If foreign investors could open their own factories, they would hire Chinese labour and be able to own the scalable income from the proceeds of manufacturing, passing on only the salaries (which are low in China) to their employees in China.

It is only the inability of foreign investors to purchase and operate Chinese factories as cheaply that forces them to  outsource to Chinese firms.

So, the barriers to FDI in China help drive business to Chinese firms.

These policies can also force the transfer of technology to local firms.

Contrast this with the case of India.

India had a similar boom driven by cheap labour in the form of software services.

There were hundreds of small, medium and large firms in Bangalore offering software services to the financial sector in the USA.

However, a trend I have seen in recent years is for US firms to buy up medium-sized software firms in India and get their software related work executed by these now captive software teams than to outsource work to Indian firms.

So, the inability to get work drives many local IT services firms to sell their operations to US-based firms.

This effectively reduces the total revenue earned locally to just the salaries paid instead of salaries+profits.

I am not certain of how the numbers compare with the boom years but I think the absence of a road up the IT services value chain results in the middle being cut out, leaving only the very large firms and a host of relatively tiny shops in the local IT services market.

So, had FDI barriers existed in the software sector, it would have forced foreign consumers of IT services to access Indian programmers through an Indian corporate entity, increasing the share of the pie that accrued to the local economy, and increasing the quantity of business opportunities for local IT firms.


Take the case of New Zealand again.

The argument put forth by the government there is that they need to keep control of land (a scarce resource in New Zealand).

In other words, the restrictions on FDI are meant to allow local firms the retain control of revenue generating resources.

Contrast this with the software industry in India again.

In software the key resources are human resources (the engineers).  And around the world, software engineers are a scarce resource.

There was no barrier to FDI that would allow local firms to compete with foreign firms (which could pay more because of their stronger currencies) for those resources.

The result seems to be a stratification of software engineering resources by capability.

The engineers with the best skills (who could effectively develop products) mostly ended up in American software firms and can be paid salaries in the range of Rs. 60 lakhs per annum.

Engineers with less valuable skill-sets (who can at most configure, install, test or maintain products) seem to gravitate to Indian IT services firms where salaries seem to stagnate at about a quarter that amount.

This flight of resources might have contributed to preventing forays into product development by software services firms in India.

So, in a sense, by providing outside firms direct access to scarce resources, the opportunity to make a lot more money might have been allowed to slip away.

 

Conclusion

In conclusion, it may be said that sometimes, a clever use of barriers to FDI seems to help extract more revenue (by blocking access to valuable resources) and thus create larger surpluses for local businesses.  Those surpluses in turn help build more infrastructure and capacity and improve the economy.  The case of China, contrasted with that of India, seems to illustrate the case where such barriers might have been beneficial to the economy.

Sample Programs for Teaching Programming in Kannada

Yesterday, I was asked to explain Arduino concepts to a group of teachers from rural schools in Karnataka at a workshop.

So, I created a set of slides and a set of illustrative computer programs in Kannada.

I was really keen to hear what the teachers had to say because I had been extremely apprehensive about whether anyone would be able to type software in Kannada (the standard keyboards available in India are ASCII keyboards labelled with Roman letters).

So, at the beginning of the class, I asked the teachers whether they could type Kannada using ASCII keyboards.

They said that they could.  They said that they were used to typing using Nudi or Baraha software (that allows one to type Kannada using a Roman alphabet keyboard).

Since I didn’t have Nudi or Baraha installed, I showed them how Google’s Input Tools worked, and they liked them very much (those with laptops insisted that I install Google Input Tools for them after the lecture).

Apparently, all the teachers could type using a Roman keyboard.  They could also all speak some English.

But their level of comfort with English was low when it came to reading and comprehension.

This group of teachers said they found it much easier to read Kannada than English though they typed Kannada on a Latin keyboard.

And they said that for that reason (ease of reading and comprehension), programming tools in the Kannada language would be useful to them.

Acknowledgements: The workshop yesterday was organized by Workbench Projects.  There had been a similar workshop at ArtScienceBLR on March 29th.  So, anyone wishing to learn to program Arduino boards in Kannada can contact either of these organizations.

You can download and explore the Indian language tools from here http://www.aiaioo.com/arduino_in_local_languages/download and the commands are listed here http://www.aiaioo.com/arduino_in_local_languages/index.php.

