Go Kerala!

Bring it dowwwwn Achuthanandan! :)

[I can already hear the critics whining about how many jobs have been lost due to this move]

Just back from a short trip to Kerala - Trivandrum and Cochin are bustling and the intentionally paced growth of the economy has meant that these centres have been able to avoid turning into urban nightmares like Bangalore. Local business is flourishing - people from all over the country come to Cochin to shop or study and/or receive medical attention in Trivandrum.

Both cities easily have some of the best infrastructure in the country - Cochin's Nedumbassery airport is lightyears ahead of Bangalore or even New Delhi. Homelessness and pollution are almost non existent as compared to other urban centres. At the same time, technology parks, ports (SEZs) and tourism are flourishing. Public Health has taken a bit of a beating with the recent outbreak of a viral fever epidemic - but the government (with extra pressure form the press) has been mobilizing massively to address the issue.

So yes, Commie-leftist governments can sometimes do a good job. Inqalaab Zindabaad! :)

Sorry Anna, I find this less amusing than you. Kerala's shoppers, and in turn, it's vendors will lose out. Say you are a juice manufacturer - why go to Kerala and try to set up buy orders and prices with hundreds of mom and pop shops, with all the expense and record-keeping that entails, when you can deal with a series of shops like Reliance, which can order in bulk, making record-keeping and pricing more straight-forward. Small, inefficient sellers that enjoy monopolies in local markets have always complained about big bad stores, from the time of Woolworth's to Walmart.

Also, WalMart is finding out it is not the behemoth it once was. Consumers have shown while they like WalMart for things like laundry detergent, cleaners, and houshold goods where price is the deciding factor, they have not had much luck in selling goods where labels matter, such as clothes and home furnishings. Plus, they are spending a lot more on upgrading their stores with wider aisles and better lighting. Walmart's size does not make it immune to marketplace pressures.

If you prefer Olsson's to Borders, that is your individual choice. Governments have no business in picking winners in the retail market.

Kerala's shoppers, and in turn, it's vendors will lose out

Somehow I think Kerala's shoppers and vendors will survive.

KXB, I always find your comments edifying. You raise very valid points and I thank you for putting up with me on a Friday when I'm sugar-happy. But yes, I am very amused, and because of this and other stories like the Coke one I linked to above, I think Kerala is pretty wacky. :) And I love it.

Somehow I think Kerala's shoppers and vendors will survive.

No. No they won't. They don't have Whole Foods or Reliant. Whatever do people do without such things? :D Does my Aunt in Ernakalum not deserve juice?? DOES SHE NOT? (Pssst, I think they'll survive, too.)

I need to make sure I have no more sugar for the rest of the day. ;)

Somehow I think Kerala's shoppers and vendors will survive.

Survival is not the same as prosperity. Kerala's seemingly idyllic appearance to tourists is largely subsidized by its best and brightest leaving for jobs in the Persian Gulf, and sending money back home. So, since the workers are there, but their money is in Kerala, they cannot exert the same pressure on the local government to spend funds wisely. Relying upon remittances is no way to build an economy (look at India pre-1991 and Mexico today).

Just FYI...somebody just posted this in the news
Reliance, Beating Wal-Mart to India, Lures Shoppers, Investors
Whats the use if only Kerala doesn't allow reliance..other states will allow and you can visit them for retail tourism like the piligrimage tours to temples

brightest leaving for jobs in the Persian Gulf, and sending money back home

You're speaking to a product of the Kerala-Gulf migration demographic. My parents left for the Persian Gulf where they were able to use their superior education (as compared to almost any other ethnic group in the Gulf) to get lucrative jobs and send money home. So the remittances from Gulf countries are a result of the government's investment in the education of its people - no subsidy here unless you want to say that the government subsidizes education and in turn the graduates of that system subsidize the economy through remittances.

In more recent years, the migration trend has slowed and even seem some reversal - I met a number of entrpeneurs in Cochin who had returned form the Gulf to start businesses and even one who returned from Chicago to open a hotel.

Kerala's idyllic landscape faces more far more problems than the choice of soft-drink - agriculture is dwindling in some of the traditional ricebowl areas, water/power generation management is still inefficient and the small but very poor tribal populations are largely ignored. I we can lick these problems, I think we'll be ok if we have to drink fresh coconut juice instead of Goldspot.

No wonder Kerala has one of the highest unemployment rates in India and you find a lot of them seeking employment and business opportunities in the neighboring states of Karnataka and Tamil Nadu and of course the Gulf :)

Also, WalMart is finding out it is not the behemoth it once was. Consumers have shown while they like WalMart for things like laundry detergent, cleaners, and houshold goods where price is the deciding factor, they have not had much luck in selling goods where labels matter, such as clothes and home furnishings. Plus, they are spending a lot more on upgrading their stores with wider aisles and better lighting. Walmart's size does not make it immune to marketplace pressures.

WalMart is a god send for folks struggling financially and people save a lot of money by shopping at WalMart. The problem with WalMat is not its size but its employee practices. There is much to appreciate about WalMart if they fix their employee practices. Its possible to be a decent employer and still make profits. Costco and Starbucks are excellent examples of good employers. If I have to buy bulk, I go to Costco instead of Sam's Club

Another important question that arises with this Walmart/Reliance entry to retail stores etc.What happens to exploitation of the farmers/whole sale producers by the middlemen...will it increase or decrease with Reliance/Walmart style retail ? If it does reduce, then I am sure the
poor farmers/wholesale producers are going to rejoice ? But remember their products are going
compete with world's better product so will they also be wiped out ?

Just a quick note about unemployment in Kerala which I've seen reported as high as 20%. This recent study from the Centre for Development Studies in Trivandrum points to the social rather than econoimc roots of the high unemployment rate - i.e. some people don't work because they don't need to or are not permitted to by family rather than because they lack the opportunity:

The paper concluded with the observation that unemployment in Kerala is much more a social problem than an economic problem.

