Student loans are crippling Americans. Education in the US is expensive because education is privatized, not that community colleges with cheaper education don’t exist. But the better jobs and opportunities go to students from more expensive universities because the perception is that these universities are somehow better.

Students will do almost anything to get into an ‘Ivy League’ or equivalent school. But this is only possible if either you are extremely brainy or extremely rich, therefore this creates a very nice balance where the extremely rich students subsidize the extremely brainy. It’s a free rider problem, but here both sides seem to be profiting. However Newton has laws, and there is no free lunch, so who loses? All we have to do to figure that one out is to follow the money.

The losers are the students who are not exactly brilliant but not exactly stupid. They are not exactly rich but not exactly poor. They are the horde, the majority, the bourgeoisie, destined to always be spectators, playing second fiddle. They are the people on the bench, the water boys and girls, always waiting for their big break. 

Never is this divide more apparent that when an economy is suffering. A rise in unemployment always sees the underprivileged suffer more. Even at the best of times the elite get the best jobs and the rest get what is left. The difference is that ‘what is left’ is usually enough to keep people happy, because a superpower like the US inevitably feeds off the rest of the world and therefore even its less fortunate are more fortunate than most of the fortunate elsewhere.

But in a recession the skeletal body of the economy is not fleshy enough to feed them all, and this is when the, wait for it, seedy underbelly of the education system exposes itself. The brainy and rich always have a way out, more or less. The rest however, gather at Zuccotti Park, ‘Occupying Wall Street’.

Modern capitalism, like a column by David Kristjanson-Gural put so nicely, is simply a system where wealth perpetuates wealth. It was George Bernard Shaw who said “all professions are a conspiracy against the laity” and this is just as true today as it was then.

The Corporatocracy own the universities and ultimately use them as breeding grounds for employable people, and the next generation of greedy elites. The system shuts out all thought that is hostile to it and reduces all dissenters to bar room intellectuals or doomsday prophets, devoid of money and success and therefore effectively devoid of influence.

And so students are hell bent on acquiring the best education (read university) possible. The vast majority who isn’t super smart or super rich proceed to take massive loans. They are then stuck with these loans for years and years after they start working and consequently can’t afford independent thought. Disillusionment with the system is effectively controlled because they all need to keep working for the corporates in order to keep the loan sharks from their door.

They refinance their debt and gradually graduate to bigger loans as they buy houses and cars. All the while slaving away in a materialistic haze that helps perpetuate their illusion of success, shutting out all metaphysical, spiritual and introspective thought, digging themselves deeper into a meaningless life, supporting war efforts and giving their implicit approval for their forces to kill thousands of unarmed civilians worldwide. This state of affairs is also loosely known as the American dream.

The Occupy Wall Street protests were a brief uprising of the laity. It was entertained as grownups entertain the tantrums of toddlers. Now the harsh winters and pepper spraying police have driven the toddlers back inside, and will hopefully turn them into good little robots again as the Corporatocracy, Israel and America prepare for yet another war, starting by antagonizing Iran, and there is nothing like a war to keep the internal peace.

Pictured is a massage chair from Abans. It’s made in China, costs about a lakh and comes with a one year warranty sans the grinning analyst. Work just bought one for us to relax on and having tried it twice, i kind of like it.

Of course, it’s never going to replace an actual masseur/masseuse. It doesn’t really help much in the leg area for instance. The air bags on the leg extensions that you see only squeeze your legs every second or so (at highest intensity) and is not going to really do any damage to all those knots that you didn’t even know you had.

But the upper body area is different. There are thick finger like objects under the surface that move up and down, they can either simply press or knead, or do something in between that is called a ‘flap’ (go figure). It feels like a giant hand massive enough to pinch your back between its fingers. The chair has three intensity levels, but the lower two are are more suited for little girls, and Jerry.

Disappointingly the head gets no treatment, the neck treatment is mostly cursory and doesn’t quite hit the spot, the shoulders and back however feel great after about fifteen minutes, and that is enough.

