Sanjay Negi's thoughts on Current Affairs and Information Technology Directions.


Tuesday, June 27, 2006

Mittal Arcelor and Value Creation

Why is there such a euphoria in India over this potentially threatening event. Steel is an old commodity and no great innovation is happening in either the product or process to benefit consumers. It is not a high value or closely guarded technology product and therefore production and markets are dispersed throughout the world. Like all commodities, the prices are cyclic as demand growth is secular and capacity growth is in large steps.

Dispersed controls over manufacture ensure free markets and fair play. Consolidation in the industry is decisively bad for the consumer. The balance of power will pass on to the industry and indeed that is the logic for this sigle minded pursuit by Mittal and its acceptance by Arcelor. Fig leaves like economies of scale should fool no one. They are only attracted by the immense potential to control the markets and therefore the prices through this merging of capacities.

Mittal Arcelor now controls 10% of global production. Watch this grow to 25% very soon in the next 3 years. At the global level 25% would give them a killing advantage vis-a-vis customers who will not and cannot consolidate in the same way as they are too fragmented. The premium that Mittal paid for Arcelor will be the best investment he ever made. There are no global anti trust laws in place.

The industrial customers of steel will simply pass on the cost increase to the end consumers. Mittal plans to become much richer by reaching his hands even deeper in the consumers' pockets.

Consolidation or mergers in cutting edge technology space is good because it gives scale to industry to invest in even more daring reasearch thereby benefitting the consumer eventually. The same actions in commodities make the consumer poorer. Imagine what would happen to prices of groceries if 25% of global farming was controlled by Bill Gates.

Even then we rejoice over what is seen as Indian success and therefore naturally calling for celebrations. Captains of Industry uniformly gloat over the occurance hinting that more will be encouraged to follow in Mittal's footsteps, Ministers openly congratulate the self made Tycoon and even try to take some oblique credit of the happening forgetting that they are supposed to represent the fragmented consumer not the monopolising industry.

There is nothing drastically wrong in letting oneself feel a little puffed up over the success of a sibling. However this is a much much more ominous development. It is beyond national concerns and needs to be viewed in the global perspective. The international community needs to energise itself to address exactly these kinds of anti competition and hence anti consumer consolidations. Watch dogs need to be setup to monitor their future game plans and obstacles need to be created in the interests of the consumer.

We must internalise the belief that consolidation for the purpose of obtaining leverage with respect to any group of customers is at the heart of it a grossly immoral endeavour. The fact that the proponent this time comes from a developing country background and has overcome insurmountable odds to reach where he has in a single lifetime and is therefore a role model for all the aspiring masses does not in anyway dilute this reality or detract from the capital sin and therefore does not entitle him to any concessions when ascribing motives to what has been attempted so successfully.

Tuesday, June 06, 2006

Are Taxes Obsolete

Imagine a world where there are no Taxes and the society still runs much more happily than it does now. Imagine that in this utopia Inflation is low, Roads, Electricity, Water, Sanitation, Education and Health Care are readily available and citizens are mostly employed in Service Industry be it travel, hospitality, Health Care, Banking, Insurance, Information Technology, Sports or Entertainment. Can such a society really run like a perpetual machine on no taxes?

Well it is not only possible, it is perhaps the right and proper way of doing things. As always we have to seek answers from history to understand how the current models of social organizations came into being. Why taxes were important in the past and why they are no longer so.

Humans organized around leaders whom they called chiefs, princes, kings, sultans and what not. These rulers provided cohesiveness to society by framing do's and don'ts, maintaining law and order and protecting people from agressive outsiders. For these services they collected taxes and spent the surplus on patronizing arts and entertaining themselves.

With time, these societies acquired mass, establishment costs got bigger and so did the taxes. Elaborate mechanisms for revenue collection backed by armed force were designed, more enterprising chieftains used the surplus accumulations as war chests and launched military campaigns to enlarge their dominions which in turn increased their tax base and potential for further invasions.

