Air Pollution is so bad in India that it Burns your Lungs when you Breathe It

Posted by PITHOCRATES - March 16th, 2013

Week in Review

The environmentalist in the United States are trying to kill the internal combustion engine.  And coal-fired power plants.  Because of global warming.  And air pollution.  But the air quality in the U.S. has never been better.  No one knows we have any air pollution unless measuring devices tell us.  For we can go to pretty much any U.S. city and breath the air without the word pollution ever coming to mind.  Which is more than some people can say (see Air pollution on the rise in Kolkata by Smita Prakash posted 3/15/2013 on Channels News Asia).

Rapid modernisation and an unchecked number of vehicles are making Kolkata one of the most polluted cities in India…

Ms Karmakar said: “My whole respiratory system feels a burning sensation. When I breathe, the smoke in the air goes inside through my nose, chokes me and enters my lungs and I feel a strong burning sensation in my lungs. Vehicles emit black smoke and run past.”

Based on her statements you can only come to one conclusion.  The U.S. has won the war against air pollution.  And any further environmental regulations would be pointless.  And an unnecessary job-killing cost to business.  For no one suffers a burning sensation in their lungs when they breathe in an American city.

And if the environmentalists say we must further regulate businesses to reduce the levels of air pollution that are so minute that you need a sensitive measuring device to detect them we should ask them what’s the point?  For whatever small reduction we can gain at great cost to our businesses (resulting in less job creation) cannot offset the kind of air pollution that causes a burning sensation in people’s lungs when they breathe.  Air pollution is bad in India.  And it’s even worse in China.  So how will further regulations in America clean the air in China and India?

The U.S. does not have an air pollution problem.  And if there is a global warming problem that battle has to be fought in India and China.  Not in the U.S.  Our air is cleaner by far than these two polluting superpowers.  It is they who need to catch up to us.  And they will.  In time.  But increasing the cost of business yet more in the United States when it won’t make the air noticeably cleaner or have an impact on reducing global warming makes no sense.  Unless you just hate capitalism so much that you’ll take any excuse to regulate and punish it.  Which is about the only reason to increase environmental regulations in one of the cleanest countries in the world.

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India leads the world in Wind and Solar Power but turns to Nuclear Power for Serious Power Generation

Posted by PITHOCRATES - January 19th, 2013

Week in Review

By 2012 India had about 1,045 MW of solar power capacity connected to their electric grid (see Year End Review of Ministry of New and Renewable Energy posted on the Press Information Bureau, Government of India website).  Available when the sun shines.  India had about 18,320 MW of wind power capacity attached to their electric grid.  Available when the wind blows.

In July of 2012 India suffered the largest power outage in history.  Approximately 32,000 MW of generating capacity went offline.  Putting about half of India’s population of 1.22 billion into the dark.  Which her solar and wind capacity was unable to prevent.  So even though they’re expanding these generating systems guess what else they’re doing?  Here’s a hint.  You don’t need as much land to make this power.  And a little of it can create a lot more electric power than solar or wind can (see Areva says India keen to start using EPR reactor by Geert De Clercq posted 1/17/2013 on Reuters India).

Negotiations about the sale of two French nuclear reactors to India are at an advanced stage and Indian authorities are keen to start using French nuclear technology, reactor builder Areva (AREVA.PA) said on Wednesday…

The World Nuclear Association expects India’s nuclear capacity will grow fourfold to 20,000 megawatts by 2020 from just under 5,000 MW today, making it the third-biggest market after China and Russia…

The third-generation European Pressurised Reactor (EPR), conceived following the 1986 Chernobyl disaster, has a double containment wall and a “core catcher” to contain core meltdown. Its 1,600 megawatt capacity is the largest on the market…

The planned site for the EPR reactors in Jaitapur – on the subcontinent’s Arabian Sea coast, 400 km south of Bombay and 230 km north of Goa – could receive up to six nuclear reactors, though at the moment only two EPRs are under consideration.

