"Government Spending to Save Businesses"

Owing to the financial meltdown many businesses are affected. Due to the fall in sales figures, many business are cutting down spending. Some are in such a bad state that they are going with a begging bowl to their governments for 'bailout' money. Automobile companies, banks, airlines - most industries have been hit badly and are pandering for major bailouts by the government.

In such a time of crisis, fearing a sharp decline in their sales and revenue streams, and fearing that they may be left out of the 'bailout money' handouts, the Mistresses and Extra-Marital Lovers Union (MEMLU) has approached the government asking for a bailout. Armed with a study by Prince and Assoc, the general secretary of MEMLU demanded that the bailout is necessary to keep the industry afloat.

Cost cutting by their consumers has been quoted as the major reason behind the industries woes. According to the survey,

"More than 80% of multimillionaires who had extra-marital lovers planned to cut back on their gifts and allowances. Still, only 12% of the multimillionaire cheaters said they plan to give up on their lovers altogether for financial reasons "

Experts from the government on the subject, however rejected MEMLU's demand citing improper estimates in the survey. "The survey has all its calculations wrong", said one government official, "We at the government are in touch with the consumers and the fall in demand is untrue; in fact my colleagues and I are confident that we can stimulate this market ourselves".

In response to a question about how the government is going to boost the souring demand in the business he said, "Government spending. Our government firmly beleives in Keynesian theories of spending by the state during a downturn and it is no different in this case." He also added that goverment officials will "personally ensure and step-in to help the industry not see the bad times".

Hat Tip to Greg Mankiw

The Valedictorian Administration

As Obama assembles his cabinet and his administration team an interesting observation has come to light. The new administration is going to be one which has a large number of very highly educated members. David Brooks, an op-ed columnist from the New York Times writes,

"Jan. 20, 2009, will be a historic day. Barack Obama (Columbia, Harvard Law) will take the oath of office as his wife, Michelle (Princeton, Harvard Law), looks on proudly. Nearby, his foreign policy advisers will stand beaming, including perhaps Hillary Clinton (Wellesley, Yale Law), Jim Steinberg (Harvard, Yale Law) and Susan Rice (Stanford, Oxford D. Phil.).

The domestic policy team will be there, too, including Jason Furman (Harvard, Harvard Ph.D.), Austan Goolsbee (Yale, M.I.T. Ph.D.), Blair Levin (Yale, Yale Law), Peter Orszag (Princeton, London School of Economics Ph.D.) and, of course, the White House Counsel Greg Craig (Harvard, Yale Law)."

For people like me who wanted Obama to lose the election, because of his left leaning, 'Socialistic' policies, this news of the centrist (atleast!) intelligentsia being at the helm of the administration is appealing. But for the sake of it, I can't resist poking fun at the new administration which looks like a reunion or alumni meet of the very best from the top Ivy League colleges in the World. In fact the same columnist also has this to say.

"If a foreign enemy attacks the United States during the Harvard-Yale game any time over the next four years, we’re screwed"

I should give more credit though to these 'Achieveatrons', after all, closer to home here in India we have some very well qualified people leading us - Dr. Manmohan Singh (Cambridge, Oxford. PH.d) and P. Chidambaram (University of Madras, Harvard MBA) - and we are not doing so bad! Right?

But, one more thing that comes to my mind is this - did you notice the number of lawyers who are there in the administration? Including the president-elect and the first lady, the count is 5 out of 9 members listed above. The actual numbers may be more. This reminds of this famous scene in the movie "The Devil's Advocate" with Al Pacino, the Devil Incarnate rants that he chose the profession of a lawyer becuase "The law puts us into everything." He goes on to say that there are more lawyers in law school than practising lawyers in the US and that "We are coming out. Guns blazing!"

Hmmm. I wonder if this is the actual second coming of you know who!

The Messiah or... ahem...

