Weekend reading links

1. The late Ezra Vogel compares Xi Jinping and Deng Xiaoping. He points to the need to evaluate them in their respective contexts. 

Because of the changes introduced by Deng, Xi Jinping inherited a China that was far stronger than China during Deng’s era. Deng’s approach for dealing with foreign relations, ‘taoguang yanghui, juebu dangtou, yousuo zuowei’ (avoid the limelight, never take the lead, and try to accomplish something) was well-known. In the 1980s, Deng held back on increasing military expenditures in order first to build up an economic base. After 1995, the Chinese began to increase military expenditures even more rapidly than the economy was growing. Thus by the time that Xi Jiping came to power, since China had much greater economic and military power than during the period of Deng’s rule, he could take a much stronger stand in dealing with foreign countries.

His summary is apt,

To summarize my perspective as one views Xi from the perspective of Deng, I conclude that Xi could be considered a stronger leader than Deng in three senses. He ruled a stronger country that could take a stronger stance in dealing with other countries. Secondly, as a micro-manager, he personally exercised more direct personal control over daily activities. Thirdly, he spent more time and effort in controlling developments in local areas. But I would argue that in three areas Deng was a stronger leader. As one with such a broad background in so many areas, he had more personal knowledge and confidence in shaping broad overall policies. Secondly, as a person who had held so many high positions and had so many former subordinates, he could achieve more through macro-management because of his experience and the readiness of former subordinates to implement Deng’s policies. Thirdly, as one who had such broad experience and such broad perspective, he conceived and implemented changes that had far more impact on the course of China’s development and thus had a far greater role in shaping the course of China’s history.

2. Anna Weiner has a fascinating profile in The New Yorker of the polarising figure of Peter Thiel. This is interesting,

Dodge the rules, skirt the law, shiv your business partner, abandon your friends: Chafkin argues that the Silicon Valley edition of this playbook was written at PayPal.

3. One signature of the distress in the rural and informal sector is the persistently high demand for NREGA jobs. 

Data available on the MNREGS portal show that 2.07 crore households availed of the scheme in September — which was 3.In fact, the monthly figure for households availing of the MNREGS has been hovering over two crores since December last year. In the last 18 months, or since the pandemic hit, the numbers have been below the two-crore mark only thrice — in April 2020 (1.10 crore), October 2020 (1.99 crore) and November 2020 (1.84 crore). In pre-Covid times, the number of households availing of the MNREGS would cross two crores only in the months of May and June.85% higher than for the same month in 2020 (coming after the first wave and the severest restrictions of the pandemic), and as much as 72.30% higher than September 2019, the last non-Covid year. The monthly average figure for households availing of the MNREGS was 2.36 crore in the first half of the financial year 2021-22 — higher than the monthly average of 2.28 crore for the whole of 2020-21. In 2019-20, the figure stood at 1.56 crore.

On a different note, Business Standard reports of a new study which points to delays in timely payments of NREGA wages.

Wage payments were delayed for 71 per cent of the transactions beyond the mandated seven days, 44 per cent of the transactions beyond the mandated 15 days and 14 per cent of the transactions beyond the mandated 30 days. The study was conducted on about 1.8 million transactions between April 2021 and September 2021 by randomly sampling 10 percent of the Fund Transfer Orders (FTOs) from one block per district per state for 10 states... 

Normally, the MGNREGA payment process consists of 2 Stages. After work is completed, a Funds Transfer Order (FTO) with worker details is digitally sent to the Central Government by panchayat/block. This is called Stage 1 and it’s the state’s responsibility. The Central government then processes the FTOs and transfers wages directly to the workers’ accounts. This is called Stage 2 which is entirely the Central government’s responsibility. As per the Act’s guidelines, Stage 1 must be completed in 8 days and Stage 2 must be completed within 7 days after Stage 1. Workers are entitled to delay compensation for each day’s delay beyond 15 days.

4. Some graphics about India's telecoms market. Spectrum charges are among the highest in the world.

While data charges are the cheapest.

And average revenues per user remains woefully small.

It is believed that the industry can become sustainable only if the near-term monthly ARPU rises to about Rs 200. 

5. Vivek Kaul writes that India's covid recovery may be a case of glass half full. 

The total priority outstanding home loans of banks as of August 2021 had stood at ₹4.71 trillion. A year back, in August 2020, this stood at ₹4.73 trillion. This means that in the past one year, banks have largely funded non-priority sector home loans... Further, as of August 2021, the outstanding loans of banks against gold jewellery have gone up by a whopping 66% to ₹62,926 crore compared to August 2020. Between August 2019 and August 2021, these loans have gone up by 137%... A recent survey by the National Restaurant Association of India stated that around 25% of the restaurants across India may have shut down permanently during the last financial year. Around 230,000 jobs may have been impacted... As per the Centre for Monitoring Indian Economy (CMIE), the labour participation rate—the size of India’s labour force as a proportion of the population aged 15 years or above—stood at 37.88% in urban India in September this year. It was 40.48% in February 2020, before the start of the pandemic. When it comes to rural India it was at 42.08% in September and 43.67% in February 2020.

