The Hindu Business Line : Economy is much like the atmosphere

A closed system, everything is connected in the world economy and every action by an individual instantly affects everyone else. The links come alive in the 14 snapshots that Daniel Altman keenly watches in the Connected for the big picture, from around a globe frozen for 24 hours, on June 15, 2005, with interludes into aspects of credit markets and currencies.

The global economy is like an enormous machine crammed with six billion interlocking cogs and wheels, one for every person, describes Daniel Altman in Connected (www.panmacmillan.com). "Not everyone's wheel is the same size, but everyone's wheel matters."

The world's economy is much like our atmosphere, a closed system, he says. "Everything's connected, and every action by an individual instantly affects everyone else." The connections come alive in the 14 snapshots that Altman keenly watches for the big picture, from around a globe frozen for 24 hours, on June 15, 2005.

That day saw Napster's stock open 7 per cent higher and close with a gain of 2 per cent on the Nasdaq market, reacting to the company's joint venture with Ericsson, whose share too rose a wee bit. "A better response than the one that greets many mergers and buyouts, where the market picks a winner and a loser — or worse, two losers," comments the author about the coming together of two companies `separated by nine time zones'.

Chapter two takes us to Japan to find out if governments can make global markets more competitive. "Around the world, regulatory regimes can be as different for competition as they are for trade. These differences tend to affect big companies the most, since they are the ones most likely to gain a dominant position in a market," says Altman.

Move on, then, to Vietnam, to check if multinational companies such as Intel bring progress or problems abroad. "Essentially, Intel gave the government a menu of options — all of which were good for Intel — and followed up on the ones the government liked. The company has taken advantage of cheap marketing and played up to local traditions." Between chapters are interludes, such as one on credit markets and currencies, set in Hong Kong. "Anyone with an interest in the global economy ignores the currency markets at his own peril," cautions Altman. "Think you know why a Sri Lankan textile exporter's business is booming? It might just be because the rupee's cheaper, not because the company's doing anything right... "

Fast-paced.

Economics of chastity

Common sense generally comes in for praise. We have been taught to think, for instance, that philanthropy is better than stinginess, that authors of computer viruses are not as bad as murderers, and that chastity is the right thing. Steven E. Landsburg has contrary views, though. He questions conventional wisdom and common sense beliefs, and offers outrageously surprising answers in More Sex is Safer Sex (www.landmarkonthenet.com).

"My weapons are evidence and logic, especially the logic of economics," he writes in the preface. "Logic is most enlightening — and surely most fun — when it challenges us to see the world in a whole new way."

To clear the vast litter of conventional thinking, the author begins with a simple and obvious general principle of economics: "That things tend to work out best when people have to live with the consequences of their own behaviour." Call it the communal-stream principle, he suggests. "Feel free to pollute your own swimming pool, but if your sludge spills over into the stream we all share, you should pay for the damage. Conversely, if you volunteer for cleanup duty, you should get a reward. Otherwise we end up with too much pollution and too few volunteers."

The book opens with the startling title piece and propounds that when sexual conservatives increase their activity by moderate amounts, they do the rest of us a lot of good. The prescription can work to reduce the market for prostitution, and thus combat the spread of AIDS, argues Landsburg, painting the scenario of "a country where almost all women are monogamous, while all men demand two female partners per year."

He rephrases the goal of `minimising the number of infections resulting from any given number of sexual encounters' as `maximising the number of (consensual) sexual encounters leading up to any given number of infections.' He cites Michael Kremer of Harvard for "estimates that the spread of AIDS in England could plausibly be retarded if everyone with fewer than about 2.25 partners per year were to take additional partners more frequently." The statistic applies to "three-fourths of all British heterosexuals between the ages of 18 and 45."

Frighteningly, chastity can be an economic problem, of demand and supply; people with limited sexual pasts choose to supply too little sex in the present. "Insufficiently rewarded for relaxing their standards, they relax their standards insufficiently."

As a result, like in any other communal stream, the stream of partners has too many polluters and too few volunteers to clean it up, laments Landsburg. Chastity gets chastised, therefore, for its potential to pollute the sexual environment "by reducing the fraction of relatively safe partners in the dating pool."

Landsburg proposes the use of appropriate subsidies and innovative incentives to invite the `clean' into the pool, while keeping away the infected. Would a government-funded dating service (`bring us a used condom and we'll get you a date') that Oliver Morton suggests work, the author wonders? Or should it be possible to check negative HIV results online, to screen prospective partners, he asks?

For the serious reader.

`Twelve smart choices'

Welcome to the Wal-Mart economy, in which you may need survival tips from William H. Marquard's Walsmart (www.tatamcgrawhill.com). For, in the new `W' economy, there are new challenges. To competitors of today, low prices are a given, competitive advantages have a waning half-life, customers often know more than the manufacturers, and industry boundaries no longer provide any shelter. Suppliers have to reduce total delivered costs, and create a flexible network for global supply, while employers face tough human resource challenges.

`What do we do now?' As answer, the author offers `twelve smart choices', presented in groups of three: differentiate, emulate, dominate; leverage, invest, diversify; reward, impassion, grow; and belong, align, engage.

"Find the And," he urges in conclusion. Because "effective strategic thinking comes from piecing together wisdom from diverse and often disparate places." Connect seemingly unrelated dots in the market or across industries to develop new strategies, counsels Marquard.

Smart choice for those smarted by the big biz.

Best practices documented

Piecing together wisdom from diverse places is Learn From Them: A Compilation of Best Practices brought out by the Department of Administrative Reforms and Public Grievances (www.penguinbooksindia.com).

Included in the book are essays on Bhoomi, the land record management system in Karnataka; the Gujarat earthquake reconstruction project; ITC's e-choupal; city-wide sanitation in Pune; e-registration in Tamil Nadu and Punjab; IT for Braille education in Indian languages; Attappady wasteland conservation project; telemedicine in West Bengal; and more.

Best practices can never be fully replicated even in similarly placed situations, concedes the Department.

"This is largely because every social interaction is dependent upon the peculiar socio-cultural context in which it operates."

Reassuring reads for the week.

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