On a serious note, it is heartening to note that president elect is not veering so much to the left as many had feared/hoped he would. But still, there are some shortfalls in his selection of candidates. According to Mark Cuban, there is a lack of entreprenuers advicing Obama on his team. He writes,

"There are a lot of great minds on the list.

“Robert Rubin, Larry Summers, Laura Tyson, who served as Clinton’s top economic adviser; former Fed Vice Chairman Roger Ferguson; Time Warner Inc. Chairman Richard Parsons; former Securities and Exchange Commission chairman William Donaldson and Xerox Corp. Chief Executive Officer Anne Mulcahy.

Google Inc. CEO Eric Schmidt, Michigan Governor Jennifer Granholm and Roel Campos, an ex-SEC commissioner, and Warren Buffett are also on the advisory board.”

Notice anything missing ?

Not a single entrepreneur. Yes Warren Buffett started a business, but he will be the first to tell you that he “doesn’t do start ups”. Which means there isn’t a single person advising PE Obama that we know of that knows that its like to start and run a business in this or any economic climate. That’s a huge problem."

This is absolutely true. It is only thruough entreprenuerial vigor that one can see this battered economy regain its past glory and such calculated risk takers need to be fairly represented in the administration.

But then again, will entreprenuers want to get into politics and waste their time? They might be more interested in taking the 'worthwhile risks' in the Market rather than in the political arena!

SearchWiki by Google!

Google has launched a function called SearchWiki, which lets people customize their searches. Now, what it basically does is that it allows users to rate and 'rank-up' the search results based on their preferences, for personal consumption. While it does not affect the way others see the search results, it is an option to help users customize thier search results. The details of this is explained in the video below.

This is an interesting option and lets me customize what I want to see on the top of my search results, and a move towards a 'social networking' way of customizing and sharing my searches (and the comments I have about the content and relevance of the search results). But it still does not let my preference influence the overall search results others see. Nor does it help give me more targeted content. I have blogged previously about how a synergy between StumbleUpon and Google search results can help give better targeted content and advertising. You can read it here.

I agree with TechCrunch's call that this new addition, while being a move towards making it more interactive and social, will essentially be a test platform to see how to make searches better. Here is Michael Arrington saying,

But Google search wasn’t broken. It’s one of the few things on the Internet that isn’t. I love it, as does 62% of everyone on the Internet. This new stuff is a mess of arrows and troll comments and stuff moving around the page. That doesn’t make my search experience more useful. It makes it move to another search engine.

My guess is they’ve made the changes to see what kind of data they get, and how it can be used to make their overall search results better. So when Google says “The changes you make only affect your own searches,” I think they’re only being half-truthful. All this data, in aggregate, will certainly be used to improve Google search results in general.

This can also be a move towards changing the search paradigm from traffic based popularity ranking to a more content and page view friendly approach to search results. For instance, Google could use the data from SearchWiki to observe and rate websites which are 'ranked up' and based on the quality of comments make subjective, qualitative decisions about the popularity of content. While I don't forsee dramtic changes in search technology becuase of SearchWiki, it is an interesting development!

Up in smoke!

India's beedi makers are in trouble because of the smoking ban imposed by the Government. Mint reports that beedi makers have forecasted a job loss of 1 million in the industry because of the ban on smoking. The situation they find themselves in is funny.

“Things are looking quite bad. At one point, we even wanted to close down [production facilites] but that is impossible on account of the tough laws pertaining to closure. This (smoking) ban has made life quite difficult,” said [Ramesh] Patel

Thanks to the smoke and mirrors law which prevents smoking in 'public' places, the beedi industry is experiencing a fall in sales. But wait, thanks to the communists whom they pandered to before the smoking ban to help them 'compete' against the big tobacco companies, they are now not even able to cut their losses and bail out! The 'tough' laws preventing industries from retrenching its workers when experiencing the 'downturn' is a pet project of the CITU [Centre of Indian Trade Unions].