Below are screenshots of some of the programs:

  1.  Storing an Integer in Memory and Reading it Back

kannada_program_storing

2.  Adding Two Integers

kannada_program_adding.png

3.  Dividing Two Real Numbers

kannada_program_diving.png

4.  Logical Operations

kannada_program_comparing.png

5.  Conditional Transfer of Control

kannada_program_if.png

6.  Repetition

For Loop

kannada_program_for.png

While Loop

kannada_program_while.png

7.  Electronics

kannada_program_electronics.png

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Kashmir Floods 2014: Designs For Simple Homemade Boats

I was watching reports on the Kashmir floods on television today.  Reporters in Srinagar went around a few neighborhoods that had been partially submerged in the waters of the Jhelum river and talked to people living there.

The impression I got was that there was no longer any serious danger to life and limb in Srinagar, and that the problem there was now merely one of logistics.

Many families (I believe 700,000 people) had decided to remain in their partially submerged homes, on higher floors that the waters wouldn’t reach, and now had no way to procure food and water for themselves because the roads were impassable and because the phone lines were down.

It seemed to me that these people could procure food and water if they could put together makeshift boats to get around in.

So, I started thinking of ways to build boats with household materials.

After thinking about the problem a little, I hit upon a simple boat design that anybody with a bed and some waterproofing material can construct.

Bed Frame Boat

Step 1:  Get hold of a light bed (a good option would be a steel-framed folding bed) such as the one in the image below:

beds_1

Step 2:  Turn the bed upside down as shown in the image below and if it is a folding bed, connect the legs with supporting rods.  If the bed is a stiff wooden bed, it might be possible to merely link the legs of the bed together with rope.

beds_2

Step 3:  Cover the bed with a waterproof tarpaulin sheet (such as the sheets you’d cover your car with).

beds_3

Step 4:  Optionally attach floats to the ends of the bed (to prevent sinking of the tarp tears).

beds_4

Each boat should easily carry one or two people.

The boats can be roped together to make larger craft that can act as taxis.

beds_5

We shall have to try this design out and make sure it works in practice because the forces on the tarpaulin could tear the fabric.  So the raft would work only if the tarps were strong enough to withstand the forces on the sides and bottom of the craft.

Another very simple design, that would make for a far more robust craft would be a barrel raft, shown in the image below.  It’s just a bunch of barrels tied together.

Barrel Raft

barrel_raftA barrel raft would be more resistant to debris and to sharp objects holing the bottom, but unless the barrels are broad enough to sit in, it would be less comfortable, and also less stable.

Barrels are going to be a bit unwieldy so the best design we came up with ultimately was the Jerry Can Raft.

Jerry Can Raft

The idea came from Dwiji Guru, a friend of mine who is a physicist and consults on design involving physics and on policy in Bangalore.  He figured out that a craft displacing 10 litres of water can carry 10 kilograms of weight on water.  So, ten 20 litre cans submerged to half their volume can carry a weight of 100 Kg.

Cans like these http://shardacontainers.com/narrow-mouth-rectangular.htm are pretty tough and have a handle at the top.

We figured that you can tie 12 cans with a long rope in pairs with their handles together along the center.  Then tie one stiffening rod along the outside edges and two spacers at the front and back, and you’ll have a roughly 1 m by 2 m raft.

This raft would be slim and light and almost impossible to sink.

Funky language features – some things that you can never say in English and what that might tell us about human languages

Inexpressibility in English

There is a common expression that is widely used in South Indian languages that can’t be translated into English no matter how hard you try.  This post is about things that can’t be expressed in certain languages.  There are some things that cannot be expressed in even the most eclectic of languages though they can in others.

Now I have the unenviable task of trying to tell you in English what cannot be said in English!

Here goes.

Imagine two grown-up people A and B who meet on the street in South India.  B is with her son.  When A meets B, A feels that it would be impolite to not inquire about B’s son.

So, A asks B an open question about B’s son.

B replies, with a big smile and slow polite nods:  “This is my 2nd son.”

What is the question that A would have asked B, to elicit that response from B?

It is impossible to frame an open question in English that would elicit the answer that B gave.

But this exchange is something that South Indian parents have all the time.

