Analysing Petroleum Price Hike and the strike

Standard

The Nepal Oil Corporation (NOC) has jacked up fuel prices effective from Saturday afternoon. Diesel and kerosene prices have been hiked by Rs 1 per litre, while petrol has become dearer by Rs 2 per litre. As per the new rates, diesel/kerosene will cost Rs 100 per litre, while petrol will available for Rs 125 per litre. The price of aviation fuel sold to domestic airlines has been hiked by Rs 10 per litre to Rs 130 per litre, and that sold to international carriers has been increased by $50 per kilo litre to $1,300 per kilo litre.

With this revision, NOC’s monthly projected loss will come down to Rs 1 billion from Rs 1.15 billion. NOC dropped its plan to raise the price of LPG fearing possible political backlash, sources said. NOC faces Rs 733 million in monthly losses from its LPG business alone. On a LPG cylinder, NOC incurs Rs 523 loss.

Nepalese students protesting at fuel price rises set a parked bus on fire and vandalized other vehicles on Wednesday during a strike in the capital Kathmandu, leading police to make more than 60 arrests.
The city-wide strike, called by student unions to protest at an increase in the price of petrol, diesel, kerosene and aviation fuel last week, saw schools and colleges shut and most government vehicles stay off the roads. Some 2,000 police patrolled the streets, detaining protesters as they tried to enforce the strike by stopping vehicles.

A question just stroke to me. NOC’s monthly projected loss will come down to Rs 1 billion from Rs 1.15 billion. How is this covered? or How has this been covered? Of course, the loss is ultimately coming upon the head of government, as it owns NOC. How will the government cover the loss? The absolute answer is from the tax paid by country people and or loan, either of the way, it is covered by the sum of money that otherwise should have been sanctioned for the development projects. Thence, the loss is going to be covered from the payment of the fund collected from and for all Nepali people.

I do not know which group and with what motives, are the students calling for the strike. But its obvious, it tends to add the burden to all Nepali, by reducing a part of the burden of the consumers of the product. If the NOC gets loss, the loss is to be covered by the fund collected and should have been targeted all people. The consumers of the product may be in balance, but it is to rob the non-consumers. To summarise, the strike is called up to rob the non-consumers. Wouldn’t it be better that the cost of the product be beared by the consumer of the product. In my view, NOC should not make up the price to go for loss. The single penny of loss of the NOC is the direct loss of non-consumers and low-consumers of the product.

Advertisements

Inequality and Growth

Standard

A society constitutes of variety of people with variety of skills, knowledge and attitude. This is what brings variation in the achievements and living of individuals, some achieve more some achieve less, some grow rich some remain poor. Its the natural phenomena. To try to make the rich ones achieve less and the poor ones achieve more is in fact to try to disturb the natural growth cycle. Making one achieve more than what s/he deserve may be kindness but doing so by compelling the captives one to give away the benefits obtained by their toil is not a fare practice. A voluntary service can be considered to be ethical to help the less deserver, rather then making the real deserver to contribute with coercion.

We have different philosophies and organizations (political and non-political) trying hard to reduce the natural human in-equality towards equality. I really question myself “Is this natural brone in-equality really evil and needs to be reduced?” And “Should we worry more about the in-equality than growth?”

Is the economic inequality really a problem? Are the less fortunate suffering because someone are succeeding? If so how many people are suffering because of the Billionaire of Nepal, Mr. Binod Chaudhary? Wait a sec, had there not been Chaudhary group, how many people would suffer? Lets just consider, Chaudhary Group closes from a day x. Then, how many people in Nepal are going to be jobless? How much people had to depend on imported goods? How much costly the product would have been? Chaudhary Group was a start from a zero and regular addition of the building block in seek of betterment. It did not earn by slaving people. It earned by giving job and providing living of numerous families. He grew more, other grew less. And he deserved to be so. To forget the growth of living standard of numerous families and to accuse the inequality is just to be jealous of the success of people. I just say “Why to worry about someone making his fortune, by using his physical and/or mental abilities?” But what if he had not initiated the company? Would anyone work if he will not achieve more then other? And would anyone work more and more if he would not achieve more and more? Getting more is the inspiration that promotes one to work harder. As a summary, its the inequality that motivates people for the growth. Nobody will work harder to just be equal or almost equal with others. In my view, Nepal needs to forget the chapter of economic equality, at least for decades, if it really wants to grow.