6. FT on Korean halyu,

In turns saccharine, brutal, and dazzlingly original, Korean content has since bulldozed its way into the global cultural consciousness. Girl group Blackpink has the most YouTube subscribers of any musical artist in the world, while boy band BTS has a following so organised and devoted that Chinese authorities have come to regard it with the kind of suspicion historically reserved for religious groups like Falun Gong. More recently, South Korea’s merciless social satires have conquered the heights of film and television respectively. Bong Joon Ho’s Oscar-winning Parasite and Netflix sensation Squid Game — the streaming service’s most-watched show ever — have given global exposure to traditional Korean preoccupations with economic precarity and social violence.

7. The airports, alongside national highways and ports, are a great example of successful infrastructure PPPs. Sample this,

The Airports Authority of In­dia (AAI) can make over Rs 650 crore annually as concession fee from the six brownfield airports that have been won by the Adanis... This is more than four tim­es the income that AAI made in 2019-20 from the same airports, at Rs 142.72 crore, by running them on their own... AAI has also earned Rs 29,300 crore in 13 years from the concessions of the greenfield Delhi and Mumbai airports under the private-public partnership (PPP) model. How­ever, in both these airports, the concession model was not based on bid per passenger as has been the case for new PPP airports but on a revenue-share model. So, while Delhi pays 45.99 per cent of its annual revenues, Mum­bai forks out 38.7 per cent. In contrast, the earnings (profit from operations) that AAI made from these airports when it was running them between 2001 and 2007 was collectively only Rs 3,000 crore. However, in just one year (2019-20), under the PPP model, AAI’s earnings from Delhi and Mumbai together was at Rs 3,052 crore. And, this of course does not include the increase in valuation of the 26 per cent equity that it holds in these two airports.

8. The arrest of former SBI Chairman, Pratip Chaudhuri, supposedly a very honest official, on very questionable and flimsy grounds is sure to exacerbate decision-paralysis within the banking sector. Most worryingly it goes to the heart of decision-making on NPAs in their valuation, transfers, and resolution. 

Consider this. An asset becomes NPA. It's taken up for resolution. The lender follows the due process and sells the asset to an ARC. The original promoters (the borrowers) question the transaction at DRT, NCLT, High Court, and Supreme Court. All were dismissed. Now the promoters press a fraud charge and get one Director of the ARC arrested without even issuing a summons! 

This raises the question of accountability. One cannot but help wondering whether the Chief Judicial Magistrate of Jaisalmer will be held accountable for this decision, and the damage it does. 

Two very good articles on the issue here and here. 

9. India's exports may hit the $400 bn mark.

Business Standard reports that the fact that it's significantly contributed by rise in exports of sugar, cotton, and iron ore means its sustainability is doubtful. 

10. The Federal Reserve finally announced the beginning of the long-awaited tapering of its massive $120 bn monthly bond purchase program. The FOMC announced that it will keep reducing its purchases of Treasuries by $10 bn a month and of agency mortgage backed securities by $5 bn every month. The process will start in mid-November and the stimulus will cease in June 2022. It also said it'll calibrate the taper based on changes in the economic outlook. It however said nothing about rate hikes, saying the economic bar for the was much higher. 

“It is time to taper, we think, because the economy has achieved substantial further progress toward our goals,” Powell said. “We don’t think it’s time yet to raise interest rates. There is still ground to cover to reach maximum employment, both in terms of employment and in terms of participation.”

In recent days, the Reserve Bank of Australia and the Bank of Canada have led the way in reversing monetary accommodation and raising rates. The Bank of England is expected to follow suit next week by raising rates for the first time since 2018. 

11. FT has a long read on the rise of green parties.

Green parties now have a share of power in six European coalition governments: Austria, Belgium, Sweden, Finland, Ireland and Luxembourg. They are on track for an even bigger prize in Germany, Europe’s largest economy, where they are in talks to form a three-way coalition government after winning 14.8 per cent of the vote in September’s election. That is more than double the 6.7 per cent of votes the Greens won in 1998, when they first entered a ruling coalition with Gerhard Schröder’s Social Democrats, in a move that made their leader, Joschka Fischer, foreign minister.

Green activism is heightened by the increasing trend of floods, droughts, and forest fires across the world. Scientists have shown that emissions must halve by 2030 and reach net zero by 2050 to limit global warming to 1.5 degree celsius, the safest temperature goal in the Paris agreement.

Crucially, scientists have shown that emissions must nearly halve by 2030 and reach net zero by 2050 to have a good chance of keeping global warming to 1.5C, the safest temperature goal in the Paris agreement. 

