My Economic Philosophy - 6 (The Next Innovation after the Corporation)

(This is the sixth of n pieces on my emerging economic philosophy called Liquidism.)

It may not be obvious to many (and in fact may actively be denied by some!) that the great prosperity enjoyed by enormous masses of people in the world today has come about thanks to some ingenious inventions in the area of finance as much as in the areas of science and technology. What Science discovers and Technology invents, Business produces for the mass market, and Finance funds that production. The Industrial Revolution could not have had the impact it did without a corresponding Financial/Legal Revolution.

My personal choice for the most important financial/legal innovation of the past five hundred years would be the joint stock company with the added clause of limited liability.

This is the innovation which allowed the mass of humankind to participate in and guide the exploitation of ideas, not only directly (by funding them), but also indirectly (by favouring some over others). By limiting the liability (the risk) of investors to the amount they invest (and preventing creditors from pursuing them for the debts of the corporation), the limited liability company encouraged shareholding on a scale never seen before.

This set in motion a virtuous circle of truly gargantuan proportions. A large mass of investors funded the practical applications of theoretical innovation. In turn, the corporate vehicles that converted ideas into tangible goods and services made their investors richer. Wealth began to flow to society on a scale unparalleled in history, and the mill has never stopped churning since.

In terms of an actual date in history, perhaps 1855 could be considered the official turning point. This was when the Limited Liability Company finally became the accepted norm in Britain thanks to an act of parliament.

The LLC has served the world well, but the world may be discovering the limitations to its usefulness. The world economy today is dominated by limited liability companies, but what use is a system that suffers major upheavals every few years? Capitalism may have created enormous wealth over the past two centuries, but all that seems to register nowadays is the wealth that is wiped out in a single day of a stock market crash.

I have written in the past (1, 2, 3, 4, 5) about my economic philosophy of Liquidism, and how a liquid market can be relatively immune to systemic collapse even if individual players in the market fail.

The problem with ensuring liquidity is that enforcing it is hard in practice. Ensuring liquidity goes against the grain of the capitalist system as it is currently structured. Calls for the break-up of monopolies and oligopolies are wrongly depicted as "leftist", whereas a high level of competition is in fact the capitalist ideal. This inherent contradiction is summed up in the book "Saving Capitalism from the Capitalists". I've elaborated on this earlier.

Today's firms are geared for individual growth, whether organic or through mergers and acquisitions. Firms are not at all well suited for divestiture or corporate break-ups, which can facilitate market growth with its associated liquidity advantages. We need both types of growth, going hand in hand, to achieve wealth creation without the dangerous instability that seems to accompany the concentration of wealth among a few very large firms.

Are there any mechanisms available to achieve that?

In today's world, a new kind of company is becoming common - the company designed not for independent existence, but purely as a takeover target. Venture capitalists often fund startups whose sole business plan is to be taken over by a larger company at an attractive price. This is the way the startup repays its investors.

Why can we not consider the opposite (the business division that is designed to be spun off as an independent company)? Shareholders in the original company are automatically offered a stock split, with ownership in the newly formed company. As more and more units are spun off, the original shareholders' holdings become more diversified. And as the child entities begin to thrive and grow in their respective niches, the wealth of the shareholders begins to grow as well.

The constant creation of new companies increases the liquidity of the markets in which they operate, reducing systemic risk. From time to time, a governmental competition watchdog (suitably renamed to reflect its systemic risk mitigation role) provides a friendly nudge to encourage some divestitures (if antitrust is an ugly word to some), but in general, the spin-offs are internally driven.

In this newer world, continuous amoeba-like phases of organic growth and splitting are seen as the best way to grow shareholders' wealth.

What we need, therefore, is the next major financial innovation. We need a built-in mechanism within a corporation that will propel it to seek out wealth through a combination of growth and divestiture, rather than through growth and merger.

Arguments based on economies of scale have often been made in favour of mergers, but having worked in small companies as well as large ones, I can testify (anecdotally) to the extreme diseconomies of scale that are exhibited by large companies as well. Large companies in an oligopolistic market charge their customers more than they should and pay their shareholders less than they should. The difference is lost through sheer inefficiency. On balance, I think shareholders are served better by smaller and more diversified players.

I wrote before about injecting "amoeba DNA" into the modern corporation, so that it naturally supports market liquidity instead of opposing it. I believe that is the next financial innovation that needs to happen, perhaps with some legislative support to push the world in that direction.