If you do the math that one site in Jaitapur will be able to produce 9,600 MW.  They’ve been building solar power for a decade or more and have only brought that capacity up to 1,045 MW.  That one nuclear power site will produce 9.2 times the power produced by all the solar power they’ve built to date.  And it doesn’t matter if it’s day or night.  That nuclear power will always be there.

To produce that additional 15,000 MW of nuclear power will only require building two nuclear sites like at Jaitapur.  To get this additional capacity they could double their wind power installations to add another 18,320 MW.  Of course if they did that power would only be available when the wind blew.  Which is why they are installing nuclear power.  Because it’s easier, less costly and more reliable.  And with good reliable power some 610 million people may avoid another power outage like that in 2012.  Or they can build more solar and wind.  And continue to set more records for power outages.

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India seeking Private Railway Investment to fund Modernization and Capacity Addition face Union Opposition

Posted by PITHOCRATES - November 24th, 2012

Week in Review

India had an explosion of economic growth as they unleashed free market activity.  So much that their infrastructure is struggling to keep up with it.  Especially their railways (see Union Cabinet okays private sector investment in railways by Mahendra Kumar Singh posted 11/23/2012 on The Times of India).

Desperate to attract private investment in the cash-strapped railways, the Cabinet on Thursday cleared the state-run transporter’s plan to rope in the private sector for building new rail lines and plants, and augment capacity, a move that was red-flagged by the unions.

With the policy in place, the railways will be able to get the private sector to connect ports, mines and industrial plants with the rail network by allowing them to invest in laying the tracks for last-mile connectivity. The move is expected to lower the transportation cost and help evacuate minerals, coal and finished products from the production centres…

The move comes as the railways, in the absence of fare increase, has failed to generate resources for funding modernization, leave alone capacity addition despite successive rail ministers adding new trains to appease their constituency. In fact, it has repeatedly failed to meet the targets…

Even this time, the unions are opposing any attempt to hand over operation and maintenance to private players, which could deter investors looking to enter the BOT space for building new lines.

That’s a pity.  For it’s those operation and maintenance costs that consume the capital that they otherwise could use to fund modernization and capacity addition.

In the US there are two types of railways.  Those that make money.  And those that lose money.  Those that make money are privately owned.  Those that lose money are publicly owned.  Every subway, commuter train and Amtrak train loses money because of high operating and maintenance costs.  For the usual reasons.  High pay, pensions and health care costs for active workers and retirees.  While the heavy freight railways make money.  Despite their high operating and maintenance (all union) costs.  For there is no better alternative to moving heavy freight across land.  While every other way to move people (bicycle, motorcycle, car, bus, ship, plane, etc.) is a more cost efficient way to move people than by train.

The freight railways in the US are a modern marvel.  Moving so much freight that main line rails are like polished chrome.  While the best passenger train still pulls onto a siding to let a money making freight train pass.  Clearly showing who makes money.  And who doesn’t.  As well as the difference between a private sector union and a public sector union.  One has accountability.  The other doesn’t.  Customers moving freight have choice between rail shippers.  While people traveling by train have no choice.  The freight railroads have to be able to stay in business by being competitive.  While the passenger railways just keep raising fares.  Or beg for more taxpayer subsidies.  Which is why public sector workers don’t want to privatize their industries.  Because they don’t want to be accountable.  Or work within budgets.  Like everyone in the private sector does.  Including their union brethren in the private sector.  Who often don’t live as comfortably as their public sector brethren live.

If India is to continue her move into a free market economy she needs to privatize her freight railways.  Which could easily become and stay state of the art.  While biting the bullet on her passenger rail that probably will never make enough money to fund modernization or capacity addition.  But at least the money-making private railways can help bolster the economy.  Producing greater tax revenue for investment in the black hole that is passenger rail.

