‘The gift which is given as being given,
to one who does no favor,
at the proper place and time and to a worthy person,
this gift is considered good.
But that which is given for the sake of reward
or again with a view to the fruit or unwillingly,
that gift is considered emotional.
That gift which is given
in the wrong place and time to the unworthy
disrespectfully and with contempt is said to be dark.”

—   Bhagavad Gita

Joe Sobran on the best way to teach your children civics:

“Because I write about politics, people are forever asking me the best way to teach children how our system of government works. I tell them that they can give their own children a basic civics course right in their own homes.

In my own experience as a father, I have discovered several simple devices that can illustrate to a child’s mind the principles on which the modern state deals with its citizens. You may find them helpful, too.

For example, I used to play the simple card game WAR with my son. After a while, when he thoroughly understood that the higher ranking cards beat the lower ranking ones, I created a new game I called GOVERNMENT. In this game, I was Government, and I won every trick, regardless of who had the better card. My boy soon lost interest in my new game, but I like to think it taught him a valuable lesson for later in life.

When your child is a little older, you can teach him about our tax system in a way that is easy to grasp. Offer him, say, $10 to mow the lawn. When he has mowed it and asks to be paid, withhold $5 and explain that this is income tax. Give $1 to his younger brother, and tell him that this is “fair”. Also, explain that you need the other $4 yourself to cover the administrative costs of dividing the money. When he cries, tell him he is being “selfish” and “greedy”. Later in life he will thank you.

Make as many rules as possible. Leave the reasons for them obscure. Enforce them arbitrarily. Accuse your child of breaking rules you have never told him about. Keep him anxious that he may be violating commands you haven’t yet issued. Instill in him the feeling that rules are utterly irrational. This will prepare him for living under democratic government.

When your child has matured sufficiently to understand how the judicial system works, set a bedtime for him and then send him to bed an hour early. When he tearfully accuses you of breaking the rules, explain that you made the rules and you can interpret them in any way that seems appropriate to you, according to changing conditions. This will prepare him for the Supreme Court’s concept of the U.S. Constitution as a “living document”.

Promise often to take him to the movies or the zoo, and then, at the appointed hour, recline in an easy chair with a newspaper and tell him you have changed your plans. When he screams, “But you promised!”, explain to him that it was a campaign promise.

Every now and then, without warning, slap your child. Then explain that this is defense. Tell him that you must be vigilant at all times to stop any potential enemy before he gets big enough to hurt you. This, too, your child will appreciate, not right at that moment, maybe, but later in life.

At times your child will naturally express discontent with your methods. He may even give voice to a petulant wish that he lived with another family. To forestall and minimize this reaction, tell him how lucky he is to be with you the most loving and indulgent parent in the world, and recount lurid stories of the cruelties of other parents. This will make him loyal to you and, later, receptive to schoolroom claims that the America of the postmodern welfare state is still the best and freest country on Earth.

This brings me to the most important child-rearing technique of all: lying. Lie to your child constantly. Teach him that words mean nothing–or rather that the meanings of words are continually “evolving”, and may be tomorrow the opposite of what they are today.

Some readers may object that this is a poor way to raise a child. A few may even call it child abuse. But that’s the whole point: Child abuse is the best preparation for adult life under our form of GOVERNMENT.”

The Governor of Pennsylvania Ed Rendell on “Face the Nation” October 2, 2010:

“We don’t have it in our DNA to mislead the public.”

According to CNN Money the SEC and CFTC report on the May 6 “flash crash” blames it on an unnamed trader’s algorithmic trading of E-Mini contracts, leading to two crashes – one in the broad index and one in individual stocks. [None of this actually makes sense to me. I thought there were already circuit -breakers in place since “Black Monday” to stop crashes. Two. How does a sell-off in the broad index cause steep plunges in particular stocks, but not in others? Three. Why would an order of this size not be broken up? Four. Can you tell I don’t believe this flimsy story?]

“A large investor using an automated trading software to sell futures contracts sparked the brief-but-historic stock market “flash crash” on May 6, according to a report by federal regulators released Friday.

In the 104-page report, staff members at Securities and Exchange Commission and the Commodity Futures Trading Commission said an unnamed investor used a trading algorithm to sell orders for futures contracts called E-Minis, which traders use to bet on the future performance of stocks in the S&P 500 index.

