Demoralised | Learning by Proxy

Are governments only in the business of demoralising their people? Afghanistan, China and India - Different things, similar effect.

Not a single war was ever lost because the victor killed every last man standing. It is usually lost because the opposition is so demoralised that they no longer have the will to fight.

Truth be told, the largest armies can fall prey to a small number of people engaging in a fight against them. This is exactly why in countries where guerrilla warfare is rampant, there is no way to declare complete victory. Think Vietnam or Afghanistan.

War is always won in the head first and then on the ground. If you cannot demoralise your opponent completely, you can never win! On the contrary, if you can make them feel that they have no chance of winning, you may not even be needed to fight.

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The Taliban marched into Kabul and took the city in a matter of a week. While nobody was expecting this, now that it has come to pass, many wonder, what next? There were those who tried to protest but were fired at and dispersed. Some of them met their maker.

A group of Afghan women too young to recall the Taliban’s 1996-2001 rule are experiencing the same trauma once recounted by relatives after the group retook control of Afghanistan, leading thousands to flee the country.

“We are going back to darkness,” said one of the university students evacuated to Qatar, who described feelings of anxiety and fear and like others declined to provide details that could identify them or their families back home for security reasons. “It’s all the stories that we were hearing from our parents and our grandparents, and at that time it was a story but now it’s like the nightmare came true,” a second woman said.

Source:

Reuters

The Afghan economy is in a free fall. Their currency has already fallen by 7.5% in a week. It will only be a matter of time before it loses all semblance of value. If the people can unite and put on a front that the military was unwilling to, they could in fact push the Taliban out of power. It could even force them to practice a kinder Islam.

The nightmare has not come true - yet - but if the battle has already been lost in the mind, you can expect little to no opposition, to begin with.

The Afghans seem to be already demoralised.

China

In China, the crowned dictator has decided that the presence of those who are extremely wealthy makes it harder to hold on to his vice-like grip on the people. The reason capitalism works in the west is that the poor can keep toggling between parties hoping things will improve; while the rich continue to run away with all the money, irrespective of the regime in power.

Dictatorship 101 - Hold on to power at any cost.

The only way to accomplish that is by ensuring, everyone is poor. That way there is nobody that one can be jealous of and nobody aspiring for anything better.

Simply put, it’s a bleak message to China’s wealthy elite: it’s time to redistribute their fortunes. The meeting urged high-income groups and entrepreneurs to “give more back to society,” indicating the potential for higher taxes or the expectation of more charity contributions from the rich and from corporations. Even before the latest speech, some wealthy tech firms have been heeding the call. Tencent in April pledged 50 billion yuan ($7.7 billion)—an amount greater than its last quarterly net profit—toward social causes. After Xi’s speech, it pledged the same amount to a “common prosperity” fund.

[...]

Double Effort: The “double” refers to the effort to reduce both work and pressure on children coming from public schools, but also the time children spend on after-school studies at private institutions. Some see it as part of a broad effort to “take back” students from private institutions into the public school system, where the government also has more control over what young people learn. In theory, all this is meant to reduce inequality. But Chinese families and education professionals say that it will reduce opportunities for children, especially those in rural areas where public schools aren’t as good. Many in China also see it as an effort to reduce the costs of raising children so as to encourage people to have more children, but it could backfire by reducing an important source of employment for people in their 20s.

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Savage Growth: This term is the Party’s clear warning to its tech giants: The freewheeling period under which the firms flourished thanks to relatively light regulation from the government is over. The last two decades of China’s internet economy can be seen as analogous to the “move fast and break things” ethos that tech startups in the US adopted, where firms were often trying things or developing products that regulators had to catch up with. Fang Xingdong, a prominent Chinese expert on internet governance, said in an article last month that Beijing’s recent cybersecurity probes into companies, including ride-hailing giant Didi Chuxing, marked the official end of tech companies’ savage growth era, which means they need to treat compliance as a far more important component of their business strategy going forward.

Source: Quartz

The Chinese government has banned many of the largest apps from onboarding new users. This has been done under the pretext of data laws and data privacy. I think they are just hoping a competitor would emerge and reach parity!

While the existing rich are getting bullied and their businesses are being hampered, especially if they happen to be listed overseas (read the USA); they are also going after the young.

China had gone after all of the ed-tech startups and said that charging and trying to profit from education is a sin. The shares of the ed-tech companies in China plunged by half and then some.

For China’s nearly 300 million students, the country’s recent overhaul of the education sector to reduce their study hours may have been welcome news. But now they’re getting a new assignment that’s not optional at all: studying the ideas of leader Xi Jinping.

