1/ I recently visited a textile spinning mill, one that converts raw cotton to yarn. The yarn goes to weaving mills which weave the yarn to fabric. The fabric eventually becomes clothing - that last part is where most textile jobs are, with the earlier parts highly automated.
2/ The spinning mills and the weaving mills have highly sophisticated machinery, most of which are made in Germany, Switzerland and Japan. These countries have had a long tradition of engineering focus and excellence.

India has a lot to learn and catch up in this area.
3/ We need to revive our tool making culture and build a strong machine building focus in India.

The economic impact of tool making and machine building is enormous. I will discuss that now.

Under socialist dogma, India assumed "we only need labour intensive industry". Wrong!
4/ The benefit of having a strong domestic machine tools industry is that the tools become more affordable and get widely deployed. As a result , manufactured goods become more affordable to everyone.

We see this in textiles where clothes have become widely affordable.
5/ Even in textiles, having more affordable machine tools will make the industry spread to parts of India that still don't have these mills. Right now, only a few states in India have a strong textile industry, and it needs to spread wider. Textiles are the crucial first step.
6/ More broadly, if machine tools and capital goods of many kinds become more affordable, they spread wider.

Assuming highly automated manufacturing, where do jobs appear? The services jobs we already do (teachers, nurses, plumbers, barbers ..) get much higher real income!
7/ That last part is very important. The spread of machine tools and automated manufacturing raises the real income of service workers because manufactured goods become much more affordable.

That's why a Swiss barber can afford a car!
8/ In order to spark a manufacturing revolution in India, we need a strong machine tools revolution.

That is how industrial capability and know how is built.

I am starting to learn more about this area and will share what I learn. 🙏

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More from @svembu

30 Sep
1/ When we attempt to do anything new - and often when we repeat something we have done before! - it is inevitable that we will make mistakes. I have made plenty in life and I continue to make them.

So many that I came up with "how to make mistakes" and I will infict that now!
2/ First, try to make small mistakes and learn bigger lessons from them. That way you make the mistake pay for itself.

What is a small mistake? Anyone that doesn't kill you or permanently haunt you is a small mistake. Now it is obvious why I like small mistakes.
3/ Second, try not to make the same mistake twice. That's not as easy as it sounds because to be sure we don't make the same mistake twice, we need to accept that we made a mistake in the first place.

For most of us, even accepting that we made a mistake to _ourselves_ is hard.
Read 6 tweets
26 Sep
1/ Concentration of activity in industry and agriculture (even coffee shops!) is justified by economic theory on the grounds of economies of scale.

That's the idea that the per unit cost of a product drops with rising scale of production. It is true to a point but oversold.
2/ Per unit cost of production does drop with rising scale but here are a few key caveats.

The costs drop rapidly with scale at first but beyond a certain scale (let's call it "optimal scale"), stop dropping or even start increasing as dis-economies of scale kick in.
3/ The second point is crucial: the optimal scale, the scale at which unit costs stop dropping, itself is decreasing with technology advances. This is true for many industries.

Translated into plain language, it means that smaller scale production is viable in many sectors.
Read 9 tweets
26 Sep
1/ From extensive experience, I have come to oppose credentials driven education and it's counterpart, metrics driven management. I have opposed them on the ground that humans are not widgets.

Here are two books, coming from unorthodox university professors that I recommend.
2/ First, the case against college (the title "The case against education" is a mistake in my opinion, it should be "The case against college")

en.m.wikipedia.org/wiki/The_Case_…

It argues that the college degree is now primarily a "signaling mechanism" and not about learning. I agree.
3/ The second book "The tyranny of metrics" is a critique of how so much of modern management doctrine, in business, government and most institutions, is governed by metrics.

I had reached similar conclusions and this book lays out the case very well.

goodreads.com/book/show/3664…
Read 7 tweets
25 Sep
1/ One young man approached me recently to ask for advice to start a small manufacturing business in a rural area. He had arranged financing from his family.

I told him I am no one expert in manufacturing (still learning the basics) so talked to him about business in general.
2/ I asked him "First, are you mentally prepared to lose your entire initial investment? Have you prepared your family for that possibility?"

This is not negative thinking. I always ask: "Am I prepared to lose it?"

I actually did lose all my savings in my first attempt!
3/ I told him: "Your challenge in deciding what to make is to find paying customers. As a bootstrapped operation you can't afford to take very long or spend a lot to persuade customers to take a chance on you - massive VC funded companies would be different in this respect."
Read 8 tweets
21 Sep
1/ We have been very running a skills training program in one of our rural centers for the past 2 months, with the goal of hiring people who do well in it.

We have not required a college degree to enroll but most people who show up are people with degrees and no jobs.
2/ What is surprising is the number of fancy sounding degrees such as "MBA in HR" we see.

One person with that degree dropped out of training after 3 days because he said "I want a job relevant to my degree". He didn't even want to try.
3/ His mother - having spent her savings on the MBA in HR degree for her son - approached us again because she wants him to get a job and she cannot understand why he dropped out.

These degrees are doing active damage, not just waste time and money.
Read 4 tweets
16 Sep
1/ I want to talk about the topic of "modern management doctrine", what is taught in business schools around the world.

Let's look at core tenets:

a) Metrics: you can only manage what you can measure

b) Specialize: focus on your core competence and outsource all the rest
2/ ... Management doctrines

c) Shareholder value: the sole purpose of a company is to increase shareholder value (this from Milton Friedman).

Now my take on these.

I often joke that a major purpose of my life is to refute Milton Friedman, who I actually admire as a person!
3/ First on "Metrics". This is probably the most pernicious modern management doctrine and has done so much to rob people of dignity and purpose at work, simply because who can be against measurement and metrics? Unscientific nuts?

Metrics are great for widgets, not people.
Read 8 tweets

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