In sum, capitalism has served us well so far, but we have lately stumbled upon some of the limits to its wealth-creating potential. The reasons have to do with market liquidity as a whole, which individual firms are not designed to address. Newer firms must be built in smaller and more agile units that can be readily started, shut down, combined or (more importantly) spun off from larger ones. That will take the capitalist system to the next higher plane of its existence.

Human civilisation has evolved in sophistication to the point where sustainability should now be built into its powerful wealth creation vehicle.

Iron Man - Rusty Premise

I saw Iron Man during a recent flight and was more than just disappointed. I don't know if the "political context" appealed to American audiences or not, but it put me off completely.

Don't get me wrong. I can handle hours of mindless violence and destruction. I'm not so high-brow. It's the pseudo-moralism I can't stand.

So the hero decides to stop making weapons because he realised that American weapons are being turned against American soldiers? So that's what's wrong with the war in Afghanistan! Riiiight....

On the other hand, news reports of American soldiers killing Afghan civilians are nothing to be concerned about, I guess. Nor is it a big deal that the US has been cozying up to the real bad guys for years. Oh no, it's the use of captured American arms against Americans that's outrageous.

As a person born in India, arguably the biggest target of terrorism in the world today, I should have been rooting for the forces of democracy. Unfortunately, Iron Man is such a sickeningly righteous, racist movie that I found myself almost cheering for the other guys...

If America is to win over its enemies, Americans must first learn to look at themselves through foreign eyes. They may not like what they see.

Saving Capitalism from the Capitalists

(The title of this post refers to a book written by an old classmate of mine, but more on that later)

They've done it again! After Bear Stearns, Fannie Mae and Freddie Mac, the Fed has bailed out the American Insurance Group (AIG) by effectively nationalising it. Bravo!

Once again, the ugly principle of modern capitalism has been revealed - "Privatise profits and socialise losses". No wonder the common man (or woman) thinks of capitalism as a system that helps the rich exploit the rest of society to get even richer.

This is no way to run a market economy! If we must let corporations succeed, we must also let corporations fail. Why must taxpayers' money be used to bail out failing companies?

The answer, we are told, is that "a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance".

Oh, yes? And pray to what do we owe this "market fragility"? (Uncomfortable silence from the government, the Federal Reserve and captains of industry)

I don't want to see a systemic collapse any more than the next person, but propping up failing companies isn't the right way to prevent that. It just postpones the inevitable. The next threat will be bigger and more dangerous. I want to see a situation where the collapse of individual firms does not trigger a systemic crisis.

How can we achieve this happy state where individual firms are incapable of taking the market down with them?

Let me provide my prescription to prevent the kind of financial instability we are witnessing today -- a liquid market.

A liquid market is one where no single buyer or seller (or even a small group of them) is big enough to move prices. All buyers and all sellers in the market are essentially price-takers. Consequently, the arrival or departure of any (or a small group) of them at any time will cause scarcely a ripple in the market as a whole.

Here is where I differ in philosophy from libertarian and other proponents of laissez-faire capitalism. Unlike them, I don't believe that a complete absence of government interference is the answer. Yes, in general, I'm against government regulation and intervention, - with one significant exception. I like the kind of government regulation that keeps markets liquid. I'm a strong proponent of -- brace yourselves for the A-word -- Antitrust.

Antitrust is the preventative instrument that governments must wield to ensure that no single player in the market can "add to the market's fragility" by its failure. Indeed, the sign of a healthy market should be the sheer number of companies failing (and being created) all the time.

Government regulators today work to contain risk at the level of the individual firm. While they study the industry as a whole, the sole instrument by which they control risk in the market is capital adequacy as applied to individual firms. They prescribe minimum levels of capital to be maintained by financial institutions to provide for their obligations in the event of failure. But this kind of regulation is very low-level. I call this "micro-regulation" along the lines of micro-economics, because it applies to individual firms. While micro-regulation is required, what we also need is "macro-regulation" (like macro-economics), which applies at the level of the economy as a whole. What is the use of adequate capitalisation at the level of the institution if the market is itself going to be fragile? How can we ensure that the market itself is adequately de-risked? The answer - liquidity.

A country's prudential regulation watchdog must act in concert with the country's competition watchdog to ensure that the micro- and macro- indicators of market health are maintained at adequate levels. We must stop thinking of competition watchdogs as populist agencies that do nothing more than ensure a fair deal to consumers. Their role is much more important than that.

