We should get the service we pay for.

So, now we know. For over a week self-styled experts have been speculating on what would be in the budget, whether slabs for income tax will be increased and whether there will be any mention of the Goods and Services Tax, which is suppose to combine all taxes under a single heading, thereby avoiding cascading taxes and bringing down prices. The income tax level has stayed at the same levels while the service tax has been raised by over 1.5%. This will make travel, phone calls and electricity bills more expensive and is a penalty on having fun. In an overcrowded, filthy and dangerous city like Delhi having a beer with friends in a bar, eating out with the family in a restaurant or maybe going to a movie are the only ways of  enjoying a few hours of clean fun but that will now become dearer. On the other hand corporate taxes are to be reduced by 5% over the next 4 years. That is good because it will enable more of our business fellows to buy properties in London and New York. Indians invested $5.8 billion in buying real estate in the US one year back. We understand that without profits there will be no new investments, which are vital for job creation, but if the government enforced simple laws on billing and consumer complaints it would cut out a lot of deliberate cheating, save us money and make our lives much more pleasant. For instance, Airtel, a cell phone company, has drop boxes to collect cheques. For its broadband service it has allotted an account number to every customer so your cheque is payable only into that account. Very often they cash your cheque but accuse you of not paying your bill. All they have to do is to check your account to see if the money has been deposited but this they refuse to do. To prove that you have paid they insist that you send them a scanned copy of your bank statement, which is private. If you phone to complain you get a call center with extremely stupid and rude people who go on repeating the same sentence over and over again. It is frustrating, infuriating and you end up paying again to keep your broadband connection. Writing to Airtel head office in Gurgaon is of no use because they will not answer your letter. This is called ' company policy ' but is nothing but gouging the customer. All we want is to get the service that we are paying for. The budget has allotted Rs 42 billion for the Delhi metro, which is a 22% increase, and Rs 50 billion for Delhi police, which may reduce crimes against women. Giving another Rs 25 billion to Air India is a waste. How about reducing crimes against the consumer?


                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

The mystery of currency.

Every banknote in India carries a promise by the Governor of the Reserve Bank to pay as many rupees as printed on the note. For instance the Rs 1000, the highest denomination available, promises to pay Rs 1000. But what does it mean? Pay in what? In the past it meant that the bearer would get an equivalent amount of gold, in market value, in return for the note. But Richard Nixon ended the gold standard, which was fixed at $35 for one ounce of gold, in 1971 so now we have what is known as ' fiat money ', which is just a piece of paper with a number printed on it and whose value depends on what it can buy, which changes from day to day. So when the Governor of the RBI promises to pay Rs 1000 he is not promising anything tangible, he is really promising another Rs 1000 note in return. There are those who think that what Nixon did was a colossal error and ending the gold standard has caused enormous economic harm to the US. Not having any intrinsic value makes the rupee vulnerable to events outside the Governor's control. The rupee plunged to 68 to the dollar, labeled ' taper tantrum ' by the press, when Ben Bernanke mentioned a tapering of the Federal Reserve's bond buying program. The most spectacular loss of control of a nation's currency happened in 1992 when Britain lost 3.3 billion pounds trying to protect the sterling and the financier, George Soros made 1 billion pounds in just one week by short selling the currency. Last month the Swiss National Bank was forced to abandon its currency peg to the Euro and the Swiss Franc jumped by 30%, but later trimmed its gains. The reason was the announcement by the European Central Bank that it was going to buy bonds worth $70 billion per month. The SNB was buying Euros while selling Francs to prop up the exchange rate but the losses of accumulating huge quantities of Euros, which were going to drop in value anyway, became too much. Currencies can be bought and sold like any commodity, which makes them vulnerable to speculators. Why do governments allow such trades? After all, currencies are national assets, like our flag. We would take great offence if foreigners insulted our flag so why do we allow them to play with the rupee? Because we need foreign investment. Foreign funds with billions of dollars invest in our stocks and debt markets. This money has pushed our stock prices to record values, is propping up the value of the rupee and is pushing down yields on debt. They will not invest if they are not allowed to repatriate their money. Trouble is that rupee trading is not allowed in the country so rupee derivatives to the tune of Rs 2 trillion per year have developed in Dubai and Singapore. So now rupee trading will be allowed in India. A banknote is worth nothing and yet it can cause havoc. Scary, what?

The Railways are arteries for India.

So important is the Railways for India that we are the only country in the world to have a Railways-only budget, which was presented to the parliament yesterday. It has 63,000 kms of track, much of it built during British times to carry soldiers and to loot commodities, and carries 13 million passengers and 1.3 million tonnes of cargo everyday. The budget promises to improve services for passengers and looks forward to investing Rs 8.5 trillion over the next 4 years. The minister did not increase passenger fares but increased freight charges. Could more be done? Absolutely. We need to renew tracks, newer carriages, complete upgrade of stations and separate tracks for goods trains, to name a few, but that will need massive sums of money which the government does not have. There are many criticisms of the budget. One writer suggests that passenger fares should have been increased instead of freight charges because an average freight train earns a revenue of Rs 894 per km whereas an average passenger train loses Rs 385 per km. Trouble is that since independence the Railways have been run for its social obligations to the poor rather than as a commercial organisation. A white paper published by the ministry showed that of the Rs 17.19 billion spent on 88 " uneconomic branch lines " there was a loss of Rs 13.66 billion. The net social obligation last year was Rs 213.91 billion. Of the 40 uneconomic branch lines marked for closure only 15 could be closed because of fierce resistance from the public and politicians. 94.64% of the revenue is spent on the unreserved category, which cater to the poor, with a loss of 68%. This revenue loss for the poor is subsidised by higher fares on the reserved seats but there is a limit to how high the fares can go. With the cost of jet fuel tumbling, as a result of the fall in the price of crude, passengers, who pay higher fares, may switch to airlines with consequent loss of revenue. The Railways has 1.3 million employees and numbers can only be reduced by natural wastage as people retire. If the number of employees is to be reduced the Railways will need to be completely computerised which will need massive sums of money. What is puzzling is why the ministry does not utilise the extremely expensive real estate it owns. Stations are usually sited in the middle of towns and cities. Why not replace old station buildings with multi-storied buildings, in partnership with private capital, where space can be rented out to shops, offices and hotels? Privatising a monopoly will only result in increase in fares with poor service as the British experience has shown. But when a former Financial Commissioner for Railways calls it " incoherently packed " it is a bit rich. Why did you not carry out all that you suggest when you had the chance? Talk, after all, is cheap.

It is all about land.