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India wants to Burn U.S. Coal in their Coal-Fired Power Plants if the Americans are Foolish Enough not to Burn it in Theirs

Posted by PITHOCRATES - October 6th, 2012

Week in Review

India is one of the leaders in solar and wind power.  They have one of the world’s largest solar power plants.  Charanka Solar Park.  Adding about 200 megawatts to the electric grid.  When the sun shines.  India has about 15,000 megawatts worth of installed windmills.  When the wind blows they provide about 2% of India’s electric power.  India also has about 37,000 megawatts of hydroelectric power.  Which provides about 20% of their total electric power.  When the rains come.  So the Indians are serious when it comes to renewable energy.  Of course, they know that solar and wind power are more novelties than serious providers of electric power.  No, the big daddy of electric power in India?  Coal (see Tata Power scouts for overseas coal assets by Malini Menon posted 10/4/2012 on Reuters).

Tata Power (TTPW.NS) is looking for more overseas coal assets, a top executive said, joining the growing number of companies in the energy-hungry nation looking to secure supplies abroad amid a widening domestic shortfall.

“We are continuously looking at the other geographies and today, the options are the U.S., Colombia and Africa,” Managing Director Anil Sardana said, pointing to logistics, cost and sustainability of contracts…

Coal accounts for two-thirds of power production in India, which is struggling to meet the demands of a fast-growing economy and increasingly affluent population of around 1.2 billion people.

With all that investment in solar and wind power coal-fired power plants still provide about two-thirds of all electric power.  Which means coal and hydro provide close to 90% of all their power.  And solar and wind account for less than 10% of their electric power generation.  When the sun shines and the wind blows.

So the Indians want to buy U.S coal.  As do the Chinese.  You know who doesn’t want to buy U.S. coal?  The U.S. government.  They don’t want any Americans buying American coal.  And are aggressively trying to shutter coal-fired power plants.  Because of global warming.  Even though in all likelihood someone will burn that coal.  It just won’t be Americans.  So instead of China and India suffering rolling blackouts it will be the US.  Because of an energy policy dominated by environmental alarmists.

The Indians know they need coal-fired power plants.  The Chinese know they need coal-fired power plants.  But for some reason the Obama administration and his political base don’t understand that we need coal-fired power plants.  Perhaps they will when those power hungry server centers suffer rolling blackouts and shut off their online activities.  Perhaps they will only appreciate reliable coal after they lose all the comforts of life they take for granted.  Pity they aren’t as smart as the Indians and the Chinese.

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Clean Renewable Energy leaves India Vulnerable to more Massive Power Blackouts

Posted by PITHOCRATES - August 25th, 2012

Week in Review

Hydroelectric power is the king of renewable energy.  The fuel is free.  It doesn’t burn.  It doesn’t pollute.  It’s quiet.  They can produce power when the sun doesn’t shine (unlike solar power).  And they can produce power when the wind doesn’t blow (unlike wind power).  Their reservoirs make scenic lakes and wildlife areas.  And after they’re built they don’t need a complicated infrastructure or masses of workers running around acres of land to keep them running.  They really only have one drawback.  You have no control over that free fuel (see More Power Blackouts Expected In India by Kenneth Rapoza posted 8/20/2012 on Forbes).

Between lackluster rainfall during monsoon season and a nasty political imbroglio in the capital city, India seems to be going back to the past.

And now, the northern states, including Delhi, could face power outages yet again as three small hydroelectric power stations have been shut down.  Combined, they run about 3,000 megawatts of electricity. Electricity generated at those power plants is distributed to 28 per cent of Indian households.

At the end of last month, back to back power outages gave way to power surges that unleashed quite a bit of chaos for over 600 million people affected.  In the last week of July, around 360 million people lost power in northern India due to excessive demand and a shortfall in hydropower. On July 31, power resumed in Delhi only to fail again the next day, with the chaos spreading to Calcutta and other parts of eastern India.

This is why reliable coal-fired power plants typically provide the majority of baseload power requirements.  The minimum amount of power we consistently use throughout the year.  Because a coal-fired power plant can also produce power when the sun doesn’t shine or when the wind doesn’t blow.  And they can even produce power when the monsoons don’t come.  You can call coal Mr. Reliable when it comes to power generation.  Old Faithful.  Mr. Dependable.  The Life Saver and Comfort Giver.  No matter the heat or humidity a coal-fired power plant will say, “Give me coal and I will keep your lights on and your air conditioners running.  In your homes.  In your hospitals.  In your restaurants.  Wherever you go.  Whatever your needs.  To help you back to good health.  Or so you can simply relax at the end of a hot, humid and exhausting day.  Give me coal and I will provide for you.”