Five factors lead to this conclusion. First, nearly 70-75 percent of the unemployed in 1998 became employed within five years, the hard-core unemployment lasting more than 5 years being only about 5-6 percent. Second, there is no geographical area that remains a high unemployment area for longer periods of time. Third, the unemployment rate among persons 30 years of age or more was only about 6 percent. Fourth, many of the unemployed came from relatively well-to-do households living in
"good or luxurious" houses furnished with expensive household durables. Fifth, the unemployed are rarely the breadwinners of the households concerned, but are mostly unmarried sons or daughters of the head, or married women whose husbands are the breadwinners.

Back to the juice metaphor - you can get fresh, local juice from local fruit in Kerala. That beats mass-produced packaged juice any day. It's obscene to ship inferior processed foods long distances into markets that have their own local produce. I have no problem with importing manufactured goods (like appliances) and stuff that isn't available locally, and pricing them according to the "global market," but fruit is something else entirely.

Wal-Mart’s market power inevitably forces its suppliers to cut corners on quality in order to deliver the lower and lower prices that Wal-Mart demands.

Right, the "the big bad guy made me do it" defense. Real nice. Suppliers cut corners when they take the easy way out.

And Kerala should also ban cars and buses because they drive mom-and-pop rickshaw pullers out of business.

Badmash has the right idea.
If they can survive why shouldn't the govt come and shear the hair off the hairy sheeple?
Why not I ask you.

because they drive mom-and-pop rickshaw pullers out of business

Wait a minute... you may be on to something there! Greener transportation - every man can pull his own rickshaw :)

I thinkt that we're doing just fine without the big box stores. People in Cochin like getting their fish from vendors who come to their homes. And since the municipal governments of many cities and towns in Kerala have banned the use of plastics in retail stores, I don't know how the big boxes would be able to package their sub-standard goods for sale anyway!

And Kerala should also ban cars and buses because they drive mom-and-pop rickshaw pullers out of business.

Right, the let's-extend-everything-to-its-most-idiotic-extreme defense. Real nice.

People can't have it both ways-- we want everything at "every day WalMart" uber-cheap prices, but then we're bereft when our dog dies from tainted petfood, etc. Why is this very real issue being dismissed?

Another important question that arises with this Walmart/Reliance entry to retail stores etc.What happens to exploitation of the farmers/whole sale producers by the middlemen...will it increase or decrease with Reliance/Walmart style retail ?

Back to the juice metaphor - you can get fresh, local juice from local fruit in Kerala. That beats mass-produced packaged juice any day. It's obscene to ship inferior processed foods long distances into markets that have their own local produce. I have no problem with importing manufactured goods (like appliances) and stuff that isn't available locally, and pricing them according to the "global market," but fruit is something else entirely.

If you are buying as an individual, or as the head of your household, that's one thing. But say your are the principal at a local school, and you have to set up a budget for the cafeteria. You have a certain amount of money to spend on juice, but due to bad weather or fungal infection, the local juice crop is ruined. So, do you wait until the next harvest, or do you buy juice from a neighboring state, which while it may not be local, can meet the needs of your students?

One of cousins in Calcutta told me the following story, "I never buy milk from some guy who pours it out of one of those large jugs, I only buy it in sealed cartons. I found out he was mixing milk with water, and charging the same price. The store restocks their goods, I don't have to wait for him to bike by the house, and if I buy something that turned out to be spoiled, he is anxious to keep my business and makes amends." As a man with a wife and child, he saw little charm in the mom and pop operators swindling him out of his limited income.

KXB

I agree. Half of Kerala population lives and works outside of the state because the economy is so slow.

The real losers will be the farmers. They lose a lot by their dependency on middlemen and changes in demand. Supplying to supermarket chains will make their livelihood more stable by cutting out middlemen and being able to better forecast the demand. Luckily rest of India will lead the way and Kerala might change its laws.

Umm, this is slightly off topic here, so please excuse me. In the caption underneath the picture in this page, I noticed a very interesting word. From my association with Tamil friends, I have come across a very similar word in Tamil. However, this word in Tamil is very un-parliamentary language, to say the least. But of course, I'm assuming its something entirely different in Malayalam. ;)

However, this word in Tamil is very un-parliamentary language, to say the least. But of course, I'm assuming its something entirely different in Malayalam. ;)

Nope. :D

Thank you for the clarification, Anna. One more word to add to my (limited) Malayalam vocabulary list. ;)

Kerala is a different growth stage economy, you can't compare what worked for a mature market like the US to work in Kerala. The needs are guided by different preference, in most parts of India US style chain stores are a novelty and it will be a while till the novelty phases out, that is why there is a rush for single brand retailers to invest in India. Retail is pegged to be the highest growth sector in India. Why don't we let the customer decide what they want, if they don't want a reliance or a walmart, they wouldn't shop there.

Brown - an interesting side note to shopping in India. One of the foundations of the big box retail model is the high use of cars in suburbs. Thus you build massive parking lots and customers will drive in and buy lots of things. What I find is that even in places like Gurgaon where malls abound, Indian households prefer the convenience of having vendors drop off products at their homes. So for example, they'll call the local store and give them a list which will then be dropped off. I'm not saying that Reliancefresh and Walmart won't adapt, but I think in the absence of a similar car-culture in India and the preference of home delivery, smaller vendors will still survive.

Badmash,

True, but from what I have heard reliance will have home delivery similar to your local vendor. Also I am not sure if you know the McDonalds in India have home delivery which is absolutely different than their model here. I am not saying supporting local businesses is bad, all I am saying is let the market decide. The market in India is waiting for this kind of development and I don't think it will be stopped. It will be good for the consumer and local suppliers.