As the Congress realised that it would lose power in last year's general elections it resorted to a scorched earth policy to make it impossible for any succeeding government to govern India. It postponed tax refunds and payments for various subsidies, increased NREGA payments more than the rate of inflation and announced a Seventh Pay Commission. But the most damaging piece of legislation was the Land Acquisition Act which has made it impossible to acquire land for infrastructure or industry. Just as the NREGA set a floor under rural wages and led to an uncontrolled rise in the price of food so the Land Act has raised the price of land to prohibitive levels. The irony was that the BJP voted for all these pernicious pieces of legislation for fear of being labeled as anti-poor. Now in government the BJP is desperate to stimulate economic growth, but for that we need infrastructure and infrastructure needs land. So the BJP passed an Ordinance to make it possible to acquire land for 5 categories, including defence, infrastructure and industrial corridors. However, the government has to pass a bill in parliament to turn the Ordinance into law, which the opposition is determined to block. Yet only last year Congress governments in various states were demanding exactly the same changes but now that the Congress has lost some of these states and is in danger of losing others it is determined to block this legislation in the Rajya Sabha where the BJP is in a minority. We know what the Congress is about but even the so called allies of the BJP are agitating against the bill. Why? Not because their hearts are bleeding for the poor farmer but because they do not want the economy to grow strongly because that may increase the popularity of the BJP and reduce their own votes. If you cannot win seats you cannot loot, the country can go to hell. The new Chief Minister of Delhi is also vehemently against any changes to the Land Act. Problem is that he has promised to build 200 new schools and 20 colleges. We are not talking of a few square feet of land but many acres. Perhaps, he will construct a 220 floor building, with a school or college on each floor. The Chief Minister has banned all demolitions of illegal structures in the city. He has promised to ' regularise ' unauthorised colonies, which means registering illegal buildings on public land. The excuse is that it helps the poor but it actually helps the land mafia. So how to handle these cynical opportunists? The government could call for a joint session of parliament and get all the bills passed in one go or, better still, puncture the bubble in land prices. That will result in cheaper land and get rid of black money.

Not just culture.

The Governor of the Reserve Bank, Raghuram Rajan thinks inheritance tax, or death duty as it is known, is a bad idea. He wants rich people to leave less money for their children and instead give away their money to charity. India has been a socialist country since independence which has meant very high taxes to redistribute to the poor. Inheritance of wealth is particularly obnoxious to socialists because it is seen as undeserved. Birth is a matter of chance and it is not right that children born to rich parents should enjoy all the advantages of a good education and then be left a vast fortune so that they are on easy street for the rest of their lives. It perpetuates inequality from generation to generation and punishes those who lost out in the lottery of birth. People hate paying taxes and the rich can afford to pay consultants to advise them on how to avoid paying death duty. " I would argue rather than a blanket inheritance tax, let's change the culture. Make it such that people don't want to leave a lot of wealth for their children," said Rajan. " A dramatic estate tax generates value for lawyers as they figure out ways to hide the estate so that it does not get taxed." Rajan probably wants Indians to be more like Americans where contributing to charities is a part of life. But here too the amount of contributions varies from state to state and between people. Those who earn between $50,000 and $75,000 contribute 7.6% of their income while those in the top 1% contribute a mere 2.8%, although one could argue that 2.8% of $1 billion will be considerably more than 7.6% of $50,000. This maybe because the US is a highly individualistic society while families are still important in India. However, as India moves towards nuclear families with fewer children people, such as the elderly, will be dependent on institutions for old age care and will donate more to charities, as they are doing in the US. But there are other reasons why Indians do not contribute to charity as in the west. The middle class pays some of the highest taxes in the world but has no safety net such as social security, universal health cover or old age pensions. The discussion is always about how to deny subsidies to the middle class so that the poor get targeted handouts without any responsibility to the nation. Today property prices are so high that no one can open a shop, a clinic or any business unless your parents have left you some real estate or a huge sum of money with which to buy one. Indians are very suspicious of institutions because almost all are controlled by politicians. Thus endowments to US universities are in billions of dollars, Harvard having the highest at $35 billion, but when Murli Manohar Joshi wanted endowments to IITs to go through Bharat Shiksha Kosh everyone refused. Culture changes slowly. We need to change politicians. Fast.

Who do children belong to?

Mr Kailash Satyarthi, has written an emotional article against child labor and suggested that there are only 2 solutions to this pernicious problem. One is to pass draconian laws to punish all those who employ children and to increase spending on children. " We have particularly asked for complete prohibition of child labor at least up to the age of 14 and of the worst forms of child labor or hazardous work up to the age of 18," he writes. Mr Satyarthi is the winner of this year's Nobel Peace Prize but we beg to differ from his suggestions. The Dowry Prohibition Act has been around since 1961 but it has not stopped women being killed for not bringing enough dowry. On the other hand, last year the Supreme Court found that vindictive women are misusing the act to harass their husbands and in-laws. Kidnapping, murder, rape and money laundering are all against the law, with severe penalties, but that has not stopped 186 criminals from getting elected to the Lok Sabha. We absolutely agree that children should be going to school and anyone employing a child should be punished severely but, if children are stopped from working, how does Mr Satyarthi propose to stop parents from sending their children out to beg? If we give money to a child beggar is it tantamount to employing the child? Mr Satyarthi has suggested 2 solutions without identifying the core problems. We suggest that there are 2 basic problems. The first is that there can be no restriction on who can have children or the number of children anyone can have and the second is that children belong to their parents, almost like property. There are strict laws against cruelty to animals, as there should be, but there are no such laws against cruelty to children. Children may not be left without adult supervision in other countries but in India it is common to see children, as little as 5 years of age, walking along a busy road all alone. Should parents not be punished for not caring for their children? Last November 2 men were arrested for the sexual assault of 3 teenage girls who were sold to them by the parents. What was particularly disturbing was the fact that the girls escaped once only to be sold back to the men again. Do the parents have no responsibility of care towards their daughters? Does poverty absolve you of any crime? Mr Satyarthi's second suggestion of spending more money is the usual socialist bunk pushed by Prof Amartya Sen, with Nobel Prize in Economics, which has kept India poor for 67 years. " The biggest travesty is the fact that there are almost equal numbers of adults who are unemployed. It has been proved beyond reasonable doubt that these unemployed adults are the very parents of these child laborers," says Mr Satyarthi. Precisely. Parents are making their children work. Make them responsible. 

Allow people to fight under UN supervision.