When the rulers were not thinking about invasions, they were thinking of ways and means of increasing their revenues which mostly meant increase in rates as in the primarily agricultural economy, farm productivity was more or less stagnant and so was the GDP for all practical purposes. The vast majority of the population lived at subsistence level and could not hope to improve their lot as entry barriers into higher classes or castes in a frozen socio-economic structure without improvements in productivity were just too insurmountable. In times of natural calamities like famines, floods or earthquakes, the rulers did support their subjects and helped tide over the bad times mostly in their self interest to ensure that the cosy system with guaranteed rents did not break down.

In some parts of the civilized world this system came under strain and even lead to rebellions followed by grudging grant of some freedom, in others constant external invasions did not give sufficient time to the masses to organize protests and therefore the modern industrial age found these societies quite unprepared for the opportunities that the new economic dynamism threw up. India is one such example. The general population still looks to the Government with a sense of abject dependence and the Government looks at trade and industry primarily as a source of tax revenue without having to give anything in return.

The twist in the tale is imported Democracy. To get voted, the politicians have to tax the rich trade and industry and transfer the meager collections to poor masses whose expectations are not very much higher or ambitious especially from the longer term investment perspective. It is logical as for someone dying of thirst it is infinitely more sensible to somehow quickly gain a right to share from someone else's water bottle than to think about investing in digging a well.

The problem is not the basics. It is okay to transfer wealth from the haves to the have nots on the margins of existence. The issue is the perpetuation of a system where social and economic mobility is a victim to compulsions which need not be. It is well known that only 15% of the funds actually go to the intended beneficiaries. Rest are soaked up by the bureaucracy and the delivery channels. At this rate neither will all the thirsty quench their thirst, nor shall any one dig a well. Can this be corrected?

On the face of it, it ought to be a cake walk. This country gets much more rainfall than the developed west. The strong sunshine and short or no winters mean more crop cycles in the year. The soil is almost ideal for cultivation. With modern nutrients, pesticides, irrigation methods, seed varieties and knowldege inputs, this land could easily provide food security to a population several times the current numbers. Only a tiny fraction say 5% of the employable work force can achieve this and the rest can lead a healthy and interesting urban life. It is bizzare that we just don't get it.

We can keep trying but there are even more fundamental issues. The Governance structures of democracies were invented in ancient Greece and Rome as a deep reaction against despotism. Heriditary monarchy was abandoned in favour of elected representatives by the relatively small franchised sections of the populations. In the modern version, the entire adult population is franchised with the principle of one person one vote being strictly followed.

In the original scheme of things, it was envisaged that elected consuls would have been successful achievers in their vocations be it as professional soldiers, philosophers, teachers, landlords or whatever. The modern version especially in India obviates this pre-requisite. Politics is a vocation by itself. A typical politician has no other dependable source of livelihood and in the intensely competitive jostling for power, the expenses are mandatorily very steep. So how does the political class balance the economics of career politicking?

Simple enough actually. The entire machinery of the state is geared to directly or indirectly contribute to the revenue streams of the political class. That the bureaucracy is a more than willing accomplice is only natural as their's is a truly symbiotic relationship where one needs the other for survival and prosperity. The opaqueness in the laws, the poor implementation and execution in all initiatives, the low accountability, the rampant corruption, the constant pitting of one section of population against another are all designed to make it easier to channelise monetary resources towards the political careerists.

It is indeed very apparent that in a free flowing global economic village, capital liquidity will quickly find its way to service areas of deficient investments as the returns there would be the highest. This will eventually happen as the momentum of global transformation and integration is too great to be resisted by the political class of any one region. However the unstoppable will be delayed as much as possible and the fruits of modernization will be tantalizingly visible but just out of reach to the masses for some generations to come.

Some will argue that the East India Company experience was not good for India. People with control over capital and technology would exploit in their own novel ways and even reduce the entire nation to second and third class ethnics. Did the East India Company and the English really leave behind such a sour experience that we would rather grow slowly than risk renewed subjugation .

