|» INVESTING IN INDIA|
Boss-man sets an example, driver follows his path
I was in my car, stationary at a red light, waiting for red to turn green.
A white Mercedes with the boss-man in the back pulls up and inches past me, and comes to a stop a few metres ahead of the red light. A few seconds later, a black BMW with another boss-man at the back comes by and stops on the right of the Mercedes - but a few feet ahead of the Mercedes. Therefore, way ahead of the line behind which all cars should be standing at a red light. Within seconds the BMW speeds ahead and, within a micro-second, the Mercedes follows.
The light is still red.
I continue to wait at the signal, wondering when the red light will turn green.
The BMW and the Mercedes are out of sight.
Gone: with the disdain and defiance of a teenager programmed to be heartless and defiant to any form of authority.
Have the BMW and Mercedes - advertised as products of great design, engineering and luxury - become symbols of an unintended consequence?
These specific vehicles don't stand for design, engineering, and luxury. No, they depict crass power, the ability to break a law, the nonchalance of the boss-man in the back who sees no merit in educating his driver to be civil and to stop. Icons of an era where the end is more important than the means.
The physical comfort of the driver steering the leathered symbol of irreverence is enhanced by the driver's expectation that if he gets caught for breaking the law, his boss-man in the back will encourage the driver to be a part of the system. For the driver, though uneducated, knows that the boss-man became a boss-man by gaining the ability to eliminate government road blocks to any project, to knock down any obstacle in his exercise of personal wealth enhancement.
Bushmaster positions its guns as "manly". The extension of the medium of the gun, to apply the McLuhan quote, is that it can be used to murder innocents in an assault. That is the unintended consequence.
In the western world, BMW and Mercedes are signs that you have arrived in a higher middle class, or upper class strata. In developing countries like India - and please do observe the traffic etiquette of the drivers of these vehicles next time - they are symbols of success for those willing to break the law. That is the unintended consequence not envisaged by the creators of BMW or Mercedes.
How comfortable are you as an investor in shares of listed companies?
And what about businesses and listed companies?
They were entities created to generate a business, hope for its financial success, and then give a fair share of profits to all the shareholders who bore the equal risk as providers of capital for the venture. That is what a "listing" was all about. The "owners" would hire "managers" to run the enterprise. The interest of all shareholders would be protected by these managers. And, yes, these businesses would follow the laws of the land and be "enterprising".
That was the ad campaign for "capitalism": The encouragement to shed the failed socialist model and vote for reforms.
That was the intention of the reforms: A more luxurious drive for many in a well-designed framework with a better engineered machine. A new economic model that was ready to live up to the challenges of the new world.
India, you may recall, was Shining.
But, what have we got now that the shine seems to have worn out of the jaded cricket team? A hangover from the hungama of all the grab-the-cash battles of T-20?
Are the "promoters" fair to all shareholders?
Have the captains of industry, revered by the media who salivate at the prospect of more advertisements, built their business on true enterprise? Or have they built their business on hijacking governments and policy-making?
You tell me.
Allocate your 200 points to the 2 criteria for the business groups mentioned below.
As an example, I have given my point allocation to HDFC (a maximum of 200 points out of 200 possible, in my opinion!).
Fill up this table below and email it to HonestTruth@equitymaster.com
Let's see what you think the unintended consequences of the innovation of "capitalism", Indian style have been.
Have the captains of Indian industry ensured that the reforms have delivered a more equitable and fair corporate sector, or have we been left with the unintended effect of creating multiple Adam Lanza's out to destroy any modicum of respect, decency and fairness?
Suggested allocation in Quantum Mutual Funds (after keeping safe money aside)