nytimes.com
I sure hope this turns to reality and the tide rises the rate of innovation that has meaningful social impacts on problems like poverty and disease plaguing the developing nations.
Bankruptcy.
The legal ability for an individual or a business to fail.
Seriously.
If I don't get buried in a mountain of business debt from a (legitimate) business failure, then I am free to try again with a different business idea or different business model, and to pivot and to hone my business skills, and to see what else might work with the customers and with the investors.
Countries and regions with punitive laws around business failures and particularly around the legal exposures and debt incurred by legitimate businesses will inherently operate at a competitive disadvantage.
Carefully balancing the societal benefits and costs of non-putative bankruptcies (and of non-putative layoffs, for that matter) is critical in encouraging new business ventures.
On the other hand, relaxed bankruptcy laws can be taken too far as in the housing crisis since homeowners took in huge profits by flipping houses during the housing bubble but can just walk away from their mortgages if they're underwater which means the loss is eaten by the banks/taxpayer.
Think too about the "crippling long-term debt" on the other side of the contract, too.
Loans are built on standard contract law. There are penalty clauses and associated costs with exiting the contract, and you (from whichever end of the deal you're on) have to expect that those exit clauses might be exercised.
When thinking about these "strategic defaults", consider the responsibilities of and the systemic risks that occur on the origination. If you're originating or are repackaging what may be questionable loans or derivatives, or are incurring excessive leverage, isn't that also a systemic risk?
It's a balance.
The folks that are severely upside-down (and staying that way) won't be consumers, they'll approach indentured status. They'll be paying for the losses they've taken by not walking away, and (given that these folks are taxpayers, and if they have any money left) in taxes, and (indirectly, economically) by not being able to buy the products and services that businesses are looking to sell (meaning a slower recovery).
If this topic is interesting, here is some "light" reading out of the University of Arizona: "Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis":
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1494467
And playing devil's advocate here, if you're +not+ exercising what you're entitled to within a contract (and from either end of the deal), then what does that say about the sustainability and efficiency and equality of the business system?
And yes, this sort of legal and contractual mire can bury a country and an economy. As we're seeing.
I'm particularly referring to Canada (which I'm most familiar with since I'm Canadian). Canada continues to fall behind the US in terms of productivity and technology investment. Apart from a few of the major population centres and Kitchener-Waterloo we have little in the way of a startup culture. We do have a strong tradition of entrepreneurship but it appears to me that this is mainly focused on traditional and particularly service-based businesses.
Technology firms here will also tell you that Canadian companies are slower to adopt new technologies than companies in the US, India and China.
Countries like Canada that have let innovation stagnate because they currently enjoy a high standard of living may be in for a harsh wakeup call as Indian and Chinese companies start to really come into their own.
Most of the issues are related to their inability to innovate and their use of old technology (and methodology).
I don't mean to be rude but sometime I viewed Canadian technology companies as the western-but-India-in-the-past kind of company.
Many companies in Vancouver is looking for 7-10 years experienced (enterprise) Java developers. Gone is the need of fresh-grad/junior developers position.
Guess what the fresh-grads do?
1) Go back to Asia (most immigrants came from Asia)
2) Go south of the border to Google, Microsoft, or Amazon.
The cycle breaks down there. Tough really.
I've been here for almost 10 years since college and I'm starting to plan my move to south of the border or to Asia.
There's also the issue of talent drain and pay. I'm currently south of the border working for double what my going rate is in Canada. Most of the people I went to university with are also here (as in the USA).
Yes, for the people not familiar with Canadian software, double. I'd like to be closer to home and live in a more progressive society, but it's a 50% pay cut to do so.
I continue to struggle to understand why things are this bad. How is that a mere hop across the border can easily double one's pay? What prevents Canadian companies from being compensation-competitive with American ones?
Part of it is the distinct lack of "real" engineering jobs. A lot of work I've seen either belongs to the thoroughly disreputable gaming industry, or working as Java monkeys pounding on keyboards... neither option appeals to most top talent.
The other part is the culture of satellites - much of the software work I've found in Canada is at satellite offices of American companies, and having worked at one before, it seems that it's less "satellite office" and more "place full of cheaper people so we don't have to pay Californians to do the menial stuff".
But still, what's with the lack of high-paying software gigs in Canada?
SR&ED: I've said this before and I'm going to say this once again. It attracts fishy investors, clueless businessmen, lame business models (clone of X social networking site), and a sense of false success.
Immigrants: no, it's not their fault. But they're trying to survive. So when everyone is trying to survive, basic needs must be fulfilled first (food, house, clothes).
Supply > Demand in HR: People want to move to Vancouver (even people from the East Coast) to enjoy life. But the demand of jobs aren't that many. So you get people from everywhere who probably have 10 years of experience coming to Vancouver.
Supply > Demand in Products: Not too many people are willing to buy software or services. Probably because they don't care or they don't need it or because they want to save money to survive (immigrants).
Enjoy Life: Laziness. Get it done by 5, I want to go skiing/fishing/hiking. Forget unit-test.
Government Oriented: They rule around here. You know how it is with the government contracts and deals and whatnot. Man, even Government own and run online gambling website (http://www.playnow.com)
As you've said it before: disreputable gaming industry. Tons of online gambling companies based in Vancouver. I don't see the rate to go down at anytime soon, especially when our municipal just open its own. (see above).
Politics: due to fierce competition (survival) and/or laziness, politics is all time high. Ability to get things done go down significantly. Guess what's the hottest job in Vancouver? Business Analyst. Guess what they do (mostly)?
All these things created an unhealthy cycle. Suddenly people don't want to be an engineer or a developer. They all want to go to the managerial position.
One other choice is to move East to Toronto. There's better chance there, albeit not superb, but still way better than the West coast.