We have to examine the context in which all that did happen actually came to pass. Europe was rapidly industrializing and India was civilizationally behind when the English came here. It was not the case of some semi nomads from Central Asia conquering a more developed civilization and in the process getting assimilated but a more developed, educated, competitive and competent society taking control of a relatively backward country. Naturally there was no question of getting assimilated in this context and the ethnic aloofness was only to be expected.

The proof of this is in the fact that those sections of Indian society that grabbed the opportunities, took up the challenge and educated themeselves or established trading relations with British Institutions were treated much better than the rest. The modern Indian Bureaucracy and Industrial community is an offspring of that cohabitation.

It is safe to assume that the vast majority of services provided by the state through the governmental systems are invented more for the benefit of the providers than the recepients. We have greedily joined the bandwagon of the welfare state philosophy which works in the west without pausing to assess the capacity of the state machinery to deliver transparently. It is not only a prioritization blunder, it is a scale problem and it is a distribution issue as well.

How can anyone in their senses channelize scarce revenue collections to subsidize urban water, sanitation, electricity, road transport, rail travel, metro rail and university education, when a huge proportion of the rural population is living at the edge of subsistence and does not know where the next meal for severely under nourished pack of squealing kids would come from. It would seem common sensical to first ensure basic minimum calories to all and for the time being leave the rest to efficient market forces.

It is quickly evident based on simple math that given the resources available to the government, it is not economically possible to provide all these so called basic amenities to the full population of the country. Therefore there is even less logic to provide these to relatively better off sections living in cities and towns. It is not that there is any great compulsion to distribute these freebies and that there would be a mass rebellion if the services were to be withdrawn. The real motivation is that the management of the ditribution of these services provides the poltical and bureacratic structure an opportunity to earn a decent living.

The political class would have us believe otherwise. In our anarchical and chaotic adaptation of Democracy, political representatives are permitted to vociferously protect and advance the interests of their constituencies. It is just that the constituencies happen to be the more vocal and organised sections of the population. It is just not possible for the widely dispersed starving masses to organise themselves and prevent the Government frittering scarce funds on a glittering air conditioned Metro Rail for the pampered residents of the Capital. The unwitting media propaganda machinery would have us believe that it is a great investment idea. If it were indeed so then why would the government need to invest anway, any Venture Capital fund would want to participate in such an opportunity.

The other screaming need is to focus on the distribution capacity of the state's machinery. Every small or large commercial organization understands that it cannot service all its customers directly and builds independent sales channels which require little day to day management, even though this entails sharing a large percentage of revenues with the business partners. However the mamoth government which has to serve a huge population, insists on doing everything directly. It runs water and electricity services, it runs most universities, it has municipal sanitation departments, it has the public works department for roads, it runs the railways and the metro rail, it runs health services and postal services, besides the usual law and order and justice dispensation which it keeps making more difficult to administer by introducing new rules with exemptions every now and then.

No one has laid down the service levels that each of these services is expected to deliver and therefore no one is sure of the corresponding resources required to meet those service levels. It someone were to objectively analyze, it may well be discovered that the state needs a hundred times more policemen, a thousand times more judges and so on even if they were all very knowledgeable, competent, highly motivated, hard working and incorruptible.

To be able to manage the stupendous distribution tasks effectively and efficiently, the state would have to strictly limit its role to the basic minimum. It would seek to create independent channels for delivery and just provide the catalytic inputs like acquiring land, guaranteeing right of way, laydown a broad framework of do's and don'ts or help instituting a regulatory mechanism and so on. This is also the most reasonable thing to do as channels for delivery can then be made to run on market principles and the state may actually earn revenue instead of spending on these services.