What makes their situation hilarious is that even their erstwhile supporters seem to have also ditched them. Mint reports,

"Pandhe, also the president of Centre of Indian Trade Unions (Citu), however, said the trade union will, however, not lend its support to beedimanufacturers. “People will smoke indoors if they want to and this will not impact their sales,” he noted "

There you have it. The very idealogical banner of protectionism has now come back and bit the beedi industry's behind!

I am not a smoker, but I think the ban on smoking is nonsense, simply because there is no way it can be implemented in a country such as ours. I daily see innumerable number of people 'flouting' the rule on the streets.

But, if you think this arguement is contradictory to the 'falling sales' arguement of the beedi manufacturers, think again. The market unfortunately runs on cues from the government. While the ban may not be effective because of it cannot be easily implemented, it has an impact on the industry value chain. The industry works because on various interconnected cogs. Farmers grow the tobacco, the beedi maker rolls the beedi, the distributor channels it and the retailer sells it. Due to the ban, while the consumer may not stop purchasing (the government argues that smokers will smoke at home and hence sales will not fall, although this may not be entirely true) the cost of making a beedi will rise. The farmer may not want to harvest tobacco fearing a fall in demand, the distributor may not channel it fearing fall in demand and the retailer may not stock it fearing that people may not buy it. This will eventually cause a fall in sales. Hence an entire industry value chain will fail.

I think the ban on smoking should be repealed. Instead a Pigouvian solution should be sought. It will make the industry either abandon a product which causes negative externalities, but still make it available for those who can 'afford' the negatives and pay for offsetting them. A market solution to the negative externality of smoking can be the only true solution.

What kind of person does this blog make me?

Remember Organizational Behaviour subjects from college? With all the 'profiling' of personality types and group exercises to help understand psychological motivations, it used to almost seem like one was being racially profiled! Anyway, one of the types of profiling that is famous is called Myers Briggs Type Indicator. I was classified as INTP - Introverted iNituitive Thinking Perceiving type. I mostly agree with the classification and a website which specializes in predicting personality type by analyzing one's blog has also confirmed this. Here is type of person my blog makes me..

INTP - The Thinkers

The logical and analytical type. They are especialy attuned to difficult creative and intellectual challenges and always look for something more complex to dig into. They are great at finding subtle connections between things and imagine far-reaching implications.

They enjoy working with complex things using a lot of concepts and imaginative models of reality. Since they are not very good at seeing and understanding the needs of other people, they might come across as arrogant, impatient and insensitive to people that need some time to understand what they are talking about.

I just love the bit about how difficult I am to understand. Now I know why my colleague finds me so difficult the understand!

Hat Tip to Greg Mankiw for the website.

Open Source Code

I came across this wonderful statement on the ideology behind the Open Source revolution from an interview, in Mint, with Bob Young - one of the founders of Red Hat:

"Only in the software industry, the vendor had control over the way the consumers use the product. Imagine you buy a car, and the dealer who sold you the car had the key to the hood of the car. If your engine starts making a noise, he can say that it is not a bug, but a feature."

Brilliant! Read the whole article here. I particularly like the way he says that he is not a free software exponent, but a free market exponent!

What is bound to happen...

This is a simple explanation of the financial crisis and the current response towards it.

Illustration 1 shows the global financial system as it existed until very recently. The lenders deposited with retail banks which gave them back interest on the capital. The retail banks invested in the stock markets where the investment banks underwrote stock equity for the various businesses and also made loans out of the capital invested with it. The central banks and government officials had a significant say in the whole system; they dictated the interest rates (kept them low => Caused a bubble) but they also followed a misguided monetary policy based on fiat currency and fractional reserve banking. Life went on; but behind the balance sheets, the investment banks were betting on toxic assets, and the retail banks were making loans to individuals and organizations with bad credit histories.