The contracts were sold quickly and in large numbers, according to the report, on a day when the market was already under stress due to concerns about the European debt crisis.

The selling was initially absorbed by “high frequency traders” and other buyers, the report said. But the algorithm responded to an rise in trading volume by increasing the number of E-Mini sell orders it was feeding into the market.

“What happened next is best described in terms of two liquidity crises — one at the broad index level in the E-Mini, the other with respect to individual stocks,” the report said.

In other words, the lack of buyers and the rapid selling of E-Mini futures contracts began to affect the underlying stocks and the broader stock indexes.

As a result, the Dow Jones industrial average plunged nearly 1,000 points, briefly erasing $1 trillion in market value, before regaining much of the lost ground to close lower. It was the largest one-day drop on record.

Waddell & Reed, an asset management and financial planning company based in Overland Park, Kan., has been widely reported as the investor behind the sell order. But the report identified only a “large fundamental investor.”

Waddell said in May that it was one of possibly 250 other investors trading the E-mini futures contract on the day in question, and that it did not intend to disrupt the market.”

Who’s Waddell & Reed? Its website has a brief self-description:

“Founded in 1937, Waddell & Reed is among the most enduring asset management and financial planning firms in the nation, providing proven investment and planning services to individuals and institutional investors.”

Huff-Po adds some details from the SEC report (which I’ll read in a bit):

The new “circuit breakers” are in effect until Dec. 10. Under the rules, trading of any Standard & Poor’s 500 stock that rises or falls 10 percent or more within a five-minute span is halted for five additional minutes. On May 6, about 30 stocks listed in the S&P 500 index fell at least 10 percent within five minute”

Now, why December 10? I’ve no idea.

None of this is new. Just after the crash, Zerohedge had the pertinent questions based on a report by Matthew Goldstein at Reuters, which included the following crucial information:

“Waddell’s contracts were executed at Barclays Plc’sBarclays Capital and later given up to Morgan Stanley, according to the document.”

Barclays and Morgan Stanley, of course, played powerful supporting roles in the ongoing looting of mainstreet by the big banks.

At least, no one’s saying it was a just a “fat-finger” anymore.

From Truthout.org:

“The report of the fact-finding mission of the Office of the United Nations High Commissioner for Human Rights (OHCHR) on the Israeli attack on the Gaza flotilla released last week shows conclusively, for the first time, that US citizen Furkan Dogan and five Turkish citizens were murdered execution-style by Israeli commandos.

The report reveals that Dogan, the 19-year-old US citizen of Turkish descent, was filming with a small video camera on the top deck of the Mavi Marmara when he was shot twice in the head, once in the back and in the left leg and foot and that he was shot in the face at point blank range while lying on the ground.

The report says Dogan had apparently been “lying on the deck in a conscious or semi-conscious, state for some time” before being shot in his face.

The forensic evidence that establishes that fact is “tattooing around the wound in his face,” indicating that the shot was “delivered at point blank range.” The report describes the forensic evidence as showing that “the trajectory of the wound, from bottom to top, together with a vital abrasion to the left shoulder that could be consistent with the bullet exit point, is compatible with the shot being received while he was lying on the ground on his back.”

In the Bible, The Book of Esther tells how the queen pre-empted an attack on the country’s Jewish population and then persuaded her husband to launch an attack before being attacked themselves.

Israel has threatened to launch a pre-emptive attack on Iran’s facilities to ensure that the Islamic state does not gain the ability to threaten its existence.

Ralf Langner, a German researcher, claims that Unit 8200, the signals intelligence arm of the Israeli defence forces, perpetrated the computer virus attack by infiltrating the software into the Bushehr nuclear power station

Mr Langer said: “If you read the Bible you can make a guess.”

Computer experts have spent months tracing the origin of the Stuxnet worm, a sophisticated piece of malicious software, or malware, that has infected industrial operating systems made by the German firm Siemens across the globe.”

Read the rest of the piece at The Daily Telegraph.

What’s interesting to me is that when I was doing a little googling to find out about Stuxnet,  I came across a Microsoft page on it in July 2010 that listed Iran, India, Indonesia, and the US as the only countries in the world associated with the worm.

Atanu Dey: What “free” (state-subsidized) education has cost India

[While I disagree with his premise that public goods should be subsidized, Dey does make an excellent argument that the subsidy of higher education ended up being a subsidy of foreign corporations and economies. Yet another of the unintended consequences of statist benevolence….]