The analogy with a start up business is apt. When a new business is commissioned, it is best to deploy the scarce capital on the core or essential functions and outsource everything possible. It is not good prudence to start with all upstream and downstream activity inhouse. Similarly a newly formed state with a paucity of resources would do well to concentrate its meagre capabilities and capacities on the bare essentials and leave the rest to market forces which can then be tightly regulated with little incremental effort. Regulation is far easier when the refree is not an interested party or even worse a player. Tough competition laws would cost far less to implement and do much more for fair pricing than stradelling a large part of the market through public sector agencies.

Municipal amenities like water, electricty, sanitation, mass transport, for city dwellers need not cost the government a single rupee. These services can easily bear user charges. Municipalities at present get funded by state governments who in turn receive a share of central tax revenues. Municipalities desperately need to become self sufficient. It is paradoxical that the cities are the centers of value and wealth creation in any modern society, but in the current setup are not able to monetarily fend for themselves. With huge concentrations of consumption potential, cities are a marketer's paradise for providing services to residents at much lower costs than to a dispersed population in the rural hinterland.

If we can find a way to move our population to the cities, urban services can be easily left to the market. Only common goods and services like non Toll Roads, Law and Order and Defence need to be funded through non market mechanisms. If we look at the deficit published in the annual budgets, the quantity of extra money that is printed and thrown into circulation by the RBI is much more than sufficient to cover these essential expenses. Indeed a little imaginative handling of the Law and Order infrastructure could possibly convert that arm of the Government into a net revenue earner. We just have to look at the ridiculously low fines and penalties provisioned in the law which have no relationship to the financial capacity of the violators. This needs to change immediately and the principle of pain of penalty being constant through all the income and wealth strata should be strongly and truthfully executed. Looking at the pervasive and pandemic economic offenses that are second nature to most citizenry it would not be surprizing if the collections generated by this channel are sufficient to provide food security of not only bread but butter and jam as well for all the vulnerable masses. This would be a good reason for a unique PAN number and income tracking system to be more vigorously and faithfully implemented.

It is easy to see that if and only if most citizens could move to cities, markets could effectively take over the role of providing nearly all present and future services and therefore all taxes could be abolished without fear and society would still survive, perhaps more happily than now and this would be even more applicable to those at the margins of subsistence.

How do we move people to cities? Not very difficult really. We first need to accept that people engaged in agriculture are really adding little value to society as what they produce as output can easily be done by less than one tenth the number. Theoretically they are under employed to the extent of 90% of an average productive worker in any industry. It is not really fair to them because there is no way they can pay for and enjoy the fruits of modern civilization like running water, power, sanitation, latest electrical and electronic gadgetry, education, travel, entertainment, sicialising, fancy clothes and good housing.

The potential for getting gainfully employed derives from productivity and creativity arising from division of labour which can only happen economically when critical mass is reached for each specialized activity. This pretty much lays down the imperative of living and working in cities unless newer technological developments make telecommuting and virtualization a reality and people can live far apart but work together. For the present we will assume that those futuristic scenarios are some way off and people will have get concentrated into crowded cities before they are able to disperse back to a well connected countryside.

It is however true that cities are much more resource intensive per capita and therefore much more money supply would need to be in place. The good news is that even low skilled, uneducated people who can only add value through physical activities can easily work their way through this transition if they have a place to live in the city. This is where the crux of the problem lies. Why do homes cost a fortune compared to the average income of a household?

The cost of bare construction for a one room tenement with electricity and sanitation would not be more than 50,000 rupees on which the viable monthly rent should be about 500 rupees. This would be easily affordable to an unskilled labourer. However in real life this accomodation would cost ten times as much and the labourer would be forced to look for a place in some slum built on encroached public land. What is the catch?

The difference between the cost of construction and the cost of the tenement is the cost of land which is driven sky high by artificially restricting supply through complex laws, huge corruption payoffs by colonizers all the way up to the highest levels in the political heirarchies, ridiculous building density restrictions, insufficient commercial floor space forcing the spillover to residential areas and subsidised amenities which get factored in by the market.