The videos of executions by Islamic State terrorists are very professional and circulate all over the middle east. Beheading and burning alive are gruesome but dead people cannot suffer any more. Perhaps, even worse is to sell women of different faiths as sex slaves, girls under the age of 10 years fetching the highest price. The perversion of this act is hard to comprehend and the suffering of the victims is unimaginable. This is what Boko Haram did to schoolgirls it kidnapped in Nigeria last year. There is evidence that the ISIS, Al Qaeda and Boko Haram are learning from each other while competing in depravity. Yesterday a girl, described by witnesses as around 8 years old, was used as a suicide bomber in Nigeria. Last month two 10 year old girls blew themselves up in the same area. Children have been used as soldiers in many conflicts in the world. Tamil Tiger Chief, Prabhakaran's son was killed at close range. He was only 12 years old. Western countries are quick to condemn the " medieval savagery " when one of their citizens is killed but do not describe their own savagery when they use a drone to assassinate a 16 year old boy along with his teenage cousin and 5 other civilians, having dinner in an open air restaurant. We may recoil in horror at the brutality in the world today but human beings have always been experts at inventing hideous ways of torturing their enemies. Even in the ' good old days ' when there were no computers or televisions or airplanes the implements of torture were ingenious in inflicting excruciating pain. All this we know and it is not surprising. What is surprising is that videos of torture and killing are so attractive that they are being used for recruiting others. Knowing how they treat women it is particularly shocking when 3 teenage schoolgirls fled their homes in Britain and are believed to be on their way to Syria to become jihadi brides of ISIS fighters. However, the attraction to kill is not one sided. Western men are joining Kurds to fight against the ISIS, as in any Hollywood movie where the white guys are the goodies and the colored fellows are baddies. Perhaps it is natural for human beings to fight. Animals fight for food or a mate but we seem to kill for pleasure. In the olden days you had to fight with a sword or a spear and so had to get close to your enemy, which gave him equal chance to kill you. Even a king could be killed in combat but today killers are controlling the weapons from thousands of miles away. We should accept that people will fight, so let them. An island should be set aside. All those who wish to kill will be allowed to go there without passports. Only swords and daggers maybe used. The UN will act as referee. As the fighting will be confined to one island the rest of us will be safe. The only way we can ensure peace.

Make money but not from corruption.

Business fellows are apparently disappointed with the Prime Minister because it is no easier to do business under the new administration. They say that 9 months have passed since this government took charge but nothing seems to have changed. These are educated and very rich fellows so why do they expect that the working of the government, which has been built up over 67 years, can be changed overnight? Maybe because they have been used to making easy money, such as in the 2G and Coalgate scams, by bribing ministers and civil servants and resent the tap being turned off. For years companies have apparently being spying on the petroleum ministry by bribing people to make copies of policy documents. Some of the documents found in the houses of those who have been arrested could jeopardise national security. Some mid level officers of these companies have been arrested but it is inconceivable that the officers at the very top and the promoters of the companies were unaware of what was going on. Fellows were coming in at night, turning off CCTV cameras, opening doors with duplicate keys and then copying sensitive documents, including those of international arbitration. During the 10 years of Congress rule they bid enormous sums of money to be awarded infrastructure projects. In a complete reversal of the usual rules of business they were paying premiums to the government to build roads. This was based on 2 assumptions. One was that they will borrow all the money from banks and refuse to pay it back. After the RBI Governor, Raghuram Rajan tightened rules on restructuring of loans these fellows are facing great difficulties. The second assumption was that they will collect toll even before they had started building these roads and continue even after their contract expired, giving rise to great public anger. When so many are thriving on corruption they are bound to be angry if anyone campaigns against it. So an 82 year old man and his wife, out for a morning walk, were shot in Kolhapur. Mr Pansare has since died. To reduce poverty we need the economy to grow by 7% plus but this cannot happen without improving our infrastructure. However, these companies have no money to invest and want the government to write off their debts. The government is struggling to control the fiscal deficit due to the plethora of handouts started by the Congress and cannot finance such hugely expensive projects. Meanwhile Nobel Prize winning economist, Amartya Sen has resigned as Chancellor of Nalanda University, angrily claiming that academic freedom is under threat. He is a great supporter of handouts and so was awarded by the Congress. Wish we had innovators as in the US.

500 pages a day make a billionaire.

Warren Buffet, the third richest man in the world, according to the Forbes list of billionaires, and known as the Oracle of Omaha, was once asked by someone as to how to become as smart as he is. Buffet apparently held up a stack of papers and said," Read 500 pages like this everyday. That's how knowledge builds up, like compound interest." Presumably he meant reading annual reports of companies, forward guidance by the Federal Reserve or new laws passed by the Congress, and not Fifty Shades of Grey. But most people would find such literature mind-numbingly dull because they would not understand what was written. Sir Isaac Newton discovered gravity because he was relaxing under an apple tree but ' lost a bundle ' on the South Sea bubble of 1720. The progress of human society is based on specialisation. English surnames, which are common today, were derived from the professions of people in the past. A blacksmith or a carpenter would not have been able to read but without them to build carriages trade would have come to a standstill. Warren Buffet also said," What we learn from history is that people don't learn from history." It is the responsibility of historians and journalists to teach us about our history and Constitution and warn us of mistakes made in the past but what we get is a lot of noise, based on the political bias of who you listen to. The sweeping victory of the Aam Aadmi Party in the recent assembly elections in Delhi is a typical example. They won by promising a whole list of freebies which can only be achieved by destroying Delhi's budget or a huge increase in taxes. From the disintegration of the Soviet Union to the double digit inflation of the Congress handouts it has been proven without any doubt that socialism increases poverty but not one journalist warned the people of Delhi. Instead there was euphoria that the Hindu-loving Modi has been defeated. We may say that most people are not very intelligent or educated but most politicians are and yet they continue with the same stupid policies, guaranteed to fail. The invasion of Iraq led to the growth of Al Qaeda and has now given rise to the dreaded Islamic State but they made it much worse by attacking Libya. Having resulted in the death of hundreds of thousands they were not satisfied. They engineered an armed coup in Ukraine which has led to the death of at least 5,000 people and displacement of many thousands more. They celebrate the victory in World War II but not the lessons from it. There has been much howling about freedom of speech in India recently but freedom of speech does not mean freedom to deceive. Perhaps there should be a Hippocratic oath for journalists too.

Fear cannot lead to rational decisions.

