Observations from Kathmandu

First observations from Kathmandu, September 2011:  “I typed this into Notepad for when I could get wifi access.  Extreme lack of electricity really is a problem.  The official explanation for 18 hours a day of load shedding made no sense.  Now I’m amazed at my naivete.  There’s a 200% customs duty on imports which means an imported generator brings twice its value to the government, i.e., the politicians.  Also, since they have a monopoly on fuel imports, they make money on every liter of generator fuel.  The politicians have powerful incentives to minimize the supply of electricity, therefore they do.

The Kathmandu real estate bubble has deflated because banks are not lending.  Everyone imagines lower land prices to be a temporary problem but Nepal’s economy depends on tourism, which is much lower this season, and remittances from family overseas.  There is almost no industry and none of the infrastructure, physical or cultural, that industry requires. There’s no fundamental reason for Kathmandu to be a large city.  It became the center because it’s at the crossroad for China/India trade.  Not much of that these days.  Villagers moved here en masse when the Maoist guerrillas made rural life too dangerous.  Now they don’t want to go back to village life.  They survive for now in what feels like the pre-recession US economy, i.e., one not based on anything real.

G. and I continue to talk about small scale businesses we could try to kickstart so villagers in the hills around Kathmandu could support themselves but we no longer believe it makes sense.  It just goes against our nature to give up.  The bright spot we found yesterday is villagers in the hills above Buddhanalikantha do not need to sell their land.  They are doing quite well selling illegal home-brew down in the city.   Because the rainy season isn’t quite over, it’s very humid.  Hill walking is pretty tiring in these conditions so we often stop for tea which provides opportunities for chatting, a double benefit.

Many of the few tourists this year have always-on iPad-type devices but the internet is usually off for lack of electricity.  It’s a dramatic illustration of the need for infrastructure and why the libertarian ideal is not viable.”

Some questions in response: “The corruption answer makes sense but I’m still surprised.  I suppose not having an immediate assumption of corruption is part of growing up in a culture where corruption is supposedly policed.  From your descriptions of Nepali politics it doesn’t seem like it’s possible for Nepal to succeed; do you think there’d be a way to arrange things so there was more benefit in their politicians doing what was good for the people they supposedly represent?  Something where the politicians could still benefit (they’d have to, or they’d never go for the policy changes.)

If Kathmandu has no real reason to be a city, and can’t seem to support being a city, does it follow that it will eventually have to stop being a city, or will there being a dense collection of people mean enough jobs that people will be able to stay?”

My response to the questions: “I haven’t yet figured out a system of carrots to incent politicians to do what is good for the people.  The stick, however, is a vigorous and independent judiciary determined to stamp out corruption, which Nepal does not have.  Politicians need to fear consequences of abusing their position.

I also haven’t yet figured out Kathmandu’s future.  D.’s social studies teacher told the class it would take another massive earthquake to make sufficient change possible.  He is almost certainly correct.  I don’t see how else it would be possible to establish the infrastructure necessary for a viable city.”

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