When two South Indian parents run into each other, it is highly likely that one might ask the other (in their language) something like, “Oh, what a cute little boy/girl/child!  Whichth son of yours is this?”

The other parent would then reply very proudly: “This is my eldest son/daughter/child” or “This is my 2nd son/daughter/child”.

There is no way to ask someone in English that question because the word or even the concept of “whichth” doesn’t exist in English (and possible doesn’t exist in any European language).

Here’s how you would say that in Kannada (a language used in South India).

A:  Ivanu nimma yeshtaneya maga?  (This boy your whichth son?)

B:  Ivanu nanna eradaneya maga.  (This boy my 2nd son)

Acknowledgement:  This phrase was something I overheard someone discussing when I was a child.  I think it was someone working on translation theory.  I have no recollection of who it was.

Conditional Inexpressibility in South Indian languages

In South Indian languages, there are two ways of saying “and” / “or”.  One way is through a word meaning “and” or “or”.  In Kannada, the words would be “matthu” (means “and”) and “athava” (means “or”).

Another way is using a suffix.  In Kannada you can say something and add the suffix “aa” to indicate “or”.  You can add the suffix “uu” to indicate “and”.

You will find that in South Indian languages you can only express ORs of ANDs using the suffixes.  You cannot express ANDs of ORs.

So, using the suffix forms, we can say “A and B or C and D” but not “A or B and C or D”.

In Kannada, that would be “A-uu B-uu -aa, C-uu D-uu -aa”.  You cannot say “A-aa B-aa -uu, C-aa D-aa -uu”.

You will find a similar restriction in Japanese (though Japanese does not have a suffix form for AND).

Implications for Practical Linguistics

Years ago, we worked on a research project related to natural language programming.  We designed a programming language that would allow humans to program computers by saying things to them.  So, you could say things like: “x égale 2. Si x multiplié par 3 est moins que 5, dis “Salut” sinon dis “Ciao”!

The natural language programming system was designed to help students in rural India learn programming (they often don’t know English and so can’t use an English-based programming language).

It works only in the domain of numbers.  A Fibonacci number generator would looked like this in bad German: “z ist gleich 1. y ist gleich 1. x ist gleich 0. während x ist weniger als 13, z wird y plus x. Danach x wird y und y wird z. Danach schreib z.

(We didn’t put much work into it.  It’s just a research prototype.  But you can play with the technology yourself at http://www.aiaioo.com/cms).

Anyway, since South Indian languages and Japanese favour AND over OR, in this programming language, we specified that AND gets precedence over OR.

Implications for Universal Grammar

I recently read a small book on the latest efforts by Chomsky’s research group to find common grammatical frameworks that can be applied to all languages.

Personally, I do not much like the approach of using grammar to try to explain language.

People can speak a language even if they have only ever heard a few sentences in that language.

They would of course have to limit their use of the language to those few sentences and the variants thereof, but they are still generating language.

It is impossible to construct a grammar of a language from a few sentences.

So it is unlikely that the human language comprehension/generation system uses grammar as we formally understand the concept.

Chomsky believes that there is some language faculty that has a grammar of sorts that generates language and that the output of this faculty is transformed into Chinese or English as the case may be through the use of some simple transformation tools.

If this were true, than one can argue that what is expressible in one language must be expressible in another language.

This must be true at least for commonly used expressions.

But we find that it is not true.

The fact that obvious concepts can’t be expressed in a language with as large a vocabulary as English makes me wonder if there is a common universal grammar, and if languages are as comprehensive as we’d like to believe.

If all languages are derivable from a common grammar, then a concept such as “whichth” which is so common in Indian languages, should have been derivable from that common universal grammar in English just as it is in South Indian languages.

It seems more likely that languages evolve from societal and environmental needs (needs to express things from a cultural or practical perspective) and are nothing but a set of shared signals.

These shared signals eventually evolve to allow for the use of parameters, to allow for a fitting of expressions into slots recursively, that gives rise to an appearance of grammar.

Each language evolves that appearance of grammar independently and there’s nothing more to it.  Or at least, that’s someone’s pet theory.

For some other surprisingly non-universal language features, you might want to take a look at two of our articles on deictic references and ‘possessive verbs’:

  1. Funky language features – the third spatial deictic reference in Japanese, Korean and Tamil
  2. Funky language features – the mystery of the missing possessive verb

Two Types of Corruption

There are really two types of corruption.