Germany has rejected Greek request for an extension of its debt out of hand. Greece has a debt of 315 billion Euros which is equal to 175% of its GDP. The European Commission, the European Central Bank and the IMF, known as the Troika, have imposed strict austerity measures on Greece, forcing it to sack public sector workers to reduce government spending and to increase taxes and privatise state assets to increase revenue. The result has been falling living standards, unemployment in excess of 25% and rising suicide rates. Liberal economists think that it is reasonable for Greece to ask for an easing of austerity which has not worked in 5 years and is not going to because the loans given to Greece are going towards paying existing debt, thus increasing its debt burden. Those on the right wing are sympathetic to Germany and think that Greece is completely wrong on every count and should be made to suffer for their sins. But Greece is not alone. The total borrowing of all the countries in the world has risen to $199 trillion, a rise of $57 trillion since the financial crisis began. That is equivalent to $27,777 for every person in the world. China's debt is now 282% of GDP, more than that of the US and Germany combined. As real estate prices fall in China property developers are getting squeezed, and some maybe forced to default on their loans. China has some $4 trillion dollars in reserves and has just pumped $100 billion into banks to encourage lending but that increases the danger of local authorities borrowing more to spend on wasteful projects. As the global growth rate remains subdued and commodity prices keep falling there is a risk of credit downgrade of $260 billion of emerging market debt. Brazil, Russia, Turkey, South Africa and Indonesia are at risk of a credit downgrade while it is probably a matter of time before Venezuela, with the highest oil reserves in the world, defaults on its debt. Argentina is in technical default of its debt to some US funds because of one of those US judges, with delusions of world domination. Household loans in Britain are rising at alarming rates as people bought goods on credit cards. This explosion of borrowing is because central banks of rich countries have kept interest rates at 0%, to stimulate their own economies. This is exactly what happened to Greece where the government and the people were able to borrow cheap Euros, with which to buy German goods which were the same price as in Germany because of the common currency. Our Reserve Bank would be wise to build up reserves in case all the money coming into our stocks and bonds suddenly flow out. Germany may feel that forcing Greece out of the Euro will teach others a lesson at no cost but what if the others stop spending out of fear? Who will Germany sell to?

The stooge has center stage. We watch.

The new Chief Minister of Delhi, Mr Kejriwal was sworn in on Valentine's Day on 14 February, which was very apt as the people love him for all the freebies he is going to give them. The common complaint against Mr Modi is that things have not improved. No one understands or cares about how the Congress left the country bankrupt, how the growth in the early years of the Congress regime was a mirage built on massive borrowing, which has left the banks struggling with bad loans, or the double digit inflation caused by the blatant bribery of voters, with handouts. However, what people want differs completely depending on who they are. Business fellows want laws to be changed so that they find it easier to run a business. It is strange that they did not castigate the Congress for enacting those very restrictive laws in the first place, which have resulted in India dropping to 142 in the list of countries on the ease of doing business according to the World Bank. Most of the people want handouts. The middle class wants more jobs but in the meantime would like electricity bills to fall and free wi fi throughout Delhi. The poor, who are the vast majority, want lots of free handouts regardless of the cost to the economy. So, the fun starts now, how to pay for the freebies. The regulator is going to increase electricity charges by 10-15% which will add to the amount of subsidy the government will have to pay. Power distributing companies want a rise of 25% in electricity charges, so we could face long periods of blackouts when consumption peaks in a couple of months, when temperatures in Delhi exceed 45 degrees Celsius. So, Mr Kejriwal has come up with a plan to set up a coal based power plant dedicated to supply Delhi. Brilliant. Except for the fact that he will have to bid for a coal mine and then buy land in a neighboring state to set up the plant. The Delhi Metro wants a rise in ticket prices, which have not been revised since 2009, and if the price of electricity rises then the deficit will rise accordingly. If the government does not allow fares to rise it would need to pay the difference to maintain the same level of service. The government has banned demolition of illegal buildings in the city. This will not only encourage land grabbing but cause friction with the municipalities. There are more humongous expenses - 700 liters of free water for everyone, land for 200 new schools and 20 new colleges and cheap student loans. The Congress-loving, anti-Hindu press was venomous in its criticism of Mr Modi's monogrammed suit but was silent when Manmohan Singh took his official gifts with him. We shall see how this Congress stooge destroys Delhi. Mr Modi is warned that he is hated by the traitors so let us hope he watches his back.

Seesaw economics. Will it balance?

The Wholesale Price Index turned negative in January, falling by 0.39%, from +0.1% in December, due to falling oil and commodity prices. Fuel prices fell by 10.69%, but have gone up a tad since then, but food prices increased by 8% which caused the Consumer Price Index to rise to 5.11% from 4.28% in December, which is well within the Reserve Bank's target of 6% by 2016. One would have expected vegetables and fruits to be cheaper because they are transported by trucks so the rise in their prices indicate structural problems. Industrial output grew by an anemic 1.7% in December. The RBI unexpectedly reduced the repo rate by 25 basis points in January to 7.75%, signalling its bias towards lower rates so the new figures have heightened expectations for steeper rate cuts. Raghuram Rajan, the Governor of the RBI, has indicated that he wants real interest rate to be 150 to 200 basis points higher than retail inflation, to encourage people to save in financial instruments, rather than buy gold, so if the CPI stays at around 5% he can cut the repo rate by a maximum of 75 basis points. There is much debate on whether a real rate 200 basis points will be enough to lure people away from gold. That depends on whether people have surplus funds to invest after paying India's extortionate taxes and constantly rising food and electricity prices. An enormous trap for the RBI will be the fiscal deficit in the coming financial year which will be unveiled in the budget at the end of this month. There are calls for the government to stimulate growth by increasing spending on infrastructure but that may only add to the fiscal deficit and to inflation. In 2008 emerging market economies spent heavily to stimulate growth, to compensate for lower growth of the rich countries, but that did not last and growth rates have fallen. Brazil and Russia are in recession, China sees falling growth and India is only now getting a handle on soaring inflation. Curiously, low inflation maybe increasing the discomfort of the government as high inflation decreases debt/GDP ratio which fell from 90% in 2003-04 to 68.5% in 2013-14 because of double digit inflation unleashed by the Congress. Prof Jagdish Bhagwati believes that the government should start spending only when revenues flow in but the problem with that is that revenues cannot increase without growth and to increase growth we need massive spending on infrastructure. No one is mentioning the real elephant in the room, which is real estate prices. Real estate has become so expensive that sales have almost dried up but prices are still rising. Prices need to fall by 70% to reflect real market rates but everyone is terrified to see it happen. It is like a seesaw - when one side goes up another goes down.

Obama a bigger moron than Bush.