But, alas, the government of India is trying to reduce India’s carbon footprint.  And is pursuing wind and solar power.  In fact they have just connected the world’s largest solar power plant to their electric grid.  Gujarat Solar Park.  Covering some 11 sites spread over 3,000 acres.  Putting some 600 megawatts onto the grid.  Replacing about 20% of what those three small hydroelectric dams were putting on the grid.  That is, the world’s largest solar power plant can only produce what three small hydroelectric dams can produce.  And that’s only when the sun shines.  An incredible investment of capital that did not prevent in any way the back to back massive power failures that left 360 million people without power.  Which is more than the entire population of the United States.  Which is about 314 million.  Just to give you an idea of how big this power failure was.

Just think what that massive investment in solar power could have done in the northern states of India.  Instead of tilting at windmills.  The global warming boogeyman.  They could have rebuilt the electric grid.  Added a coal-fired power plant or two.  And paid for who knows how much coal.  Had the Indian government done that the good people of India probably would not have suffered through back to back power outages.  Not with Mr. Reliable on the scene.  Who laughs at large power loads.  Because he can produce power every hour of every day of every season.  The way people like their power.

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India turns to Renewable Energy and Abandons Coal, causing one of the World’s Worst Power Outages

Posted by PITHOCRATES - August 5th, 2012

Week in Review

India suffered a massive power outage that left some 600 million Indians without power.  Stranding train travelers.  And trapping miners underground.  Not to mention leaving people to swelter in 100+ degree Fahrenheit temperatures.  In one of the most humid climates to ever grace our planet.  Some buildings had backup generators.  Including hospitals.  But these were few.   Most just suffered.  One wonders how this can happen in one of the biggest emerging economies.  India is, after all, one of the BRICS.  And being that the modern economy runs on energy it leaves one scratching their head.  If India has such a burgeoning economy where is their electricity production (see India: More than 600 million without power in biggest blackout ever by Rick Westhead posted 7/31/2012 on the Toronto Star)?

 While India has been aggressively trying to encourage investment in renewable energy sources such as solar and wind power, critics say it rarely upgrades its electrical grid. India has missed every annual target to add electricity production capacity since 1951, Bloomberg reported.

Oh.  They’ve been pouring millions into renewable energy to save the planet while they in essence have left their country plugged into the lamp post on the corner.  Here’s an interesting fact.  India just recently switched on the world’s largest solar photovoltaic power plant.  They are also a leader in wind power.  So they are working hard to remove their carbon footprint.  While their economy, and their people, starve for reliable electric power.  Let’s go to Bloomberg for more details (see Ambani, Tata ‘Islands’ Shrug Off Grid Collapse: Corporate India by Rajesh Kumar Singh and Rakteem Katakey posted 8/3/2012 on Bloomberg).

About 1.6 trillion rupees ($29 billion) spent by companies including Tata Motors and billionaire Mukesh Ambani-led Reliance Industries Ltd. (RIL), to quarantine their plants from the national grid is shielding India’s biggest users of electricity from disruptions. Sixty years of missed investment targets, transmission losses and theft is prompting factories to build their own plants boosting costs in a nation that suffers from the fastest pace of inflation among BRIC nations…

Five of India’s biggest electricity users generate 96 percent of their requirement, according to their annual reports.

India’s electric power is so unreliable that large consumers of electricity have to produce their own.  We call it captive power.    They generate it.  They keep it.  Which is only fair as they paid a fortune to generate it.  Which, of course, they pass on to their customers.  Via higher prices.  Which just adds to the inflation.

India has missed every capacity addition target since 1951, underscoring the urgency behind Singh’s effort to boost investment in power. As much as $300 billion, or 30 percent of the total spend planned on infrastructure, over the next five years is on the electricity sector, according to Planning Commission Member B.K. Chaturvedi.