Type 1:  Speed-Money Corruption

In India, bureaucrats sometimes deliberately delay the processing of applications in the hope of getting a bribe.  A citizen who needs, say a water connection, has to pay a bribe to a clerk to get their application looked at.  If you are the victim of a crime, and go to the local police station, the policeman will expect a small bribe to register your complaint.

This seems like a fairly harmless form of corruption.  Some people defend it as necessary in a free market, as a mechanism for the differentiation of services.  It actually seems very like a tip.  But in this case, you have to pay before you get the service.

But if you take a closer look at this form of bribe and think about the economics of it, you see that what is being demonstrated is a form of rent-seeking behaviour.  And you will see that it has the harmful side-effect of encouraging inefficiency.

As time progresses, the processes get slower and slower and newer hurdles and pain points are introduced to make people fork out more and more money, and everyone ends up losing – paying a heavy price for encouraging such practices – because of the resulting inefficiencies.

If there’s one take-away from the above discussion, it would be this:  in this form of corruption, the inefficient people get rewarded, and you end up encouraging inefficiency.

Type 2:  Man-In-The-Middle Corruption

The second kind of corruption is the man-in-the-middle kind of corruption. This is the corruption you encounter when people’s money passes through the hands of a middle-man tasked with procuring services for them.

In the realm of public services, like the construction of roads and schools, that middle-man is government.

In the presence of corruption, the middle-man ends up selecting the service-provider who pays the highest bribes, not the service-provider who does the best job.

This leads to a market where the lowest-quality service provider wins.

Economic theory also suggests that this drives the highest-quality vendors out of the market.

That conclusion follows from the work of George A. Akerlof. He described it in a paper titled ‘The Market for “Lemons”: Quality Uncertainty and the Market Mechanism’.

In the case of India, it is possible that the migration of computer scientists and engineers out of India can be explained in part by the pressures of such a process.

We can also compare the two forms of corruption in terms of how damaging they are.

Impact Analysis

1)  Speed-Money Corruption

Let’s say that a citizen needs to get a job worth X dollars/rupees done.  He needs to pay a bribe that’s usually of the order of 3% to 10% of X.

With the cost of the bribe factored in, the value/expenditure ratio is above 90%.  So, the loss is small.

If we count the money taken as a bribe as a benefit to society (assuming the bribe-taker uses it well – maybe he donates it to charity) then the value/expenditure ratio is 100%.

So, speed money corruption doesn’t hurt too badly.  It leads to a small loss if any per transaction.

The other type of corruption is far more damaging.  Here’s why:

2)  Man-in-the-Middle Corruption

Things are much worse (much more damage is done) when a middleman decides to spend the money that you pooled in (tax money) injudiciously.

So let’s say X dollars/rupees of our tax money is in the hands of a middleman.

Let’s say the middleman takes a bribe from a vendor to buy something worthless (I’ll give you some examples of this shortly).

The middleman who made the purchase would get 3% to 10% of the value of the sale from the crooked vendor (this is called a kickback).

Now assuming the middleman spends the money he gets very well (let’s say he donates it to charity), that is the only value the tax-payer gets for the transaction.

So, for X dollars spent, the taxpayer gets a maximum benefit of X/10.

That means the value/expenditure ratio is less than 10%.

Now, here are some examples of possible cases of man-in-the-middle corruption in India.

There is an article in the BBC titled “India scraps $753 Finmeccanica helicopter deal“.  It is about the purchase by the Indian government of 12 helicopters for transporting VIPs at a cost of $753 million. Each helicopter cost around $60 million.  The kickbacks paid are estimated to be a whopping $67.6 million.

In comparison, the cost of India’s space mission to Mars is $73 million.

So, Indian officials were willing to pay as much for a helicopter as it would cost to fund a space mission to Mars.

The helicopters were also quite useless because there are thousands of military helicopters already in use in India to ferry VIPs.

The argument that the Generals who bought the helicopter put forth was that the helicopter would allow the bodyguard of the Prime Minister to stand upright while accompanying him to landings at high altitudes.

