Confessions....(II)

This is a great read, would highly recommend this. Finished this book a while back, just havent had time to blog. It reads very well, a very fast moving book, as fast as any great fiction I have read.

I am sure there might be critics of John Perkins who might doubt the veracity of his statements, especially those with far-reaching consequences - for example, planned assasinations of Omar Torrijos, president of Panama, Jaime Roldos, the President of Equador. If you are interested in what John is right now upto, visit Dreamchange.

John takes us through his early career as an EHM (Economic Hit Man) with his stint in Indonesia, followed by Iran, Equador, Panama, Saudi Arabia, Iraq, etc. I was particularly impressed by the character of President Omar Torrijos, of Panama who defiantly resisted US pressure to hand over the Panama Canal to US control.

So, why Iraq?

Contrary to common public opinion, Iraq is not simply about oil. It is also about water and geopolitics. Both the Tigris and Euphrates river flow through Iraq; thus, of all the countries in that part of the world, Iraq controls the most important sources of increasingly critical water resources. In addition to this, Iraq is situated in a very strategic location. It borders Iran, Kuwait, Saudi Arabia, Jordan, Syria and Turkey and has a coastline on the Persian Gulf. It is within easy missile striking distance of Israel, China & the former Soviet Union. Today, it is common knowledge that whoever controls Iraq holds the key to controlling the Middle East.

Some information about OPEC I was not aware of that helps in understanding some of the key strategies of international politics:

During the 1960s, a group of countries had formed OPEC, the cartel of oil-producing countries, largely in response to the power of the big refining companies. Iran was also a major factor. The heads of state of petroleum-rich countries knew that the major international oil companies, known as "Seven Sisters" were collaborating to hold down petroleum prices - and thus the revenue they paid to the producing countries - as a means of reaping their own profits. OPEC was organized in order to strike back.

This all came to a head in the early 1970s, when OPEC brought the industrial giants to their knees. A series of concerted actions, ending with the 1973 oil embargo threatened to bring on an economic catastrophe rivaling the Great Depression. The oil crisis could not have come at a worse time for the US - reeling from a humiliating war in Vietnam, Nixon's Watergate, scandal, etc. The international monetary system took a blow; the network of fixed exchange rates, which had prevailed since WW II, essentially collapsed.

Here is another part that really interested me - on the future of US corporatocracy.

The end of Saddam, like the end of Noriega in Panama, would change the formula. Once we controlled iraq, could we break OPEC? Would the Saudi royal family become irrelevant in the arena of global oil politics? There is another possible outcome: the OPEC could reassert itself. With the US controlling Iraq, the other petroleum-rich countries might have little to lose by raising oil prices and/or reducing supplies.

In the final analysis, the global empire depends to a large extent on the fact that the dollar acts as the standard world currency, and that the US Mint has the right to print those dollars. Thus, we make loans to countries like Ecuador with the full knowledge that they will never repay them; in fact, we do not want them to honor the debts, since this is what gives us our leverage. The US prints currency that is not backed by gold. Indeed, it is not backed by anything other than a general worldwide confidence in our economy.

As long as the world accepts the dollar as its standard currency, this excessive debt does not pose a serious obstacle to our corporatocracy. However, if another currency should come along to replace the dollar, and if some of the US's creditors (Japan or China for example) should decide to call in their debts, the situation would change drastically. In fact, today, the existence of such a currency is no longer hypothetical - the Euro is growing in prestige and power with every passing month. If the OPEC decides to substitute the Euro as its standard currency, and if one or two major creditors were to demand that we repay our debts in Euros, the impact would be enormous.

Wow.

Confessions of an Economic Hitman

or How the United States Uses Globalization to Cheat Poor Countries Out of Trillions

I had heard about this book from Vinod, and he just sent me this link to an interview with John Perkins by Amy Goodman on Democracy now.

