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Saturday, February 21, 2009

The Farce called MNC's

"BIG IS BETTER" thats what they used to say..nay they still say.Ever since we stopped believing in Gandhian principles of small scale industeries as a tool of poverty alleviation,we as a nation have been trying to furiously be a nation of MNC's..the american way.We have tried it all..provided trade protectionalism and become a model of inefficiency for the world.Then we went for the so called reforms(were they?)in 1990's but India still continues to grapple with the same problems of low rates of poverty alleviation and continues to be a nation of have and havenot's

The current financial turmoil provides an oppurtunity in darkness to take remedial steps that would have been considered franatical and sucidal to say the least just a few months ago.For the first time we can ask ourselves that at this crossroad should we as a nation continue to promote the MNC culture insted of investing in small scale industeries and agriculture which are considered a much better way of employment generation and wealth distribution.

Some economists argue that big industeries help the growth of the nation by providing a means of using distributed wealth over the mass of population and creating employment,infrastructure and standards of efficiency unthinkable otherwise.

While the above might be true to some extent but overtime the advantages of the so called big corporations become their biggest drawbacks.Consider efficeincy for example..i can remember talking with my manager at TATA MOTORS how the process of buying a simple lathe machine costs the company about twice of any small scale company..u had to go through set channels..so called systems and then inevitably their is payout to company officials (yes corruption is not limited to governments alone and not to Indian companies alone...this is the hard truth).If big corporations were so efficient why would "outsourcing" have become the buzzword today??

Yes I know what all of you would be thinking till now..if their would be no MNC's who could take all those big infrastructure projects and what about all the R&D these companies do.Well, let me spill you a secret,if we had no MNC's we wouldnt have required all that infrastructure.Its like the proverbial viscious circle whose solutions are the problems.Consider for example the massive money put in by private corporatoins in retail and reality sectors.If we had a good enough agriculture and small scale industrial set-up there wouldnt have been the problem of massive urbanisation and assosciated enviornmental damage that is plaguing our world today.Insted we would have an equi-developmental model implemented with relatively little difference between urban and rural incomes..something all counteries are trying to develop...and the benefits...social stabilty,lower crime and increased development..can our MNC culture beat that??

Another point of ten raised in favour of big corporations is that MNC's help in channelising money towards R&D efforts and they help in utilizing the natural efficiencies of a country (outsourcing in India?or manufacturing in China?>)to maximum extent possible.Nothing could be further from truth...the biggest inventions of our times have been the result of direct or indirect government programs.The internet was invented at CERN,a research program funded by European nations,the atomic power was discovered by US government sponsored programs,the latesttechnologies GPS,supercomputing have all been developed at government funded research institutes or universities across the world.Infact the MNC's have been only been successful in goppling up the massive research subsidies doled out by governments and exploiting the developed technologies..which in the long rin has only led to environmental and social destruction (remember children working at NIKE factories in China or Coke selling pesticide laced soft drinks in India or companies selling GM seeds eventually trying to control food chain)

No, i am not a jehadi,advocating dissolution of all these MNC's rather I am just asking to relook our equations in a bid to ensure that these giants do not become so large that they sink in the whole financial ,social and economic system with them just like a black hole sinks under its own weight.Infact if we were to do some detailed analysi the graph of corporation size and social growth would be in the shape of an inverted parabola with the peak at about medium sized industeries.

So what do we do now..first of all trim all the big companies so that any future faliure of one organisation wont lead to faliure of the whole system.Second develop a model which encourages youth to embark on enterprenural ventures rather than seeking fat pay packages.Statistically this could lead to increased job creation and wealth distribution,something for which the state exists.Third the government needs to spend heavily on research and have a better patent regime to support these industeries..

Ah ll this and we may just hope that another economic depressoin wont happen..atleast in our lifetiem

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