However this should not surprize anyone. We have to come back to the democracy problem. It costs a lot of money to successfully run an adult franchise based political career, there are no legitimate returns available, the only way returns on investments can be assured is by creating an infrastructure for illegitimate payoffs and the property business is the domain where an average politician has some skill. Therefore builtup property supply gets artificially restricted, masses of unskilled villagers happily willing to do any physical work cannot afford to shift to cities and are forced to stay on in the rural hinterland where they remain hugely underemployed and therefore their earnings remain abyssmally low.

Now let us look at how the politicians tell us they would solve the problem. Prevent people from migrating to cities. Move industry to villages through tax incentives even though it is not economically sound to do so, provide amenities like roads, water, electricity, schools, health centers to villages at high capital cost and then not be able to recover user charges because of the low income of these consumers in any case precludes that. It is a self defeating exercise though it sounds good to the deprived masses the same way that Robin Hood robbing the rich and doling out some food to the hungry appears a blow for justice without actually solving the problem structurally.

Some would argue that even if politics could be run without investment and returns on investment considerations, people in power would still want to make money out of sheer human greed, get richer and gain economic status, even try and provide for their future generations. So why harp about motives for generating illegitimate funds?

It is just that the investment and returns issues in political careering impart a convoluted and perverse moral legitimacy to the business and the whole ecosystem surreptitiously colludes in the ensuing recovery of money spent. The system of checks and balances completely breaks down when moral force is absent. At the higher levels of the political executive heirarchy, one politician is really and practically accountable to only another politician and this doesn't work because as Gandhi would have said both are having their hands in the till.

As India modernizes and liberalizes under the pain of International obligations, the balance of power is shifting to the market and we are seeing the momentum gathering steam. Urbanization is happening, populations are shifting to cities even if they have to start out in the slums. Globalization is forcing rationalization of laws and business rules even though all smart Finance Ministers are quick to claim credit and in the process help their political parties lose the next round of elections.

The force of technological advancements is sweeping the Global with such power that no individual nation and its politicians can escape for long. Change will happen, the only issue is that it will happen with pain and cost to those who will not get enough time and support to adapt. At the end of the day it will be survival of the fittest in the jungle.

Saturday, June 03, 2006

Why is Japan's Economy Slowing Down

The Japanese economy was a miracle economy for more than 4 decades from the fifties to the early nineties of the twentieth century. When Japanese goods with right functionality, high quality and utter reliability but low prices hit Western markets, they inspired research into the Japanese way of working and Kanban or Just In Time, Kaizen, TQM, Kakushan and 5S system of Housekeeping Seiri, Seiton, Seiso, Seiketsu, Shitsuke, became the new Management buzzwords in Industry all over the world.

These principles and techniques were sometimes transplanted into companies located in the west and were even successful especially when practiced by well managed subsidiaries of large Japanese corporations.

Then in the mid Nineties things started to change. The Japanese juggernaut started to slow down. Their Financial system came under stress and growth momentum got lost to the point of near stagnation. Japan continues to maintain a huge trade surplus but several sectors of industry have come under pressure and cases of downsizing have taken place with human cost (albeit with a heavy heart) which was unthinkable in the classical Japanese Management paradigm.

The new generation of Japanese no longer take life time employment for granted and are being increasingly influenced by Western thoughts, though they have along way to go to fully adopt Jack Welch style (raise the bar and fire those who fall short) of industrial philosophy.

It is not only Japan that is losing momentum. Europe has been sluggish and US has been growing on borrowed capital based consumption, Asian Tigers have been knocked around quite a bit with the banking crises in the mid nineties and some had to seriously devalue their currencies though they later manage to stabililize once again, and Latin America has seen major restucturing prompted by external prescriptions.

On the other hand China has posted continuous blazing performance for the past two decades and shows no signs of stopping. India has woken up gingerly and together with China threatens to shift the global center of gravity of economic muscle to Asia. What are the underlying themes? Is the future predictable finally?