“India suffers from very low literacy even compared to other developing countries. Yet one gets to hear about the tremendous impact that Indian doctors, engineers and scientists have had around the world. This conveys the impression that the Indian schooling system works. I believe that that impression is wrong and that in fact the Indian school system is inefficient and biased against the poor.

Free Education

I spent many years the Indian school system and I must admit that I received very good schooling. My eleven years in a pretty good high school in Nagpur was practically free. I was given a scholarship during my bachelor’s degree in engineering. At IIT Kanpur, while doing a master’s degree in computer sciences, I received a stipend which was sufficient to pay for all normal expenses. I estimate that my entire education in India, including a master’s in computer science, cost me less than US$ 100 in today’s terms.

How is it that a poor society can afford to educate its children for free? I come from a middle class family and I am sure we could have afforded more than that. I am also sure that if the education had been priced at full cost, we could not have paid for it up front. [There is a way to circumvent this problem. See “Full cost pricing” at the end of this page.]

Someone else paid for my education. That is true for a very large number of people who are educated in India’s premier institutions–someone else paid.

Nagpur is a medium-sized city by Indian standards. It has a bunch of good high schools. You have to have a middle-class or better background to get into those because competitive pressures keep the poor out. But if you get in, and don’t goof off too much, you can do well in the competition for admission into a good engineering or medical college. And then you get heavily subsidized education in college. Armed with all the advantages, you fill out a bunch of applications, write the GRE and the TOEFL and off you go to the US, never to return.

Brain Drain

It was fashionable in the 1970s and 80s to refer to the migration of trained doctors, scientists and engineers to the advanced industrialized countries as a “brain drain.” Actually, it was a “resource drain” rather than a “brain drain.” India never really had a shortage of basic brains. There are hundreds of millions of basic brains in India. However it takes resources to train a basic brain and turn it into a useful brain. These scarce resources are lost to the economy when used to train brains that eventually migrate.

Just like capital flight from poor economies to the rich ones, the migration of trained manpower, human capital flight, is enormously expensive. It is an even more of a burden when the training is publicly funded. When a trained engineer migrates to the US, it is totally indistinguishable from a gift of US$ 100,000 from India to the US. Over the years, the total implicit subsidy from India to the US could be estimated to be of the order of hundred billion dollars.

Losses

When an educated person leaves India, there is a first-order loss to the economy if the education was publicly funded. There is no comparable first-order loss if private resources were involved in the training. But in either case, the economy loses the life-time stream of economic contributions that the migrant would have made. This is a second-order loss. There is what can be considered a third-order loss that is harder to estimate but whose impact may be the most damaging in the long run. This arises from publicly subsidizing higher education at the expense of primary education.

Primary education, somewhat like primary health care, has characteristics of what economists call a “public good.” The positive effects of primary education spill over into the larger economy more than that of higher education, which is more like a private good. Markets efficiently provide optimal quantities of private goods but are known to under-provide public goods. The market understandably fails in the case of primary education. The solution is straightforward: the public subsidy of primary education.

The essential point is that the subsidizing higher education is an inefficient use of resources which could have been used for primary education. And this distorted system has real-world consequences: the shameful neglect of primary education.

Dismal Statistics

The Indian constitution mandates universal primary education for all (see Article 8 of the Indian Constitution). Yet, 41% of children do not reach grade 5 in India. Compare that to some other countries:

   	  Gambia             20%
	  Mali               18%
          Senegal            15%
          Tanzania           17%
          Burkina Faso       25%

[Source: Human Development Report 1999. UNDP.]

Of the countries that rank lower than India in the human development index, only about four have higher percentage of children that do not reach the fifth grade. Mozambique does worse than India, for instance. But never mind small strange sub-Saharan African countries. Take Indonesia for example: only 11% of its children don’t go past the fifth grade. Or take Mexico with its 14% figure. Compare India with neighboring Sri Lanka with its 17%.

The failure of Indian primary education is hard to escape. Sixty years after India’s political independence, India is places 126th out of 175 countries ranked in the 2006 Human Development Report. India’s adult literacy rate is a dismal 61%, below Cameroon (68%), Angola, Congo, Uganda (67%), Rwanda (65%), and Malawi (64%). That 40% of today’s Indian adults cannot even “both read and write a short, simple statement related to their everyday life” implies that they did not get the equivalent of the most basic of primary education. Compare that to China’s 90% adult literacy. [Source: UNDP Human Development Report.]

