Saturday, May 7, 2016

Weekend reading links

1. Upshot points to a reversal of the trend on national income distribution between workers and capital owners in the United States,
At the start of 2013, for example, 61 percent of national income went to pay and benefits for workers. But by the end of 2015, that had risen to 62.6 percent. (That said, in the early 1990s, that figure was around 66 percent.) If the proportion of national income going to workers in early 2013 had stayed constant, there would now be $251 billion a year less flowing into Americans’ paychecks than is the case. That is about $1,900 a year per household. At the same time, corporate profits’ share of national income has fallen, from 14.2 percent in the middle of 2014 to 12.1 percent by the end of 2015. That translates to $328 billion less in annual corporate profits than there would be if the earlier proportion had held.
While higher incomes to labor is surely a positive development, the vast majority of it may be concentrated among those at the executives level.

2. Business Standard editorial expresses concern that the Indian Railways' very high operating ratio (working expenses to traffic earnings), over 90 per cent for 2015-16, will constrain its investment plans,
The medium term trends revealed in the recently tabled CAG’s report on the railways for 2014-15 are illuminating. Virtually the entire surplus (97 per cent) generated by freight operations goes to meet the deficit in passenger services. Every class of passenger travel, except three-tier AC, loses money. The report expectedly recommends that passenger fares should be raised. However, the total number of passengers carried in the last three years has not just plateaued but fallen, even as passenger revenue has gone up. If fares are raised further, more passengers are likely to keep walking away until revenue starts getting affected. The story is the same in terms of the scope for raising freight rates, with the railways continuing to lose market share. If the scope for improving margins by raising tariffs is severely limited, there is only one way to go – reduce costs by improving efficiencies.
That may be easier said than done, and unlikely to be enough to make a serious contribution to increasing internal revenues. Given the limited fiscal space to provide budget support, the only realistic option would be to leverage existing assets. More specifically monetize through optimal value capture techniques the realizations from its massive land assets, especially railways stations. But where are the much-awaited PPPs? This may be a step in the right direction.

3. Bhupesh Bhandari points to the diligent work of pharma industry whistleblower Dinesh Thakur, whose blog has exposed the dark side of India's pharmaceuticals industry,
There are, in effect, two pharmaceutical industries in India that work in parallel: one compares with the best in the world and the second with the worst. The first sells its produce in large volumes in quality-conscious United States, the gold standard, while the second sells chalta hai medicine within the country without fear. To put it differently, the Indian pharmaceutical sector, which makes the finest medicine in the world, sells sub-standard stuff to Indians.
Bhandari's diagnosis is focussed on the supply side,
This is because Indian regulation is lax. On their part, pharmaceutical companies argue, with a lot of justification, that India has become an impossible place to work in, thanks to the ever-expanding price controls, which leaves them with no money to upgrade their processes and machines..The bigger players often blame the smaller ones - the long tail of pharmaceutical companies - for the mess. The smaller companies, the argument goes, cannot have production units of a high standard and they resist all demand for stricter regulation because it will put them out of business.
This may only be a partial analysis. A more nuanced argument would go back to the point that I blogged earlier while discussing the debate on the choice between Make in India and Make for India. Fundamentally, the very small size of the country's middle class means that it simply does not have the market to support such world-class products. This, in turn, leaves manufacturers with no option but to indulge in cutting corners with various cost contributors, especially those involving standards. 

4. From Business Standard on the troubles faced by South Indian states on the back of insufficient transmission capacity,
Of the 9,000 Mw of wind power produced in Tamil Nadu, around 40 per cent was asked to be backed down last year during summer, as the state’s grid could not handle the whole capacity. This has been brought down to 20 per cent as of now but we will face a similar issue in June-July. 
5. Fascinating essay on one of the world's most ambitious real estate development projects, the $20 bn Hudson Yards project being developed by Related Companies and Oxford Properties (who secured development rights from the Metropolitan Transportation Authority) over seven blocks in New York's Far West Side involving the construction of 17 million square feet of residential and commercial space. The Project, a touchstone for "smart city" urbanism, is being built on two massive steel and concrete platforms that span the 30 active tracks of the West Rail Yard.
Because the complex topology of tracks and tunnels limits where engineers can embed caissons into the bedrock, only 38 percent of the site can support construction, so developers have to maximize the usable area by building as high-density, and high-profit, as possible... One fourth of the residential units are designated for affordable housing (although skeptics fret that “affordable” means studios and other housing unsuitable for families). Sustainable features include an efficient, on-site, cogeneration plant; energy management systems that calibrate use across the grid; household meters that provide real-time readings; and a thermal loop that ties together each building’s central plant, enabling them to exchange heat and chilled water... The power plant is supposed to “keep building services running through any disruption,” whether brownout or superstorm. Circuits are the new topology of this terrain, once dominated by tunnels and tracks. Yet another mechanical loop — a pneumatic-tube trash removal system by the Swedish company Envac — will have separate circuits for recyclables, food waste (converted to fertilizer), and trash (fed into a central dehydrator). While such systems are environmentally “smart” — they eliminate noisy, polluting garbage trucks; minimize landfill waste; and reduce offensive smells — they also cultivate an out-of-sight, out-of-mind public consciousness. With disposal chutes on each floor of every building, garbage becomes more of a domestic aesthetic problem than an ecological concern.
6. Fantastic interactive graphic from Flowingdata that shows how Americans commute to work. As can be seen from the graphic below, driving alone is the overwhelmingly dominant mode.
See also this on when people leave for work.

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