Illustration 2 shows what has been happening in the global financial markets since early September 2008. The investment banks and retail banks are going bankrupt because of toxic assets - that they have been bundling and selling - on the stock market, not giving them any returns. The stock market has crashed. Lenders are spooked and are diminishing in confidence and are unwilling to lend money to banks hence causing a credit crunch, which is impeding the way retail banks function. Now, the government official's and central bank's role in the economy is large; they are continuing the misguided monetary policy and still 'banking' on fractional reserve banking and fiat currency systems. They are now buying assets in toxic and underperforming businessess and financial institutions, while still knowing that they are worthless assets. This is having no impact on the confidence of the retail investor who still does not trust his money with the banks, further worsening the credit crunch. His assets are also wiped out in the stock market fall denying him the ability to even lend back to the banks if they regain his confidence.

Illustration 3 shows what is expected if the increased role of the Central bank continues the way it is. The nation will become a toxic asset and this would have been caused by none other than the most toxic asset of them all, which is called 'Government Intervention'

Don't believe my prediction as depicted in illustration 3? Why not atleast listen to the scholar who knows more than any one alive about monetary history - the 92 year old Anna Schwartz! Here is an article where she has made the simple arguement,

"Everything works much better when wrong decisions are punished and good decisions make you rich."

Capitalism - Still an Unknown Ideal

While I was chatting with a friend on the phone this past weekend I was asked a question. "Has Capitalism failed? Now that everyone is questioning the lack of regulation which has led to the near collapse of the global economies, isn't it time to rethink the primacy of Capitalism?" Both of us - let me mention upfront, are laymen; salaried employees who are not experts at economics. But ,we have studied economics and its many theories as part of our MBA course. Both of us are still students of economics and are learning to appreciate the many nuances which each theory in economics poses to the interested mind. But when it comes to the debate between which solution - Free Market Capitalism, Keynesian Economics or Communism should be at the helm of the commanding heights of the economy, one of us - me, is not open for debate. The solution has to come from Laissez Faire capitalism. I may have doubts about how a free market solution can be achieved to a particular problem, even profess the need for certain degree of policy regulation, but it is irreconcilable to me that such a solution can be better than one which a free market can provide - in the long run.

The problem, I think, which leads people to end up believing that Free Market Capitalism is bound to fail, or has failed is the undue importance to human greed which people attribute to an unregulated economy. It is common to hear people say of the collapse of Lehman Brothers that "Isn't it obvious? When you let people indulge their greed unabatedly, there is bound to be such failures. We should restrict their blatant freedom!". But this is a knee jerk reaction. One which casts a doubt over a system based on the symptoms of the affliction ailing it, and not the cause. This is beautifully described in an article by Quinglian He, a chinese economist. When asked "Does The Free Markets Corrode Moral Character" she replies "No" and rightly points out -

"Ofcourse, the market economy is not a perfect system. But the market's flaws stem from the actions and motivations of its human participations rather from its design"

Free markets allow us to be what we are. It gives all of us a playing field where we compete based on merit and the rewards are directly proportional to the level of risk we are willing to take based on the merit of our judgements and capability. Free markets nurture the individual's rights and allow him to pursue his goals. It is also a test to his character and as Tyler Cowen points out,

"By placing more wealth and resources at our disposal, [free market] tends to boost and accentuate whatever character tendencies we already possess."

Ayn Rand wrote in her book "Capitalism: The Unknown Ideal" about the form, nature and purpose of government as being a means to protect man's right - protecting him from physical violence. It is from the person who is bound to utilize the unregulated free market for personal corruption and greed, that the government needs to protect others from. Not regulate the system itself. Any other interference by the government in the functioning of the market is detrimental. But most people find this line of reasoning a hard pill to swallow. Today when governments around the globe are bending backwards to come up with plans to 'bail out' underperforming financial institutions, it seems a far cry for anyone to keep believing in the merits of 'unabated capitalism' and the extent of greed of people who are not regulated.