That would have been an expenditure of 753 million dollars for a value of 67.6 million (provided the officials used the bribe money well) which is a less than 10% value/expenditure ratio.

This is why man-in-the-middle corruption is particularly dangerous and damaging.  It can lead to a country’s resources being siphoned off without conferring any benefits upon the country.

Another example I can give you is that of the excessive expenditure over the last few years on the import of arms.

In the years 2011, 2012 and 2013, India spent $12 billion to buy aircraft from Europe, and a further $12 billion to buy 120 Sukhoi planes from Russia, and $10 billion for just ten Boeing transport planes (each plane costs $1 billion – no tenders were issued).  [This World Bank report suggests that corrupt governments overspend on defence procurement because of the lack of transparency in such deals.]

And the Indian government is spending so much money on weapons imports while running a deficit (India is borrowing money to finance I believe 50% of its budget).

What is scarier is that the Indian central government’s annual education budget is only $12 billion, at a time when there are 400 million Indians who don’t get a basic education, and when India graduates less than 100 computer science PhD students each year (thousands of Indian students go overseas for graduate studies).

But it’s actually much worse.  More than 250,000 farmers have killed themselves since the mid-1990s — a figure that may be a fraction of the truth as local authorities willfully misreport “accidental” deaths.  Every second child born in India is malnourished. Nearly two million children under the age of five die every year from preventable illness as common as diarrhoea.  Of those who survive, half are stunted owing to a lack of nutrients. The national school dropout rate is 40 per cent.

The above numbers highlight the dangers of man-in-the-middle corruption and make clear why it is imperative to put a stop to it.  We can see from the above that both types of corruption lead to inefficiency, but the second type of corruption can lead to the large-scale misallocation of tax money (leading to poverty, hunger and death on an unimaginable scale).

We have proposed some methods to prevent this type of corruption in the following articles:

What traffic can reveal about society

The last post was about Socially Optimal Solutions and the Nash equilibrium.

In this post, we examine traffic patterns under the same lens.

It appears bad traffic situations might be avoided if road users a) play by the rules or, b) play fair or, c) are trusted by other participants.

Scenario 1

road_1

In Scenario 1, the North-South traffic is waiting for the light to turn green.  Cars 1 and 2 are going South.  Cars 3 and 4 are going North.

Now, if the drivers of Cars 2 and 4 try to cheat by overtaking on the wrong side of the road, you could end up with Arrangement 2 (everyone is blocked).

This is what you would get at the Nash equilibrium assuming that there were no policemen at the intersection (the Nash equilibrium is one of many possible equilibriums that can be reached if people don’t cooperate, but just act in their own self-interest).

So, it is only if the drivers all respect the law,  without any trying to cheat, that they would end up with the socially optimal solution (Arrangement 1 rather than Arrangement 2).

Scenario 2

road_2

Here, the intersection does not have traffic lights.  The North-South traffic has stopped.  Cars are accumulating in the North-South road, and so Cars 1, 2, 3 and 4 are not going anywhere.  Now, 3 can choose to leave a gap for 5 to pass through.

The game here is between Cars 3 and 4.  If Car 3 feared that Car 4 might try to overtake by taking advantage of the gap, it would move forward and block the intersection.

So, in this case, an expectation of unfairness could lead to a solution that is not socially optimal.

And that would be the Nash equilibrium.

However, if people considered each other to be fair, there could be a socially optimal solution that is better than the Nash equilibrium.

Scenario 3

road_3

No traffic lights.  There are two lanes going in the same direction (South to North).  Traffic is stalled in the North-South direction (Cars 3, 4, 8 and 9 are going nowhere).  Cars 3 and 8 have the option of leaving a channel open for Car 5 to pass through.

What’s interesting here is that if Car 3 suspects that Car 8 might close the intersection, Car 3 would do well to close the intersection itself (preventing Arrangement 2).

Again, that would be the Nash equilibrium.  However, if everyone agreed and cooperated to keep the intersection open, you would get a much better result (a social equilibrium) than you would with the Nash equilibrium.

So, the socially optimal solution is obtained only if there is strong mutual trust between the participants in this traffic pattern game.

Summary

I find these traffic patterns interesting because they could be indicators of local ethics. When you visit a new place, you might be able to get an idea of how fair, trustworthy and rule-abiding the local people are, just by observing the traffic?