The story so far: George Bush, the moron, invaded Iraq and killed Saddma Hussein, based on, lies about Weapons of Mass Destruction. Barack Obama, the gasbag, withdrew all US forces from Iraq because ' he can '. Then Obama supported David Cameron, the ladyboy, along with Nicolas Sarkozy, Carla's little one, to willfully misuse a UN resolution authorising force to protect civilians, to bomb Libya and kill Gaddafi. In November 2013 the US organised an armed coup in Ukraine, through extreme right wing nationalist Svoboda and neo-Nazi Right Sector thugs, against an elected President, Victor Yanukovych who was forced to flee to Russia. Obama, in his Drone Master avatar, has killed hundreds of innocent civilians, including children, in Yemen. So, what has been achieved by all the brainless actions by this bunch of megalomaniacs? Read on: 21 Egyptian Coptic Christian laborers, captured in Sirte, were beheaded by the Islamic State terrorists in Libya, prompting Egypt to bomb the city of Darna which apparently is a stronghold of the IS in Libya. Last year Egypt, with the help of the Untied Arab Emirates, bombed Islamist groups supported by Qatar, in Libya. Despite such bombing, militants from Misrata seized control of Tripoli airport along with civilian aircraft which caused panic in European capitals for fear of 9/11 style attacks. In Yemen, a Shi'ite group from the north, called the Houthis, have seized control of the capital Sana'a, dissolving the parliament and removing the president, who was supporting US drone attacks on Al Qaeda in the Arabian Peninsula in the south. Western countries have closed their embassies and fled Yemen. Jordanian air force is bombing Raqqa in Syria which is the de facto headquarters of the IS after a Jordanian pilot was burnt alive by the IS. The UAE is also supporting Jordan's bombing of IS targets in Syria. Hundreds of Yazidis, a Christian sect, were killed and women sold as sex slaves until the siege of Mount Sinjar was broken by Kurdish fighters, allowing the Yazidis to escape. Now the Yazidis are exacting revenge by killing Sunni Arabs, who they suspect of supporting the IS. The Sunnis are supporting the IS because the former Prime Minister of Iraq, Nouri al Maliki, installed by the US, was a Shia and persecuted the Sunnis. Large parts of northern Iraq, including the city of Mosul, are in the control of the IS. The fight against the IS in Iraq is being waged by Shi'ite fighters backed by Iran. Having withdrawn forces from everywhere Obama is dependent on Iran to restrain IS from gaining more ground. Which means he has to go soft on Iran's nuclear program. Which means Israel and Saudi Arabia may take unilateral action against Iran. So has Obama learnt his lesson? No, he is eager to supply weapons to the Ukranian government. He is a bigger moron than Bush.

Love maybe blind, but marriage should be profitable.

During the presidential elections in 2004 in the US a team of psychologists studied 30 men with fMRI, who were strongly committed to either the Republicans or the Democrats. They were shown statements which appeared to show the 2 candidates, Bush and Kerry, as duplicitous. Those who supported the Republicans did not agree that Bush was duplicitous but strongly agreed that Kerry was, while it was the exact opposite with supporters of the Democratic Party. What surprised the scientists was that once a subject had formed his opinion, despite evidence to the contrary, the pleasure center of the brain was activated. It seems that the human brain lies to us. Is that the reason why human beings fall in love? Why would a wealthy western woman marry a compulsive fornicator, like Dominique Strauss Kahn, who told her that he had no obligation to be faithful. Must be because a lying brain blinds us to the object of our desire. " But love is blind and lovers cannot see / The pretty follies that themselves commit. " Love may well be blind but economists have won the Nobel Prize by proving that marriage is based on sound economic principles. Since marriage is a competition to find the best mate the act of getting married is satisfying. Marriage is a partnership in which the couple can accumulate assets, such as tangible goods, and share in non-tangible pleasures of bringing up children. It is more efficient for 2 people to share the same assets, such as property and furniture. Two incomes make the couple more credit worthy which, in turn, helps them to purchase more assets. Sharing of domestic responsibilities allows for more efficient allocation of money and time and to find more time for shared enjoyment. That is why couples who share educational and physical attributes tend stay together. Using game theory economists have shown that it is best not to buy a gift for your partner on Valentine's Day. If both partners buy gifts for each other it is an economic loss because gifts are hugely overpriced for Valentine's Day and if one partner buys a gift and the other does not it will give rise to friction. According to Facebook data break-ups spike during the second half of February. Maybe marriages are not made in heaven after all and the rise in divorces is because people are marrying for love when they should be marrying for economic compatibility. Would it be better to take romance out of marriage and let a bank manager marry people instead of priests? Maybe it will happen when people start traveling through space and fail to find a paradise. 

Mars and Venus are same. At least in India.

The 73rd amendment to the Constitution reserves one third of positions in panchayats, including mukhiya, sarpanch or chief, for women. Many states reserve half the seats for women. An experiment was conducted in 40 villages in Bihar to see if women are more honest than men. Participants were divided into groups and men were made in charge of half the groups while women were made heads of the other half, randomly. Each leader was given Rs 200 to be divided among group members with the opportunity to keep a larger amount for themselves if they so wished. The experiment found that women leaders deceived in 56% of cases while men deceived in 43% of cases. The authors of the study explain this excess of deception by women as being due to an expectation of being treated poorly and hence fulfilling that expectation. But surely is it not more logical to perform to a higher standard to prove others wrong and gain plaudits? Women CEOs advise hard work, accountability and external benchmarking as a reason for their success. However, it is possible that the behavior of a college educated, middle-class American woman would be totally different to that of an illiterate, married, poor village woman in India. Another reason given by the authors for the excess of female deception was that a majority of women did not expect to get reelected, so they cheated. A survey conducted by the government of India in 2008 found that 89% of female mukhiyas did not stand for reelection and all those who did, lost. But that is not the behavior of our most esteemed members of parliament. Figures show that MPs accumulate vast quantities of wealth and the richer the person the greater the chance of winning reelection. That is because elections cost vast quantities of black money, last year's elections cost $4.9 billion, second only to the US. The surprise is that the authors seem to be surprised by the result. Why? Studies seem to show that there is little difference in behavior between men and women, nurture being stronger than nature. Cristina Fernandez, President of Argentina has been accused of benefiting from money laundering and former President of the Philippines, Gloria Arroyo was charged with electoral fraud. Princess Cristina of Spain is defending herself against charges of tax fraud. We Indians know about Ms Indira Gandhi and the dark days of Emergency and how she corrupted the Supreme Court. Sanjay Gandhi confiscated and burnt all the prints of a satirical movie called ' Kissa Kursi ka '. The Supreme Court protected him. Reservation is wrong. You cannot stop discrimination by discriminating in favor of one group. Equality in education, opportunity and respect will end discrimination. But will they get votes?

