What will the defeat mean ?

What will the defeat of the Congress in the 3 states mean for India, I wonder.
Will it mean that all non-NDA parties come together?

Well I certainly hope so mostly because I am a partisan hack. I hate the BJP more than anything else in the world.

But also because I think the BJP is the wrong party to carry India's economic reform further. Their support base--urban, upper caste Hindus and increasingly "brahmanized" intermediate castes (like Uma Bharti) are the principal beneficiaries of the current economic system like free higher education, LPG subsidy, in the villages fertilizer subsidy, virtually free water and power , jobs in public sector undertakings, rent control etc.

Economic reform in essence means uprooting a lot of this structure. The BJP, like every other political party in the world, will be unable to go against its own supporters.

What it means is that the Congress must ally with the Communists, Mulayam, Laloo, Paswan and whatever else is left of the old United Front government if it wants to form a government next year. But how the hell will Manmohan Singh as finance minister convince the communists to support the government over PSU divestment, or labour reform? The BJP is unlikely to be magnanimous and lend their support as the opposition just as the Congress hasn't supported Arun Shorie over privatization.

I still think the Indian economy will grow fast enough. The impetus for economic change/ growth comes from deep within the fabric of the country. There is only that much that any government can do to stop this thing we've started.

However questions remain...

I won't watch TV today...

Or tommorow, the day after, maybe for a week. I can't bare to watch that loathsome Arun Jaitley gloat on my TV screen.

As you probably know, the Congress lost three states today... :( Two of my favourite political leaders--Digvijay Singh and Ashok Ghelot won't be Chief Ministers. There is no justice in the world.

We're not in Kansas Anymore

Following straight in behind Atanu's last post, the recent Business Week cover story really does seem to be making waves. Among the the latest 'shocks' in the breaking news: the fact that even the MIT open courseware itself is now being outsourced. I'll let my friend Marcelo explain by republishing his original Bonobo post.

When do you know, positively, clearly and down to your very bones, that the world you're living in isn't the world where you were born? When Italian mammas have to be incentivated with cash to have more kids? Or when the MIT, one of the world's foremost centers of education and research in science and technology , outsources to an Indian company the core of the software programming it took to "Open Source" its educational materials?

None of this will really be surprising to Bonobo readers, as Edward has been writing for longer than most about the demographic and economic currents driving these events. Yet it's a bit of a shock to realize that they aren't even very surprising to the public in general. Like the proverbial frog in the pan, we get used to trends long before we have fully grasped their implications.

The problem, of course, is that the water in the pan eventually boils...

Update: from Edward

Apart from the fact the post linked to about MIT is interesting in itself, the comments column is fascinating, and some good arguments are made all round, including this one:

We're slowly killing our talent pipeline - the best senior techies start out as programmers and junior technical staff and learn the business from the ground up. The same goes for analytical talent. If you're somewhere in the lower levels of management and came up through the technical ranks, you've got a decent career ahead of you. Half of your peers have probably changed careers - and there is no one coming up the ranks behind you to compete with you. I suspect we're going to see a real problem finding truly competant project managers and development team leaders in a couple of years once the recession is over. Due to the staff cuts and lack of talent nipping at my heels, I'm the top person in my field at my company at age 30. Yes, I really am that good - but I'd have a lot more competition if we hadn't laid of most of our junior analytical pipeline three years ago and dumped half of our senior staff in favor of cheap offshore folks. It's not a problem until you need someone to talk to the client or senior management - then you're screwed. You've then got the choice between charming airheads or incomprehensible technical folks.

The Law of One Price

Why the law of one price astonishes people is astonishing to me. BusinessWeek Online of Dec 3rd has a story about US programmers at overseas salaries. The story reports that someone came up with a novel solution to the problem of the off-shoring of US programming jobs. The "novel" solution is for employers in the US to bring the salaries of US programmers more in line with the costs of hiring an off-shore programmer. Now, I would have thought that anyone who has had even a nodding acquaintance with Econ 101 would have figured that as the most natural outcome of market integration. But I am mistaken. It appears that some people do get astonished when they see markets work.

US programmers cost approximately $80K per year. Contract programmers from India cost about $40K per year (although the programmer gets a lot less because the jobs are intermediated through firms that have to have piece of the action.) The market for programmers worldwide is not maximally inefficient -- that is, it is not a fragmented market. So naturally, the law of one price is going to hold. In other words, Competition rulz.

Here is an excerpt from the tail end of that piece:

What if other companies begin taking the same approach -- offering Indian-style wages to American workers? On the positive site, we could begin to solve our job-creation problems. But on the negative side, America's standard of living would inevitably decline. There's only one way to find out for sure how it all might shake out, and that is for other executives to replicate Jon's experiment. The results could be quite interesting.

The implicit assumption in the question above is that GOD has decreed that the American standard of living is sacrosanct. The Americans must continue to consume a disproportionate share of the world's resources and thus maintain their standard of living. Other people -- Indians, for instance -- should be content with a meagre share of the global resources. All the breast beating about the grave threat to the American standard of living is grotesque when one sees the pitiable living standards of a couple of billion humans who don't happen to be Americans.