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Countries Economics - Money Whither

Out of adversity comes opportunity

March 31st 2011 02:09

Cyclone Yasi

Graeme Newton is a busy man.

He heads the Queensland Reconstruction Authority, the body in charge of getting the Australian state back on its feet after twin muggings by nature earlier this year - widespread flooding in January was followed two weeks later by Cyclone Yasi, a storm so big we may never see another like it.

Graeme Newton and his team are in charge of cleaning up. The bill is expected to be about A$5.8 billion.

So he had plenty of other things to worry about recently when he was asked to take a phone call from the World Bank, a body involved in the permanent disaster area of global poverty.

"Could we," the World Bank asked Graeme Newton, "send a few people to watch what you're doing?"

"Why?" Newton replied, or words to that effect.

"Because," said the World Bank, "we think that what you are doing is cutting edge."

The World Bank may not have used the term "cutting-edge", but media reports today do use the term to describe how the World Bank saw the way Newton and Queensland were going about reconstruction.

Out of adversity comes opportunity. The observers are on their way and, hopefully, the World Bank will learn something which will be of use in its future roles in disaster management.

When it comes to disasters, every little bit helps.

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Posted By: Chris Champion - Category: Australia, Economics

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Fertile economics

October 24th 2010 06:38

Harold Ickes, US Secretary of the Interior from 1933 to 1946.

In another time and another downturn, President Franklin Delano Roosevelt fought the Great Depression with all the weapons he could muster, boosting public spending, lowering interest rates to encourage lending etc.

In 1933 the US Secretary of the Interior, Harold Ickes, was asked why the president was so bent on shaking things up.

"You can't fertilize a 40-acre field," Ickes said, "by farting through the fence."

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Posted By: Chris Champion - Category: United States, Economics, Politics

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Putting some spice into economics

September 26th 2010 11:26

The word economics comes from the ancient Greek word oikonomia, which means "management and administration of a household", and economics today is often defined as the social science that studies the production, distribution and consumption of goods and services.

Sometimes, however, the best definition is demonstration, and one of the best demonstrations of the principles of economics can be found in the streets of Mumbai, India. Let us take you on a trip, a journey of economic discovery.

In the crowded streets of Mumbai, India's most densely populated city (with more than 19,000 people per square kilometre), can be found a complex, sophisticated and extraordinarily efficient delivery service. Let us enter the world of the dabbawala.

A dabbawala is, literally, a person with a box. That person will by extension be in Mumbai, because the dabbawala service exists nowhere else. He is employed in a unique service industry whose primary business is spreading through the suburbs each morning to collect boxes containing freshly cooked lunches, delivering those boxes to the respective desks of office workers, and then returning the empty boxes again to workers' homes.

The contents of the box are often referred to as "tiffin", which is a light lunch or afternoon snack, and the word is sometimes also used for the box in which the food is carried. The dabbawalas are therefore also sometimes called tiffin wallahs.

It was the British who brought the word tiffin, and it was they who started the dabbawala concept. The Brits who came to the colony had trouble adjusting their palates from kippers and tea to dahl and lassi, and so established a service to bring lunch from their homes to their places of work. Today, Indian business people are the main customers for the dabbawalas but, increasingly, affluent families are employing them to deliver lunches to their children at school as well.

A collecting dabbawala, usually on bicycle, collects dabbas from homes, or sometimes from special dabba makers, then takes them to a designated sorting place, where he and other collecting dabbawalas sort (and sometimes bundle) the lunch boxes into groups. The grouped boxes are put in the coaches of trains, with markings to identify the destination of the box (usually there is a designated car for the boxes). The markings include the rail station to unload the boxes and the building address where the box has to be delivered.

At each station, boxes are handed over to a local dabbawala, who delivers them. The empty boxes, after lunch, are collected and sent home by reversing the process.

This service started in 1880. The first collective was formed in 1890 with about 100 men. An attempt to unionise the dabbawalas was made in 1930, and in 1956 a charitable trust was registered under the name of Nutan Mumbai Tiffin Box Suppliers Trust. The commercial arm of this trust was registered in 1968 as Mumbai Tiffin Box Supplier's Association. Nowadays, the service often includes cooking of foods in addition to the delivery.

An estimated 175,000 to 200,000 lunch boxes get moved every day by between 4,500 and 5,000 dabbawalas, all with an extremely small nominal fee and with amazing accuracy and punctuality. A recent survey found an average of one lost or misdirected tiffin box for every 6,000,000 deliveries.

No wonder the dabbawala business is booming (The New York Times reported in 2007 that the industry continues to grow at between 5 and 10 per cent per year).

The British Broadcasting Commission has produced a documentary on dabbawalas, and Prince Charles, during a visit to India asked to meet some of the. He did, although the heir to the British throne had to fit in with the schedule of the dabbawalas as their timing was too precise to permit any flexibility.

As the dabbawala business has grown, and as its complexity and efficiency have become known, it has come under scrutiny from business analysts and teachers, and economists. Dabbawala organisers have been invited give guest lectures at top business schools of India.

As a recent feature in London's Independent newspaper said, "Logistically, what the dabbawala army achieves each day is nigh on impossible. A team of Harvard statisticians has proved as much. Without computers, pretty well without mobile phones, relying on a relay system fraught with the potential for dabbawalas being late, ill or even dying en route (two did last year), they weave across the city on a spider's web of routes."

The Harvard statisticians proved that Mumbai's dabbawalas should not be able to do what they do do. This is not, we suggest, one of the more radiant moments in the history of statistical endeavour. Which is why the economists are taking note and moving in to study the phenomenon.

Or perhaps they just want some tiffin, delivered reliably on time.

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Posted By: Chris Champion - Category: India, Developing countries, Economics

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Never argue with an economist

July 1st 2010 03:14

John Key

Wages in New Zealand are about a third lower than wages across the puddle in Australia, and the country's much-respected Reserve Bank Governor, Sir Alan Bollard, was recently quoted as saying that wasn't about to change. New Zealand, he said, did not have the same advantages, such as mineral deposits, and was unable to compete.

New Zealand Prime Minister John Key sniffed a political opportunity and made a public pronouncement that Bollard's comments were negative. His government, he said, was pursuing policies to raise New Zealand income levels to match those of Australia within 15 years

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