Would I pay a lakh for it? I wouldn’t have the disposable income. But i suppose it makes sense for a company to do so. Something to suggest at the next team meeting?

The premises being refurbished

Starbucks branding just coming up

Starbucks has finally turned its beady eye to Colombo it seems. There is an outlet coming up at Jawatte road just near the Thimba junction. While Starbucks might just be testing the waters*, the overpriced coffee market indeed seems to be booming.

Its funny, the thing about overpriced coffee is well, its overpriced. But the advent of an affluent upper middle class and the lack of any other alternative time killing joints, im presuming, is contributing to a growing market for high priced kopi. In the West where the concept first developed in busy cities where coffee is considered a necessity, its different. The dynamics are driven by an actual desperation for caffein and near price blind consumers.

Prices are unusually high given our income levels. Coffee in most upmarket shops here cost the same as they do in Singapore or the US. In other words, what is a slightly overpriced mass market operation elsewhere is definitely a luxury brand here.

As Tim Harford says in The Undercover Economist and this link clearly explains, overpriced coffee is usually a result of a coffee shop picking a strategic location near a subway station for example. The high rent drives away competition, and coffee starved customers pay extra for the convenience of a cup of latte enroute to work.

Expensive coffee shops in Sri Lanka and other parts of the developing world however, justify high prices by virtue of prestige. The prices keep the rabble out. So housewives can chill and gossip at the top of their voices, expats can come in to escape from the heat, office workers can take the occasional break and MBA students can discuss course assignments. You pay for the exclusivity and privilege of class, not the coffee. I’m not hating, just analyzing.

But how nice would it be if we started having some Arab style coffee joints here. Like the ones in My Name is Red. More pedestrian, more flavor and still novel enough to collect some street cred and more importantly, cheap. The stuff of dreams.

Funny thing, just up the street from the new Starbucks is a little kadey called ‘Eat cabin’ that’ll serve up some nice hot hot Harischandra for a fraction of the price, there’s even a little bench outside to sit and put a chat.

U PDATE: The outlet is not likely to be a full-fledged Starbucks and likely a new place selling Starbucks coffee. I don’t think this will affect the prices.

Tintin was epic. It managed to give near three hours of rollicking entertainment, bringing alive the twelve year old thrill seeker inside me. Speilberg and Peter Jackson did a more than decent job of doing justice to the comic book. The entire thing was done in cgi, using motion capture technology. Meaning real actors donned motion capture suits and acted out the scenes, which were then renderd into an an animated universe.

It was so real that at times you could hardly tell the difference. This made me think of creative destruction and how it might affect the movie industry soon, or later. Actors haven’t taken a real hit from economic forces for a good few decades now. There was the advent of silent film, which put a few radio stars out of business,  then there was actual audio in film which probably put a few mute and hoarse voiced actors out of business. But after that, acting was pretty much acting, you dream of it when young, escape a dreary rural existence and go out and become a star ot thereabouts.

Tintin only uses real actors behind the scenes though. The faces are competely artificial; a hybrid of many faces aimed to match the comicbook journalist as closely as possible. If this catches on, soon the movie industry might face a whole new phase of creative destruction, the old being destoyed to give way to the new; real actors giving way to artificial ones. Better looking artificial ones; fitter, more agile and capable of delivering far more camera angles at far lower budgets than can be even dreamt of in the real world. By ‘soon’ i probably mean a good few decades. People were saying the same thing when the first Final Fantasy movie came in too, and motion capture before Tintin only worked properly for non human elements like Gollum, the apes in Planet-of-the and the Navi in Avatar.

The Milennials that is, my generation, have already seen so much creative destruction it should hurt; if we didnt revel in it. There was the CD destroying the tape, then being destroyed in turn by the mp3. Then the internet comes and completely screws over many established industries while they were looking the other way. Most imprtantly the age old book is also undergoing a significant phase of creative destruction the like of which hasnt been seen since Gutenberg. Creative destruction happens when something is replaced in a way that is completely impossible to compete against, the only possible outcome is for the old to gradually and stubbornly give way to the new.