Is Nepal poor? Then why is so?

Standard

We can divide people in around 2:1 ratio for the answer of the question “Is Nepal poor?”, majority saying “Yes” and remaining saying “No, but Yes”. However, if we take a LCM, Yes is the lowest common factor for the Question. Nepal is among the world’s poorest countries. One third of people live below poverty line. More than a quarter population are insufficiently fed and some 7 percent of people are worried about meeting two inns every day.

Why is Nepal Poor?

Discussing on the topic we can come through various points from the educational, social, geographical, political and various factors that has led Nepal to be poor, some of which I would like to discuss.

1. More than 60% Nepali do not have higher education

2. Nepal is a land-locked country (No sea border), and between two densely populated and powerful countries

3.Complicated Geography with more than 60% area falls in Mountainous region

4. Majority of Nepali cannot read, write and/or speak English

5. Corruption

6. Immoral Politicians

7. Manpower and Brain Drain

More or less we come to feel each of the reasons are the factor that has caused our country to be poor. But in my understanding all of these are just the part of our Culture of Blames. For me “Every excuse are Lies”, and all these reasons are just the excuses each of us make to blame the nature and group of people to separate ourselves apart of it.

1. The fact may be true that more than 60% percent of people do not have higher education. But I find no clue, how this affects the country to be poor in a real sense. If higher education was the factor responsible for people being poor, then around 60% people should have been below poverty line, which does not applies. Neither does it apply that none of the educated ones are living below poverty line. I can say it, because I have seen the scenario of many graduates living the life below poverty line. We have a mixed population of with and without higher education living in various level of life standard. In fact, except come exceptions, most of the people with higher education in Nepal are living poorer lifestyle than many of those with no higher education. In fact, education does not teach people how to become rich. Its the knowledge, experience, skills and literacy within a person, that determines the lifestyle one tend to achieve.

2. Switzerland and Hungary in Europe and Mongolia are also the land locked countries that have significantly higher lifestyle. Belgium and Luxembourg are also between comparatively dense populated and powerful countries Germany and France. If they can be developed, why not Nepal. It can just be an excuse not a real reason.

3. The geographical feature of Nepal in unique and comprises of around 3500 micro climate. This provides Nepal to grow most variety of crops than any other country in the world and I view it as a positive aspect. Nepal bears 8 tallest peak of the world out of ten along with the peak of the world “Mt. Everest“. The beauty of mountains is famous all around the world. The main problem is not the mountains and the geographical complication, the problem is we do not know what we have got and how to manage it for the benefit. How can we say the geographical feature to be barrier for Nepal to develop when we have not used it to produce goods and services and acted it just as a burden.

4. English language skills is not at all a constraint for development. We can look at the example of Thailand, Belgium, Korea and many more who developed even after hating English.

5. Corruption is a common problem for all developing and developed countries. Even India is not untouched by it for a nearer example. It bears a share but not the real reason why Nepal is poor.

6. Nepal and India share almost the same sort of Politicians, who forget the election agendas after the election and the voters after they have voted. So, why is India having one of the world’s fastest developing country and Nepal remaining almost same.

7. Philippines is the most exporting country in terms of  Manpower. In fact, this export was one of the main reason what Philippines have achieved. The exported manpower are in fact generating more revenue and contributing more for the development of the country then similar ones residing inside. There are exceptions for everything and exceptions cannot be the reason why Nepal is poor.

Mental and physical poverty are related to each other.We are poor because of our Culture of Blames, when something goes wrong. We never take responsibility even of ourselves and look at others to do for us. We are always eager to take the credit of that good thing which we were never part of. Not only the leaders of Nepal are suffered from this illness but all sections of populations. We are more eager to preserve what we possess then to generate we do not have.

Unless and until we Nepali do not change our attitude towards entrepreneurship, and relay on limited enterprises to support our general livelihood, we never develop, we never grow rich. History is evident that, only the industrial revolution can enhance the living standard of people and industrial revolution is only possible when we have Free Market,  a market in which there is no economic intervention and regulation by the state, except to enforce private contracts and the ownership of property. Trade policy in Nepal is really one of the constricting factor blocking Nepal for the economic development.

The answer for “Why is Nepal poor?” is really complicated, but it is the fact that no nation can develop without appropriate trade policy and entrepreneurs.

