Tuesday, September 04, 2007

The mainstream media’s malaise

Rhetoric continues to be the dominant theme in the mainstream media in India. Therefore I was not very surprised to read this – an eloquent diatribe on the nuke deal and the collateral damage it has caused-by Sagarika Ghose, who on prime-time TV, often cannot distinguish between a debate and a shouting match. Let’s take a closer look at a few ‘priceless’ excerpts from this ‘master’piece.

According to a shocking recent report, 836 million Indians live on a per capita income of less than Rs 20 per day”

Getting your facts right is the first step in building credibility. So to put the above stat in perspective- more than 80% of India earns less than half a dollar/day! Outrageous, isn’t it? Ok, don’t take my word for it. Look at this. About 34.7% of the population in Indian earns less than a dollar/day. It could be a typo- I grant you, but a typo that makes you look in a very poor light.

“The in-house elitist chatter about the Hyde Act, 123 Agreement at a time of floods, collapse of urban infrastructure, bomb blasts and a horrifying poverty report reveals a grim truth: that India's powerful are closet-monarchists whose contempt and scorn for the people is so deep seated that they prefer to live in fortresses from where the public can barely be seen”

I didn’t know that a job in journalism comes with perk that is normally reserved for the artistically inclined- a poetic license!

“The nuke deal controversy shows a chilling distance between politicians and people”

“But has any politician or leader bothered to explain what the deal means or does not mean to the people?”

Nope, you were wrong there. There is no distance…most of the politicians are equally ignorant. You (CNN-IBN) could have probably done the explaining, had you devoted a little less space/time to the adventures of Sanjay Dutt and Salman Bhai. Also it’s a bit hard to explain a complicated deal (that has remained incomprehensible to a majority of the august members of the Parliament) to the ‘aam aadmi’, considering that there are only 48.7 million graduates in India (under 5% of the population). I have a radical solution- make only simple policies, such as- if you are an OBC, you can be in the bottom percentile in CAT and still go to IIMA. Easy to understand and administer!

“21st century media like all technology is an amoral being; its avalanche of images is anarchic. Floods, parties, police brutality, fashion, riots, food, starvation, murder, justice, cocktails, nuclear debates, media provides the democratic noise of everything Indian, the media caters to all tastes. The media plays its role, politicians must play theirs”

Amoral, really!

After the Hyderabad bomb blasts, a prominent media channel reporter asked a young boy, “You have lost your father, how do you feel?”. Another reporter posed provocative questions to a youth who lost his sister on the eve of Raksha Bandhan; the youth started frothing with rage and vowed vendetta in a dramatic manner. Grief is a private affair, not a public spectacle for a reality-TV addicted voyeuristic audience. Journalistic ethics-anyone?

There are, however, very good reasons albeit commercial ones, that explain the way the media houses function. It’s time people understood the economic motivations and pull the media off the moral high horse. Valuation in media centers around a nebulous concept called ‘eyeballs’. Now ‘eyeballs’ is synonymous with ‘reach’ and is measured by INTAM (Indian Television Audience Measurement). 'People meters' are installed in sample homes and these electronic gadgets continuously record data about the channels watched by the family members and the agency prepares a national data on the basis of its sample homes readings. And it’s a no-brainer that channel revenues are inextricably linked to TRPs.

I have noticed, for instance, in a couple of households- on the day of Hyderabad blasts- the women folk seemed anxious to avoid looking at some of the gory scenes and catch with up their daily quota of soaps. Thankfully, there was no cricket match on that day. My larger point is this- India’s 200 million strong middle class, that forms the bulk of the viewer-ship, is largely apathetic to political reform and social realities. Read this, a very insightful peep into this issue. So Rajdeep Sardesai’s problem is this- he wants you to throw away the remote when you are watching CNN-IBN and reach for it when you are not- a scenario more likely if there is a ‘revealing’ interview with Ms Sherawat than a ‘relevant’ interview! Also the need to put together new stories at a short notice means less time for research and reflection and hence a generous use of sound-bytes, rhetoric & decibel levels. Very much like the CP done by ill-prepared students during our b-school days!

So till there is an appreciable rise in the political awareness levels that would warrant more ‘relevant’ coverage, I will probably have to stick to watching Karan Thapar and reading blogs.

Saturday, September 01, 2007

How better fed cows could cool the planet

Something for the environmentalists to chew!!!