12. It hard not to feel that Mark Carney, as UN special envoy on climate and finance, is doing a great dis-service to the cause of climate change activism by leading the mother of all greenwashing with his claim that "we have all the money needed" to achieve net zero greenhouse gas emissions. He is leading $130 trillion of private sector assets, supported by more than 450 banks and Wall Street titans, committed to achieving net zero emissions by 2050 through the Glasgow Financial Alliance for Net Zero, or Gfanz.

13. In a brilliant article Simon Kuper points to a fascinating phenomenon - climate gentrification. 

The Little Haiti neighbourhood is barely five miles from glitzy Miami Beach, but it feels a world away. There’s no whiff of ocean here. Miami remains largely segregated and almost all the people sweating their way down Little Haiti’s streets are black... A new high-end development, Magic City, is arising on top of what used to be a mobile-home park. Hipster shops are opening: Scarab handmade cycles and Booktanica, a wine bar that sells books. House prices are shooting up. In 2012, according to Zillow, the average home in Little Haiti cost $99,600, just 38 per cent of Miami Beach. Today the price is $414,000, fractionally more than Miami Beach. Many new buyers in Little Haiti are investors using limited-liability corporations. They are betting on a future when this neighbourhood will benefit from a previously disregarded asset: its elevation. An average of seven feet above sea level, Little Haiti should outlive Miami Beach. If so, today’s poorer residents will be priced out. Miami is Ground Zero for a new phenomenon that will reshape the world’s coastal cities: climate gentrification...

Miami real estate agents used to ignore rising sea levels, then pretended the problem had been fixed by what look like waist-high garden walls. But lately Miami market thinking is shifting from “Location, location, location” to “Elevation, elevation, elevation”... What starts in Miami will go global. About 40 per cent of humanity lives within 100km of a coast, and many coastal cities share Miami’s social structure: rich neighbourhoods on the beach, poor ones inland. Think of Rio de Janeiro, Los Angeles or Cape Town. As seas rise, the most expensive places are at the highest risk. In Istanbul, for instance, the choicest coastal bits of the Kadiköy neighbourhood could go under.

Miami, built on porous limestone, is described as the world's most vulnerable major coastal city, and may be gone by 2100. 

14. Is Ethiopia going the Afghanistan way with the Tigray People's Liberation Front going to do a Taliban on the Oromo dominated government of President Abiy Ahmed? 

On the one-year anniversary of war between the federal government and the Tigray People’s Liberation Front, Tigrayan forces are intimating they could march on Addis Ababa, the capital, and eject Abiy from power. The TPLF, which ran the country for 27 years until 2018, is no Taliban, however brutally it governed and whatever its detractors say. But like the Taliban, banished from government and criminalised, it could now bludgeon its way back to power.

Ethiopia's recent history has been complicated,

Most of the regions into which Ethiopia is divided — including Tigray, Amhara and Oromia — regard themselves as nations with their own languages, cultures and competing versions of history. Transfer of control involves profound shifts in the balance of power between constituent nations of the “Ethiopian empire” and is rarely less than traumatic. Haile Selassie, who oversaw a feudal system, was deposed and later executed after a student-inspired, Marxist-led uprising in 1974. The regime that followed, the Derg, dismantled feudal land structures but imposed a “red terror” that culminated in man-made famine. After decades of perceived Amhara domination, it was a rebel army from Tigray that led the 1991 overthrow of the Derg. The TPLF, though it represented a region with only 6 per cent of Ethiopia’s population, held power until 2018. Abiy is from Oromia, the most populous region with more than one-third of Ethiopia’s population, but which has traditionally stayed on the margins of government. His election followed years of protests against Tigray’s outsized influence on politics. He promoted national unity. To some, that promised modern, ethnic-neutral democracy; to others, it spelt a return to the suppression of ethnic rights.

15. As inflationary pressures mount, on the back of rising energy prices comes the sharp rise in food prices. 

Global food prices have surged because of bad weather, such as droughts in North and South America and heavy rain in Europe, and the supply chain problems that came with the easing of coronavirus restrictions. The FAO food price index rose at an astonishing annual rate of 31 per cent in October. The IMF’s food and beverages commodity index rose at a similar rate. In real terms, after taking into account inflation, global food commodity prices are now higher than their 2008 and 2011 peaks, just before the Arab spring protests that were partly caused by soaring food costs.

16. Interesting snippet about how migration of high tariff consumers through open access and captive power plants is shrinking the cross-subsidy margin available for discoms, 

According to research by Prayas (Energy Group), with high tariff consumers beginning to move away, the share of cross-subsidy in discom tariff support (the other part being state subsidy) has declined from 29 per cent in 2017-18 to 23 per cent in 2018-19 — a decline of 6 percentage points in one year.

With the increased share of renewables, this trend will only hasten. And this is a stunning statistic,

As of March 2020, the net worth of all public sector distribution utilities in the country put together was a negative Rs 61,757 crore (though it was positive in states like Gujarat and Maharashtra). In comparison, the combined net worth of the few private sector discoms that exist in the country was a positive Rs 24,965 crore.