ACfd...

There is much to appreciate about WalMart if they fix their employee practices.

That seems like a pretty big if to hang your argument on.

I'm not sure if their strategy will be the same in India, but in the US, Wal-Mart has solved this problem. (As has Starbucks.) The business model is to deliberately set about putting small competitors out of business. They open stores in strategic locations, drive the local stores out of business, then close the 'dummy' stores and force everyone to travel to the nearest Wal-Mart. They make sure that people don't have other options. This is also why there's such an outcry when Wal-Mart refuses to carry things like emergency contraception or unedited R-rated movies-- there's nowhere else for people to go.

This practice also drives down wages-- if there's nowhere else for people to work, they'll settle for minimum wage. And in the case of immigrants in the US, Wal-Mart has been caught repeatedly paying undocumented immigrant workers less than minimum wage and locking them in stores overnight.

all I am saying is let the market decide... it will be good for the consumer and local suppliers

True - then again, big players have a way of squewing the market so while I am in sympathy with your support of the idea of consumer choice, I remain skeptical.

Oops, I meant to quote Brown at 25-- "Why don't we let the customer decide what they want, if they don't want a reliance or a walmart, they wouldn't shop there."

Apropos all this business about "the market deciding", if the market "truly" decided (as in textbooks) there would not be a Wal Mart....more generally firms would not exist; so I would be careful about blithe pronouncements about "markets".

Sarah,

I am not sure what Walmart's strategy is in India but the ground reality is not the same as the US. Take the example of small car market in India, even though the choice is far greater then what it used to be few years back, maruti is still the largest selling car with competition from local players like Tata and then Hyundai in the small car segment. I may not be able to articulate it well but for me the preference of the consumers in a developing country is different than a mature market like the US. For most who have seen an increase in their disposable income for the first time, shopping at big chain stores is more of an indication of their status. Wage rate parity and price of juice is not a concern. 50 plus years of government interference had made the consumers deprived of choices and I personally feel more the choices, better it is for consumers.

28 · TheBarmaid on July 6, 2007 01:49 PM

Wow, could that be, is it possibly, THE BARMAID? Who doesn't spew love and haterade in public any longer?

There is much to appreciate about WalMart if they fix their employee practices. Its possible to be a decent employer and still make profits. Costco and Starbucks are excellent examples of good employers.

Starbucks may have made it trendy to drink overpriced coffee, but somehow I don't see Walmart adopting a similar strategy with their cut-throat pricing model.

Don't have too much time to comment today, but I'm glad somebody called out Costco. They are good employers, unlike the hypocrisy that is Whole Paycheck. At least, Walmart bares its fangs, so you know you're cosying up with a vampire.

more generally firms would not exist

I almost spit my juice on my monitor!!

Ok, came off a little too strong there. Hypocrisy is probably not fair, but moralizing sure is. There's the entire non-small-farmer supporting, flying-organic-food-across the country, anti-union aspect of Whole Paycheck, and it probably wouldn't irritate me as much if they didn't pretend to be whiter than Lalitaji's saree.

KXB,

I had the same reaction to Sigh's comments, I think his or her motive may be sensationalism so I think it is best ignored

I almost spit my juice on my monitor!!

Was it juice from WalMart? :D

Was it juice from WalMart? :D

Nope - Jewel, a major chain around these here parts.

This most excellent attitude will ensure that Kerala remains an inexpensive holiday for me & French anarchists/anti-WTO protesters. Nothing removes papier mache encrustations from months of effigy making better than the warm waters of the Arabian Sea. Relaxing by the sea with a coconut full of kal while a PhD in Physics from Trivandrum University kneads all cares away...

AS if Mom and Pop shops do not cheap out on employee expenses in India. It would have been better if Kerala enforced some strict Min Wage and zoning laws to limit the number of retail giants per region.

ACFD:

You compare WMT to Costco. Costco is actually not making much money off its retailing operations- all of its profits are through membership fees. There is a high cost to good employee practices, which is why the WMTs of the world do what they do and in some ways have to do to survive/thrive as business entities.

I was not kidding. Read the following article to begin with:
Coase, Ronald. "The Nature of the Firm" in Economica, Vol. 4, No. 16, November 1937 pp. 386-405. Coase received his bank of Sweden nobel memorial prize for among other things, solving the puzzle of why firms existed, since they are not supposed to according to the then prevailing model of costless transactions. Once you are done read some Herbert Simon (another laureate). Start with something simple like, his "Organizations and Markets" Journal of Public Administration Research and Theory: J-PART > Vol. 5, No. 3 (Jul., 1995), pp. 273-294

and I accept your apologies (and chalk your pronouncements to ignorance)

What do Mom & Pop stores really offer? For the consumer, you have limited selection and higher prices. For their supplier, you have a customer that often has limited credit history, cannot buy in volume. An employee in a Mom & Pop is probably the worst off - no benefits, no pension, limited or non-existent advancement. Plus, such business generally do not last beyond the lifetime of Mom & Pop, which means once it closes, what does that leave the local consumers?

To quote George Costanza, "What's so special about a Mom and Pop store? Let me tell you something, if my Mom and Pop owned a store, I wouldn't shop there."

I love Kerala. It's the best damn state in India.

To quote George Costanza, "What's so special about a Mom and Pop store? Let me tell you something, if my Mom and Pop owned a store, I wouldn't shop there."

Classic!

Keralam may be years ahead of the rest of India in many aspects, yet the mosquitoes are unbearable much like all parts of India. Refreshingly different is Trivandrum, where are not very many buzzing around and biting the crap out you. Also, if they want to promote their beaches ( kovalam has probably one of the most beautiful coastline and beaches)they need to install basic amenities like toilets. On a recent trip to the beach, I had to bribe a waiter of a nearby beach hotel, to let us use the facilities because the one public "latrine" available was stinky, filthy with human faeces everywhere but the bowl and no water!! ( imagine- you are near the biggest body of water-Indian Ocean).