Bettina Gartner in the Christian Science Monitor
It may be bad manners, but it's also necessary Every 40 seconds or so, a cow burps. Scientists are now scrambling to make them burp less – not to make more polite cows, but a cooler planet.
As cows digest their food (up to 150 pounds of grass, hay, and silage per day, along with 20 pounds of concentrated feed), myriad microorganisms – bacteria, protozoa, fungi, and archaea – busily break down the fibers and other nutrients in their rumens. In the process, hydrogen and carbon dioxide are released. The archaea (a kind of bacteria) transform the two gases into methane (CH4), up to 100 gallons of it per cow per day, and the cows get rid of it mainly by burping.
How could a burp matter? But it does.
Odorless, colorless methane – the primary of natural gas – is a powerful greenhouse agent. According to the US Environmental Protection Agency, pound for pound methane is about 21 times more effective at warming Earth's atmosphere than carbon dioxide is. Globally, ruminant livestock – including cattle, goats, and buffaloes – produce about 80 million metric tons of methane a year, accounting for about 28 percent of man-made methane emissions annually.
Recently, researchers from the Japanese National Institute of Livestock and Grassland Science in Tsukuba calculated the environmental impact of a serving of beef and published the result in The New Scientist. According to them, the production of one kilogram of beef (2.2 pounds) results in the emission of greenhouse gases with a warming potential equivalent to 80 pounds of carbon dioxide. In other words: Serving steak to your family is the greenhouse-gas equivalent of driving 155 miles.
More here

Thursday, July 26, 2007

Disillusioned with democracy ……

Pratibha Patil becomes another symbol of Woman empowerment! So gushed a lot of celebrity women like Pooja Bedi... I don’t understand why PP cannot be a symbol of empowerment for- bespectacled old hags or senior citizens aspiring to be the first citizen or the likes of Harshad Mehta and Ketan Parekh or more precisely Nick Leeson (who brought Barings Bank down). PP, potentially, is also a beacon of hope for all those mediums who can converse with the dead... well, my point is why take a gender perspective of her ‘achievement’ and leave the rest of rich, diverse groups in the cold. OK, the uninitiated can see this.

Since the alternatives to democracy are untenable, it’s often implicitly assumed that ‘right to democracy’ is axiomatic. In an ideal sense, probably yes. My question is whether voters have any idea what they are doing. Voters are often worse than ignorant; they are irrational in their analysis. Now this is not a sweeping statement, a large proportion of the political leadership in India proves my point beyond a shadow of doubt. Theorists of public choice, in defending democracy, invoke what’s called ‘the miracle of aggregation’. Imagine that just 1 percent of the voters are fully informed and the other 99 percent are so ignorant that they vote at random. So in a contest between two candidates, one of whom has an excellent economic agenda and other a bad plan, the candidates evenly split the ignorant voters’ ballot. The fully informed voters, on the other hand, vote for the right candidate- she/he wins. Therefore even in a democracy composed exclusively of ignorant people; the system ensures an optimal outcome. The catch, of course, is that this miracle works only if the errors are random. In the real world, unfortunately, voters make systematic errors because of herd mentality and a variety of other factors turning the ‘wisdom of crowds’ into a myth. Now Markets and other phenomena like Wikipedia work because there is a real-time correction involved; prices adjust instantaneously and entries are updated almost on a continuous basis. In a democracy, the average correction time is 5 years, enough time to ruin an economy or screw up international relations.

A legitimate question to ask is why should the 1% of the population pay for the decisions made by the other 99%. If it was credit cards or a personal loan market, you could charge the 1% -a lower interest rate and ensure fair pricing. Unfortunately in a democracy, it would be hard to come with such a market segmentation strategy. However it not clear how we can solve this problem without coming up with some measure of voter competence – criteria that would allow extra votes to be given to individuals who score high on this scale. Highly educated people (elite b-schools grads for instance :-) , business leaders, academicians etc probably deserve some extra votes.

I know this sounds radical, elitist and self-serving, but here are some of the reasons why it may be appropriate and hopefully I will have convinced you that my solution is not as blasphemous as you thought it was. It may be important to understand why Governments exist in the first place and an economic perspective might give us the best answers. Now why economic, you might ask? Well, an economic analysis can tell you whether a system is efficient or not; and like it or not, efficiency is one of the fundamental requirements of any Government. Think of the Government as a business enterprise that offers its services to the entire country; taxes are its revenues- sure, everybody doesn’t pay taxes- but that is just differential pricing. It does look like a monopoly, but in some sense, the Opposition is expected to create a sense of balance in the system. We know, in practice, however the Opposition ends up ‘opposing’ progressive polices and teams up with the Government on ‘bad’ policies. So my solution is to have a non-political opposition (representing the 1%) functioning like a board of governors. Then you can bring in governance standards and accountability. And the rest I leave it to your imagination…It might just work.