The network in Asia’s third-largest economy loses 27 percent of the power it carries through dissipation from wires and theft, while peak supply falls short of demand by an average of 9 percent, according to India’s Central Electricity Authority. Some 300 million people in India, or one in every four, remain without links to the grid and the number will still be about 150 million by 2030, according to the Paris-based International Energy Agency.

The blackout engulfed as many as 19 of the South Asian country’s 28 states on July 31, with more than 100 intercity trains stranded on the second day…

They have been failing to meet demand since 1951?  Wow.  What a horrible track record.  Yet they can build the world’s largest solar photovoltaic power plant.  Even though their electric grid can’t transmit the insufficient power that they can produce.  And what’s astonishing is one in every four people doesn’t even have electricity.  This in one of the strongest emerging economies.  A country that is capable of doing so much better.  Full of people deserving so much better.  But they leave the electric grid to the elements.  While they spend a fortune to build the world’s largest solar photovoltaic power plant.  That can only “power a medium-sized city’s worth of homes.”  What a catastrophic misuse of investment capital.  No wonder large consumers of electricity are building their own generating capacity.

Companies plan to set up more than 33,000 megawatts of new captive power capacity and applications for approvals are pending with various state agencies, Rajiv Agrawal, New Delhi- based secretary of the power producers’ lobby said on Aug. 2. Some of these stations may not be set up because of a shortage of coal supplies, he said…

The pace of growth in generation has failed to keep up with demand because of a shortage in coal and natural gas supply, and deficient monsoon rains.

The world’s second-most populous nation suffers from frequent power outages that can last as long as 10 hours, amid summer temperatures of as high as 45 degrees Celsius (113 degrees Fahrenheit) in the capital, New Delhi. Power supply shortages shave about 1.2 percentage points off the nation’s annual growth, according to the Planning Commission…

This is what happens when you demonize one of the most energy-rich and reliable fuels.  Coal.  To reduce your carbon footprint.  Saving the planet may come at the cost of killing people.  Forcing people in an advanced society powered by electricity to go without electricity frequently.  Coal-fired power plants are the backbone of baseload power.  Those plants that run 24/7 to produce a steady stream of power to meet most of our needs.  These efficient heat engines can spin steam turbines forever as long as we feed them coal.  And a large coal-fired power plant can power everything in a region full of large cities.  Not just the homes in a medium city.

Subsidized electricity to farmers is also exacerbating electricity-supply bottlenecks, discouraging producers from adding capacity. India deliberately abandoned metering power supply for agricultural irrigation in the 1970s, as part of a strategy of switching to new high-yield crops, which required regular water supplies, Miriam Golden of the University of California and Brian Min of the University of Michigan said in a report published in April…

The Reserve Bank of India refrained from raising its benchmark interest rate on July 31 amid the slowest pace of growth in almost a decade and raised its inflation forecast to 7 percent from 6.5 percent, citing rising food prices and lack of roads, ports and power plants…

A dry monsoon season is a double whammy.  The lack of rain has lowered levels in the reservoirs at hydroelectric dams.  Reducing the amount of power they can produce.  On top of that the dry weather has forced farmers to irrigate their lands.  Using free electricity.  Which doesn’t discourage them in any way from sucking power off the grid.  Adding to the strain of the grid.  Doing their part in causing power outages.  Adding to inflationary pressures.  And loss in GDP.

This is a horrendous energy policy.  But you know who would approve of it?  President Obama.  For he is trying to do the same thing in America.  Shutter the coal industry and replace it with renewable energy.  He’s even cool on nuclear power.  Which is something the Indians are planning to expand to meet their exploding electrical demand.  Nuclear power.  So their horrendous energy policy is bad.  But it’s still a bit more sensible in one area.  They aren’t trying to shutter nuclear power, too.  Which happens to be one of the other most energy-rich and reliable fuels.  Joining coal to provide the backbone of baseload power.  Where a government will have it, that is.

