I’ll start this post with one of the most thought provoking things I read this week. Fred Wilson is one of the leading VCs in the US, and he wrote a post titled What is going on? on Monday and gave a brief and hard hitting explanation on what’s wrong with the economy in the US, and why aren’t there more jobs being created there.
Although the post is written from a US perspective, what he describes is applicable to every single country in the world.
The first point is about entitlements in a system that make the costs so huge that it makes it impossible for the company or even the industry to operate profitably. I’ll come back to this point later in this post because it ties to something that may happen soon.
The second point is about the transformation of the current system from an industrial society to an informational society. I’ve written earlier how India moved from agriculture to services, and missed the industrial phase in between which is what almost all economies go through, but it’s the first time that it’s occurred to me that it’s probably because of the times we are in, and may not even be needed for India. I’ve always thought that until there is a strong manufacturing base, the millions below the digital divide can never be brought up to par, but maybe that’s not needed in the 21st century?
Getting back to the first point about entitlements – Ajay Shah wrote a post this week titled Reversal of Reforms in NPS? about the possibility of making the NPS a guaranteed returns scheme – this ties back amazingly well to Fred Wilson’s point about having systems that have such high inherent costs that they can never be profitable.
Making the NPS a guaranteed returns scheme is a bad idea, and this Mint Editorial does a great job at explaining why.
So in fact India may be creating a problem that US is currently dealing with!
On to personal finance – Hemant discusses 10 financial planning rules of thumb.
The Hoot on paid news in the Times of India. Apparently, TOI doesn’t mind republishing an entire story from 2008 without any updates if they have a fine print disclaimer telling you that it is from 2008!
BusinessWeek on how a Pakistani tech whiz has created a supremely useful service that can send a text message to thousands of people at one go. It’s a simple technology that’s relevant and useful to their situation today.
Finally, PIB reports that Khadi and Village Industries Commission in collaboration with Gandhi Gramodyog Urja Vikas Sanstha has developed Solar Charkhas.
Enjoy your weekend!
Dear Manshu,
I beg to differ with your views as well as those of some others reg. the guaranteed returns on NPS. I think there is broad agreement that except for the Govt employees, NPS has really not taken off. And there is a lot of debate on how to make it more appealing. The fact remains that whenever you talk about ‘Pension’, the word conjures up visuals of ‘Security’ – And that in turns comes with a ‘Guarantee’. When you are telling people that you are going to provide them with a Pension and in the same breath, tell them that its gonna be subject to the vagaries of the stock market and that you may either make a windfall or lose al your money, people are naturally going to view it as some kind of a joke. I agree with the Leftists on this one. Although i am not sure as to whether one should compare it with EPF returns and guarantee a sum, some form of minimum guarantee, i feel, is certainly necessary.
Dear Vijay,
I have experienced this first hand several times on the NPS post, and I can sense the confusion of people when I tell them that it’s not a straightforward thing to tell you how much pension you should expect because of these vagaries, and lately I’ve been asking people to stay away from NPS if the employer doesn’t mandate it given these kind of uncertainties around it.
I certainly agree that it’s not the thing that comes to people’s mind when they first hear pension, but also fear that a guarantee for so many people for such a large number of years may present an unaffordable bill at the end of it. The way the US system is right now, shows an example of that, and our past experience with things like UTI guaranteed schemes have also not gone down well.
We’re missing a social security net and that’s needed for sure, I just hope we don’t make avoidable mistakes.
Hi Manshu,
Thanks for info on SMSall.
Many a times I really desired for such a service.
Daily I receive various info thru SMS, which I need to forward to all my clients.
Time & again I have to go thru the cumbersome process of typing the SMS in my online SMS software in order to send it to hundreds of clients – its prone to typos.
I hope such a service starts in India soon – just forward the SMS to one number & its gone to all the clients – what a relief !!
Hi Furqnan,
Thanks for your comment – gives a good idea on how to use these kind of services apart from the situation described in the article. I never thought of what you just mentioned.