As the global economy gets more integrated, as peak duty rates fall, as single market areas expand, as protectionist barriers get lowered, as product cycles get shorter, as time to market collapses, as significant services become deliverable over the wire, as commercially valuable knowledge and skills becomes universal, as labour mobility improves, it is but natural that economic development will find its own level, disparities will become less, investments will flow to areas where labour costs are lower and returns are therefore more attractive, in short the dawning of the new age of market driven global egalitarianism.

It is not that Japanese have suddenly forgotten to manage their industry well, They still practice 5S, Kaizen and TQM with deep respect for people. Process innovation remains as much a part of their daily routine as before. It is just that the current sluggishness is but a small part of the ongoing global restructuring unleashed by the modern age of universal communications and knowledge and free flowing capital and labour.

It is becoming increasingly difficult to take refuge behind a patent or technology or intellectual property or manangement practice or even culture and dominate the market for several years. Someone somewhere is able to quickly copy the product, process, software, management practice or design a slightly different variant targetting the same space.

The good news is that products are being taken for granted and services are the new drivers of global commerce. Of course there are still large parts of the world where basic needs of food, clothing and shelter are still out of reach for major sections of populations not to speak of higher needs like education and health care. There would be some viable commercial model in a globally integrated economic system which would fill these these voids and help them find their level.

A depressed portion of any surface is an opprtunity for a body of water to occupy just as a backward economy region is some kind of opportunity for the more advanced saturated areas. Yes to realise the potential, nationalistic barriers would have to crumble and identities would have to melt, but solutions should be possible nonetheless.

Housing Shortage in India

A large proportion of the inhabitants of our cities live in slums without the benefit of good quality water or sanitation. Families of five to ten members are crammed into one or two rooms. Most people in villages live in mud houses or brick houses built with mortar from mud and makeshift roof materials.

Housing and real estate companies estimate that the active demand for housing runs into scores of million units but construction activity fails to cope up. Prices in the metros increase with every passing day making Indian Real Estate's absolute dollar value comparable with developed cities in developed countries.

Considering that all important ingredients that go into housing like cement, bricks, structural steel and labour are all available locally at very reasonable rates, the only explanation for the high prices is the law of demand and supply. Demand is high and supply is insufficient. Why?

It is not that our construction industry is lethargic or is deliberately curtailing supply. They are as much driven by the profit motive as any other vocation. Materials and labour are readily available, but throughput remains sluggish. Where is the catch?

Once again it is our rules and bye laws which come in the way. Government develops towns and cities by investing the tax payers hard earned money in infrastructure like roads, water supply and sewage systems.Then it proceeds to block too many citizens from latching on to these infrastructure oases by framing town planning laws limiting the floor area which can be built. It goes further and creates a subsidized system of services for those who manage to get in. Thus the lucky few who get in do not pays the costs for water, electricity or other civic amenities and are continuously funded by operating municipal budgets. Municipalities do not generate much revenue and get most of their fundings from the states who in turn draw on the consolidated fund of India.

Of course there is no free lunch in life. So these Oases of urban infrstructure are highly valued by the market and this reflects in the embarrasingly high prices of real estate in the pampered metros. It also means that the Government is in the business of creating wealth for the lucky few who manage to buy real estate and unwittingly pushes this opportunity beyond the reach of the masses who cannot accumulate the capital to make high value property investment transactions.

What happens next is only logical. People who become rich through their investments in housing units and urban land holdings soon trade these for upcoming colonizations and are in effect on a virtuous cycle gravy train albiet at the cost of stunting a natural growth process in the larger populace.

Why is it that our democracy is unable to resolve such distortions. Is it that public monies are always channelized towards private benefit whatever the system of polity a country has? We can see the Public Sector investments benefitting the politicians, bureaucracy, managements and employees and through policy even carving out a protected space for themselves in the name of larger social objectives.