The prudential regulation watchdog will operate based on triggers that correspond to capital adequacy levels. If the level is breached, the agency will swoop down on the offending institution and ensure restitution to required levels. (They already have the power to do this in most advanced economies, and many of them are quite proactive.) The competition watchdog will operate based on triggers like the Herfindahl-Hirschman Index (HHI), a measure of the degree of competition in a given market segment. They must similarly have the power to swoop down on markets where the index is breached, and effect restitution through any means necessary, including a break-up of the largest players. (In practice though, competition watchdogs tend to be rather weak-kneed, perhaps because the role they play is perceived as populist rather than economically critical. Anti-competitive action is viewed as economically disruptive, rather than as economically corrective, and both business and the investing public express annoyance at such activity. How often do we hear of corporate break-ups, or even of mergers that are blocked?)

Forcible break-ups of large players must not be considered a punishment for being successful, as they are often portrayed. Rather, they are in the interests of all players - shareholders, customers, deposit-holders, policy-holders and employees. When the US Justice Department broke up AT&T into 7 "Baby Bells" in 1984, that did not cause its shareholders any long-term loss. On the contrary, within a decade, each of the Baby Bells had grown to be larger than the original Ma Bell. [Of course, economic sense went out of the window later, and the Baby Bells obtained permission to merge and stifle competition once more.] The lesson is that shareholder wealth can grow through break-ups, and so they are not something to be feared, but to be welcomed. Indeed, a break-up may be the best way to help investors realise value once the original corporate vehicle's market capitalisation plateaus.

"Amoeba DNA"

But aren't corporate break-ups costly and a waste of everyone's time and energy? Well, as the eXtreme Programming folk over in the IT world like to say, "If something is hard, do it often." We need to inject "amoeba DNA" into corporations, so to speak, so that when they reach a certain size relative to their market, they are ready to split (or be split). In this way, there is always a large number of players in a market, providing diversity of investment opportunity, and there is a Darwinian system that rewards only the most efficient, so every dollar invested is used to maximum advantage. As a side-benefit, the market is immune to the failure of a few players, because no player is big enough to influence the market as a whole.

This is my economic philosophy. I call it Liquidism, and I have explained it here, here, here and here.

What does the title of this post mean? This is the title of a book (read a synopsis here) by an old B-school classmate of mine, Raghuram Rajan, who went on to become Chief Economist of the IMF. The book's main insight is that competition is the lifeblood of capitalism, but capitalists hate it. More precisely, incumbent players in a market will always try and manipulate government to protect them from failure and prevent newer competitors from entering their market. It is the duty of government to resist the pressures exerted by these petty capitalists and act in the larger interests of capitalism itself (i.e., a liquid market). I'm gratified to see that an eminent economist like Rajan makes pretty much the same arguments as myself (an amateur student of economics) - that markets must be liquid, competition maintained at high levels, and that governments must be prepared to let businesses fail even if it means employees are thrown out of work.

The book does not offer much comfort to employees facing the loss of their jobs due to downsizing or business failure, but there is a powerful argument that should appeal to them all the same. I would argue that job losses are inevitable in a dynamic economy, but what causes them to hurt is the lack of liquidity in the market. If no single firm is large in comparison to the market, then the constant loss of jobs as firms disappear will be mere drops in the ocean, and people will find other jobs almost as soon as they lose their old ones. The pain will be so diffused it will hardly be perceived. Far from being traumatic, the loss of one's job will be nothing more than an annoyance lasting a couple of days, maybe even an exciting opportunity to improve one's prospects.

Is anyone listening? Or must the world go through a lot more pain (and a lot more waste) before we learn to apply capitalistic principles rigorously and keep the engines of the economy humming?

Thank you, Brendan Nelson

One could tell it was going to happen one of these days, and today was the day. Dr. Brendan Nelson was ousted as Liberal Party leader in an intra-party coup this morning. His sudden gamble to force the leadership issue early resulted in an equally abrupt end to his 10-month job as leader of the opposition. Now the job is Malcolm Turnbull's, and Australia will be watching to see what he will do.

This post is mainly to say thank you to a man who took on the difficult and thankless job of leading the shambles of John Howard's defeated party after the old man ran it into the ground last November. [The swing to Labor at the last election was so great that Kevin Rudd will probably remain PM for another term, so Malcolm Turnbull shouldn't count his chickens just yet.]