Wednesday, June 06, 2007

How free are we?

You’ll notice that I have rephrased the question ‘is there a free will?’ from its binary form into an analogous query that forms the title of this post. This question has decidedly created countless debates and zillions of web page discussions among the philosophers and the religious. I, however, will address this question, purely, from a biological point of view which is probably the only legitimate perspective, if you care for truth i.e. Let’s start with definitions; admittedly there are many variants of free will, but in order to avoid getting into a vicious (or virtuous) and circular philosophical arguments- let’s define free will as the ability to choose your future course of action independently.

Any discussion of free will usually has to address two issues; one semantic and another conceptual. The issue I refer to as semantic is the one that deals with our identity; clearly when we say free will, we also have to answer ‘whose’ free will we are referring to. For millenniums, Hindu Philosophers (probably folks from other religion are at it too) grappled with this question ‘Who am I?’ and waxed eloquent about the life-changing implications of inquiry into our identity. The answer, as it turns out, is pretty simple, we are bipedal primates belonging to the mammalian species ‘Homo Sapiens’. The reason why there continues to be a debate in the spiritual circles is the following- ‘I have a leg- therefore I am different from my leg, I have a brain- therefore I am different from my brain, so I must be a soul who has a body’. A little bit of thinking reveals that the problem is purely semantic- the brain refers to itself in the third person to avoid going into circles, that’s all. A robot can be programmed to say ‘I have an onboard computer; therefore I am different from it, etc’; but doesn’t mean anything.

But are we robots then; here we need to address the second issue- the conceptual one. Most people have a polarized view on free will- either they believe in determinism or freedom. Fortunately another perspective is possible, only it’s not an ‘ism’; I refer to the category of things (both living and non-living) that can be ‘programmed’. As somebody who is addicted to playing chess with the computer, I can’t think of a better example than computer chess to illustrate my point. Most people think the reason Deep Blue could beat Kasprov was because it could evaluate 35/40 moves (the entire game) for all combinations; frankly that is impossible. The number of possible ways the first 35/40 moves could be played is larger than the number of atoms in the universe; to evaluate all the possible combination of the first 10 moves itself would take close to 1500 years for the fastest supercomputer today. No, it doesn’t quite work that way, programmers provide heuristics/thumb rules to shorten the decision making process. These rules, by the way, have a small but finite probability of misfiring under specific circumstances- but mostly they work well. Also once the programming is complete, the programmer is not allowed to help the computer during a competitive game. This is probably the closest analogy to how our brains work; our brains are programmed by genes and memes (cultural equivalents of genes). The programming consists of a set of instructions, heuristics, rules of thumbs etc., but once we are born, we are on our ‘own’. No gene would actually whisper instructions into our ears, but the programming creates a statastical bias to behave a certain way- which again gets modified under cultural influences. Now here comes the interesting part- the set of rules is finite, but the range of behaviors possible is practically infinite like the total number of moves possible in chess. Thus the unpredictability of these infinite emergent behaviors arising from a finite set of rules is what that gives rise to the illusion of free will/control over our actions.

But this world-view creates a few sticky problems of its own, chief among which is explaining how we can hold people responsible for their actions if free will was only an illusion. One must appreciate the fact that morality is purely a human affair, and therefore we can’t look to biology or science for answers. But we do know that human behavior responds to incentives and penalties, therefore having a robust legal system may be only way to regulate behavior in absence of free will!

Friday, April 20, 2007

An Ode to NYC

Oh boy, New York looks like a first-cousin (certainly richer) of Mumbai”, I thought as I got into a limousine after getting out of the airport. I continued to discover striking similarities in the days to follow- people stood in queues even in front of elevators (I have been told this is true in most parts of US) which in India, as far as I know, happens only in Mumbai. Local trains are the preferred form of transport in both cities as traffic jams are equally frequent and common in either place. Mumbaikars and New Yorkers have an air of professionalism as they go about their work; there is a sense of purpose about them when they walk on the road, you wont find them loitering and staring blankly and aimlessly.