Culprit for Corruption: Person or Power?

Standard

ImageIn the Corruption Perception Index-2013 published by Transparency International, Nepal ranks 116th, with 31 points on a scale of 0-100. Last year Nepal stood at 154th position with 27 points. This situation seems improving, however Nepal still is one of the most corrupt country in the world. The Index scores 177 countries and territories on a scale from 0 (highly corrupt) to 100 (very clean). No country has a perfect score, and two-thirds of countries score below 50. This indicates a serious, worldwide corruption problem. – See more at: http://cpi.transparency.org/cpi2013/results/.

If a question “Why is Nepal underdeveloped?” is blindly thrown to the air in Nepal, it is more likely to receive the same answer “Corruption”. This may be probably none of us have been left sacred out of corruption directly or indirectly. The sectors most seriously affected and involved in corruption in Nepal are: Bureaucracy, Politics and Business, however there’s no place left without corruption.

Corruption, in general, refers to the abuse of power and/or resources for the personal, professional or financial gain. Why do people abuse their power? I had a similar post on “Who is the culprit, Politicians or Power?” I am no expert, but I believe I have come to understand human nature up to some extent. Of course, its the person who become corrupt, but its not who the real culprit is. Blaming a person for what his corruption and chatter that you would never have been corrupt, if you were in his place would just be an utopia. I say, most of us are not the corrupt one, simply because we do not have power to be so. If only we had the chance to corrupt and had an easy escape, most of us would also have been the same. A human is not born with corruption, he acquires it from the surrounding by his experience of exercising power. “Had there been no power in an individual to abuse upon other, would there be corruption?”

Image

It is we who invited corruption in our society. It is we who provided an individual a greater power then others, that made him indifferent from other, to have the authority to exercise power upon others. Its we who provided him power to impose his decisions on others. Its we who had him the only alternative so he could conceit in his power and tend to take the benefit of it. As quoted by Lord ActonPower tends to corrupt”, I believe its the power we grant to people or group of people that tends to corrupt rather then the man himself. For me, “the man is just a vector”. Had not he been in the place, there would be someone other doing the same or similar.

However, its not my point that corrupt people are innocent. My point is, they are not the real culprit. The system of rule by a person is the main culprit. Its however there is still a question unanswered; “Rule of Law: Will the Dream come true?” In my view, not only Nepal, but in every nation, unless and until a person or a certain group of person is powerful than law and have the power to play the law, Corruption never fades.

Explaining Taxes to a 5-Year-Old

Standard

Its not only in America, its elsewhere. Nobody wants to give up the hard earned money to invest in facilitating people who do not work. The higher tax not only discourages the 5 year old child, its equally evident in the youngster and adults. One would rather be happy to invest even more for the purpose s/he would like to serve voluntarily.

Free Your Family

After finishing 2 jobs where he earned a total of 30 cents, we talked of economics…

Me (Mom): If I hired you to do a job and I told you that I would pay you $2 for the job, but you thought it was too much work for not enough money, would you do the job?
Young Inventor (Son, 5): No (smiling)
Me: What if you asked for more money?
YI: Yeah like 100 dollars!
Me: (laughing) Okay and if I said that was not fair either but then offered you $5 and you agreed, how much would I have to pay you?
YI: $5
Me: When would you get your money?
YI: When I finish the job.
Me: Good. If you finished the job but wanted more money, because it was harder than you thought, should you demand more than the $5 we agreed on.
YI: No
Me: Should I…

View original post 451 more words

The Missing Data in Krugman’s German Austerity Narrative

Standard

International Liberty

There’s an ongoing debate about Keynesian economics, stimulus spending, and various versions of fiscal austerity, and regular readers know I do everything possible to explain that you can promote added prosperity by reducing the burden of government spending.

Simply stated, we get more jobs, output, and growth when resources are allocated by competitive markets. But when resources are allocated by political forces, cronyism and pork cause inefficiency and waste.

That’s why statist nations languish and market-oriented countries flourish.

Paul Krugman has a different perspective on these issues, which is hardly a revelation. But I am surprised that he oftentimes doesn’t get the numbers quite right when he delves into specific case studies.

He claimed that spending cuts caused an Estonian economic downturn in 2008, but the government’s budget actually skyrocketed by 18 percent that year.

He complained about a “government pullback” in the United Kingdom…

View original post 702 more words