Dr. Nelson may not have raised confidence in the Liberals during his brief spell of leadership, but he did command immense respect for the dignity and decency with which he conducted himself, and for the civilised tone that he brought to Australian politics. That is no mean achievement in these days of gutter politics. I felt it was worth mentioning his thoughtful speech when Prime Minister Kevin Rudd formally apologised to the Aboriginal people in February. True to form, he put his own feelings behind him today and urged his partymen to support their new leader. Thanks once again, Dr. Nelson, and I sincerely wish you the best in your life and career. This is not the end. Your contributions to Australian public life are significant and will surely continue.

I'm inclined to give Malcolm Turnbull a sporting chance. I know he's widely disliked, but that's probably because he's so obviously ambitious. It's no secret that he wants to be PM one day. That's not a crime, and I won't hold it against him. Unlike many other career politicians, Turnbull has actually worked in the real world, having founded companies like OzEmail and been a partner at Goldman Sachs. He's also actively pro-environment and wants Australia to become a republic, both causes that get my vote.

Turnbull may not do much more than erode Labor's gains in 2011, but in 2014, he may be the one to watch.

History was probably made today.

India, Inc. should sell off its loss-making Kashmir division

If you were the CEO of a multi-trillion dollar enterprise and you had a division that was making losses for years, diverting resources from more profitable divisions, creating bad press for the organisation and contributing to poor employee morale, what would you do?

India, Inc. is an enterprise in exactly that situation. For sixty years since Independence, Kashmir (or more correctly, the Kashmir province of the Indian state of Jammu & Kashmir) has been a black hole consuming endless resources in terms of both money and human life and providing no tangible benefits in return. It's ironic that India, the back-office of the world, which is selling the business benefits of outsourcing to a host of global corporations, has failed to apply the same hard-nosed business principles when it comes to its own affairs. Have the CEO (the PM), his management team (the cabinet) and the board (members of parliament) been managing the enterprise in the best possible way to further the interests of their shareholders (the Indian people)?

This is a case fit for a business school discussion. What should the management do with this chronically loss-making division?

I don't believe the Kashmir question has ever been phrased in business terms before, which is why it has so far been a taboo subject that "patriots" have been expected never to question.

At long last, a section of the intelligentsia has begun to think the unthinkable and voice their thoughts in print. Vir Sanghvi, Jug Suraiya and Swaminathan S Aiyar are 3 prominent columnists who have written up some very eloguent arguments about "letting Kashmir go". I particularly like Vir Sanghvi's article. The well-known activist and author Arundhati Roy (who wrote "The God of Small Things") summed up the collective national fatigue with Kashmir by saying "India needs aazaadi (freedom) from Kashmir as much as - if not more than - Kashmir needs aazaadi from India."

And it's not just a flight of fancy by some elites sitting in their ivory towers. The response to this idea from the general population has been dramatic. A recent poll conducted in 9 Indian cities showed that fully 30% of the country's (urban) population agrees with the idea of letting Kashmir go. So much for an unthinkable idea! I'm sure as time goes on, the idea will gain more supporters. After all, the debate has just begun, and there is already so much pent-up support.

Imagine the benefits that can ensue when a loss-making activity is stopped and funds are immediately available for profit-generating ones instead. India badly needs investment in infrastructure, especially in transport, power and communications. Investment in infrastructure is a multiplier in economic terms. It accelerates economic growth. China has shown the world that growth rates in excess of 10% a year are sustainable. India needs to aim for such a target, and throw every spare resource into achieving that target. The prize is the potential status of being not just the world's largest democracy (already achieved), not just the world's most populous country (projected to happen by 2050), but being nothing less than the world's biggest economy! With a population potentially greater than China's and with more favourable demographics, this is not a pipe-dream. But it requires vision, planning and investment to get there. Worthless diversions like Kashmir are an unaffordable luxury to a country with a far greater tryst with destiny. Kashmir is a needless drain on India's precious resources.

But the idea is still a wrenching one. I grew up in India and the image of the Indian map in my mind is the (untrue) official Indian one with an undivided Kashmir shown as fully Indian territory. That became the "look" of India to me and, I'm sure, to hundreds of millions of Indians. I could almost see a person standing with their left arm around Bangla Desh and face turned westwards. Foreign publications that showed a truer map with the actual line of control as the border were rubber-stamped with the bristly phrase "The external boundaries of India as depicted are neither correct nor authentic", or something of that sort. Yes, the Indian map without Jammu and Kashmir looks admittedly ghastly. It looks like India has been beheaded. That would be my initial, emotional response. A map with Kashmir alone gone would look like India has (literally) lost face. But I can swallow that and look beyond it.