Successful NRIs

The argument is often advanced that the Indian education system must be world-class. After all, doesn’t it produce world-class NRIs (non-resident Indians) like Vinod Khosla and Rajat Gupta? Yes, of course. And don’t they turn around and give millions of dollars to support the IITs? Yes, of course. Sure the NRIs send some money home. But what is the ratio of the amount India spends on their education to what these worthies send back home?

Even then, who could be so crass as to measure everything in terms of dollars? Surely there is something more important than money. Yes, there is. And it is the untapped human capital that India has in abundance and which it criminally neglects. It neglects them because the powers that be have it made under the current system and it serves their narrow purposes.

In practically every measure of education, India’s rank is so abysmal that it is depressing to even look at the figures. Even if the solution to India’s education problems were as little as a week’s worth of clean drinking water, India would still be in trouble. Around 60% of Indians don’t have access to clean drinking water.

For all our vaunted world-class scientists, doctors and engineers, India ranks miserably in the number of scientists and technicians it has: 0.3 such per 1,000 population. Compare that to: China 0.6, Islamic Rep of Iran 0.7, South Africa 1.7, Korea 2.9.

Hyperbole and Hubris

We in India lack many things. One thing appears not to be in short supply–the hyperbole and the capacity for self-delusion. We have pretences of being an information superpower. Our IT sector is supposed to make us great. It stretches the imagination beyond belief that this idea can be entertained by anyone. We account for less than 1% of the global $600 billion IT business. Remember we represent 17% of the world’s population. Even if we were to increase our share 10 times (and this is unreasonable by any account) we’d still be below the world average.

Judging the Indian education system based on a Chandrashekhar or a Ramanujan is misguided and delusional. It is like weighing a pinch of mustard seeds against a herd of elephants and declaring that the mustard weighs more. How do we manage to delude ourselves so? I believe that those doing the judging live in very rarified atmospheres. Their world is populated by jet-setting intellectuals and internet millionaires and H1-B visas and ecommerce and NRIs. Hard evidence to the contrary, it is more comforting to believe that we are not that badly off.

Is there any point in confronting the hard evidence, you may ask. Yes, there is. Unless we recognize the basic problem, examine it dispassionately, we are unlikely to even consider solving the problem. In a sort of defense through denial, we can go on with business as usual by declaring the problem does not exist. But the problem does exist. And the problem is not one that does not have wide ranging implications. The most devastating impact of our dismal educational system is that we are condemning ourselves to a future of exceedingly low economic development. If there is one thing that developmental economists have learnt, it is this: education is the most important factor in economic growth. Education has more impact on economic growth than natural resources, foreign investment, exports, imports, whatever. Neglect education and you may as well hang yourself and save yourself the pain of a slow miserable death.

So who paid for my education? It is the poor rural children, thousands of them, who paid for my education by losing their opportunity to become semi-literate. The system is tilted against them and unless there is a radical change in the way that education is funded, they will continue to pay the price for subsidizing the US for decades to come.

~~~~~~~~~~~~~~~~~~

FULL COST PRICING

A brief solution to the problem of full-cost pricing is easy to state. Price all higher education at full cost. If a year of engineering school costs Rs 3 lakhs, price it at that. Then give loans to every student that needs it to pay the price. The loan is repayable upon employment and in terms commensurate with the level of employment. If you earn big dollars in the US, pay in big dollars. If you work as a doctor in a small village in India, pay small amounts in rupees. Essentially, with the loan system in place, there is no need for public subsidies for higher education.”

AP reports that Chinese billionaires aren’t inclined to follow the power elite’s favorite piece of flim-flam – hyper-public philanthropy. Seems the canny Chi-Coms aren’t buying into the “good little rich boys” club:

“Some of China’s super rich are skeptical about Gates’ and Buffett’s approach. China’s wealthy don’t have to “copy the U.S. charity mode,” billionaire Guo Jinshu told Xinhua in a story Wednesday. “In China, an entrepreneur’s top responsibility is to keep his own business sound, to fulfill taxation payments, and create jobs. This is also out of a philanthropist heart.”