Role of Good Governance Practices

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This is a paper presented by me at University of Passau, Germany. It provides birds eye view of how large systems work.

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  • Poor man's India
  • Unorganised sector refers to those enterprises whose activities or collection of data is not regulated under any legal provision or do not maintain any regular accounts. In the unorganised sector, in addition to the unincorporated proprieties or partnership enterprises or partnership enterprises, enterprises run by cooperative societies, trust, private and limited companies are also covered. The informal sector can therefore, be considered as a sub-set of the unorganised sector. Informal sector in India is broadly characterized as consisting of units engaged in the production of goods and services with the primary objectives of generating employment and incomes to the persons concern. These units typically operate at low level of organisation, with little or no division between labour and capital as factors of production and on a small scale. Labour relations, where they exist, are based mostly on casual employment, kinship or personal or social relations rather than contractual arrangements with formal guarantees. Thus, production units in informal sector are not constituted as separate legal entities independently of the household or house hold members that own them and for which no complete sets of accounts are available which would permit a clear distinction of the production activities of the enterprises from the other activities of their owners. The owners of their production units have to raise the finance at their own risk and are personally liable, without limit, for any debts or obligations incurred in the production process. Expenditure for production is often indistinguishable from household expenditure. For statistical purpose, the informal sector is regarded as a group of production units, which form part of the household sector as household enterprises or equivalently, unincorporated enterprises owned by households. In India, the term informal sector has not been used in the official statistics or in the National Accounts Statistics (NAS).
    (http://labour.nic.in/ss/INFORMALSECTORININDIA-approachesforSocialSecurity.pdf)
    http://timesofindia.indiatimes.com/videos/news/Truck-driver-beaten-to-death-for-not-paying-bribe/videoshow/10125209.cms; Reference to speck of former President of India A.P.J.Abdul Kalam on the incident. (www.abdulkalam.com )
  • Role of Good Governance Practices

    1. 1. Presentation by Dr.K.Prabhakar, Professor Universitat Passau The Economics of Corruption: Seeking Nudges for Reforms Role of Good Governance Practices and Native Intelligence to Reduce Corruption in Truck Industry 1/10/20141
    2. 2. Structure of Presentation  Facts sheet about truck industry  Motivation  Context  Discussion 1/10/20142
    3. 3. Fact Sheet  Second largest employer after agriculture in India. (11% of population work in this sector both directly and indirectly).  87.5% of total goods transported in India are through trucks spanning 42.36 lakh kilometers roads of which only 1.7% is national high way.  The ownership of trucks is predominantly with small operators owning not more one or two trucks (85% as per the records of All India Motor Transport Congress Report.  The industry is considered as an unorganized sector and informal sector.  Industry is financed to the extent of 1,60,000 crores (27 billion $) is from private financiers and not from banks.  Approximately 35,000 crores (6 billion $) is paid as bribes every year at different check posts.  The legal framework is given in the year 1884 . 1/10/20143
    4. 4. Motivation  what makes this industry survive despite its inherent contradictions and perennial issues with law enforcement agencies and rent seeking politicians with resists any legal framework?  How should we describe this industry with no one is able to influence the prices with large number of suppliers and buyers- economists dream of free competition?  In a similar vein is it possible for a person like Shanmugappa to bring about a change that has not moved the state for 149 years?  Shanmugappa’s organization has no characteristics of a modern organization. Yet it is globally competitive supplying to 40 countries across the world.  If there are some other models what is the theoretical basis for the same? 1/10/20144
