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“Corporatization” April 20, 2007

Posted by Sharath Rao in economics, rant.
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At first surprised and then angered at the arrogance of the statement.

Come 2008 and you might be able to buy and sell shares of the University of Mumbai on the BSE. If it sounds like fiction, forgive the current administration of the 150-year-old institution—it claims it knows what it’s about to do. In these tantalizing times of the Market, it believes higher education, scholarship and research can be corporatised, put up on the buy/sell index.

By saying that something is corporatized, it is assumed that its evil. Corporatization is evil. Period. Its like winning an argument by saying – “Aah, that exactly what I would expect Adolf Hitler to say in response !”

The rest of the article is not actually so unreasonable. I too wonder what Bombay University will offer as dividend.

But this article apart, ever since Mr. Nehru talked about profit being a bad word, it appears an entire generation has been brought up on that idea and some of this has even seeped to the younger generation. Its enough to say something is not acceptable because it is motivated by profit. Actually what must be explained is why is a profit motive in that particular situation unacceptable. Much like “interest” ( in the sense of simple interest/compound interest) is a bad word in some quarters. Ofcourse, thats only when you are the borrower.

Abolishing interest is equivalent to lending Rs. 10 to your friend and receiving Rs. 9 in 1 year’s time. Game for it ?

~~~

Those ego-maniacal, self-centered dogs. How much I love them, notwithstanding !

~~

Walmart’s world. Corporatization, take it !! 😀

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Comments»

1. Abhinav - April 21, 2007

Profit fuels corporates.

And that soon becomes the primary behind all the decisions made by the corporation. Not a bad thing, of course. In fact the incentive to gain is a huge driving force for almost all of us. If that gain is monetary, it’s all the more better.

However, corporatization also opens the possibilities for ethics to take the backseat as t->∞.

Take Walmart, for example. Or the East India Company. The first company. Ever.

Hmm. And probably Google in the next 10-20 years. But who cares. Greed is good anyway.

Btw how did your Google ban go about? Fizzle or Sizzle?

p.s.- Had a favor to ask. Can you recommend any good, concise reference material for basic time complexity analysis for algorithms? Thanks:)

2. Aswin - April 21, 2007

Agree with Abhinav.

Its the ‘motive’ behind the material . For instance, when ToI compromises honesty/journalistic integrity to put sponsored articles in it’s newspaper, everyone knows that it is now officially ‘evil’ . Because here, the integrity of the material is compromised for the money.

The same reason water is added to milk and sold . When money comes into an institution – the focus changes to money. And this *at many times* though not all times, leads to malpractices of all kinds to ensure profit.

With the kind of reputation businesses in India have, I am left with no option but to look skeptically at the University of mumbai getting corporatized. The ‘value’ of a University are the people and the grades they achieve. All the Uni has to do is to ensure people come out with good grades – and then the shareholders confidence will increase.

This leaves a whole lot of room for manipulation – and I don’t think I like the sounds of it.

3. Sharath Rao - April 21, 2007

Well, this computer u are working on is a reality because of the profit motive. that the cost of the transistor fell to 3millionth of its price in 1963 is because it was possible, to use the hated word, “commercialize” it ….In fact, pretty much anything that could not make a profit died, because they could not innovate. Profit covers the cost of research failures as well.

In addition to all of above, companies dont exist in isolation. Esp. publicly held companies. People invest in Reliance/Infy, make money and then bitch about these companies. The bank that you put your money in and hope to get an interest, reinvests this money in these companies and the fact that these companies make profit means you can gain your interest. People bitch about hedge funds but forget or are ignorant that these hedge funds have the risk exposure and invest where other banks are not legally allowed to. In the process they will make a profit ( or lose money ), but protect again things like currency stability and risks of international trade.

So we shud start looking at ourselves as individuals not just with moral intentions and dreams and goals, but also as beneficiaries of the economic structure. You reap the benefits of the profit-motive. We are not some isolated entities, we are a cog in the wheel of this large this called the economy.

Walmart, well, wat about the millions who cant get through the month but for walmart. Its their economy of scale that enables them to cut costs. Ofcourse, not for a moment am I imagining that they have altruistic goals. Infact, the beauty is that it is not necessary for them to have altruistic goals to do good. They are trying to beat their competitors and in that process, you are getting a better bargain. Aswin, its like 2 udupi kunpadur buses if you get what I mean :-).