A picture of cops

From the guy who ‘helps’ you park at a random location in Colombo and then snidely asks for payment for a service you never noticed him doing, to the hustlers outside airports who get you taxi’s but yelling and waving their arms about, freeloaders (economic term, rent seekers) are everywhere.

There are rent seekers all over the country, hidden in little nooks and corners, sucking a little juice out of your paycheck every time you come close to them. Most of them you don’t notice, most of them you will only notice when you’re in trouble; because most of them can be found in the government service.

In the government service, ‘rent-seeking’ is the technical term for a bribe. You bribe the clerk to do his job, and to move your file to the top of a pile. When you get your driving license you have to invariably slip a bribe to the guy who tests you. This is regardless of your performance in the test; of course if you fail miserably then they kick you out and return the bribe so at least we can be reasonably sure that there aren’t any real malcontents driving around.

The Real Bad Boys

But there’s a brand of rent seeker that is far more devious and conniving. They are the bigger versions of the smaller rent seekers we just talked about. The simple ‘parking assistant’ or government clerk pales in comparison to the vested interests of these bad boys.  They are the grafters, the influence peddlers and the hoodlums in business and national suits.

Like, It is no secret that politicians love commissions. Ever thought why we continuously pick Chinese contractors despite the abusive loan rates? Hint; It’s not the superior quality. I heard from a friend who heard it from a parliamentarian that the Chinese offer commissions of up to thirty percent of the contract value, while the Indians only offer ten percent.

In an environment so lacking in transparency and accountability as ours, commissions and other vested interests are the only deciding factor in politicians’ decisions. Contracts that should be made with the best interests of the people in mind are made in line with the best interests of political pocket lining.

Influence Peddlers

Organized groups of influence peddlers are also known by the more civilized term ‘lobbyists’ in more ‘developed’ governments. Here in the paradise isle everyone is an influence peddler. Law and order rests completely at the mercy of an elaborate network of contacts. Even a little influence goes a long way. The letter of the law is a book shut up in a medicine cabinet, only to be pulled out to prosecute the non-connected or the scapegoat.

Influential people get government contracts; influential people get licenses to open gas stations, hotels and supermarkets. Influential people can mobilize law enforcement officials (being rent seekers themselves) through bribes and threats to protect business interests; protection that should have been given free to anyone with a business, influential or no.

When vested interest is rampant corruption becomes commonplace. Otherwise uncorrupt people become corrupted too because there is really no other way to participate in the economy. It can shut out the brainiest and most capable and only let the unscrupulous and devious in; reducing overall productivity, widening the wealth gap and grossly increasing poverty. In Philippines a study has shown that rent seekers have contributed to poverty in the county for over fifty years.

The Real Problem; Anything for free

But the problem is not just a problem of a few bad apples in the pile. The real problem here is that it is an attitude that shockingly permeates everything from the highest echelons of the economy to the lowest, most widespread parts of society in Sri Lanka. We’re all influence peddlers in our own way. We all give bribes and pull strings if we have the opportunity, and most of us don’t balk at getting away with a violation if we can.

If the people in the country are themselves prone to operating on vested interests, rather than interests that benefit the whole of society, then our leaders and business elite will do the same. The damage increases with the power of the person doing it and so you have another social disease that causes untold damage to all concerned in the long term.

Every time you bribe someone you exacerbate the disease, every time you stand by and let injustice go unpunished you make it worse.

I won a Galaxy Tab from Dialog recently. Ever since i used a friend’s ipad briefly i was playing with the idea of buying a tab. not only because i’m a bit of a gadget freak, but also because i thought it was an easy, portable computing option.

So what happens just when i’m contemplating this is a competition on Foursquare giving away a Galaxy tab to the winner, God is great. Dialog was generous with the prizes, also giving away a Galaxy S2 to the runner up.