The likes of mini walmarts have already sprung up in big cities like Cochin, Trivandrum, Kottayam etc and the affluent malayalees are eagerly lapping it up imitating their brethren in the Gulf and America. In other words Consumerism has crept in and threatening.

"Shopping at Mom and Pop stores" is really just code for a different way/pace of life where the shopkeeper knows your name etc; a different shopping experience. It's a fine argument to make if the 5% markup in prices is generally inconsequential to your budget. I suspect someone who's barely month-to-month would forgo the smile/name-recognition for 5% savings, especially in India where this mentality is very much ingrained even in the middle-class.

Sigh,

Being a U of C grad, I can appreciate the Chicago school, without having to worship at the altar of individual faculty there. I never saw the big deal behind guys like Coase. Plus, the bail-out of Long-Term Capital Management (which had heavy involvement by several U of C economists) back in 1997 shows that theory often shatters when it collides with actual marketplace conditions. The cliche is, "An economist is here to tell you tomorrow why what he predicted yesterday didn’t happen today."

KXB, your arguments are immaterial as they do not take into account the awesomeness of freshly squeezed local juice.
Even your mind is making you spew your inferior juice onto your monitors to blind you to this obvious truth.

yea well 50% of kerela is the "gyulf" as they say it.

Also, "local" is just a georgraphic term, not a value term. In Illinois, if I had to depend on "local" growers, I would never get any juice, since this ain't citrus country. Similarly, if my counterpart in Florida wants "local" corn, he's out of luck.

yea well 50% of kerela is the "gyulf" as they say it.

50% of bittermelon is in the gelf?

Nice post, Anna. What's interesting about the Reliance/Wal-Mart debate in India is how quickly people seem to lose sight that it is in fact Reliance, not Wal-Mart, that is running these operations. Wal-Mart is providing back-end services, such as supply chain support. More interesting is the economic nationalism that is going on. There are already large Indian companies that have set up and these are already running the Mom and Pops out of business in the grocery and clothing sectors. Many Indians seem to be okay with their own multinationals (or soon to be multinationals) gaining ground, and I suspect the Indian government is too. As is often the case, it's not really about principles, it's about who gets the bling.

There may be better, cultural and communitarian reasons to retain small businesses, but that's a different question.

Being a U of C grad, I can appreciate the Chicago school, without having to worship at the altar of individual faculty there. I never saw the big deal behind guys like Coase. Plus, the bail-out of Long-Term Capital Management (which had heavy involvement by several U of C economists) back in 1997 shows that theory often shatters when it collides with actual marketplace conditions. The cliche is, "An economist is here to tell you tomorrow why what he predicted yesterday didn’t happen today."

I don't see you disagreeing with me then. My whole point was that Wal Mart's strength cannot be traced to the "market", since theoretically the perfectly competitive market should not allow for any firms. The very presence of firms means that the theoretical market does not exist in reality. This in turn means that Wal-mart is not the result of "market forces" (at least in the classical sense). This logically leads to the point that the "market" does not "decide". Which then means that the automatic normative elevation of the market (if "market" is defined as economists normally do, i.e. as a special kind of allocation mechanism) is far more problematic than it seems. Thus I said:

if the market "truly" decided (as in textbooks) there would not be a Wal Mart....more generally firms would not exist

To which some reacted with incredulity and others accused me of "sensationalism" (whatever that means).

By the way, although I love Olsson's, particularly as against Borders, B&N, and (dare I say it) Kramerbooks, it's not a Mom and Pop business, it's a chain. But they'll play an entire Yo La Tengo album in the store while you shop and also give you a 20% discount.

As someone who goes out of her way not to shop at Wal*Mart, the first word that popped into my head at the thought of the company setting up shop in India was, "Nooooooooooooooooooooo!" (Darth Vadar style)

After I calmed down, I made myself read all of your posts in an effort to bring a little more balance to my perspective. It did that, but not by much I'm afraid.

I can't help but equate Wal*Mart with evil in my mind--in my eyes, they are the epitomy of a behemoth that takes advantage of little towns, their residents, and small manufacturing companies that supply to them. They're low prices come at a cost--*someone* has to suffer for them, and often it's the manufacturing companies. They go out of business when they can't supply at the rate Wal*Marts paying.

And don't even get me started on their responsibility in obliterating mom and pop stores.

In Atlanta a newly constructed Super Wal*Mart has put countless small ethnic grocers in the area out of business, and their workers (who previously owned their own business), are now forced to work minimum wage for 38 hour workdays (making them ineligible for health care).

Urgh.

Now if you excuse me...I'm gonna go enjoy some juice. From the local Farmers Market.

=D

Anna:

when they are in the "gelf"...they luv shopping at Carrefour...the french version of walmart. so the keralite govt can promote their pinko agenda... but ppl from kerela would luv walmart

Kramer's is a chain!? Really!?

I'm with sigh! re: the "market" regulation of mass companies like WalMart, or in my hometown, Chevron (boo hiss).

I think there are a lot of arguments that go back and forth re: chain vs. mom/pop, but there are relatively few economic arguments that hold a lot of weight, particularly when you regulate basic things like whether homey pouring milk from a jug watered down the milk. (after all, this used to happen in the U.S. also from.. oh, guess who? chains)

This story is nifty, thanks ANNA :)

No, I don't think Kramerbooks is a chain, but they charge more for the same book than Olsson's does.

but ppl from kerela would luv walmart

You know what they would love more? You spelling KerAla PROPERLY. If it's my inner communist who is so annoyed by your consistent disrespect (once is an accident, twice was deliberate, esp. after my comment pointing it out) then I don't mind being THAT as well as a radical feminist today.

