Tourism in India

Taj Mahal
The Taj Mahal is India’s premiere tourist destination. As one would hope, there are rigorous security checks at the entrances. But, if the officials responsible for the security don’t understand that they are manhandling one of India’s most vital assets, they are doing their country a disservice.

It was disconcerting to watch their handling of an American teacher. The teacher was carrying a paper cut-out doll, a well known children’s character, often photographed with the world’s leading landmarks, and shown to young students in foreign countries, who are then tasked with identifying the landmark, and writing about it.


This cut-out, according to the over-zealous official, was disallowed according to statute determined by the national assembly. The teacher’s efforts to appeal to logic were in met with disdain. So, she gave up on diplomacy, and explained to the senior officer that the official list of disallowed items at the gate did not include anything that could, even in the broadest terms, include the paper doll. The doll got in, but no-one won.

That experience was not unique among the tourists.

In contrast, a local youth carrying a hockey stick, apparently the weapon of choice among the young men in Agra, was allowed in without question.

India really needs its tourists.

Looking at the national statistics makes that clear. The country has a population of 1.22 billion people. More than 150 times as many as tiny Switzerland. Both countries earn the same amount from tourism – $16.6 billion. But India needs its tourist a lot more. Switzerland is running an international trade surplus of $66.5 billion, while fighting against an appreciating Swiss Franc. India runs a deficit of $80.15 billion and the Rupee is in decline.

The tourist in India soon realizes that the government is heavily reliant on visitors for its revenue. Every bill at hotels and restaurants contains a plethora of taxes, usually adding more than a third to the cost of the meal.

Government expenditures at 14.4% of GDP vastly overshadow the revenue (8.8%). It desperately needs the money because its not anywhere close to balancing the books.

Taxing tourists also acts as a disincentive, but with so few alternatives, one would expect an effort to treat guests well. Apparently not.

More at:
India tourism statistics at a glance
India tourism statistics
CIA World Factbook – Switzerland
CIA World Factbook – India

Employment will decide the election. Really?

Apparently American voters won’t re-elect a President when unemployment is above 8%. At least the debate is about a substantive issue.

The impact of the jobs figures on the stock markets is an indication of how much relevance employment has. But it needs to be put into perspective.

The shock that hit the world economy in 2008 was on a par with that which launched the Depression. In the 12 months following the economic peak in 2008, industrial production fell by as much as it did in the first year of the Depression. Equity prices and global trade fell more. Yet this time no depression followed. (The Economist Dec 10, 2011)

Unemployment rates in 1933, four years after the 1929 crash and before the economy started to recover, topped 25% . Presently, unemployment in the U.S. is at 8.3%, down from the peak of 10%.

Monetary policy, which failed in 1929, provided most of the relief needed after 2008. The Federal Reserve, which is beyond political control, has the responsibility for monetary policy.

Deciding who should be President, based on something that’s not part of the President’s mandate is crazy. Not only that, the 2008 crash is not over. What happens in the next few weeks in Europe will have a big impact on the world economy, and that’s also out of the President’s hands.

Europe’s problem is much bigger. The European Central Bank, the body that should have control of monetary policy in Europe, doesn’t have the same level of mandate that the Fed has. The politicians from the 17 countries that make up the Eurozone, led by Angela Merkel, need to provide that mandate. They are not even talking about trying, let alone working out how it should be done.

This will be a big decision, and would require relinquishing autonomy that many of the members indicate they have no desire to give up. Voters in the union are increasingly feeling that membership is not beneficial. The chances of getting consensus are low.

What follows next is looking bad.

And in the U.S., the debate is about whether unemployment figures will be above or below 8%.

Nero fiddled while Rome burned. What else could he do?

More at:
Lessons of the 1930s There could be trouble ahead
Business cycles Lessons of the 1930s
Lost economic time The Proust index
The euro crisis The growth problem