Whet they didn’t do so well was promoting the competition, and when i joined with only about 12 days to go (it ran for a month), i easily managed to take the lead. Only about four people were competing seriously towards the end. The guys at Dialog, Milinda and the team, want to do it again, and next time they promise it will be much more competitive.

Doing the competition was roller-coaster, and i think i went a little militant and overboard. Soon it wasn’t just about winning that tab, it was about kicking ass. And kick ass i did, but looking back i think i was a little scary. Yasir came in second. He was planning on all along. I know Yasir from way back and he is very crafty,  so i was extra wary of him. In vain though, some collusion would have solved both our problems.

We basically had to become the mayor of as many Dialog star points locations as possible, and then make a star points transaction there. Doing it is like taking an in depth course in the inner workings of Foursquare; loopholes, do’s and don’ts and strategy-to-confuse-your-enemy. Yes ‘enemy’, that’s how competitive i got. I’ve barely touched foursquare since though, the colors make me puke.

Next time i hope there are more participants, and loopholes like remote check-ins are covered. They only advertised on twitter, so only got people who 1. were on twitter 2. were also on foursquare 3. had a smartphone.  Wider advertising on FB would have helped. I can hardly complain though, the competition was really fun, and the prizes were boombastic. Kudos.

The pad and i are getting along fine, insha Allah i will put up a review soon. But for now i’m enjoying browsing on it and even manage to blog from it. On the hunt for a better MS office app though. The whole thing is essentially like a bigger version of a Galaxy S2.

Messed up Una beach, pic by Indi

Indi went down to Una last night to check out the destruction down there. He says things aren’t that bad. Some illegal obstructive constructions on the beach have been demolished but the actual hotels haven’t been touched. The beach is a mess though, and the season is just starting. Apparently things look like another tsunami hit the place:

..Tourists are there now and it looks like tsunami again – though parts of the beach are fine…They could have done this off-season, and they should have taken the time to move the rubble. Because clearing structures to preserve the environment and, in the process, destroying the environment is not what I would call a win. They still have a few days to make it not a fail.

The last time i went to Una was over an year ago. There were some parts of the beach that were pretty unpleasant. It’s good of these places have been cleared up. So far there is no indication of locals being kicked out of their business. sorry for the drama.

Things haven’t been as sweet in other parts of the country. Last year in Mirissa, we found that big hotels had virtually displaced many locals from the beach. In Passikuda the Man moved in so fast that the tired locals, just recovering from the war, didn’t even have the time to realize what they were losing.

Often in Sri Lankan clothing stores you can find designer wear going dirt cheap. Most of these clothes come from garment factories. They are either rejected shipments or a result of surplus production. It’s technically illegal for the factories concerned to sell these items but they do so anyway, lucky for us.

I’m not going to go into the morality of the whole thing. Clothing is a basic human need. I just came here to talk shop.

There’s a new shop down highlevel road that had great gear going very very cheap. This shop has dropped all pretence and simply called itself The Factory Outlet (TFO for short). There were jeans by Lee and Wrangler going for like a thousand bucks along with an array of other designer wear with labels cut off or descreetly erased selling for low prices. This was only a couple of days ago, so I’m betting these items are still there.

Of course there are a good number of items that are clearly fakes, with made up brand names so you have to know how to separate the chaff. There are also some on-the-fence stuff like soft leather Crocodile wallets for about Rs.700. And don’t bother with the shoes. There was a ladies section also, and kids; but I didn’t venture in.

Where else do they sell designer wear dirt cheap? Spellbound, also on Highlevel road has great t-shirts. Most of their shirts however are made presumably for hulking Europeans cause they only have from size XXL upwards. Cool Planet also has some good stuff. House of Fashions has the occasional hidden gem but most of the time you shouldn’t bother. And take my advice and be wary of Odel, anything you find there can be obtained more or less for half the price at any of the other stores I’ve mentioned. Cotton Collection is not bad though. Although there are plenty of other shops popping up everywhere now, so if you know a place, do share.