One common denominator in all of these discussions-- what is missing is respect. For names, for women, for differences, for everything.

My whole point was that Wal Mart's strength cannot be traced to the "market", since theoretically the perfectly competitive market should not allow for any firms. The very presence of firms means that the theoretical market does not exist in reality. This in turn means that Wal-mart is not the result of "market forces" (at least in the classical sense). This logically leads to the point that the "market" does not "decide". Which then means that the automatic normative elevation of the market (if "market" is defined as economists normally do, i.e. as a special kind of allocation mechanism) is far more problematic than it seems.

WalMart is not the result of the market – price and selection are the results of the market. WalMart is a player in the market. And as other posters pointed out, WalMart came about in a uniquely American fashion – take wide open spaces in underserved rural communities plus a well-laid road network with plenty of cars – you have the conditions for a WalMart. A century ago, when Americans lived in apartments, did not own cars, and did not have a lot of space, you had Woolworth’s.

Second, what market are you talking about? WalMart actually had to leave the German market, cause they could not withstand the market conditions there. In China, they are flourishing. How WalMart will do in India is not clear, unless you’re the government of Kerala, believe you know better than your constituents, and won’t let them enter the marketplace.

Slight change of venue - in American inner-cities, they only place many shoppers can go to is a Mom and Pop. Most don't like it, cause they realize they are paying more money for poorer quality, and they don't hire anyone from the neighborhood. They would love it if a chain store could come in to give them better selection.

I think the history of WalMart is interesting, but it can't be denied that they are AWFUL to their labor/employees, and that they go out of their way to drive out other businesses in the area. At the same time, in poor parts of the country WalMart is one of the only providers of affordable items (including organic food now, apparently), and they're the first major retailer to try to go green. They're complicated, as are all MNCs.

One common denominator in all of these discussions-- what is missing is respect.

All A N N A's asking is for a little respect when you come home!

Also, A N N A, bittergourd is spelt kArela :) Alright, it seems like I am not capable of making any coherent comments anymore. To work, to work!

Also, A N N A, bittergourd is spelt kArela :)

Duly chastened, even as I mutter "whatever, mang". ;)

My point is, it's in the title, it's in the article and my snarky "paavaka" comment was a reminder. Enough already with the butchering. :)

what is missing is respect.

Have you tried looking in Walmart?

Have you tried looking in Walmart?

Nope, I only buy respect and juice at Costco. :D

http://kerela.org/

yea didnt mean to be disrespectful.. and kerela is nowhere close to sounding or being spelt as kArela.

i have seen it spelt both ways. but kerala henceforth!

Calcutta is a glittering example of the economic growth that the Communists can bring about. Such industry, capital growth, FDI by the boatload. I could only laugh the day the sensex dropped 10% because these same clowns wanted to apply the reservation system to the private sector, especially the MNC's in order to operate within India's borders.

when they are in the "gelf"...they luv shopping at Carrefour...

oh, the Carrefour in KL is amazing...

By the way, although I love Olsson's, particularly as against Borders, B&N, and (dare I say it) Kramerbooks, it's not a Mom and Pop business, it's a chain. But they'll play an entire Yo La Tengo album in the store while you shop and also give you a 20% discount.

Your comment really struck me, because I have never thought of them as chain, even as I've patronized at least half their locations. :) This is what I read about them via Google...

Olsson's is a locally Owned & Operated, Independent chain of six book and recorded music stores in the Washington, DC area, started by John Olsson in 1972.

and the following quote from an ancient article from WaPo really turned me all Polly-A N N A :D

John Olsson and his corporate staff don't refer to the stores as a chain. They are more similar than different, and they are linked in terms of processing orders, Greene said. "We are seven neighborhood stores," she said.

"We're not a chain. We can't afford the kind of inventories a chain has and can't pay the type of rents a chain does," Olsson said. "But with our type of store, catering to really intelligent Washington readers, we can keep customers coming back."

I know, semantics. But I still love them (much more than Kramerbook's, which is in my 'hood...Kramer's, the only bookstore in the world where I have to throw 'bows...yeesh).

whenever i visit a pizza hut or mcdonalds in india, the people working there seem thrilled with their jobs and i think, "wait a minute, you're working for a HUGE big bad MNC and you're getting screwed right? so how come you seem so content unlike your brothers and sisters in the west?" what makes it different there? the sheer improvement over what else was available? MNC pride in a shrinking world? free maharaja burgers?

WalMart is not the result of the market – price and selection are the results of the market.

You are being a little obtuse here; you know that what I meant was that theoretically relative prices under perfect competition make it impossible for firms to arise.

A N N A, I was just giving you a reality chakkai and a hard time :) As for books, I have you all beat. I use the community library. So there. I will now be off to preen myself.

Coase, Ronald. "The Nature of the Firm" in Economica, Vol. 4, No. 16, November 1937 pp. 386-405. Coase received his bank of Sweden nobel memorial prize for among other things, solving the puzzle of why firms existed, since they are not supposed to according to the then prevailing model of costless transactions.

Orthogonal to your point, I am reminded of this great nugget from a speech by Coase a few years ago:

As Ely Devons, an English economist, once said at a meeting, "If economists wished to study the horse, they wouldn’t go and look at horses. They’d sit in their studies and say to themselves, ‘What would I do if I were a horse?’" And they would soon discover that they would maximize their utilities.

Hey Rahul, check out his prize lecture too (available at the noble website); good stuff.

Lots of Indians buy packaged milk currently. The doodwalla has mostly been replaced is urban areas.
But fruit is another story. Mass produced and shipped fruit is tasteless. And, whatever health benefits Indians get from consumption of such fresh produce, will be sacrificed. Whatever will happen to "mango season?"
But then isn't India one of the few countries that has embraced genetic modification of food? Huge Simla Mirchi are available in local markets.