It is not to say that Governments not invest in Cities and Towns. It is just that if as Government you have limited resources, you must not fritter away that money on a small section of people. The best way to conserve scarce resources is to leave everything that can be left to viable business models which are self sustaining.

Government can of course help in igniting the process by providing the seed capital and other quasi legal support and framework and then exiting the schemes with huge profits like Venture Capitalists do and then recycling these gains to reach further afield. In no case can the scarce monies be funneled into perpetually subsidizing water, electricity and other amenities for a populations which is in anycase growing richer by the day.

A new colonization appropriately connected to existing centers of business activity and settlements is easily viable as a business model in this housing starved nation. It is for the colonizers to decide what density of populations they would like to support as it would be based on their capacity to mobilize and secure supplies of water and other amenities as well as the value perceptions they would like to create among prospective subscribers. It is for the colonizers to decide what proportions of commercial, public and free space is best for their business model.Government can of course provide the necessary contractual frameworks which enforces adherence for future. The only money that the Government would be required to spend would be in providing road connectivity to the nearest highway. Thus a million colonies can come up in a short span and our rural populations can shift to towns and participate in the opportunities offered by a post modern society.

There can be no doubt that this is doable and the craving for a private space of one's own can provide the seed crystal on which the whole edifice of a thriving human maelstrom can be built.

Thursday, June 01, 2006

How Many Humans Can The Earth Support

The Human Population is expected to double or even triple or quadruple before it stabilizes. What is the population number that can live happy and satisfied on this third Rock from the Sun.

Let us take food first. Conventional wisdoms says that there is no more cultivatable land left, large parts of Africa already face famine and hunger, food is being grown with increasing dosages of chemicals which are likely to reach lethal levels, global warming is disrupting normal rainfall patterns leading to more draughts and floods and a Malthusian crisis is looming large already.

With new technologies like Hydroponics and Aeroponics with genetically modified crops, the food output can easily go up hundreds of times without increasing the acres under cultivation or any addional need for water for irrigation. Current cropping practices are essentially thousands of years old and are too inefficient in their use of light, air, moisture and fertilizers.

Next if we look at fresh water needs of a growing population, there need be no fears as even the most densely populated cities get enough precipitation and if only they could store all this rain water, they would not have to depend upon external supplies. All the gigantic dams and barrages can actually be mothballed or put in museums for future generations to ogle at and wonder what was wrong with their ancestors' thinking capabilities.

Electricity also would not be a major concern as there is no shortage of generation alternatives and market forces would direct the flow of necessary investments into building more generation, transmission and distribution infrastructure.

Housing again should not be an issue as there is enough limestone and hence cement to build houses to cover the entire globe with several stories of masonary.

Services like education, telecommunication, healthcare, law and order are essentially created and consumed by humans in exchange for other services and a transparently operating market and rules based democracies in a true spirit of "serve and get served" would ensure a healthy balance between demand and supply.

As a matter of fact even with an exploding population humans could easily expand the non-human reserves like forests and so called "wastelands" on the planet by proactively accelerating the transition to a post consumerism society. This would also re-establish the ecological food chains and balance of nature which may contribute to overall meaningfulness in our existence.

The planet may be able to smilingly bear the upkeep of another 50 billion people, but it is not compulsary for us to keep multiplying when we have still not learnt to tolerate and coexist with each other. Historically Humans have been violently competing for the Planet's resources at populations levels which were a small fraction of the current numbers. Enterprizing individuals and communities always found it more attractive to loot and plunder than to painstakingly grow and store.

The difficult issues are not the resources of this Planet but the inability of Humans to live within their means. It is perhaps impossible for man not to attempt to be one up on his neighbour or envy his more fortunate bretheren. It is human nature that causes the rat race and growth of knowldege is but a by-product of this intense competitiveness. Hopefully knowledge will grow to a level where competition will be rendered meaningless and then we can all grow our own food using the techniques of Hydroponics.