    5. 5. Artificial Economics  The seminal work by Batten (2000) on Discovering Artificial Economics an analogy is provided to that of sand piles. The common example of reaching equilibrium at the intersection of demand and supply curve may not explain the complete picture of how decisions are made. The decisions by human agents tend to be discrete, like grains of sand are not continuous and it is the same case with the prices.  Buying or selling goods happen only when the need arises or the opportunity of a bargain presents itself, remaining passive in between. There is no continuous adjustment of goods in response to fluctuations in the market.  In other words, there's plenty of friction in real economies, similar to sand piles. It is like the friction of distance that binds villages, towns, and cities together in special patterns to form a stable, yet dynamic, economy. It is also friction that prevents a sand pile from collapsing completely to a flat state. It may even be responsible for a special kind of dynamic equilibrium. 1/10/20145
    6. 6. Self Organized Systems  There may be an argument that economic agents can think but grains of sand have no thinking capability. An examination of sand piles behaviour provides better understanding of phenomena. The following experiment may be tried. Starting from scratch on a flat base, a pile is built up by randomly adding sand at the centre; slowly and carefully, a few grains at a time.  We will notice how the grains tend to stick together. The peaked landscape formed by the sand doesn't revert automatically to the flat state when no more sand is added . Static friction keeps the pile together. Gradually it becomes steeper. Then a few small sand slides start to occur. One grain lands on top of others and topples to a lower level, causing a few other grains to topple over it. In other words, that single grain of sand can cause a local disturbance, but nothing dramatic happens to the pile as a whole.  At this formative stage, events in one part of the pile have no effect on other grains in more distant parts of the pile. We might say that the pile is only weakly interactive, featuring local disturbances between individual grains of sand. As you add more grains and the slope increases, however, a single grain is more likely to cause a large number of others to topple. 1/10/20146
    7. 7. Invisible Choreographer ?  It is not invisible hand, but it is the invisible choreographer who will be able to add few sand grains that is likely to cause avalanche. This is what is being done by an individual that will change the course of the world.  Stuart Kauffman (1993) of Santa Fe Institute scientist and devout advocate of self-organization, argues that this kind of emergent order seems to be the work of an "invisible choreographer." An ordered pattern has sprung up from nowhere. The relevance of this discussion is apply the concept of Shanmugappa and his team of people who can become invisible choreographers to change the system to bring about the required avalanches in the sand pile of corruption, inefficiency that is plaguing the industry? Arab spring, Occupy Wall Street, Anna Hazare movements choreographed by few people has brought about phenomenal changes in the thinking of the people. Is 1/10/20147
    8. 8. The qualitative phenomenological method  The qualitative phenomenological method is likely to be appropriate as it is more oriented towards discovery.  This approach relies on information that is dependent on the individual perceptions and interpretations of a subjective reality they have created ( Arbnor & Bjerke, 1997). Thus, the actor paradigm perceives reality as a manifestation of human intentionality. 1/10/20148
    9. 9. Words that had profound impact  (சிந்தனை )thought, conception, recollection, imagination, reflection  (சிந்திப்பது )contemplation  (சசயல்படுத்துவது )execution  சூழ்நினை circumstances or appropriate eco system.  (நாட ாடிகள) Vagrants, vagabonds, strollers; a derogatory term to describe persons who lost their roots.  (ஆட ாக்கியம்) salubrity, freedom from disease, wholesomeness 1/10/20149
    10. 10. Reasons for corruption  டதனவயில்ைாதது not needed, not necessary, not wanted or non exigency  அவசியமில்ைாது not suitable 1/10/201410
    11. 11. What made him successful  (உறுதியாை மைப்பான்னம) categorical and unwavering strong will.  (மடைாபாவம்) real state of mind.  (எண்ணம்) thought; supposition; imagination; conception.  (பி திபைிப்பு )reflection.  வி ாமுயற்சி perseverance and endurance  டபசுடவன் Talk or communicate. I interact with my colleagues and with all living and non living beings. 1/10/201411