John Perkins was a self-professed Economic Hit Man. He worked for a score and more years as chief economist at an international consulting firm in Boston called Chas. T. Main. His job was to persuade countries that are strategically important to the U.S. - such as Indonesia, Panama, Ecuador, Iran and Saudi Arabia - to accept enormous loans for infrastructure development from USAID and World Bank and then to make sure the lucrative projects were contracted out to U.S. corporations. This ensured that the principal money moved only from Washington D.C. to New York, Boston and San Francisco. The countries which received all the infrastructure improved the lot of the top 2% of their elite and further marginalized bulk of their poorer population. Stuck with extraordinarily huge debts which they couldn't possibly repay, these countries came under the control of the U.S. government and other U.S.-dominated aid agencies. Terms of repayment were meted out and the foreign powers were forced to hand out free or cheap oil, allow U.S. military bases and other atrocious empire building actions.

As an economic hit man, chief economist John Perkins' job of persuasion entailed coming up with projected economic growth rate charts over a futuristic 25 years in the event of the country accepting the generous loans of the empire-building aid agencies. According to Perkins, when he and his ilk failed to convince the heads of state, the CIA (he calls them sharks) would move in and silently assassinate the president and instead place a puppet at the head who would agree to the terms of the loan. When this failed, U.S.A. would go to war, an Iraq would occur.

Very lucidly in his new book Confessions of an Economic Hit Man, John Perkins takes one through his career, from being hired as an econmic hit man to his actions in Indonesia, Equador, Panama, Saudi Arabia and Colombia.

I have to buy this book soon.

More on The Bottom of the Pyramid

OK, so continuing my summary/review of C.K. Prahalad's book, here are some of his principles of innovation for BOP markets (I quote directly from his book along with examples, taken from other chapters):

1. Serving BOP markets is not just about lower prices; it is about creating a new price-performance envelope. The best example here is the incredible growth the world has seen in the use of cell phones. What used to once cost $1,000 in India (GSM handsets used to be that expensive!) now is so cheap, and India is now the second largest growing wireless market. Another example is the Aravind Eye Care System, the largest eye care facility in the world, headquarted in Madurai, Southern India. Cataract operations that cost about $2,500-$3000 in the US cost about $50-$300 here, including the hospital stay and post-operative care. This case study is truly worth reading more about! I was amazed.
2. Innovation requires hybrid solutions. Most scalable, price-performance-enhancing solutions need advanced and emerging technologies. A case in point here is the how Hindustan Lever Limited (HLL), an Indian conglomerate innovated the manufacturing of iodized salt. More than 70 million Indian children suffer from iodine deficiency disorder (IDD), which can lead to mental retardation. Same with Africa. Only 15% of salt sold in India is iodized. Salt, to be effective as a carrier of iodine, must retain a minimum of 15 ppm of iodine. Due to harsh conditions of storage & tranportation, and furthermore due to the cooking habits, the challenge of creating iodized salt that will release the iodine only on ingesting cooked food is truly great. HLL innovated their process by performing what is called molecular encapsulation. Unilever is now using this innovation from HLL to other countries like Ghana, Ivory Coast and Kenya.
3. Solutions must be designed for ease of adaptation in similar BOP markets. How does one take a solution that worked in India to Brazil? This is a key consideration for gaining scale.
4. Developed markets are accustomed to resource wastage. All innovations must focus on conserving resources.
5. Product development must start from a deep understanding of functionality. Marginal changes to products developed for rich customers in the US or Japan will not do. One case study here is that of the Jaipur Foot. The artificial limb business is not new, it has been around since the American Civil War. In India alone, there are 5.5 million amputees, and about 25-30,000 are added each year due to polio, accidents, etc. Traditional artificial limbs were found to be both expensive (about $7,000 per prosthetic foot) as well as not serving the needs/requirements of the Indian life style - for example, most Indians squat (hence the need for dorsiflexion of the limb), they sit cross-legged (need for transverse rotation), walk on uneven ground (need for inversion and eversion) and walk barefoot (need for natural look). This unique set of requirements (well, not that unique, since this was adopted to Afghanistan, Bangladesh, Pakistan, Cambodia, Congo & Vietnam) led to a master design. Master craftsman Ram Chandra & Dr. P.K. Sethi, along with their Jaipur design team, developed a prosthetic that meets all he criteria for less than $30.
6. Deskilling work is critical - most BOP markets are poor in skill.
7. Education of customers on product usage is key. Most BOP markets live in "media dark" zones, without access to radio or TV.
8. Products must work in hostile environments - noise, dust, unsanitary conditions, low quality of infrastructure such as electricity, water, etc. ITC, the Indian conglomerate, was building this network for connecting Indian villages in a seamless supply chain. The PCs placed in the villages had to work in conditions unthinkable in the West. For example, the voltage fluctuated between 90-350 volts (against the rated 220 volts), and sudden surges are very common. ITC engineers had to add an UPS, and a solar panel that would allow at least 3-4 hours of uninterrupted, quality electricity. For communication, they had to depend on satellites.
9. Research on interfaces is critical. Given the multitude of languages, ethnicities and diversities in culture, this is no surprise. The interfaces could be either of - iconic, color-coded, voice-activated, fingerprint and iris-recognition interfaces. This is another area of crucial research, in my opinion. There is already a lot of work that has been done in this area. For example, the Baraha software is a wonderful tool to create documents in about 13 different Indian languages. Incidentally, my cousin was the key person who developed this during his spare time.

