Delhi's water for free

The new Delhi government, keeping its poll promise has announced 20KL of free water a month to each household with a metered connection. Use a litre more than this, and you'll be charged for the entire amount of water consumed. i.e. 20001 litres. This scheme is likely to be a disaster. And one needn't wait long to see the effects.

The scheme heavily penalizes usage beyond the 20KL. So there is a huge incentive to 'officially' use just below 20KL every month.

What could happen is:

• Spurt in (requests for) metered connections.
• Large scale tampering of meters.
• Households monitoring their water consumption closely, and stopping each month and just below 20KL. They would then depend on alternative sources for their remaining consumption. This could be water tankers, or bore-wells (don't know if they exist in Delhi).
• Connections which currently use well below 20KL per month, could start selling their surplus free water in the black market.
• Large number of complaints about faulty meters.
• Increased number of outages and disruptions in water supply. Delays in fixing them.

It would be interesting to see the distribution of water consumption across connections before and after this scheme. While before could most likely be a normal curve, the distribution with this scheme would likely peak just below 20KL with it falling sharply to 0 on either side. It would pick up again at values > 30KL.

PS: Just had a look at my water bill. It must be a really large household to reach even close to 20KL per month.

Why is anyone surprised about the news on Dubai?

For many years now, many conversations about the transformation of Dubai would usually end with someone sighing "Don't know when it'll all come crashing down." Even the layperson on the street, who'd never heard of terms such as 'Economic Bubbles' knew that Dubai was one. So why is anyone surprised about the news on debt defaults?

The only unknown was the timing. That holds true for all market corrections. Otherwise there were signs, for all to see, since 2008. Besides the low occupancy rates and rentals falling, the decision by Dubai Metro to not extend up to Jebel Ali as originally planned was ominous.

However there's no reason to believe all is lost in Dubai, a la Lehman A lot of investment has been in infrastructure - the metro, wider roads, lots of housing.. So it's well poised for the next round of boom, whenever that happens.

Though right now, there seems to be a lot of schadenfreude around.

Hayek in Muscat Daily

The November 14th edition of Muscat Daily had, surprisingly, an article on Friedrich Von Hayek, one of the giants of the Austrian School of Economics.

Quite a welcome change to the usual coverage of economists in this region, which is normally restricted to the Keynesian apologist, Paul Krugman. Yes, he's won a Nobel Prize, and writes in the New York Times. But that doesn't make him always right.  Even coverage of economic througts and ideas do not go much beyond Socialism, Statism, Keynesianism, and on the odd occassion, Monetarism. Seem like quite a lot of 'ism's there. But there's still a lot more not covered.

The said article itself does not paint a good picture. Inexplicably the entire essay has not been printed. Seems to cut off abruptly. The original write-up is available on Bloomberg.

Hayek was not all gloom as painted. He should rather be remembered as one of the foremost advocates of free-markets. And bringing the Austrian school into a bit more of limelight is positive. Even if one doesn't agree with it, we still get to learn some new words. Such as Praxeology and Catallaxy

Austerity - Indian style

Digest this. A couple of Indian Central Govt. Ministers, whose personal wealth run into crores, have been asked to stop spending their own money on accommodation, and waste spend the taxpayers' instead.

And I thought you had to spend your way out of the recession? Your own money, not the taxpayers'. Those who can, should be allowed to spend on their wants. This keeps money circulating in the economy.

So what is the new plan? Shun 5-star hotels and run them out of business? And then maybe airlines as well, by sticking to trains? Ministers have already been asked to use Economy Class when flying. Some have objected to this. Sharad Pawar claims that he doesn't fit into an Economy seat. Other ministers such as Farooq Abdulla have also stated their dislike for the cattle class. Pranab Mukherjee has been lambasted for publicly "advising" his colleagues to cut spending. And funnily he himself doesn't seem to be observing this in his planned jaunt to Cyprus

Of course, being economical when it comes to government expenditure is quite welcome. Apparently a lot of policemen have already been relieved from useless security cover duties. But asking all govt officials to use Air India is clearly not saving the taxpayers anything. Air India should be sold off, and the likes of Kingfisher & Jet allowed to fill its space.

Suddenly everyone seems to be on Krishna's & Tharoor's backs - showing them how their colleagues are very thrifty in spending public money. Poor rich fellows:(