On the other hand, there is something to be said about hygiene in a regulated environment. Have we seen the last of the local cow happily munching by the butta stand?

Maybe we do not need a Walmart type makeove but something like vendor collectives where they are provided sanitation, shade, trash facilities but shoppers still wander the labyrinths and can bargain.

sigh!, I will check out the lecture, thanks!

As for the serious content of this post, I don't know how to feel about it. Yes, there is something about the monopolist mega-corporation that steamrolls all into submission that makes people uncomfortable, but at the same time, if people are not willing to pay for superior service or vote with their wallets because they are not willing to understand the hidden costs to them, how much is it reasonable for the government to protect them? And Walmart does provide affordable products to some strata of the society that couldn't afford them, as well as generates employment (there is the cost to Medicare it imposes, the way it treats immigrant workers, its discrimination against women, its Big Brother behavior towards its employees on its private time etc. which are galling, no doubt).

As for Communist hypocrisy in India, the latest ongoing drama in West Bengal is the Tata plant which they are pushing in Singur, even against farmers' protests, sometimes violently.

Lets not even go down the Walmart road. I am completely with Shalu (# 59) on this. WMT does not engage in its horrendous labor practices to survive in a competitive market. It engages in these practices to annihilate competition and rake in the billions. It makes my blood boil. And, yes, I do know that companies are supposed to rake in the profits but when an organization so clearly screws its employees to do so...AAARGH!

whenever i visit a pizza hut or mcdonalds in india, the people working there seem thrilled with their jobs and i think, "wait a minute, you're working for a HUGE big bad MNC and you're getting screwed right? so how come you seem so content unlike your brothers and sisters in the west?" what makes it different there? the sheer improvement over what else was available? MNC pride in a shrinking world? free maharaja burgers?

The clean, air conditioned environment. The chance to socialize with others in their age group at work. The contemporary music being played in the background on a decent CD player. The paycheck which will be anyhow bigger than if they were working at Pandu's Dhaba down the road. And the work culture, the "team player" type mentality, yada, yada, yada.

So many things.

Same could be asked of the call-center workers who have to work all kinds of weird hour un-healthy shifts. The work environment tends to be more lively and fun then working for some "uncle-ji's" office.

My best friend was an accent neutralization instructor at one of these MNC's and she said she can never go to work for an Indian company after that experience, despite the fact that the weird hours took their toll on her body.

Widow Power, you forget to mention the passionate sexuality inherent in the kneading of the dough, and the milking of the cow in the shed at the back.

Widow Power, you forget to mention the passionate sexuality inherent in the kneading of the dough, and the milking of the cow in the shed at the back.

.........that depends on who's doing the kneading and milking...........

Widow Power, you forget to mention the passionate sexuality inherent in the kneading of the dough, and the milking of the cow in the shed at the back.

per Pardesi Gori (Widow Power ?), many desis are unable to locate their errogenous zones without the assistance of Westerners. Surely there is an unmet need/business model here that can be monetized, franchised, teased, tickled and turned into an HBR case study. Instead of Victoria's Secret we can call it "Vimala's Enigma".

As an "abcd" I must say, why am I here in the USA--ummmm--the $$, no doubt--so,nostalgia for the commies in Kerala ain't doing it for me--nozick rules!

Rahul:
"There's the entire non-small-farmer supporting, flying-organic-food-across the country, anti-union aspect of Whole Paycheck, and it probably wouldn't irritate me as much if they didn't pretend to be whiter than Lalitaji's saree."

--> Have you read Omnivore's dilemma ? Michael Pollan addresses this organic fetish even if only tangentially.

Shalu
"In Atlanta a newly constructed Super Wal*Mart has put countless small ethnic grocers in the area out of business, and their workers (who previously owned their own business), are now forced to work minimum wage for 38 hour workdays(making them ineligible for health care)."

--> Does Walmart have its own corporate calendar ?

work minimum wage for 38 hour workdays(making them ineligible for health care).

_________________________________________

non-sequitur alert--paging Dr. Logic

(snark off)

Walmart scares the crap out of me in the Indian context, I was picking on Kerala more for its Coke & MSFT related idiocy than anything else. That being said, I think the anti-Walmart haterade in the US is mostly around aesthetics. I doubt the individual proprietor mom & pops were providing health care benefits. It's devilishly awesome propaganda to call these mom & pops, implies "maa baap" relationship where it does not necessarily exist or does but it is more of the "Mommy Dearest" dynamic ;-)

It's devilishly awesome propaganda to call these mom & pops, implies "maa baap" relationship where it does not necessarily exist or does but it is more of the "Mommy Dearest" dynamic ;-)

From the same Seinfeld episode:

JERRY: So all my sneakers are gone?

KRAMER: I'm afraid so. And that's just the tip of the iceberg. I've been asking around - they didn't even have any kids.

JERRY: Mom and Pop aren't even a Mom and Pop?!

Have you read Omnivore's dilemma ? Michael Pollan addresses this organic fetish even if only tangentially.

No, but the thought crossed my mind even as I wrote my original comment. Great minds think alike, and apparently, so do we.

I read the excerpts in the New York Times, and didn't feel compelled to go read the whole book because I wasn't sure what mental nutrition I'd get out of it.

Amazing how little awareness there seems to be here of how much this obsession with "small-scale industry" has damaged India in the past.

It has been the reason India has produced so many shoddy, substandard, unsaleable, internationally uncompetitive goods and services in the past and for the most part continues to do so.

There is nothing more dangerous than someone with good intentions and a refusal to examine their consequences critically.

Many of the extremities of India's poverty in the last several decades are attributable to Indira Gandhi (may-she-rot-in-hell) and her adoption on a grand scale of the same kind of idiocy Kerala displays in this case.