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Hydroelectric Dams can’t make Electricity if it doesn’t Rain

Posted by PITHOCRATES - July 21st, 2012

Week in Review

Some people like to think that renewable energy is the energy of the future.  And that it will be free and abundant.  But with today’s technology it is none of these things.  It is just too unreliable.  And has such low capacity factors (CF).  The CF is a rating we calculate by dividing actual power produced by the amount possible under ideal conditions over a period of time.  Solar panels have a CF of about 20% because there are nights and cloudy days.  Wind farms have a CF of about 30% because there are times the wind doesn’t blow.  Big hydroelectric dams have a CF of about 50%  because there are times when it doesn’t rain (see Erratic monsoon clouds hydro power generation by Sadananda Mohapatra posted 7/18/2012 on the Business Standard).

Hydro power generation in the state may decline over the next couple of weeks due to erratic and deficient monsoon…

Daily generation from seven hydro power plants in the state reached up to 722 MW this week, up from 210 MW in early June. However, as the monsoon rainfall has been below normal so far, power managers feel this could hurt generation in coming days.

“All reservoirs, except Burla, have water levels below or at par with (MDDL) Minimum Draw Down Level. The generations had gone up on expectation of better rainfall, but it has to come down as rainfall has not been satisfactory,” said a senior official of state-run power trader Gridco…

Even though hydro power generation does not contribute significantly to meet the state’s power demand, cash-strapped Gridco depends on it heavily due to its low cost and easier availability. This summer, thermal units operating in the state had to shut down operations frequently due to technical glitch or coal supply problems, compelling the power trader to look for other sources such as captive power plants.

Fossil fuel-fired plants may not be as clean as the renewable energies but they are more reliable.  With capacity factors in excess of 90%.  As long as they aren’t broke.  Or run out of fuel.  Things we can minimize with proper maintenance.  And a sound energy policy.  One that encourages the extraction of fossil fuels from the ground.  Even with this though these plants can go off line because they only have a CF of about 90%.  And sometimes that 10% happens.

Of the renewable energies hydroelectric is the one with the most commercial potential.  A mix of coal and hydro can go a long way in meeting a nation’s energy needs.  One that normally works in India.  When the rains cooperate.  Which they sometimes don’t.  Which limits their capacity factor.  For if the water in the reservoir isn’t high enough it can’t spin those water turbines fast enough.  Or long enough.  And if it falls too low it may not even be able to enter the water inlets that feed those water turbines.  A prolonged dry spell could shut a hydro dam down completely.  Something you never have to worry about with coal.

Renewable energy can help.  But it just can’t replace fossil fuel-generated electric power.  For nothing is more reliable.  Which is a comforting fact when you head home after a tiring day at work.  Knowing that the electricity-provided creature comforts you so enjoy will be there waiting for you.  Thanks in large part to coal.  With the occasional assist from hydroelectric power.

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Life was Good for Women Entrepreneurs in Afghanistan but after the Americans Leave they may Emigrate to India

Posted by PITHOCRATES - July 1st, 2012

Week in Review

The American Left attacks the Republicans for wanting to turn back the hands of time for women in America.  Ridiculous, really, considering the success of women in this country.  There are women CEOs.  Women governors.  Women cabinet members.  Women in Congress.  Women on the Supreme Court.  (The first woman justice of the Supreme Court, Sandra Day O’Connor, was nominated by the man the Left hates most.  Republican Ronald Reagan.)  Women in the military.  Something usually associated with the Right.  So if the Right really wanted to turn back the hands of time for women it would be doubtful they would allow them into the military.  So the argument is silly.  And sad. Considering how the hands of time may move back for some women in the world (see Afghan women entrepreneurs look to India for opportunities by Rama Lakshmi posted 6/27/2012 on The Washington Post).

They run fleets of trucks, supply construction material, design software programs and make furniture. Women entrepreneurs in war-torn Afghanistan have been breaking many cultural ceilings in the past decade…

“It will be a big challenge once the Americans and the others leave. The local market in Afghanistan has not progressed much,” said Masuma Rezaie, 24-year-old founder of the evocatively named company First Afghan Lady Logistics and Services. “But there is big money in the Indian market.”