Cannot be rich without a fight.

China is now the second richest country in the world after the US and before Japan but if its GDP is divided by its population then it is way down the list of countries of the world. On a list of nominal GDP China comes in at around 84 with $6,800 per capita per year while India is at 148 with $1,500 per capita per year. On a list of Purchasing Power Parity, which seeks to eliminate currency values, China is at 89 with $11,000 per capita per year and India is at around 126 with $5,000 per capita per year. The US, Canada, Australia, countries of western Europe and oil producing countries are the toppers in both the lists. There is now a theory of a ' middle income trap ' which states that poor countries will become richer up to a certain point and then get stuck there, failing to reach the heights of the white nations. How did the white nations become so rich and why will we fail to catch up? Seems that the genesis of the Industrial Revolution can be traced back to the Great Plague which ravaged Britain in 1348 and 1665. Europe and the US caught up with Britain by adopting an internal free market, a stable domestic banking system, high external tariff, universal education, and superb infrastructure. European countries fed their industries with looted resources from colonies, set up by invading other nations. Up to 1750 India and China contributed half the manufacturing of the world but the combined populations of the 2 countries amounted to about 80% of the global population. Epidemics and famines were not unknown in these 2 countries and would have ravaged the populations regularly. So, why were the populations of western countries so low, when birth control was actively discouraged by the church. Perhaps the authors have chosen to ignore one extremely important factor in the supremacy of western races. And that is warfare. The history of Europe is a history of constant wars. There was a Mad war, a Salt war, a Long war, an 80 years, a 100 years war and even a 350 years war. War not only reduces population by direct slaughter but also by causing starvation through destruction of agriculture and epidemics in large numbers of displaced people. Thus the scorched earth policy as an effective means to stop an invader. To win wars you need to have better arms than your enemy so the Europeans developed canons, rifles and battle ships which we could not match. Even tiny Portugal was able to establish colonies in India, Angola and Brazil. We can conclude that wealth is not possible without exploitation and a small population. We must reduce population and guard our resources. Sounds simple but can we?

There is no class war in India.

It is a mystery why Jawaharlal Nehru, who saw himself as the last Englishman to rule India and was educated in England, did not follow the English path to economic growth. Compulsory school education for all, with truancy officers to enforce school attendance, a National Health Service to offer the same quality of care to everyone free of charge, State Pension for everyone after certain age, paid for by a National Insurance Scheme, and a high quality manufacturing sector born of the Industrial Revolution. Nehru chose to follow socialism and chose the USSR as his inspiration. During his time a few families became very wealthy by acquiring monopoly licenses to set up businesses. Imports were severely restricted by high taxes so everyone used whatever shoddy products were available. There was very little difference in lifestyle between the poor and the middle class. People commuted by bicycles, rickshaws or buses. You had to wait 5 years for a telephone connection, apply for permission to buy cement to build your house and wait for hours to withdraw cash from a bank. Even in 1972 we were reusing glass syringes and needles after boiling and catheters after sterilising in Lysol. Poverty of the people led to poverty of the nation so that the government had to pledge 20 tonnes of gold in London to meet its balance of payments crisis in 1991. Mr Narasimha Rao started reforms by reducing duties on imports, introducing competition in telecoms and allowing foreign television channels. From 1947 to 1998 the Congress ruled India apart from short intervals when disgruntled Congressmen became prime ministers by joining the Janata Dal. From 1998 to 2004 the BJP formed the first non-Congress government at the center but the Congress came back to power by promising freebies and increased its seats in 2009. Another economic calamity followed and in last year's elections the BJP won absolute majority with 282 seats while the Congress was reduced to just 44 seats. In 2013 a new party, called the Aam Aadmi Party was born in Delhi and within months was able to win 28 seats in assembly elections. A few days back the AAP swept into power with 67 seats out of 70 seats in the Delhi Assembly by promising a load of freebies. We do not know if the Congress created AAP as an alter ego or whether Congress supporters have shifted allegiance to Mr Kejriwal to get back to power but there is no difference between the Congress and the AAP. The margin of victory shows that not just the poor but almost everyone voted for the AAP. The middle class also wants freebies, such as lower electricity bills, civil servants want a return to relaxed working times and parents want lower education fees. Thus, there is no class war in India. We are all beggars.

The root of reforms is in land.

The new York Times has unearthed that the owner of a luxury condominium in the Time Warner Center in Manhattan as one Kabul Chawla, who also owns BPTP, a company which builds multi-storied apartments in India. He paid $19.4 million to buy the apartment in February 2012 through a shell company called NYC Real Estate Opportunities, a Delaware company with a Singapore address. The apartment, no 68AF, has 5 bedrooms, 5 1/2 marble bathrooms, a 23-by-24-foot great room, his-and-her master closets, a media playroom, soaring ceilings, river-to-river views of the city and Central Park views. Chawla lives in the apartment but his name does not appear in any of the documents. The apartment is registered to his cousin, Aneil Anand. But why is this Chawla of interest to us? Because in 2005 he started buying farmland in Faridabad and by 2012 he had 2 dozen projects over 2,500 acres with 22,000 customers and sales of $1.6 billion. In 2012 he collected around $35 million from 400 buyers to build Park Serene Apartments, 200 of whom were army officers, who used all their savings to buy flats in the building, but the project was not completed because Chawla used the money to buy land for other projects, which is a common practice in India. This kind of flimflam is possible because real estate is the main source of wealth for most Indians, accounting for 92% of wealth in urban areas, writes Prof Vidya Mahambare from Chennai. Wealth in financial assets is a mere 4.5% but " While calculating wealth, shares and debentures held by households were valued at market prices in the NSSO survey, but land and buildings were valued at guideline prices. Had the latter also been recorded on the basis of its market value, the share of land and buildings in urban household wealth would be even greater." The wealthy have multiple real estate, the middle class usually have one, in which they live, and the poor have none. Thus real estate is the main reason for income inequality in India. The construction industry does produce a lot of jobs but they are usually for daily labor, insecure and poorly paid. Most of the black money in India is invested in real estate and the income from rent is non-productive income for the the rich while the poor stay poor because rent is a waste, which does not build future assets. Hence, " Revolutionizing the housing market to reflect the fundamental prices...will do more for lowering wealth inequality than aiming directly for a goal of housing for all." If property prices fell black money would disappear, the middle class will not be affected because they only own the property they live in so the loss will be notional, while it will benefit the poor who will be able to enter the housing market or pay less rent. Trouble is that the people who have to initiate reforms are the ones with black money.