But, this is again a case of assigning blame to the symptom and not the cause. It is a mistake to point blame at the capitalist ideaology for the current financial industry meltdown, because it is not under a purely capitalist system that these financial institutions functioned. Observe the conditions of pseudo-capitalism which has been at the commanding heights of every major economy in the world today. There is always an ever present creditor of final resort which each of these countries have - a central bank. As rightly pointed out by this article,

"Additionally, the only reason why the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac were able to guarantee nearly $5 trillion in home loands with merely $100 billion in net equity is that both their management and other market operators knew that the government would step in if things took a turn for the worse. Acting as lenders of last resort, the Federal Deposit Insuarance Corporation (FDIC), the treasury department, and the Federal Reserve Bank fueled the crisis by encouraging a decade of careless lending"

A classic case of a Moral Hazard where the proper functioning of a free market does not happen because the players are tempted to risk more than what their judgements and analysis lead them to believe, because a pseudo net is ever apparent to cushion their fall. Free markets punish those who make unwise decisions and reward only those who take calculated risks. Free market success stories are those which exhibit fundamental growth and true value creation as against a 'sentiment' based growth.

There are many opinions about the bailout plans which are unfolding around the world - most, even pro-libertarian ones are saying that maybe a bailout was inevitable. But interventionist solutions are unfortunately never better than what a free market can come up with - in the long run. It is almost uncanny to see how the 'bailouts' have started popping up across the world after the US Treasury department came up with the $700 billion plan. It is seen as the repercussion of the failure of the 'capitalist bastion' of United States of America and leads many an undecided mind to disbelieve the essential efficiency of a free market.

To such doubters, I can only say - please observe where you cast the shadows of your doubts. The world may not be facing this problem in the first place had the true ideals of Free Markets been adhered to. The question of greed and favouritism does not hold too much merit in a free market economy because, like Milton Friedman said,

"In a capitalist society, it costs money to discriminate, and it is very difficult given the impersonal nature of market transactions"

Viva Liberty!

Co-opetition, collusion and free markets

Co-opetition is when traditional competitors in a market form a pact and offer a single product, service or an experience to the consumers in order to avoid splitting the market shares. It is optimal when the market is saturated and further fragmentation is not beneficial to the players involved.

Can co-opetition be a good solution all the times?

Consider the case of the flower vendors outside Dadar railway station in Mumbai. The small lane where the sell their flowers is a key artery which all the pedestrians use to get to the railway station from workplaces in the Dadar area. Come a festival season, this street is so crowded that getting to the station for commuters is nearly impossible! Now, assume that people who regularly use this street all decide to work out a deal with the flower vendors.

Assume that deal is simple - the flower sellers will sit only on one side of the road thereby allowing the commuters to freely use the other side of the road. In return, the flower sellers who are displaced could be incentivized monetarily or sell their daily quota to other flower sellers who sit on the side of the road where they are not displaced at prices slightly higher than what they would sell to consumers. All these transactions are facilitated by a small association formed with participation from the flower sellers and commuters. There is no involvement from the law enforcement agencies or the government.

Unfortunately, although I am a firm believer of free markets and voluntary regulations (like the one mentioned above), the following concerns pop into my head immediately:

• The above system will work when the monetary incentive which the displaced flower sellers get is more than what they can make in the free market. It won't be business sense to be party to such a scheme if the flower seller ends up making a loss. Hence, the value of the incentive would essentially need to be above the profit of the most profitable flower seller. A threshold price which will need to be borne by the commuters.
• How would the consumers distribute the cost of bearing the incentive given? As the commuters are not a homogeneous community and there would be many who would not be willing to partake any financial cost and not mind the madness.
• Where does co-opetition end and collusion begin? The displaced and not-displaced flower sellers can soon start forming cartels and look to make profits in the arbitrage thereby offsetting the commuter's costs.