Fulminations about Wal-Mart in an American context are simply beside the point in an Indian context. People suffer and die for this kind of stupidity.

If you can't make your point without abusive language, go elsewhere, unless you want to be banned and deleted.

Eurodesi,

Amen
آمين

SM Intern, thank you for reminding me of one of the basic cultural differences between Europe and America. It has been so long since I lived in the US that I quite tend to forget it. I was initially quite dumbfounded by your comment, since I hadn't said anything abusive, certainly not by the ordinary standards of commentary. Then I remembered -- In Europe, it is considered deeply shameful to have said something stupid, while in America, it is considered deeply insulting to point out that someone has said something stupid. The result is that Americans tend to find Europeans insulting and abrasive, while Europeans tend to find Americans precious and hypocritical. (Indians, I think, sometimes seem abrasive to both, cf. Krishna Menon, but I have no convenient theory to hand as to why that might be the case.)

Without being culturally judgmental I personally prefer the European style and have no intention of reverting to an American one, which I personally find brittle and childish. Therefore, please feel free to ban or delete me as you see fit. In case you are interested in broadening your horizons, here are a few samples of European commentary that I feel you would benefit from reading. (While googling up these articles, I noticed the phrase "morally imbecilic", which I like and plan to try to use in conversation.)

http://observer.guardian.co.uk/comment/story/0,,750810,00.html
http://www.guardian.co.uk/commentisfree/story/0,,2028181,00.html
http://www.guardian.co.uk/commentisfree/story/0,,2073123,00.html
http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2007/07/07/do0705.xml
http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2006/07/29//do2902.xml

Louie cypher
Why would call kerala out on its idiocy on KO and MSFT?
KO does not serve any useful purpose and messes up ones health. Quite like MCD. You may not agree with this and so doesnt most of urban India. MCD and DPZ are premier dating spots :) KO & IBM were thrown out of India in 1977 - dont see how that had a detrimental impact. For a governmental organization Open Source is a far better way system than Proprietary. I am not basing this just on cost but on other factors as well. It may mean that Bill G makes a couple of billions less but that is hardly an issue. On the whole a good idea - commies sometimes do have good sense. And for all those who think that mixing water with milk is a serious crime, how do you react to the mixing chemicals with milk. Read the labels on the food packets. Most of the stuff is designed to kill.

I am curious to know how many Indians have heard or seen peanut allergy. Peanuts are considered one of the safest foods in India. Unheard of in India but quite common in the Western world. Further, peanut allergy has increased in the last 30 years in Australia.

Just for the record - I love shopping at WMT / Aldi / Costco/ Coles / Carrefours/ IKEA. I love shopping in the "mom&pop" stores. Dont agree with a big box store in Kerala. Long distance NIMBYism at its worst :)

In France, there are studies to show that super stores like Wal-Mart (Carrefour, Auchan, Leclerc) do have adverse impacts on the community, on local security, on jobs. Many studies indicate that the real impact is net job loss after five years. Though initially there is an increase in jobs, small businesses cannot survive because the size and scale of Wal-Mart is such that it can be involved in predatory pricing schemes where people are forced to sell below cost. Thousands of farms and small-scale industries had to close down because they were compelled to sell below cost. In fact, the tendency is for big businesses to exploit all other businesses and ride roughshod over health safety or employment norms.
There should be a way for small and big businesses to co-exist. It's all about consequences. You cannot insert Big Box models without thinking of the consequences. It is paramount to find common ground to protect the interests of the community and retailers. Competition between big corporations and small businesses tend to destroy competition and install monopoly!

Eurodesi, touching and pious as your rejoinder in #96 is, the primary issue with Indira Gandhi's regime that led to many of the problems you state including poor quality and lack of quality is not the obsession with small-scale industry, but the protectionist regime that led to the complete absence of competition and an overwhelming amount of corruption as the bureaucrats and politicians wielded far too much power in the license raj. Her arrogance and insularity even led to such travesties as the 1977 emergency. However, it can be argued that at some level, Indira Gandhi only took to an extreme the social policies and ideas put in place by Nehru.

I am not saying that all aspects of these policies were bad, but they definitely had tons of severe detrimental affects.

P.S: Maybe what you wanted to argue was that small-scale industry was the only viable way to beat the license raj. but that was a second-order effect of the crushing burden of the babus, not the primary focus of Indian economic policy.

Eurodesi:

That comment was not aimed at you. It was directed towards the comment which came after you, which had been deleted. You also missed the fact that I posted the exact same comment on two other threads.

In case you are interested in broadening your horizons, here are a few samples of European commentary that I feel you would benefit from reading. (While googling up these articles, I noticed the phrase "morally imbecilic", which I like and plan to try to use in conversation.)

If by preferring "European" discourse", you think it superior to dance around your distaste and tell me what to broaden, then that is your right. Many "Americans" would childishly prefer the brittle, blunt truth, i.e. "I disagree with you". Many humans would merely courteously ask for clarification re: my comment. Please try that next time.

Rahul:
"I read the excerpts in the New York Times, and didn't feel compelled to go read the whole book because I wasn't sure what mental nutrition I'd get out of it."

--> The last section of the book where he tries to feed himself a meal strictly from nature, is boring but other sections of the book about food industry in general and organic industry in particular were interesting.

Eurodesi, I'm dumbfounded by your comment, because you seem to reversing the European and American attitudes on their very heads.

If you're referring to the AYL(American Yuppie Liberal) attitude, it is atmost the same as the "European" attitude; but then unlike in Europe this demographic does not have any real power, if it did the US would have become another French and Indian wasteland as well. The so called brash and reality driven American attitude is still alive and dominant.

Kerala does look like a karela on the map.