Obviously NYC’s infrastructure is far better and your daily life-optimization goes much further; especially when you use a GPS with a sexy female voice to decide whether you need to take a left or a right, and you monitor weather forecasts & traffic jams online. An interesting question to ask would be whether tough environment (read weather) forces optimization? Surely in Darwinian terms, natural selection favors the efficient and hence optimization could evolve to ridiculous lengths. The general discipline in the city is so conspicuous that I am sure that it hurts some of us back home- for instance there is a natural split even on an escalator, people who wait for the escalator to take them up, stand on the right side leaving place for people who are in a hurry.

I used to sit on a ‘futures’ trading floor; a trading floor, for the uninitiated, is an awe-inspiring piece of architecture with an assembly line of money producing machines (read traders). Traders, I noticed are extremely bright people- obviously brilliant at their job, but with a conspicuous childish streak. The legacy of the Salomon Brothers is still palpable, so I was disappointed when I did not run into any of the characters from ‘Liar’s Poker’. The high point of my stint was a debate on the trading floor with a famous energy analyst who came on Bloomberg TV every alternate day.

One of the most interesting features of American people (to my mind) is their famed diplomacy and their obvious linguistic supremacy. You might recall that the phrase ‘collateral damage’ is an American invention. If you stepped on an American’s toes, he/she would never say ‘ step off my toes’, instead the response would be something like ‘ Do you think putting your shoes elsewhere is a viable alternative?’. Your boss would never say, ‘You are fired’. What is more likely is a 120 slide deck explaining the company’s 40 year long –term plans followed by a nice farewell party with a ‘ we have to let you go’. Americans are heavy users of sarcasm which automatically makes them my favorites; surely there is a mouth-watering debate about the superiority of satire over other forms of comedy such as goofy, slapstick etc which are more popular in India, but I’ll let that pass. An interesting question to ask is – why are these guys so good at communication? It cannot be explained by ‘English is their primary language’ reason alone; English is the primary language for Australians, Canadians and of course the English themselves and yet we don’t place them on par with Americans. I suspect that it has something to do with the kind of institutions that exist in US, in particular the legal system. Think of it this way; what does it take to succeed in a country where the legal landscape has a far reaching influence into everyday life? Obviously the ability to represent yourself in a sophisticated way offers a compelling competitive advantage; this translates into being politically correct, simultaneously being courteous and sarcastic, euphemizing skills etc. Therefore a war of words fought at a sophisticated level often decides winners and that’s why you will see politicians (George Bush is clearly an exception) paying particular attention to their choice of words-which often ends up the influencing the vote.

I think Mary Schmich put it best in her immortal ‘sunscreen’ song. “Live in New York City once, but leave before it makes you hard.”

Sunday, February 18, 2007

Understanding Mergers, Marriages & Mishaps

Ok, all those happy bachelors who are in no hurry to get on this side, unhappy bachelors who are desperate to get on the other side, unhappily married men who want do a RCA (root cause analysis) of their miserable state and the rapidly vanishing breed of happily married men who are curious to understand why they have been chosen to stay happy; here are some of the answers.

It’s probably no coincidence that the Tata Group which has been, of late, on a merger spree has a bachelor chairman. Sure that was tongue-in-cheek, but it’s more than likely that corporate mergers and social mergers have a lot in common and by extension failed mergers and broken marriages are alike in more ways than one. Let me add a couple of disclaimers here. Firstly this post is a male point of view (isn’t that obvious?), hence it’s not meant to be construed as anti-feminist. Secondly, this post is a positive statement, not a normative one (for the uninitiated, ‘the way the world is rather than the way it should be’)

Let’s look at the Indian scenario first. For centuries men in India married purely for the purpose of outsourcing some of their functions such as household work, rearing children etc. and it was believed for long that men had a comparative advantage in terms of earning livelihood. Now this model worked for a variety of reasons; there was tremendous social pressure that kept it that way, both partners did not compete for the same resources (there was an implicit non-compete agreement), so it became in some sense, an evolutionarily stable strategy. Things changed, of course primarily because of increasing complexity in the environment and the institution of marriage as it exists now in India is akin to the Jurassic Park , which could collapse (or mutate) because it is, in the words of Ian Malcolm, the chaos theorist, ‘ an unsustainably simple system forced bluntly upon an incredibly complex system.’ In corporate terms the relationship was more on client-vendor terms, clearly putting man in a stronger negotiating position. Now of course vendors have upgraded and evolved, thereby changing the balance of power significantly. Now you have co-sourcing and partnership models which again mirror the changes in the social world, vendors (and wives) increasingly participate in strategic decision- making.