Well, sure, lesser of two evils anyways. The choices are: unemployment in an expensive city like Vancouver, or crappy employment in a cheaper city like Toronto, or slave your ass away and be abused at a media/gaming company in a city like Montreal.
Or live in the desolate tundra that is Ottawa where lucrative but mind-numbingly boring government contracts abound.
No wonder Canada's software scene is completely dead.
I grew up in Vancouver, moved east for school, and looked on both coasts for jobs near graduation. Vancouver had few jobs, and your best bet was EA (no thanks!). Toronto had more interest in entry-level engineers, but upon closer inspection most were monkey jobs pounding out Java boilerplate for some bank or other gargantuan legacy enterprise system.
There were a few companies I encountered that did honestly really cool stuff... they were also tiny and unstable (financially) as hell. Generally a poor idea to work the only good job in town.
I loved living in both Vancouver and Toronto, and honestly wish I can have that lifestyle back (the poverty levels I see in the US is shocking and appalling to my over-protected Canadian ass). But damn, slaving at some enterprise Java-factory for half the pay is a pretty high price to pay.
I'd take entry-level Java boilerplate code at any given day than a Microsoft boilerplate code (which is what Vancouver has to offer these days, especially with the government around here). Vancouver salary is also between 20-30% less than to that in Toronto.
And lately, since all the fun lies in Asia, I can't wait to go there. Vancouver becomes boring (and gray) to me. Especially with the 10 months of rain.
I daresay American tourists find the poverty levels in Vancouver's downtown eastside just as shocking and appalling.
It is, however, nothing compared to Seattle where I am now. Where in Vancouver the violence and poverty seem to be confined to a small-ish neighborhood, in Seattle it's rampant and everywhere.
Poverty is nothing new - I've seen it in every place I've ever lived. It is however somewhat shocking to see homelessness overrun an entire city - there's not a single spot in downtown Seattle (or hell, anywhere within city limits) where you can't find vagrants or street kids.
This isn't a value judgment on homelessness in general, but rather an observation that unlike some cities where the worst of the poverty is geographically distinct, here in Seattle it's just... everywhere.
Maybe it's for the better - the harder it is for you to avert your eyes, the more compelled you may be to fix it.
Well, scratch that, the city of Seattle just cut even more funding to homeless social services.
We are soft. Our duvet's are too fluffy. And we can't rely on our natural resources forever.
However, I couldn't find the stories.
As China and India continue to modernize, their innovators will enjoy much more success in feeding their native markets. Simply: if you're a software entrepreneur in India, does it make more sense to compete with western software companies for western business? Or to sell software that runs on the kinds of machines Indians own, architected with Indian cultural preferences at the fore-front and can grow along with the growing Indian market?
You're hopelessly behind in competing with the west for western markets, but unbelievably advantaged in competing with the west for native markets.
They're only focused on us, for now, because their wages are so advantageous as to make up for the pains in bridging the culture-barrier. As they continue to modernize, those wages will rise well past the point where it makes business sense to continue.
(I believe that India and China have a relatively bright future. I do not believe in the narrative whereby the United States faces problems, because we live here and can see them, but China and India must inevitably be on a smooth trajectory upwards with no bumps, because we don't live there to see the bumps and in China's case we are probably having the bumps deliberately and systematically hidden from us. Just as Japan's inevitable triumph over the entire world turned out not to be bump-free either. In fact, doesn't anyone learn from history...?)
I should tell that they have been trying this since last few years and one of the reason why the idea worked is that this startup reached out to people personally. The same is the story of Red Bus (http://techcrunch.com/2010/03/24/yes-you-can-build-a-web-com...) which reached out to the bus companies.
The trend I am seeing is that IT companies in India have bigger challenge in making people adopt the technology than marketing or anything else.
There are many companies in this niche but they won't succeed until they reach out to these people who are not literate to begin with.
"It takes an American executive to disrupt cumbersome Indian banking", "With globalization, Americans go on to innovate overseas", "U.S. education is the driving force of innovation in modern India" and so on.
Note: they could probably do just fine with local education and an Indian COO. Point is you should be cautious with extrapolations from a single story.
[1]: http://www.tradingeconomics.com/india/inflation-average-imf-...
Edit: To clarify, I'm not doubting your statement, especially since I've been hearing it frequently these days. I'm genuinely curious.
And I used to live in Bangalore till last March. You'll get a nice veg meal for Rs 30 even there - Kairali Restaurant, 80ft Road, Koramangala
What is really the truth is that the wealthy nations are unheard of the situations in poorer countries. What is obvious in our community (banks, credit cards) is not at all in some areas in the world. It's rare to see the problems when the problems are not in front of us.
The good thing about cheaper technologies is that, they are more accessible, could improve the conditions of people faster and have more impact.
This is an excellent guide for innovation for India and much of developing world. Companies like EKO etc. have taken these lessons and are building upon those ideas.
This is the umpteenth time that this user (known) has literally copy pasted the same responses every time any article with India as a focus comes up on HN .. caste this, less than $1 that, etc etc.
Wish there was a way to ban trolls ..
There are 17,000 cults aka castes in India.
They're destroying India because they literally hate each other.
To strengthen India, it is better to give autonomy to FC/BC/SC/ST/Minority regions with a single passport and currency across these regions viz http://goo.gl/A8F6
I am from India, and I assure you I dont hate anyone based on their caste.
If you go back and look at this "known" person's history, he repeats same asinine sentences over and over again.
IMHO, I think that is what China is doing right - no problems caused by special treatment of majority groups.
This is a list of communal riots in india. Go figure who hates whom
That seems somewhat contrary to what I have read. Details?
Indians are brainwashed to believe that (voting in elections == democracy) and a solution to all problems.