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.