Let’s look at mergers (and therefore marriages) from another perspective- one of the most (mis)used terms in MBA lingo- synergy. I wont dwell at length on the corporate ones except to say that shareholder viewpoint is often marginalized before empire building and agency issues and the often-quoted reason of ‘diversification’ for mergers is often a dumb one since the shareholders can themselves diversify at much lower transaction costs. Let’s look at the more interesting parallel in the social world. We have heard this before; for example marry a partner who’s from a different industry, so as a unit, your risk is diversified. Sure your risk is halved, but so are your rewards. But there are better ways to diversify your risk; all you have to do (after considering other things) is to invest in a sector which has no correlation with the sector you are working in. Child rearing is an issue, I agree, but there is already an increasing trend towards a single-parent model. I am not sure if there is enough empirical evidence to suggest that children reared in single parent homes are worse off than the rest of us. Assume that on an average partners fought 1/3 of the time, were very happy 1/3 of the time and did nothing for the rest of the time, I am reasonably certain that the expected impact on the child, on average is same as living in a single parent home where there was no upside, sure, but there was no downside either. Sure, my thought experiment made some assumptions, but I don’t think I am way off the mark.

So do I see an equivalent for the on-demand (pun intended) model emerging in the social world? Sounds attractive conceptually, but then, who knows? I’m no Alvin Toffler.

Monday, December 11, 2006

Are MBAs Overpaid?

I couldn’t help borrowing this title from a program on Headlines Today bearing the same title, the reasons for which I will explain presently. The program was structured as a panel discussion, with a few intellectual heavyweights on the panel; most notable among them of course is Prof Arindam Chaudhari. And there were others such as Prahlad Kakkar and I frankly don’t remember the rest. Several great insights were offered, but in my humble opinion, an insight of a ground-breaking nature was offered by Prof Chaudhari. His argument was as follows. ‘There are close to 200000 MBA aspirants in the market (in India i.e.). IIMS have a student intake of 1600; so it looks like IIMS have deliberately kept the supply low so that their grads land those nine lac+ salaries. I don’t see any problem in increasing the intake significantly. The infrastructure is adequate and the professors can be trained’. Whoa, what an insight? This statement would have easily made the CP of the year in my B-school, wait, hang on, I must keep my overflowing admiration in check and offer my humble reactions.

Prof Chaudhari, I am sure with the amount of data you have at your fingertips, you also must be aware that fail/dropout rate in top business schools is around 5% and in exceptional circumstances has even touched 8-9%. Obviously, it wouldn’t be that hard to conclude that this rate would go up if the intake would increase. Now how do you suggest we handle that? No, I know you are not suggesting that the standards need to be diluted, may be we should tweak the syllabus a little bit, let’s remove some of those finance courses that work only in the perfect world where there are no taxes, fees, information asymmetries and all those fancy jargon that don’t mean anything in the real world. Instead, let’s introduce some soft courses such as ‘Breathing techniques to increase profits’ ‘How meditation can help increase shareholder wealth’, ‘Duryodhana’s views on corporate governance’ – where you have to try really hard to fail. Wow, pure genius, do it the Indian way, Loka Samastha Sukhinava Bhavantu; let everybody pass. That is all-inclusiveness at its best. You were also mentioning that MBAs actually are worth only around Rs 30000/- per month; now isn’t that suspiciously close to salaries landed by students from your college. What the hell, that must have been only a coincidence.

Yes Mr. Kakkar, you were mentioning that the ‘business of business is risk-taking, and MBAs are ill equipped to do that since MBA increases risk aversion’. Well, I suppose it is futile to explain that to you that managers risk shareholder wealth, not their own and hence risk aversion is a legitimate position to adopt, and if you are a risk lover, may be you should be sitting in a casino not in a boardroom. You were also mentioning that decisions should be taken from gut and not with those fancy models taught in B-schools. Well, I would use excel at least and not just rely on my gut. Depending only on my gut would put me in the same bracket as a soothsayer or a crystal gazer; In which case you are better off firing me and hiring an astrologer. Believe me, it’s a lot cheaper.