To this end, Rezaie and other businesswomen came to New Delhi on Wednesday to seek deals, training and technology from Indian companies. The three-day business-to-business meetings, facilitated by USAID and the Consortium of Women Entrepreneurs of India, comes at a time when the impending withdrawal of the international forces from Afghanistan is also raising concerns about the future of women’s rights to study and work…

Another entrepreneur, Malika Qanih, wants to learn the process of manufacturing herbal medicines from Indians.

“Afghanistan is rich in undiscovered, untapped herbs. Big business potential,” said Malika Qanih, 60, chief executive of Sun Pharma. On Friday, she will visit a factory owned by Shahnaz Husain, czarina of Indian herbal cosmetics.

Qanih hopes that Afghan women will not have to go back to the past after 2014. “Many countries have signed strategic partnerships with Afghanistan. I hope they will not forget to protect us even after 2014,” she said.

President Obama always said the War in Afghanistan was the right war. To put the Taliban and al Qaeda on the defensive.  And take away their safe sanctuary.  While the Iraq War was just a distraction.  But the Left didn’t like the War in Afghanistan any more than they liked the Iraq War.  So to appeal to his liberal base in an election year the president announced a timeline for the withdrawal of US forces.  Even though it is likely that the Taliban and al Qaeda will return once the international forces leave.  Raising concerns about the future of women’s rights to study and work.  While in America the Left warns women that if Republicans get into office they’ll have to suffer the horrors of paying for birth control.  And enduring back-alley abortions.

At least if the Afghan women don’t have the support of the American Left they have a safe sanctuary in India.  Where free market capitalism still can flourish.  As do women’s rights.  India may not be perfect.  For no country is.  But it’s one of the BRICS economies so they’re doing something very well.  So India provides hope for Afghan women.  A place that will let them keep the freedoms they gained in Afghanistan.  For in India they’ll be able to breathe free.  Hope.  And pursue their entrepreneurial dreams.  Something they can’t quite do in Iran, Afghanistan (other than doing business with the international forces) or Pakistan (which the Afghani women will presumably pass through to get to India).

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Has Keynesian Monetary Policy in India only created Jimmy Carter Stagflation?

Posted by PITHOCRATES - May 19th, 2012

Week in Review

Milton Friedman said, “Inflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output.”  This means only government can create inflation by ‘printing’ too much money.  And they ‘print’ money these days by keeping interest rates low to ‘stimulate’ economic activity.  But when you increase the amount of money each unit of that currency becomes worth less.  And therefore takes more if it to buy the same things as it did once before.  Which is why prices rise when you ‘print’ money.  Just like they did in India (see April CPI inflation accelerates to 10.36 pct y/y by Manoj Kumar posted 5/18/2012 on Reuters).

India’s consumer price inflation accelerated in April to 10.36 percent, making life harder for the RBI as it looks to kickstart a flagging economy, government data showed on Friday…

The Reserve Bank of India, which unlike other central banks uses mainly the wholesale price index for monitoring inflation, slashed policy rates by a steeper-than-expected 50 basis points last month to boost a sagging economy.

The Reserve Bank of India (RBI) lowered interest rates in April to stimulate the economy.  At the end of April the consumer price inflation increased to 10.36%.  Just like Milton Friedman said.  Only government can create higher prices with inflationary monetary policy.  A lesson we all need to learn.  Especially the Keynesians whose answer to everything is to lower interest rates and spend money.  So India followed this Keynesian advice.  Now they have a flagging economy and double-digit inflation.  Reminiscent of Jimmy Carter’s stagflation in the Seventies.

Will Keynesians ever learn?

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The Reforms of Manmohan Singh are Eroding and Threatening India’s Economic Growth with a Return to a Welfare State

Posted by PITHOCRATES - April 22nd, 2012

Week in Review

The BRICS economies are doing pretty well.  Well, better than Europe and the United States at the moment.  Which is saying something.  But it’s not all rosy.  China is struggling to get housing prices under control while at the same time not hindering economic growth.  Not easy to do.  When inflationary policy gives you both that growth and those high home prices.  And now people in India are worrying about sustaining their economic growth.  Which appears to be making a transition from free market capitalism to state capitalism.  Putting the brakes on economic growth much as it has in Europe and in the United States.  Where policies now are turning (or returning) to be more anti-business than pro-growth.  And a rise in public spending that would seem to indicate a return to a welfare state.  For which Manmohan Singh, India’s prime minister, was hammered for at a recent event (see Now finish the job posted 4/15/2012 on The Economist).