More recently, notable research in some of these areas:

• MIT announced the $100 laptop that has a hand-powered crank that can charge up the battery and comes in the form of a rugged, rubberized case so that it can survive under harsh conditions. More here.
• Intel Research, Berkeley, is working on real-world deployments of Delay-Tolerant Networks (DTN) that considers the networking usages of satellite-based connections. More details here and here.

Some other key areas the book focuses on: Governance, and the interaction/importance of governmental interaction with NGOs, conglomerates and getting the common people involved in a transparent manner. This is a critical factor - lack of transparency, bureaucracy and corruption are the leading obstacles towards making the Millenium Developments a reality.

Case studies in the second half of the book illustrates in a very nice manner how millions of lives have been transformed by these projects:

• Casas Bahia (Brazil) - Innovation in retailing
• CEMEX (Mexico) - Innovation in Housing for the Poor
• The Annapurna Salt Story (India) - Solving the Iodine Deficiency problem for India
• Selling Health: HLL and the Soap Market (India)
• Jaipur Foot: Challenging Convention (India)
• The Aravind Eye Care System: Delivering the most precious gift (India)
• ITC e-choupal Story: Profitable Rural Transformation (India)
• Voxiva: Disease surveillance and response (Kosovo, Peru, Iraq, Africa, India)

All in all, a terrific read! I would highly recommend this book.

Whew, that was a lot of stuff. I hope I havent bored anyone off from the web site!

Back from Goa

Just got back from Goa, I was there for the last one week for HiPC - the 12th International Conference on High Performance Computing. A lot of my friends asked me what I did in Goa. Unfortunately, I dont have many interesting things to report. Being one of the core organizers of the conference, I hardly had any time to see Goa, except for early morning runs on the beach, and a visit to one of the forts close by overlooking the beach (yeah, the one they have in the movie Dil Chahta He). And some amazing walks on the beach during sunset. Maybe next time, I will actually do some sightseeing. I forgot to take my camera, maybe I will steal some pics from my friend's camera & post them later.

As for the conference itself, it was good, we had some great keynote speakers, good discussions on how Google uses clusters for doing their searches, Google Earth, etc. There was another very interesting talk on how the Institute for Genome & Biological Research in New Delhi uses clusters for their gene sequencing work.

All in all, some good learning, wonderful time meeting new people and discussing some good ideas for next year.

The Market at the Bottom of the Pyramid

I finally got down to jotting down some notes from C.K. Prahalad's recent book The Fortune at the Bottom of the Pyramid, I thought I will put them here.

The book starts off on a very ambitious note, and he surely doesn't disappoint the reader throughout the book. Here is an excerpt from the first chapter:

Turn on your television and you will see calls for money to help the world's 4 billion poor - people who live on far less than $2 a day. In fact, the cry is so constant and the need so chronic that the tendency for many people is to tune out these images as well as the message. Even those who hear and heed the cry are limited in what they can accomplish. For more than 50 years, the World Bank, donor nations, aid agencies, governments, and civil society organizations have all fought the good fight, but have not eradicated poverty. The adoption of Millenium Development Goals (MDG) by the United Nations only underscores that reality; as we enter the 21st century, poverty - and the disenfranchisement that accompanies it - remains one of the world's most daunting problems.