And the problems I can forsee are many more. Some trivial and some profound. What about enforcing the framework of the law on those who default? It is when I see such situations where the market is so dense and players innumerable that I feel that regulation from the government is the only feasible way out. One overarching rule which all people have to abide by and enforced by the government. Although I hate myself for admitting this, I doubt free market mechanics to be able to handle such a situation when the market players are compelled to make a profit by any means possible, so that one can feed oneself the next day.

One mega solution would be to privatize the entire suburban railway system in Mumbai. This would force the private company to make the surroundings, entries and exits to the station commuter friendly to keep up business. This would involve costs, which eventually would have to be borne by the commuter, atleast initially - and given the fabric of current Indian society, such a plan would face severe opposition. So we are stuck in between a rock and a hard place. Bold plans like privatizing the suburban railway system in Mumbai would never get off the ground because of the opposition, and even small bottom up approaches like voluntary self imposed regulations by the people who are involved in the matter is also doomed to fail because of the immense number of variables. One would need to impose a very strict 'Police Raj' to see that all these variables are harnessed - which is defeating the very premise that it is a voluntary.

What really bugs me is, how then can a society like that of India be, even gradually moved towards a free market economy from its current socialistic bent of mind. Top down, mega projects would fail because they would never get off the ground and would have to be championed, ironically by the government itself, and bottom-up approaches which would act as shining examples of how efficiently a voluntary free market regulation can work, showcasing it so that it can be adopted in other situations, also are doomed to fail due to the sheer number of hurdles it needs to overcome!

Three Dimensions of Photography

A recent article by Christopher Hitchens for Vanity Fair, commemorating the culture magazine's 25th anniversary since its relaunch in 1983 narrates the story behind the famous photographs which have graced the magazine pages over the years. The author writes, during the course of the essay

"To have once or twice worked with photographers like James Nachtwey is to have appreciated the way in which - contrary to a once cherished belief of mine - the photographic image can possess a moral weight greater than words"

Photography to me, is an exalted art form. Never in the past four thousand years of human existence had an art form come close to the pinnacles which photography has reached in the past two centuries. Photographs as chronicles of our times are a medium par excellence. Great photographs over time have captured in mind blowing detail every aspect of our lives - from daily mundane activities to avant-garde expressions of human exisitence. But the beauty of photography also lies in the abstraction they so easily impress upon their viewers. Literature poses a level of abstraction which is presented in the tone and style of the writer's language. Painting delves into a level of abstraction which is presented through the palette of the painter, sculpture in the chisel of the sculptor. These art forms are essentially two dimensional. They are either seen from the perspective of the writer, the painter, the sculptor or through the perspective of the reader and viewer. The characters of literature are moulded by the style of the writer. The painter's brushstrokes paint the emotion of the subject and the sculptor's chisel shapes the subjects form. It is only photography which allows for three dimensions in perspective - that of the photographer, that of the viewer or audience and that of the subject which is being captured.

It is true that the influence of the photographer on the subject is critical and the photograph may be in essence what the photographer 'intends' it to be. But essentially, photographs are capsules of time and essence which necessarily include in them an additional variable - the implicit nature of the subject. Be it a 'capture' of an animate character in a portrait or a 'capture' of an inanimate object like a building, the very nature of the subject is never lost in the photograph. It remains despite all external perceptions, all superimpositions it is subject to - it remains in the texture, it remains in the film grain and it remains in the exposure.

From my collection - August 2008

The story of a photograph can be told through three distinct narrations. One is the story of the photographer, who through the camera in his hand tries to capture for posterity what his eyes see. He considers the camera to be an extension of his sight, hopefully invisible to others. He hopes the photograph to be an extension of his thought, made visible outside his mind. The second story is that of the viewer. He considers the visual stimuli of the photograph and tries to fathom the meaning of the frame of time. He considers the opinion of what has been captured by the extended sight of the photographer. He tries to understand the nature of the subject. The thrid story is that of the subject - who may never see the photograph or might not have the capability of sight itself, but nevertheless has a story to tell which is expressed in the way the subject is captured at that moment in time.