The Hugo Chavez of Delhi?

After the overwhelming victory of the Aam Aadmi Party in Delhi's assembly election, where it won 67 out of 70 seats, the chattering ' experts ' are out in full force. Christian organisations, such as the BBC, call it a victory of an anti-corruption party over a Hindu nationalist party, although why it is a crime to be a patriot and a Hindu is inexplicable. Both Arvind Kejriwal of AAP and Kiran Bedi of the BJP came into politics through Anna Hazare's anti-corruption protests in 2011 but while Kejriwal bought his way out of the Inland Revenue Service with loans from friends, Kiran Bedi was a no-nonsense police officer who was not afraid of arresting politicians if they stepped out of line. Winning 67 out of 70 seats means that the AAP has no opposition in the assembly, which maybe a means to performing sterling service for the citizens of Delhi, or a long rope to hang itself. Contrary to what the self-appointed experts are saying AAP's victory is not only because of its promise to root out all corruption or a rejection of the policies of Mr Modi but mainly because of its promise of halving the price electricity, 700 liters of free water, building 500 new schools and 20 new colleges, free wi fi throughout Delhi, cheap loans to students and young entrepreneurs and justice for victims of 1984 anti-Sikh riots. Nothing new in that. Mr Nitish Kumar won great praise for providing free bicycles to schoolgirls in Bihar and then went on to promise laptops and tablets. Ms Jayalalithaa promised free gold, mixers, goats, sheep and cows. But nobody can beat the Congress, which forgave Rs 700 billion loans to farmers, spent Rs 2.5 trillion on the NREGA scheme to bribe the rural poor and forced private schools to reserve 25% of seats for poor students. Trouble is, it is very easy to promise free goodies to win elections but then you have to pay for them. How does Mr Kejriwal propose to pay for 55,000 extra government employees that he has promised to recruit and then control corruption because government fellows are not going to be satisfied with their salaries are they? How is he going to bring justice for the Sikhs killed in riots 30 years ago? HKL Bhagat is dead and Sajjan Kumar and Jagdish Tytler are roaming free. It is hard to believe that most of the evidence has not been destroyed in all this time the Congress has been in power both in Delhi city and the center. Such an enormous margin of victory seems incredible. Did the Congress work for AAP, in which case it has cut its nose to spite the BJP? Did BJP fellows work against Ms Bedi as they worked against Gen Khanduri in Uttarakhand? India has always been beset with traitors so anything is possible. Perhaps Mr Kejriwal turn out to be the Hugo Chavez of Delhi. We shall find out shortly.

To make in India we have to break the fakes.

Since his election the Prime Minister has laid great emphasis on improving the manufacturing sector in India under the slogan of ' Make in India '. Over the next 3 years our expenditure on defense is expected to be $247 billion and if a part of that can be made in India the saving will be huge, not to mention the millions of jobs created in ancillary industries. At present we import much more than we export, always running a Current Account Deficit, although this year we may show a tiny surplus because of the drop in the price of oil. The reason we cannot sell abroad is because we do not innovate so there is no reason why anyone should buy anything produced by our companies. Since independence the Congress Party's infatuation with socialism meant that our industries were protected from foreign competition, so there was no need to spend on research. We had a huge and growing population so there was a lucrative market right here. Why bother with exporting when you could make any rubbish and people would be forced to buy them because there was no alternative. The Ambassador car was the stereotypical example. It was a replica of the British made Morris Oxford, of 1950s vintage, and had a monopoly in India. Fifty years back an Ambassador cost Rs 30,000, which would have bought a spacious bungalow in Delhi, and there used to be a 3 year waiting list for a new car. As soon a Suzuki was allowed to manufacture in India, under the brand of Maruti, people stopped buying the Ambassador and it was surviving on government orders. Last year it died. Our fellows have been surviving on reverse engineering foreign products and then producing cheaper copies to sell. The sale of generic versions of drugs is a source of friction with the US but our fellows have been punished for impurities in drugs sold in the US. We cheat even while cheating. The government mandated portability of cell phone numbers in 2011 but our fellows twisted it to mean changing from one service provider to another in the same area. Since they are all equally bad not many people bothered. They do not care for long term customer satisfaction for short term price gouging through roaming charges. Last October during the festival season in India sales at stores in shopping malls fell by 30 to 40%. The shops blame online retailers for the drop in sales but do not ask consumers about their shopping experience. Shopping malls sell mainly branded products which are expensive but have limited choice. There is no where to sit when one person is in the changing room, trying on a garment. Restaurants have crammed as many tables as possible and play ear-splitting music to stop eavesdropping of conversations. So what have they done to increase footfalls. They have jacked up parking charges by over 80%. Wonderful. Crooks cannot make, they only crook.

Money begets money.

There are 2089 dollar billionaires ( one billion equals 100 crores ) in the world today, with 341 added in 2014. India has jumped to third position with 97 billionaires, an increase of 27, behind the US in first and China in second position. A survey in Britain looked at rich people with unusual surnames and found that wealth runs in families for at least 300 years, which should be reassuring for our bunch. The rich have many advantages. Children get better diet, the best education that money can buy, ability to build a lucrative career without the worry of having to earn a living and a network of friends who are similarly placed in high positions in industry or government. This networking is called an ' old school tie ' in Britain but is present in every country in the world, as an angry article from a woman in Australia shows. Although these advantages of rich children seem unfair one cannot blame parents for providing the best possible start in life for their children. It is their duty, after all. An altogether insidious way in which the rich protect their wealth is by influencing politicians so that policies are always in their favor. This is crony capitalism, in which rich people in poor countries take control of resources, such as land, minerals and spectrum for mobile phones, and in rich countries they employ a team of advisers to help them avoid paying taxes. A whistle-blower has exposed how HSBC Bank helped clients to hide their wealth and avoid paying taxes in their countries of residence. In this year's budget President Obama has proposed a one time tax at 14% on foreign earnings of multinational companies and 19% every year thereafter. Immediately one politician has labeled the proposal " envy economics " and has proposed lower rates of taxes instead. The massive rise in the number of billionaires has been helped by record low interest rates which has allowed the rich to borrow cheaply to increase their assets while the poor are denied loans because of they are deemed risky by banks. The European Central Bank has been trying to increase lending to small businesses by allowing banks to borrow at almost no interest but banks have shown little interest. In desperation the ECB has started buying bonds of $70 billion per month, known as quantitative easing, to release more money into the system but banks might take the cash and balance their books rather than lending it to customers. While savers lose out low interest rates help those with properties to buy more real estate so that the poor are priced out of the market and have to waste their earnings on rent. The world is in for enormous turbulence. Seems unstoppable.