The purpose of this book is to change that familiar image on TV. What we need is a better approach to help the poor, an approach that involves partnering with them to innovate and achieve sustainable win-win scenarios where the poor are actively engaged and, at the same time, the companies providing products and services to them are profitable.

Now, for some observations that I thought were interesting:

1. There is money at the BOP (Bottom of Pyramid): The dominant assumption has been that the poor have no purchasing power and therefore do not represent a viable market. Prahalad shows that we should take aggregate purchasing power into consideration. To do this, we convert GDP-based purchasing power (for example China with a population of 1.2 billion and $1000 GDP represents a $1.2 trillion economy) into its dollar purchasing power parity (PPP). I think this means that you take into account the local currency and not just the dollar units. Nine countries - India, China, Brazil, Mexico, Russia, Indonesia, Turkey, South Africa & Thailand - collectively home to about 3 billion people, represent about 70% of the developing world population. In PPP terms, this group's GDP/aggregate Purchasing power is $12.5 trillion. This is not a market to be ignored.
2. BOP consumers accept advanced technology readily: This has been clearly shown by the ready acceptables of wireless devices, PC kiosks, etc. in different parts of the world. For example, ITC, the Indian conglomerate, decided to connect Indian farmers with PCs in their villages. This has allowed them to check prices not only in the local aution houses, but also prices of soybean futures at the Chicago Board of Trade! This has helped improved their profit margins, because they now how when to sell, how much to sell, and at what price they have to sell their produce. I thought this was really amazing.

I have to rush out now. I promise a post later in the day covering the other parts of the book.

The joys of Podcasting

I recently got a new iPod (and a cool FM transmitter that beams it to my car radio), and I have been having a great time downloading some great Podcasts - NPR's Science Friday, BBC's In Our Time, and here are some more: NPR's Health & Science, Canada's Quirks & Quarks, Australia's The Science Show, Boston Musuem of Science's Current Science and Technology Show, UC Berkeley's GROKS Science Show, Science cast, Nature's Science Podcast.

Now I can listen to Ira Flatow's Talk of the Nation: Science Friday here in Bangalore. Super cool...

If folks have any other interesting podcast sites, especially on science & technology, please let me know.

Ranga Shankara

We went to watch a play yesterday at Ranga Shankara. For those of you who don't know, Ranga Shankara is one of Bangalore's firsts that aims to keep the theatre alive, much like what the Prithvi Theatre has done in Mumbai. It is a performing arts space which frequently hosts plays by India's best theatre personalities and groups. In addition to the plays, which are hosted regularly, a cafe plays host to reading sessions, meet-the-people sessions, where one can meet with theatre stalwarts like Girish Karnad, Arundhati Nag, T.S Nagabharana, Girish Kasarvalli, etc. Yesterday I saw Alyque Padamsee and Arundhati Nag there, chatting over a cup of coffee after an open forum.

Ranga Shankara is named after Shankar Nag, one of Karnataka's most brilliant film & theatre personalities in the recent past. By the time of his early demise in 1990 in a tragic road accident (he was 35 then), he had won multiple awards including the Best Actor Award at the International Film Festival of India for his first film "Ondanondu Kaaladalli" (Once upon a time), directed by Girish Karnad. He had acted in over 100 films, acted/directed numerous plays. He also directed Malgudi Days, one of Indian Television's best known serials. His wife Arundhati Nag has spearheaded his dream of a theatre for Bangalore; she is herself an acclaimed theater and film personality. Among her other affiliations, she is also a big patron of Nritya Gram, the residential dance school at Hesarghatta on the outskirts of Bangalore, established by the late Protima Bedi.

Yesterday was a nice light hearted Kannada comedy play by the group Benaka, which is one of the oldest theatre groups in Karnataka. I am looking forward to more plays this week and meet-the-people sessions (hoping to catch Girish Karnad on Sat morning!).

BTW, if ever a TV channel called Times NOW goes on air, I might get lucky to go on air - my friend & I did a small interview with them about why theatre festivals like this, and places like Ranga Shankara are important to us Bangaloreans :-)