When you analyse and break them down, I guess the only reasons against a sell-off would be national security, logistical complexity, national pride and what I'd call "sunk costs".

The "sunk costs" argument is the easiest to debunk. Essentially, this is saying, "India has spent so much money and sacrificed so many lives to retain Kashmir. If we give up Kashmir now, it will be a waste of all that money and all those brave soldiers would have died in vain." The argument against it is simple: "We should stop throwing good money after bad, and we will prevent even more soldiers from dying unnecessarily by putting a stop to this pointless exercise." After all, the Kashmir situation doesn't look like it is going to turn the corner anytime soon. Why put up with this haemorrhage in good money and good men indefinitely?

National pride is a trickier issue. There's no rationalism here, so it's hard to argue with someone with a strong opinion. However, the issue can be reframed in a number of ways.

1. The prosperity of India is far, far more important than the retention of Kashmir. Our national pride should be in our socio-economic achievements, in bringing prosperity and egalitarianism to an already democratic society. Kashmir is tiny compared to the current and potential achievements of India.
2. Kashmir is needlessly giving India a bad name. We are being equated with a colonial power. We, who struggled to get the British out of India! We, who sympathise with Tibet to the extent that the Dalai Lama and his followers have enjoyed political asylum in India since 1959. We, who are overwhelmingly opposed to the American war in Iraq. How can we now behave the same way as a colonial oppressor and stay on in a place where we're clearly not wanted?
3. Even the Soviet Union allowed its republics to secede. Where is the shame in letting a recalcitrant province go its own way?

I don't know how convincing these arguments will be, but as I said before, the debate has just begun, and there will be more and better arguments.

That leaves national security and logistics.

The national security argument can cut both ways. What I call the "domino theory" held by many hardliners says that giving up Kashmir today will require India to give up other territories tomorrow. I'm not convinced, and I think this is just paranoia. Secessionist movements in other parts of the country have been tamed without territorial concessions, and it must be remembered that none of them has been a festering wound like Kashmir. [We will create more festering wounds unless we move quickly to redress the legitimate grievances of victims upon victims of communal violence in our country.] The point is, the Kashmir situation has probably deteriorated beyond the point where a solution can be found within the framework of the Indian union.

On the other hand, consider the fact that Kashmir has always been the single most important irritant between India and Pakistan, responsible for every single armed conflict between the two countries (except the 1971 war). There has been no progress on a South Asian free trade zone thanks to the antagonism between its two biggest countries. A huge economic bonanza awaits the region once the Kashmir issue gets settled. When the economies of the region get inextricably intertwined, war becomes an increasingly distant possibility. Strategically, there is in fact a strong national security argument in favour of letting Kashmir go.

Finally, the tricky issue of logistics. We remember the horrors of Partition in 1947. The last thing we need is another massacre with the body count running into the millions. India needs to float the idea of a coming "velvet divorce" gently and years in advance. It will allow people to make their plans and execute them without panic. There's also the messy issue of compensation for hundreds of thousands of Indians who have been forced out of Kashmir by the threat of violence. That's actually a tractable problem. Displaced Kashmiris within India can be generously compensated with a fraction of India's budget for Kashmir for a single year.

I know I'm advocating that India should let Kashmir go, but my guess is that most Kashmiris, faced with a stark choice, will vote with their feet and wind up in India anyway. India is the biggest engine for economic growth this side of the Himalayas. The Kashmiris' options are unfortunately quite limited, and uniformly unsatisfactory. They can either create an independent landlocked state for themselves with no resources and no industry and be an instant basket case, or be absorbed into a troubled Pakistan with its sputtering economy, perilous law-and-order situation (which puts it on a collision course with the US over terrorism) and very uncertain prospects overall. As an independent country, they will probably be humiliatingly dependent on India anyway, and the terms they receive will be far less generous. They're probably best off where they are (a much-pampered province within India), but I (just like an increasingly large number of Indians) am now skeptical whether the status quo is in the best interests of India.

If the Kashmiris finally get what they have been agitating for, it could turn out to be their worst nightmare, and India's lasting relief.

Is Compulsory Voting a Contradiction in Terms?

Today was Election Day in New South Wales for local councils. As usual, we were warned that if we did not vote, we would have to pay a fine ($55).