TOI as an example is interesting. Its what they realize their readership wants ( I know of the chicken and egg argument here as well ). You are at a loss ( capitalism produces both winners and losers ) because your tastes are at odds with the average population. ( Being different adds to our sense of self-esteem, makes you friends, but sometimes the market does not take care of you 🙂 ) But in this particular case, there are other papers/mags you could migrate to. You will not manage to close down TOI, but you will have found something equivalent. Your disappointment is with TOI not having turned out the way you think it should.

“What most people really object to when they object to a free market is that it is so hard for them to shape it to their own will. The market gives people what the people want instead of what other people think they ought to want. At the bottom of many criticisms of the market economy is really lack of belief in freedom itself.”

— Milton Friedman, Wall Street Journal, May 18, 1961

So yes, a part of the profit-motive is that some things may not turn out the way you want it. But TOI as an example is also selective – what about all those things that you would not have had the benefit of had there been no corporatization ?

“..corporatization also opens the possibilities for ethics to take the backseat “. I would suggest that banning the profit-motive would lead people to find illegal ways to make profit. Then nobody wins – not the consumer, investor, the company itself or the society at large.

What about the over $20 billion endowment of Harvard ? It is invested because there is no immediate manner to spend it meaningfully ? Now you could invest it in some 3% interest yielding account or the stock market, where the returns, on average, are higher. This would mean more available money to give more scholarships ( which is exactly what Harvard is doing), more minorities etc. Commercialization of education ? I would rather commercialize education if that gives me the capacity to do more good, than refrain from doing it because it goes against the morals of certain Harvard students/faculty/alumni. “Those who have what they want tell others who want the same that they do not need it.” – some such similar quote I am unable to now find.

Yes, under certain circumstances, its possibly a problem. Certainly in the Indian context where law enforcement is not really strong. But we will get there down the road.

4. Abhinav - April 22, 2007

Consumer capitalism creates a million suckers. &a million happy suckers at that. Because though someone else made a buck from selling them an item/service which they didn’t even need in the first place, their lives are probably better off with it than without.

So everybody wins.

That’s why I don’t feel profit is a dirty word. With that perception, one might as well be a Luddite because the sole reason ‘development’ takes place is for the want of more, for the need to live better. That’s why greed is good and technology keeps improving. As that directly translates to more $.

As for ethics and commercialized education, it all depends on which side of the loser-winner equation you are.

p.s.-Loved your example of the transistor! My Dad is in the Semiconductor field so I can proudly say that Integrated Circuits have clothed, housed and fed me all my life.

Read the story of the Regency TR-1 (if you already haven’t). Shows how commercialization alone is the reason why we have all the wonderful modern gadgets we can’t do without.

5. Abhinav - April 22, 2007

And thanks for the time complexity text recommendation. Will check it out if I find the time.

Btw..you didn’t answer one of my questions in the comment:)

RE:Google ban..

tc!

6. aswindsouza - April 22, 2007

There is ofcourse no doubt that profit drives the world and that profitability is extremely important for everyone. Companies by the very essence of the word are institutions that have to generate profit for their employees and value for their consumers. The word profit is most definitely not an ‘evil word’ for no one would ever go to work if the cost of going to work was more than the paycheque !

What I *am* vary of though is an academic institution getting corporatized . When the focus shifts from ‘providing the best education’ to ‘ensuring the shareholders are happy’ .. there is undeniably going to be a shift in focus. If the administration can handle this well with integrity and provide value to the Univ, nothing like it. I am merely skeptical about that ..

P.S. I love walmart. Couldn’t live a day here without it !

7. Aswin - April 22, 2007

P.P.S

Here are some interesting questions:

* How is the Univ planning to generate profit ? The only sources of income to a Univ are fees/grants. Grants will stop if it becomes a company.. so will the students take the hit ?

* Will shareholders be able to drive the research focus in the institution ? If a research group’s focus does not seem ‘lucrative’ will it be trashed for something with more commercial potential ? This is entirely possible

* What will the Univ’s ‘quarterly/annual results’ look like ? Number of pass/fail, number graduated, highest marks ? Considering that the invigilators are part of the univ itself, who is to stop the univ from relaxing it’s correction of papers.. to ensure better quarterly results?

8. A zeroth sketch business model for Bombay University « Epistles - April 22, 2007

[…] April 22, 2007 Posted by Sharath Rao in india, economics. trackback My post on corporatization raised some interesting comments and questions. Aside from the moral concerns regarding the […]

9. Sharath Rao - April 22, 2007

Abhinav, thanks for the regency link. I wasnt aware of that specific case.

Google ban went off pretty okay. i missed utube real badddd, other products were still okay..substitutable i guess….but its not something i look forward to doing that again. 🙂


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