Louie cypher Why would call kerala out on its idiocy on KO and MSFT?

Melbourne Desi: I call Kerala out on Coke because I don't believe in the nanny state. I actually do agree with Kerala's decision to go open source for state government SW needs. What I feel was stupid was the accompanying red manifesto that came along with the state's decision that was widely published....it discourages MNCs from setting development offices in the state. Business looking to locate in India see that the decision was not based on sensible reasons (i.e. performance, cost, opportunity for local companies to generate revenue from support fees) but rather hostility towards industry (i.e. lets stick it to the capitalist pig). I'm a pragmatist, the Communists do deserve credit for addressing what I feel are the two most critical issues (i.e. health & literacy) early on. But all their chest thumping now is based on an economy where Malayalee's go in search of their futures elsewhere in India, the Gulf etc. Sad because I feel that the state should be the seat of India's knowledge based economy

All the sound bytes of Achuthanandan's govt sounds nice. But the fact remains the Kerala govt has failed miserably to create any major industries. How many Mallus do you know who actually work in Kerala ? Kerala is not all hunky dory as it is made out to be. Here's an interesting article from outlook (registration required) in 2004 which presents some of the ugly sides of Kerala. For example it has the highest crime rates and unemployment rates in India, higher than even Bihar. Who was that claiming that Kerala has a low unemployment rate ?? Banning a Reliance here and a Coke there no doubt makes an ideological statement, but all this empty rhetoric counts to nothing compared to the state's monumental failures in creating jobs. The economy of Kerala is based out of remittances from Gulf and other Indian states.

Anna,

I realize that your taste for Olsson's over Borders and your refusal to shop at Wal-Mart are your personal choices. But isn't it disturbing to you that your government has already made your choices for you? In condoning the Communist Party's actions, you fork over your personal freedoms to a government that claims it knows what is best for you.

It is true that for many public goods and services, we hand over control to the government. Some of them have enormous positive externalities that would be inappropriately provided by private entitites. Others are natural monopoly. But neither situation applies to the retail business.
Let me illustrate to you some of the finer consequences of relying on a ma-baap government:

1) Rajiv Gandhi once said that of every Rs. 100 in development funds, only Rs. 1 reaches the intended beneficiary. The rest, by implication, are pocketed by middlemen, particularly bureaucrats. Why? Because rules are not transparent, bureaucrats have monopolies over handing business licenses and contracts and the marginal consumers in our society have no access to markets or pricing information. All because of government intervention in the market.
2) In the 70s and 80s the very same Communist Party you endorse today, opposed the introduction of computers into local businesses, fearing they would displace local workers. Kerala today is leagues behind Bangalore, Chennai or Hyderabad in producing software for this reason. Moreover, it is only recently the very same Party has begun to reluctantly admit the benefits of computers and the promise they hold to ensure the provision of fair and just government services to the public. Why should the public pay the price for an obsolete ideology and government paranoia?
3) Kerala has an excellent history of mass literacy programs, partly due to the Communist Party. Its public schools are however, a different story altogether. Regular cancellation of examinations, violence, bunking of classes are the order of the day in many of these schools, mainly because they are centers for excessive student activism. None of these student activists are directed at meaningful constructive activities; instead, most of them are local representatives of political parties that threaten each other and are mere recruiting grounds. Public schools, particularly high schools and colleges, are breeding grounds for political activism and little else. As a result, they churn out the most mediocre engineers, scientists, writers and thinkers who are several years behind other graduates in South India.

I can list many more costs related to having a government that breathes down your neck and restricts your daily behaviour.

In the end, the health of any society or market economy relies on how well information is transmitted from one party to another. For e.g., if a pineapple farmer supplies pineapples at Rs. 50/kg (just an illustrative price) to SupplyCo, Kerala's public procurement agency and retail depots (the Government's answer to Reliance) and is offered the opportunity to earn Rs. 75/kg by selling to Reliance (due to improvements in logistics and supply chain efficiencies - read less middlemen, Reliance can usually offer higher prices to farmers than the public depots), his life will surely benefit from that extra income. But, by your line of reasoning and the Communist line of reasoning, you would rather buy that pineapple at Raghavan's local mom-and-pop store than a Reliance store and thus, deprive that farmer of any benefit of selling to a free market. All because you want Raghavan to share in the profits of that fruit.

Someone pointed out in these comments that they were willing to support Reliance only if they offered higher prices to farmers. My point is that no matter what prices they do offer to suppliers, you should let them in because in a free market, they would perish if they were unable to procure products from farmers and compete with public depots. Free markets benefit both supplier and consumer because information on prices flow freely between both entities. That ceases to happen when governments intervene and explicitly prefer certain entities over others without considering the consumer and suppliers.

Yes, "Markets left to themselves do not deliver perfect outcomes. Sometimes government has to push back."
The difference is that the Communist government pushes back on everything in Kerala. They have opposed privately managed schools, ban on hartals and bandhs, private hospitals, computers, tractors, etc. The end result is that the average person in Kerala is used to being told what he or she likes or can consume. For a person who has cultivated an independent taste for the "ruthless" corporate entities, I thought you would be the last person who liked being told what to consume.

Free markets benefit both supplier and consumer because information on prices flow freely between both entities. That ceases to happen when governments intervene and explicitly prefer certain entities over others without considering the consumer and suppliers.

Sounds like an ad. Define "free markets". Do you mean "free" as assumed in the Arrow-Debreau competitive general equilibrium model?

This post is filed under humor, everyone. Just a reminder.

Refusal to shop at Wal-Mart has nothing to do with communism! On the contrary, it has everything to do with democracy; the democracy for the consumer and the producer.
Free market, almost by definition, is a system that leads to an enormous concentration of power and ends up preventing any chance of real democracy. This is detrimental to the consumer, the producer, the employees, the environment and the socie