Systems co-operatives for India

While India continues to suffer from death from malnutrition, with almost 9 hundred thousand deaths in 2018, it is with deep despair that one notes that Indian farmers are throwing away produce during the COVID-19 related lock-down.

The government is fully culpable for these and other deaths due to the hasty imposition of the lock-down. But it is time for each one of us to take steps to build support systems that ensure that India becomes a developed country, where poverty and malnutrition are a thing of the past and we can truly establish the country that every school child pledges to form everyday.

If engineers, marketers, financial experts, artists and lawyers can get together to build the following, it will help steer us in that direction:

1. Information dissemination
1. For better or for worse, WhatsApp is the medium of communication within a section of the populace. We need engineers to work with WhatsApp to clearly mark "certified" stories, whose authorship is fully traceable.
2. Censorship of any identified author must be impossible. This will ensure that Twitter-like suspension of accounts that express unpopular opinions does not take place.
2. Task-oriented networking
1. How can we connect a farmer throwing away produce to the migrant laborer who needs food while he is walking from the city to the village.
2. We need a social network that enables task oriented connections.
3. Foreign exchange monitor
1. I feel physical pain as I write this but with the foreign exchange that Nirav Modi / Mehul Chokshi stole from India, India could have bought 200,000 ventilators. That is 5 times the current number of ventilators in India.
2. Investor visa attorneys - every developed country in the world allows permanent residency based on investment. This is a legal way to do money laundering that enables transfer of wealth from developing countries to developed countries. Neo-colonialism is alive and well. We need lawyers in every developed country to trace the beneficiaries of such visas and ensure that developing countries' precious foreign exchange is not drained illegally.

For all of the above, we need public activists, communications experts, project managers, etc. who can move these "systems co-operatives" forward. The Amul approach is worth emulating in other systems. If there are such activities already going on, I will be joining them. If there aren't, I pledge to start and support them with time and money. Feel free to reach out to me on Twitter.

A Primer on the Value of a Currency

There's a song in the movie पूरब और पश्चिम (East and West) movie, that has the line "पूरब वाले हर जान की कीमत जानते हैं" (Easterner's know the value of each life as opposed to Westerners who value materialism). India's nationwide lock-down in response to Covid-19, the resultant death from starvation, and the haphazard movement of supporting migrant labor brings into focus the value of human life in India.

Compare the size of economic stimuli being applied by countries across the globe in an effort to contain the growth of the disease and it is clear that India's per-capita stimulus is quite low.

Let's get into the reasons why:

Every country in the world can print money. That money can be used to buy things locally. The only thing that holds governments back from printing money is that it leads to inflation, thereby bringing the value of the money back to its original value.

Now say that country A wants to buy from country B. Country B would not accept the currency from country A since the government of country A could simply print all the money it needs. That leads to inter currency exchange rates. To arrive at an exchange rate, one must convert each of the currencies to a mutually agreed value. That value could be derived from a commodity that is heavily traded between the two countries or it could be derived from the relative value of the currency from country A and the currency from country B as compared to a third reserve currency that both countries trust.

For a currency to act as a reserve, the government that prints the reserve currency must be stable, trustworthy, transparent and be run on sound economic principles. The country that prints that currency must trade widely so that the value of its currency with respect to goods is widely acknowledged.

The only country that meets the above criteria is the USA and that is what makes the US dollar the world's reserve currency - the currency of choice to keep savings in. The US can print the money it needs since there are systemic checks and balances in place that the entire world trusts. This explains the extraordinary size of the US stimulus as compared to those from around the world.

All other countries in the world including those in the European Union, need to keep a liquid hoard of US dollars so that it can be used to buy things outside the EU. Both the EU and China have been trying to make the Euro and the Yuan become reserve currencies but that have only succeeded marginally and instead they too have to keep up their "forex reserves" (foreign exchange reserves).

Since India cannot print its own money, India needs to produce things of value that other countries would want to buy from India with US dollars. At the rate things are going, ventilators might very well become the preferred reserve currency in the world. Also, since it is virtually impossible for any country to build everything its populace needs by itself, India will need to keep a strong forex reserve that can be deployed in times of national crises such as that triggered by COVID-19.

India also needs strong independent institutions rather than relying on regional or national level strong-men since strong institutions truly establish lasting trust in a country and its policies. The chaos caused by the sudden imposition of a nationwide lockdown imposed without thought given to food delivery, labor migration, etc. demonstrates the need for institutional clear-headedness and not personality-based leadership. Even in the US, President Trump had to follow the voices of reason coming from Drs. Fauci and Birx and extend the shutdown, despite wanting to open up the economy by Easter.

Finally, the death of a child due to starvation starkly illustrates the value of an Indian life, determined by the present day Indian government. In contrast, the low fatality rate in Germany shows the value of investment by a government into the wellbeing of its own people. I don't want to translate the fatality rates into a math equation: one German life is equal to x Indian lives type of an exchange rate, but that is the sad truth.

Manoj Kumar was wrong.