China’s education ministry has announced that “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,” a political doctrine that lays out Xi’s vision to strengthen the Communist Party’s control, must be taught from primary school to universities.

At the core of the ideology is Xi’s emphasis on the supremacy of China’s one-party rule, as well as its need for a strong man leader (i.e. himself) for the country to achieve the world standing it deserves. The thought was enshrined in the Party constitution in 2017, making Xi the first leader since Mao Zedong to have his theories elevated to that stature in his lifetime, and has since penetrated every corner of Chinese society.

Source: Quartz

If on the one hand, you are cutting the rich off at the knees; on the other hand, you need to ensure that the youth does not develop any funny ideas.

Under the new rules, foreign-based tutors are banned from teaching Chinese kids on online platforms, which in recent years had become one way for young Chinese people to interact with foreigners. This month, China also announced that it had terminated 286 tie-ups between Chinese and elite overseas universities, including those with City University London and New York University, without elaborating on the reasons for doing that. A collaboration with the University of Hong Kong was also among those canceled.

Source: Quartz

They are going after Education first but eventually, they will HAVE to go after the entire capitalistic model. There is no other way that they will be able to quell discontent.

Already there has been a push back from many of the Chinese millennials who don't like the 996 doctrine of working from 9 AM to 9 PM, 6 days a week. These are the seeds of discontentment that can get watered over time.

More than China, this can spell doom for a lot of businesses in the west. 15% of Apple's sales come out of China. Almost 50% of the sales of most luxury brands come out of China. If China is moving back to the 1920s what will that mean for these businesses?

Will the Chinese "strongman" be able to demoralise the population and make them settle for less?

India

All of you reading this post will have appliances in your house that are not utilised 100%. TV, Washing Machine, Oven, etc. They are assets that you own. Do you ever wonder what if I rented it out to someone? Could I generate more income?

More importantly, what would prompt you to think that?

The government of India came up with an "ambitious" plan to monetise public assets.

The Indian government has announced its intention to “monetize” about Rs 6 trillion worth of assets held by it, and public sector units (PSUs). It has said that it will “monetize” by letting the private sector bid for operating such assets for 25 years, for a lump sum payment upfront, but without giving away title to the underlying assets.

In effect, the government is telling private operators that here is this road, godown, pipeline, or railway platform, that you can operate for 25 years. Please calculate what you can earn from it in various ways, over the next 25 years; discount that cash flow to its Present Value, deduct from that your profit margin, and pay me the balance amount as upfront rental.

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Very simply put, the Centre is broke.

The government has been nursing a “silent” fiscal crisis, as economist Rathin Roy puts it, ever since Modi tanked the economy with serial disasters like demonetization, and GST; and followed it up with a disastrous tax cut for corporates of Rs 1.45 trillion in 2019, without giving any thought to how the shortfall would be made up. As result of continuously falling GDP growth, disruption in revenue caused by serial disasters, and the corporate tax cuts, Modi has had to steeply hike prices of inelastic commodities like petroleum products to pay for the corporate tax cuts.

The burden of the hike in direct taxes falls on the lower and middle class consumers indirectly, and hence, their consumption falls, dragging GDP growth down even further. This snarl of vicious circularity was further exacerbated by the pandemic, when Modi with his usual panache for disasters, tanked the economy by sinking GDP by 28% in one quarter. The GDP for the full year fell by 7%, the highest of any major economy.

So all these Modi engineered disasters combined, has sent government revenues plummeting, and government deficits soaring, thus necessitating record borrowings to pay for Govt. expenses.

Source:

The Wire

We are today paying some of the highest indirect taxes in the world. The government has netted over Rs. 3 Lac Crores through the tax on oil and blamed the tax on "Oil Bonds" that the last government had issued. They forget to tell you that those bonds were a total of Rs. 10,000 Crores. The government has already netted 30 times that figure.

As I see it, there are only a handful of companies that can put the monies needed to pick up these assets. You may not even need all the fingers in your hand to count them all.

Will they manage to put all of these assets in the hands of Reliance and Adani? Like the toll that we pay on some of the roads today, will we be taxed to use almost all of the infrastructure in the country? Will they demoralise an entire generation of future entrepreneurs?

If a shop has a preferential location in an airport, odds are that they will receive more sales than others. What would putting a portfolio of public assets in the hands of a company like Reliance, which is competing with every startup in the country, mean for startups?

This is net neutrality in the real world.