George Bush not the only moron.

Chancellor Angela Merkel of Germany and President Francois Hollande of France met President Putin of Russia to find a peaceful resolution to the fighting in Ukraine. The talks failed because Putin apparently made new demands. There is rising pressure on Obama to supply lethal weapons, such as anti-tank and anti mortar systems, to the Ukraine government while Merkel warned that there can be no military solution to the Ukraine problem. In which case why didn't she stop the western backed armed coup by ultra nationalist, Svoboda and neo-Nazi Right Sector thugs which forced the elected President Victor Yanukovych to flee to Russia? She should never have agreed to the sanctions imposed by the US and definitely not taken part in them. Russia naturally sees this as bullying by western powers and reacted with its own sanctions against the EU and the US. With the US economy growing strongly Obama probably thinks that he can ignore these tit for tat sanctions but the EU is the largest trading partner of the US and the Eurozone economy is in dire straits with the risk of deflation hanging over it. The present Ukraine government was elected only by the western half of the country and the Russian speaking east elected its own Prime Minister in Alexander Zekharchenko. The government has been bombing civilians in the east with aircraft and helicopter gunships, justifying its attacks by saying that there are 9,000 Russian troops in the east of the country. If you are elected by only half the country and you bomb your own citizens, whose only crime is that their mother tongue is Russian, then surely you can never hope to represent those people and they have every right to fight for independence. So what is Obama, the gasbag, going to do? He cannot use drones to blow up Putin or Zekharchenko, as he has been doing in Pakistan. Will he supply lethal weapons to the government and give Russia the excuse to send in more troops and its air force to protect the people in the east? And if Russia does that will he send in NATO and US forces for a full scale war with Russia? US Senator Rand Paul thinks that US intervention in Libya was an " utter disaster " and calls it " Hillary's war ". Being a Republican he has selective amnesia about Bush's war in Iraq and Cheney's dirty obscenity in Guantanamo. But this is not the only confrontation. Greece has just elected a left wing government which wants to renegotiate the terms of its loans with the EU, but mainly Germany. However, Angela Merkel's father was a Lutheran pastor and she is totally against any sinful spending by Greece. And we have not even mentioned David Cameron of Britain. Want a bunch of jokers, with nuclear weapons to play with. Not reassuring, is it?

Redistribution does not lead to inclusive growth.

An article by Prof Ricardo Hausmann of Harvard University defines differences between ' redistribution ' and ' inclusion ' in economic policies and the consequences thereof. His article has special relevance because he was Minister of Planning in Venezuela from 1992 to 1993, well before the disastrous socialism of Hugo Chavez that has bankrupted the country with the highest reserves of oil in the world. The country had to import crude from Algeria and Russia because the oil company, PDVSA has been looted for years by Chavez to pay for handouts. An earlier article by Prof Hausmann details how the government of Venezuela has defaulted on payments for import of food, pharmaceutical products and automobile parts so that there are shortages of every consumer product, leading to the highest inflation in the world. With falling oil prices the situation has become critical. At the level of companies there is a great difference in income distribution because productivity varies between firms so that there is great difference between income of individual companies. This is especially marked in developing countries because," Poor countries lack the means to connect all places to all inputs. They are faced with the choice of connecting a few places to most inputs and getting high productivity there, or putting some of the inputs in all places and getting very little productivity growth everywhere. That is why development tends to be unequal." These inputs include " raw materials and machines, which can be shipped around, but also specialized labour skills, infrastructure, and rules which cannot be moved easily and hence need to be specially collocated." Hence, he says," Given productivity constraints, redistribution is only palliative, not curative." To reduce inequality in income inclusion is much more effective. Inclusion is achieved through " endowing people with skills, and connecting them to the inputs and networks that can make them productive." This means good quality education for every child, vocation training to upgrade skills, superb infrastructure at low charges and equal access to resources. Unfortunately our politicians practice redistribution under the guise of inclusive growth. The Congress stayed in power for 10 years through such deception but lost when fiscal deficit zoomed, leading to double digit inflation, hurting the very poor who were supposed to benefit from the handouts. The Right to Education Act is responsible for the closure of private schools in slums where residents shun useless government teachers. Inclusive growth leads to equitable distribution of income but takes time whereas redistribution is immediate. That is why politicians conflate the two. 

Will a baby be cute to Artificial Intelligence?

Is Artificial Intelligence, or AI, a boon for the world or will it result in super intelligent robots who enslave or wipe out human beings? Depends on who you ask. On one side are Elon Musk, Bill Gates and the eminent scientist, Stephen Hawking who think that it " could spell the end of human race " and on the other side Prof Max Tegmark of MIT, Paul Allen of Microsoft and Jack Ma of Alibaba who are investing hundreds of millions of dollars in research on AI. There have been many movies in which computers or robots have been villains, either trying to wipe out or enslave human beings but usually one human proves too smart for the machines. " There had been a ridiculous amount of scaremongering," Said Prof Tegmark. " And understandably a lot of AI researchers feel threatened by this." But is it as ridiculous as the good professor thinks? A human being is not measured only by Intelligence Quotient but by many other parameters. Indeed, some believe that Emotional Quotient, which measures how we empathize with others, leads to greater success. The human brain is unique among all animals because we are the only ones with a speech center which gives us the ability to pass knowledge to the next generation so that succeeding generations have built on the past to come to the stage of building AI. Among humans Einstein's brain was unique, not because it had more cells, but because it had vastly more connections between the two halves. But what really distinguishes human from AI is that although we are intelligent we are also irrational and behave illogically. Partly it maybe because we have instincts like all animals. The fear of the dark is probably a leftover from the time when our ancestors were vulnerable to predators with night vision, such as leopards. We tend to laugh if we see a man slip and fall but we are consumed with anxiety if our child falls down and rush to find out if she is hurt. But even in activities, such as economic decisions, where you would expect cold logic, we make irrational decisions. Former Federal Reserve Chairman, Alan Greenspan complained of " irrational exuberance ", when talking about share prices, in a speech in 1996. This basic irrationality is now being recognised by economists who are beginning to understand why macro-economic predictions go spectacularly wrong. Like all computer programs AI is based on algorithms which means it has to be logical. Logic cannot appreciate the beauty of a sunset, the cuteness of a baby or the decision to donate a kidney to a partner. This restriction within the bounds of pure logic is what makes AI so dangerous. Since humans kill other humans it is logical to control all humans. Dangerous.