Weekend reading links

1. Mumbai just needs to prioritise its transportation infrastructure resources on its commuter rail and buses. Sample this,

Many more commuters (150,000) arrive in South Mumbai by train in one hour than the number that travels by car on the Sea Link (100,000) all day. In just three hours during the morning rush, the trains ferry many more people (450,000) than all four road arteries do (400,000) all day.

2.  Fascinating article in The Economist on the idiosyncrasies associated with American cities. Sample this,

Los Angeles is a striking example. The county is home to 88 incorporated cities, ranging in population from 76 (Vernon) to 3.9m (Los Angeles itself). Beverly Hills (population 34,506) is its own city, with its own police force, fire department and school district. So is Santa Monica (92,495). Even Vernon has a police department, with some 50-odd staff. All told, the county has about 30 fire departments, more than 40 police departments and 80 school districts. Los Angeles is extreme but not unusual. Alabama’s Jefferson County, which is one of seven counties in the Birmingham area, is home to 35 municipalities, including Cardiff, population 45.

The reason,

America’s constitution goes to great lengths to demarcate state and federal powers. The Tenth Amendment explicitly reaffirms that “powers not delegated to the United States by the constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.” Cities derive their power from state governments... All but 11 states follow “Dillon’s Rule”, named after a 19th-century judge, which holds that municipalities only possess powers specifically granted to them by state law... Most states make it difficult for a city to force its neighbours to join it. Only eight states allow municipalities to annex territory unilaterally. Eight require the state legislature to change municipal boundaries. The overwhelming majority, 29 states, require a referendum in the areas to be annexed, according to an analysis by Greg Lindsey of the University of Minnesota. These votes often fail. Residents of unincorporated areas resist annexation, fearing a greater tax burden. Those in already rich suburbs fret about sharing their taxes with the poorer core city and merging of school districts. Municipalities avoid annexing poor neighbourhoods because they cost more to service than they provide in revenue. In places like Birmingham, blacks worry that rich, white suburbanites will usurp their hard-won power.

The result,

A map of the incorporated areas of Jefferson County clarifies matters somewhat: dozens of independent cities slot neatly into the gaps around Birmingham like a tricky jigsaw puzzle. From the air, it may appear that Birmingham sprawls but, in an administrative sense, the city is constrained. This is a problem. Cities that are unable easily to expand their boundaries are poorer, more segregated, have higher concentrations of poverty, lower growth, worse municipal bond ratings and less well-educated workforces... 

The result is duplication and waste as municipalities each pay councillors, police and fire departments, waste-collection agencies and school administrators to perform the same services. Cities are reluctant to co-operate even on menial things like waste collection, fearing an erosion of their independence. Fragmentation is one of the main reasons that many cities are poor at providing public transport. Businesses use fragmentation to their advantage, making known their interest in moving to a metropolitan area and playing its constituent cities off against each other... Firms win tax breaks and other enticements; employees’ use of infrastructure puts a further burden on the whole conglomeration. 

And this about how it deepens inequality,

The jigsaws also deepen inequality. Small, wealthy cities can afford better schools. No matter how much young white couples enjoy living in restored downtown lofts and strolling to artisan coffee shops full of reclaimed wood, they eventually move to suburban houses in superior school districts when they have children, taking their taxes with them. Struggling cities get poorer; comfortable ones get richer. It is, for families, a sensible decision: four of the five best school districts in Alabama are in the suburbs of Birmingham, according to Niche, a website. Mountain Brook, a Birmingham suburb, is home to the highest-ranked school system in the state. Its median household income is four times that of the mother city. Its poverty rate is one-seventh.

3. A new paper finds evidence of what was always suspected, that corporate philanthropic donations often carry a business agenda. The authors examined a comprehensive sample of public commentary made by firms and non-profits within US federal rule making in the 2003-15 period and the IRS data on those firms' donations. They analysed the interaction of non-profit organisations and large corporations within the US federal regulatory environment across a wide variety of sectors ranging from banking to environment and found,

First, we show that, shortly after a firm donates to a non- profit, the grantee is more likely to comment on rules for which the firm has also provided a comment. Second, when a firm comments on a rule, the comments by non-profits that recently received grants from the firm's foundation are systematically closer in content similarity to the firm's own comments than to those submitted by other non-profits commenting on that rule. This content similarity does not result from similarly-worded comments that express divergent sentiment. Third, when a firm comments on a new rule, the discussion of the final rule is more similar to the firm's comments when the firm's recent grantees also comment on that rule. These patterns, taken together, suggest that corporations strategically deploy charitable grants to induce non-profit grantees to make comments that favor their benefactors, and that this translates into regulatory discussion that is closer to the firm's own comments...

The paper presents evidence that corporate foundations’ charitable grants reach targeted non-profits just before those same non-profits engage in public commentary... the content of the messages simultaneously communicated by non-profits and by corporations appears systematically closer in terms of textual and semantic similarity in presence of a charitable contribution provided immediately before those comments are filed. While circumstantial, the evidence seems to point to potential concerns in the assessment of prima facie independent information on the part of targeted regulators, who may be unaware of the philanthropic grants that realize in the backdrop and may interpret similar comments stemming from different segment of the public spectrum as indicative of merit.

4. As this NYT investigation on Facebooks user's private data sharing partnerships with corporate clients without the prior informed consent of its users show, the company's management (and that is effectively two  people) continues to plunge new depths in demonstrating its incompetence in management.

For years, Facebook gave some of the world’s largest technology companies more intrusive access to users’ personal data than it has disclosed, effectively exempting those business partners from its usual privacy rules... The exchange was intended to benefit everyone. Pushing for explosive growth, Facebook got more users, lifting its advertising revenue. Partner companies acquired features to make their products more attractive. Facebook users connected with friends across different devices and websites. But Facebook also assumed extraordinary power over the personal information of its 2.2 billion users — control it has wielded with little transparency or outside oversight. Facebook allowed Microsoft’s Bing search engine to see the names of virtually all Facebook users’ friends without consent, the records show, and gave Netflix and Spotify the ability to read Facebook users’ private messages. The social network permitted Amazon to obtain users’ names and contact information through their friends, and it let Yahoo view streams of friends’ posts as recently as this summer, despite public statements that it had stopped that type of sharing years earlier... They also raise questions about whether Facebook ran afoul of a 2011 consent agreement with the Federal Trade Commission that barred the social network from sharing user data without explicit permission.

These violations go much beyond poor management and border on personal data theft and malfeasance. It is staggering that the Chairman and COO of Facebook are still ensconced on their jobs. Like earlier instances, in keeping with incompetence in crisis management, the company delayed, denied, and deflected in responding to the latest exposure.

As Rana Faroohar has written here, the management disasters at Facebook and Tesla demonstrate the challenges when businesses grow too fast and continue with the culture and ownership structure of growth-seeking start-ups, and its owners and managers do not have the talent and expertise required to develop robust management capacity needed to run big businesses. 

It's one thing to invent a new technology. It's an altogether different thing to make a sustainable commercial business out of that. This is one of the best known axioms among investors. The how did they trust the likes of Zuckerberg and Musk (and continue to do so with their ownership) to manage large companies?

5. Finally, Anil Swarup lays the blame on Vinod Rai for decision-paralysis in Indian bureaucracy. He tears apart the presumptive loss audit on coal blocks. And I concur completely on his role, but think it goes much beyond Vinod Rai.