I was once asked to come up with a quotation to describe photography, to put down in words what a photograph stands for. After much deliberation and thought I came up with the following-

"Look into my eyes, you may know what I see; Look at my photograph, you may know what I think!"

I won much praise for this. But I still believe that, just like prose is two dimensional in the way it can be understood, explaining what a photograph is - in prose is two dimensional and therefore incomplete. Hence even this essay here is also incomplete.

Better Humor

Humor is a rare gift among humans. The above cartoon is hilarious. Had the comic artist storyboarded it with a minor difference it would have been excellent. Here - in text - is what I suggest.

Frame 1: Employee on his bed, waking up late, on the phone telling the employer "Good Afternoon Sir! Horrible Traffic Jam Sir. Will be coming in late for the meeting, Sir"

Frame 2: Employer actually stuck in a traffic jam as depicted in the cartoon above saying "hmmm... we are waiting for you. Make it fast!"

That would really make this hilarious!

Hype Cycle of Emerging Technology and Me

Research Firm Gartner has recently identified five technologies which are about to reach the peak of the hype cycle. Hype Cycle according to Wikipedia is the

"Graphic representation of the maturity, adoption and business application of specific technologies"

I was just wondering how many of these have an impact or application on my life today.

Green IT

While I am very interested in this topic and would adopt a Green IT product if I had an option, my contribution to the 'Hype' or its impact on me (directly) is not significant. Green computing is the study and use of computing efficiently and the only exposure I have had to this are chain emails which warn us about the amount of power that can be saved by switching off the computer when it is not in use!

Cloud Computing

This is something I hear about very frequently. But despite being among those considered to be 'tech savvy' I have in the past made the mistake of thinking of Web2.0 and Cloud Computing are one and the same. Even as I write this I have not yet read Wikipedia articles about them to clarify my doubts. This according to me is a situation where innovation or 'invention' in the IT/Internet domain don't really have the same impact as 'inventions' in the classical hardware scheme of things. I recently purchased a digital transcriber which allows me to capture in digital form what I write on a paper, using this device. I am fascinated by the technology behind this and consider this to be groundbreaking in its utility. But a similar innovation in the IT/Internet domain would not be a tangible, physical product. Its utility will be manifest as an improvement in the way data is stored, retreived etc. This would result in downloading and uploading speeds to increase. Great! But the pace at which it happens has an inherent incrementality to it, which steals the shock and awe of a physical invention!

Social Networking

Now this is one emerging technology which I agree as having significant impact on my daily activity. Social networking has been pretty popular now for the past 3 years and I have been involved in various social networking sites and have actually found it to be useful in helping connect me to old friends. But if Hype Cycle peak is acheived when business application of the emerging technology becomes apparent, I fail to see this happening yet. I haven't been influenced to purchase anything yet as a result of being part of this social networking sites. Although, I can understand that information about me that the webmasters of these sites have access to, can be used to market products to me, I think I still haven't come across a such a proposition.

Video Telepresence

This is a very attractive technology, But I haven't yet been exposed to any business application which helps me use this effectively. I did see advanced prototypes of this in HP Cooltown in Singapore back in 2007, but have not had any business application of the same. But this is one technology which I can see being very prevalent, atleast in the near future - especially aided by the growth in cloud computing!

Microblogging

While I blog regularly in its traditional sense, I am yet to get onto this new phenomena of Microblogging. But some aspects of this seem odd to me. Earlier today I had an arguement with a colleague about the whole need to broadcast 'What I am Doing Right Now' to others, which is one of the main drivers behind the Microblogging buzz. I can see it as a superb tool at the workplace to replace old systems like sending memo. It is mainly facilitated through the mobile phone technology, using which most people Microblog. India with its already booming mobile telecom market is I think poised to get on the Microblogging bandwagan. I might just do so too!

Going by my dialog above, one can currently conclude that I am not really Tech Savvy. This I guess would be a victory for my colleague Freddie who claims I am an old relic who does not understand the impact of technology!