Where does the stock come from? Local factories obviously. But also from India and Pakistan. A lot of the fakes come from Thailand and China. How do they operate and how does the distribution work? The answer to that would make for very interesting investigative journalism.

Why go designer? Well aside from the fact that designer wear obviously looks better, the quality is far superior and will last you for years if needed. Usually you pay a massive premium for design and quality and that’s why designer clothing is a multibillion dollar global industry. In Sri Lanka though, our unique position as a manufacturer of designer garments has given us a great positive externality. So why not?

Photo by AFP

They are demolishing Unawatuna. At least, they’re demolishing all the illegal hotels there. I don’t know how i feel about this yet. On the one hand they’re illegal, on the other the hotels are what give Unawatuna its character and feel.

The Man is moving into Una. I’m picturing large resorts being opened up on the bay and the beach being turned into a virtual desert spotted with the occasional oasis of deck chairs the use of which requires the purchase of a coke and lime. The charm of Una gone, the local entrepreneurs reduced to selling ganja, massages, inflatable toys and beach sarongs. Anyone been to Negombo? Its the same there.

The local entrepreneurs, now there’s a story. The beach was unused so they used it. They built their hotels and kept the local economy going. Tourists came and Una was voted one of the best beaches in the world. Places like Unawatuna, devoid of big investors and resorts were kept alive by local businesses that could survive on low turnover if they had to. This kept Sri Lanka’s tourism industry going. And now that the war is over and the Man is moving in, the authorities are quick to disenfranchise them.

In Islam for example, property rights are different. Land belongs to him who makes use of it. And if you own a patch of land and leave it idle for a long while, it effectively ceases to be yours if someone comes along and actually uses it for social benefit. All land ownership developed organically, everywhere. This whole sense of the government owning land is a remnant from feudal regimes. And if the government doesn’t provide these hoteliers with adequate compensation, it would be grossly unjust.

But what compensation can replace the loss of a lucrative business? Something that will continue to provide you and your children with a steady source of income and continued opportunity for development? What can compensate the loss of livelihood, the loss of something that gives you the satisfaction of being independent? nothing.

OK, the peeps at Una aren’t exactly cherubs. There is a very tight mafioso-esque cartel system that completely cuts off competition. Meaning that if anyone has the gall to set up show in Una without their explicit approval they would stop at nothing to make that business fail. Thug cartels like these are common around the island, look no further than Kiribathgoda for an ideal example.

But local businesses benefit the local economy. Big investors tend to suck all the profits and leave nothing for the locals. Sure, laws exists that make big hotels hire locals for work, but this only lets a smattering of the money trickle down. A plausibly better way of developing would have been to distribute deeds to well run hotels, destroying the cartels and bringing outside investors in to partner with existing owners. Come up with a plan for the development of the bay and work close with the locals to make it work. This ensures fast development while at the same time keeping the locals in the money.

Taking away a lifetime’s effort just when all their hard work seems about to pay off seems not just tyrannical, but downright ungrateful. If this happens, it would be a perfect example of the ill affects of capitalism. So much for Southern camaraderie.

UPDATE: Newer reports say that Unawatuna isn’t broken, much http://abdulhalik.wordpress.com/2011/12/15/unawatuna-isnt-broken/

Recently a Russian was caught at the border trying to smuggle in 200 pounds of not cocaine, not heroin, but butter into Norway. The stash is worth in excess of five thousand dollars

In a bizarre example of external factors affecting consumer demand, Norwegians have eaten up the entire butter supply in the country. Norway doesn’t belong to the EU and so has high import duties. Butter is currently retailing at USD 52 per kilo.

It was all apparently a result of a fad diet that has Norwegians everywhere substituting fat for carbs.

A Norwegian company also has a butter monopoly right now, pissing off a lot of fat loving Norwegians. This Reuters report says that the Danes across the border are loving it, and laughing about it over their richly buttered breakfast toast.

i’d like to know more about this fad diet. Meanwhile, economic textbooks finally have yet another implausibly interesting example to illustrate market behavior. Thanks Janith for the heads up on this!