    12. 12. Jeremy Narby (2005)  Scientists have discovered that humans are not the only intelligent beings around. The field of animal intelligence is expanding and plant intelligence is considered a scientific discipline. Anthropologist Jeremy Narby (2005), who interviewed scientists investigating smart slime, brilliant bees, perceptive plants and other living wonders gave a clear articulation in his work.  Narby posited that Western scientists are beginning to uncover two facts of life that indigenous shamans have known for millennia: All of nature teems with intelligence and all life is interconnected. 1/10/201412
    13. 13. Jeremy Narby  As an anthropologist who has studied both Western scientists and Amazonian shamans, Narby is bringing together these two knowledge systems. To Narby's way of thinking, rationalism has been the sole driver of the pursuit of knowledge for far too long, with devastating consequences. "The emphasis on technology, commodities and fragmented rational knowledge has bled the world of meaning," he says. At the same time, Western culture has drawn a line so deep between humans and nature that it's embedded in language.  Intelligence and nature are mutually exclusive by definition.  Narby says scientists lack adequate language to describe and deepen their discoveries about the intelligence and the unity of life on Earth. Indigenous people's knowledge systems and cultures, on the other hand, tend to view all beings as sentient and related in a world with no separation between humans and nature. Such understanding, combined with western science, could 1/10/201413
    14. 14. Organization and its characteristics  He created a strong base in the form of five organizations that provide livelihood for 1200 people, which was his dream.  He is not number driven or profit driven and never thinks that he will make a loss. His view is if his focus is on being honest to himself and to the society it will reward him with profits.  He does believe that as CEO he need to be frugal. He spends what is required for him. The rest he says it is for his workers and for the society.  An organization strongly believes in intuition rather than in systems or processes. There is no hierarchies and everyone is treated the same.  He radically trusts people and never on the wrong side of the law.  The organization has no written mission and vision statements, but achieved world class manufacturing practices and designed machinery with the help of workers who had little formal education.  He is deeply religious and not apologetic about it and has employees from all religions.  Strong belief in ethics and values and commitment to anti corruption.  Every employee is made to feel a strong sense of identity with the organization as well as works with great pride, which is visible from the security staff to the senior managers. 1/10/201414
    15. 15. Native Intelligence  While animals and plants can have intelligence and act according to their own needs optimally as given by Narby (2005), a non formal educated person, with a strong sense of commitment to society driven by values leverage native intelligence and achieve excellence. Thus he describes as a native intelligence achiever. 1/10/201415
    16. 16. Nudge 1/10/2014  The All India permit used to cost 1,35,000/- with only 8,00,000 truckers with licenses. While 25,00,000 truckers are operating. Revenue to government 850 crores.  All India permit to cost 15,000/-. 20,00,000 truckers accepted and the revenue to the government is1350 crores. 16
    17. 17. Discussion  Questions are the same, but answers are different. 1/10/201417
    18. 18. References  Arbnor, I., & Bjerke, B. (1997). Methodology for creating business knowledge (Second ed.) Thousand Oaks, California: Sage Publications, Inc.  Batten, D. (2000), Discovering Artificial Economies, Oxford, Westview Press.  Clark, A. M. (1998). The qualitative-quantitative debate: Moving from positivism and confrontation to post-positivism and reconciliation. Journal of Advanced Nursing, 27(6), 1242-1249.  Conger, J. A. (1998, Spring). Qualitative research as the cornerstone methodology for understanding leadership. Leadership Quarterly, p. 107.  Huberman, A. M., & Miles, M. B. (1994). Qualitative data analysis. Thousand Oaks, CA: SAGE Publications, Inc.  Kuhn, T. S. (1962). The structure of scientific revolutions (Third ed.). Chicago: The University of Chicago Press.  Kauffman, Stuart A. 1993. The Origins of Order: Self Organization and Selection In Evolution. Oxford University Press, New York.  Morgan, G., & Smircich, L. (1980). The case for qualitative research. Academy of Management Review, 5(4), 491-500.  Munck, G. L. (1998). Canons of research design in qualitative analysis. Studies in Comparative International Development, 33(3), 18.  Narby. J, Intelligence in Nature: An Inquiry into Knowledge (Penguin Group Inc., New York, 2005). 1/10/201418

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