This compulsory voting business has always puzzled me. It reminds me of the old joke about the politician who said, "If I'm elected, everyone in the country will be free to do what they please. And those who don't will be made to do it."

But now I'm beginning to think compulsory voting is a good thing, and the turnaround in my opinion has been gradual.

When I first arrived in Australia and learnt that voting was not just a right but also a duty, I was indignant. I think of myself as being fairly conscious of civil rights, and have always keenly followed news items that deal with rights.

Just a few years earlier in India, there was a well-known case of a man who had attempted suicide. He was arrested under Section 309 of the Indian Penal Code which made attempted suicide a crime. Indian law is based on 19th century British jurisprudence. While the Brits have since moved on, India remains stuck in a judicial time warp. I found it abhorrent that attempted suicide could be viewed as a crime, and was gratified when Justice Hansaria of the Supreme Court made history by ruling that Section 309 was unconstitutional. The Indian constitution (a much later and more enlightened document compared to the rest of Indian jurisprudence) upheld the right to life as a fundamental right, and the wise judge noted that "the right to live implied the negative right not to live", otherwise the right was meaningless. (I don't know what happened to the poor defendant after that. I hope he received counselling and psychiatric help.)

Disappointingly, a larger bench of the Supreme Court later reversed that decision and upheld the constitutional validity of Section 309. I suspect that questions of euthanasia (always a tricky subject) got mixed up with the issue of suicide and caused a judicial retreat to a safer, more defensible position.

In any case, applying Justice Hansaria's original logic (which resonated very strongly with me), I thought the Australian rule on compulsory voting was a major contradiction. Doesn't the right to vote imply the right not to vote?

But here's the upside of the obligation, and it has taken a few years to sink in.

A major problem that plagues a democracy like India's is bogus voting. Voter ID cards are a very recent phenomenon (and they have their own downsides in terms of privacy and government control, as any civil rights activist will tell you). There were no voter ID cards when I was an eligible voter. I remember that we had to go to the polling booths early to cast our votes if we wanted to prevent someone else from voting in our names.

The most breathtaking example to me (of what can only be called a mockery of the process) was when a neighbour of ours went to the polling booth in the afternoon to find that someone had already voted in her name. She then barefacedly asked the polling officer if she could vote in my wife's name, as she knew for a fact that my wife was out of town and wouldn't be voting. Even more surprising is the fact that he let her! It just goes to show that the problem was so endemic that even a polling officer found this a reasonable request.

Such a situation could only occur because voting in India is not compulsory. There would be an outcry if everyone turned up to vote and some of them found that they were marked as having already voted. That would automatically put an end to bogus voting. In contrast, Australians probably wouldn't know what bogus voting is. The reasons may be partly cultural, but I think compulsory voting also makes such kinds of electoral fraud systemically impossible.

A secondary (but probably more important) effect of forcing everyone to vote is that citizens are forced to take responsibility for the running of the country at every level - national, state and local. We can't sit back and blame the politicians or blame someone else for electing unsuitable leaders. When things go wrong, we and we alone are to blame. It's pretty confronting.

I realise that I now actually like being forced to vote. I feel engaged. I feel I'm part of the process and I have to do my bit. I sat up last night and familiarised myself with the parties and the candidates in my local ward. I would have felt very guilty turning up at the polling station without knowing a thing about what the election was about. It would have been like turning up to write a examination without studying (although I must confess that situation is not exactly unfamiliar to me!)

There has been a lot of angst expressed in recent times in Australia and other Western countries about the loyalties of migrants. Personally, I don't think there is much cause for worry. The most irresistible power is one that is soft, gentle and insidious. You don't build loyalty to a country by forcing people to sing the national anthem or by quizzing them on cultural aspects of the country before granting them citizenship. You win them over by engaging them intimately in the running of the country itself, at every level of government. Loyalty then becomes unconscious.

This is my country because I feel personally responsible for the way it is run. I cannot remain disengaged and alienated. I have to express my preferences. And I have every confidence that my vote is counted in the final tally.

It reminds me of something very interesting that I read about the difference between the brain and other organs. You have a heart, a liver, a stomach, but you are your brain.

I have rights and I have duties, but I am a citizen. Nothing brings that home to me as forcefully as compulsory voting.

Slogan for Fair Trade Coffee

I thought of this rather clever slogan for Fair Trade Coffee:

Fair Trade Coffee - helps you sleep better.