The event, in Delhi, was billed as a discussion of India’s economic reforms, hosted by a prominent and respected economics think-tank, ICRIER, along with Oxford University Press. The idea was to celebrate Mr Singh and the launch of an updated version of a book marking his momentous economic reforms of the early 1990s. These, everyone agrees, did more than anything else to usher in sustained and rapid economic growth which has helped to lift millions out of absolute poverty.

As ever, Mr Singh sat twinkly-eyed and almost entirely silent, as a series of speakers took turns to address the room. Yet rather than waste time celebrating his work of two decades ago, everyone pushed on with far more urgent business: trying to get India’s prime minister to understand that, without a second round of economic reforms, and soon, India’s economic prospects will look far grimmer in the next few years than they have recently. In turn, Mr Singh may not be remembered as the man who reformed India’s economy, but the man who only got the job half done…

Then a blunt-speaking economics professor from the University of Chicago, Raghuram G. Rajan, pointed out that things are looking bad when “domestic industry prefers to invest abroad” rather than brave the hassles and uncertainty of India today. Nor did he shy away from identifying who was at fault: “paralysis in growth-enhancing reforms” is a blunt way for an economist to speak; it means Mr Singh and his cabinet have done almost nothing to promote growth, devoting energy instead to ways to dish the proceeds of growth as welfare and other public spending…

He frets, too, that India’s middle class has no clue how high economic growth was first brought about, and instead is deeply, and increasingly, suspicious of capitalism and liberalisation. The result, as another speaker eloquently pointed out, is that there is no political constituency for reform. He saved his most explicit attacks for the budget passed last month, which came with a baffling mix of anti-business measures, especially over retrospective tax, and which is now scaring away the foreign investors that India desperately needs.

Those economic reforms replaced India’s socialism with free market capitalism.  And the subsequent burst in economic activity lifted millions out of “absolute poverty.”  Something their kind and caring socialism never could.  Yet another example of how capitalism helps those least able to help themselves.  But with robust economic activity comes great tax revenue.  And the temptation is to spend that tax revenue instead of cutting taxes further.  Because that excess tax revenue is not needed.  But politicians being politicians are weak.  And they will spend that excess tax revenue.  As Ronald Reagan learned in the Eighties.  His cut in tax rates created so much economic activity and tax revenue (nearly twice what it was before the cut in tax rates) the politicians increased their spending faster than the money came into Washington.  Which is why Ronald Reagan had great budget deficits.  It had nothing to do with the tax cuts.  For they increased tax revenue.  It was the massive increase in spending.  As it always is.

This is the danger of any democracy.  Once the people get a taste of this government largess they want more.  And will vote anyone out of office who doesn’t give them more.  Or, worse, takes some of it away.  Which leads to some problems.  As in chronic deficits.  And sovereign debt crises.  Like they currently have in Europe.  And are getting dangerously close to having in the United States.  All made worse by the fact that during the good times voters become blissfully ignorant about the economic policies that made those good times so good.  All they know is that they like getting a lot of free stuff.  And want to keep getting a lot of free stuff.  So they vote for the politician that promises to give them more free stuff.  Even when they can no longer sustain that level of public spending.

So when the people are blissfully ignorant it us up to the politicians to be responsible.  And not give in to pandering for votes.  They need to do the right thing.  To continue the good times.  By cutting taxes.  Cutting spending.  And cutting regulations.  The proven way to lift people out of poverty.   A particularly difficult task when many in the population have only known the good times.  And have no idea how quickly those good times can turn bad.  But unless the Indians want to slip back to their impoverished socialist past Mr. Singh should take stock of this wise counsel and keep the miracle going in India.  The miracle of free market capitalism.

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