Chalta Hai...

I recently finished reading Khushwant Singh's "Train to Pakistan". I had heard about it, read the reviews, read the sunday supplement commentaries about it and seen the trailer of the movie - but never read the book itself. The thing that struck me most about the story is the fact that it is poignant even today, 60 years after the brutal partition of the Indian Subcontinent. Khushwant Singh's prose is easy to read and almost like a screenplay unfolds to the reader and comes alive. The book was also accompanied by photographs of Margaret Bourke White, the renowned Life photojournalist who covered the horrors of the great partition. The horrifying photographs of vultures feeding on the carrion of human flesh and other such, helped bring the context of the prose in morbid detail.

The characters of the book are not all perfect and there are no true protagonists or antagonists. As the prose makes very clear, "The fact is both sides (Hindus & Muslims) killed. Both shot and stabbed and speared and clubbed. Both raped", almost every character in the book has some or other shade of grey. As I read through the book and was introduced to feelings of the various characters, another thing struck me as being very true. The character of Hukum Chand, the local magistrate and most influential person in the story is according to me, representative of our collective nature - of the people of the Indian Subcontinent - the fact that we do not have high standards for ourselves.

Hukum Chand's character is one of a lackadaisical, unkempt person who does not have very high standards for himself. He is corrupt and given the circumstance and the power that he wields, guilty of not doing anything constructive. He is also stuck in a moral conflict with himself - he recognizes his ineptitude and the bad that it is leading to, but is unable to compel himself to do anything better. He ends up rationalizing that "life is like that" and one has to go on with it. This is probably the most damaging kind of rationalizing a person can do and the mojority of the populace of the subcontinent is guilty of doing this throughout our lives. We have the "Chalta Hai" attitude - which is the anchor tied against our legs.

Back in college a professor asked us - a batch of soon to graduate MBA students, a question - "What is holding India back?". After some debate about population and restrictive government policy and other such like, the professor answered his own question. He showed us students the need to be fiercely demanding in improving the quality of one's life, a spirit which he had found in people struggling to survive in post-war Cambodia - and in juxtaposition, the lack of the same spirit in the Indian psyche. Most of us were moved by this and spent sometime debating and discussing this topic. But soon the hullabaloo of the topic waned and we were all consumed in the pursuit of academic requirements. Most of us now have comfortable jobs and are settled in the pursuit of monetary rewards and the topic is all but lost as one good presentation during the MBA course.

As I read the book, I have realized that it is the nature of Hukum Chand and truly that of the majority of our populace is the main cause of our being backward and toothless. And toothless we are. Consider the issue of our national security. A few colleagues and friends of mine were recently having a conversation about the spate of bomb blasts which has hit our metro's in the last couple of months - Jaipur, Bangalore, Ahmedabad, Delhi. Soon we realized that there is probably no other part of the World today, apart from Iraq where there is a full scale war, that there are bomb blasts every other day and the response or the action to curb it is not even registering a blip. We as a nation have come to accept this sorry state of affairs as just another incident and "Chalta Hai" attitude is manifest.

I live in Mumbai and commute everyday to office on the local suburban trains. The passanger carrying capacity these trains according to estimates is around 1700 people. A recent survey estimated that more 5100 people occupy the space meant for 1700 people during rush hour. The conditions of the trains are bad - one is barely able to find a foothold into the train at most times and many people hang on precariously at the edge and on the roofs, but very few people are committed to do anything about it. One soon realizes that there is no other viable alternative for getting from one place to another, without burning a hole in one's pocket or loosing a lot of time. The traffic is so bad that one ends up rationalizing that travelling for a short time with one's face directly in the next person's armpit on the local suburban train is better. According to statistics around three people die everyday in cases related to the Mumbai suburban train system and the effort to solve this horrendous situation is hardly visible. The number of people falling off trains and getting seriously hurt are innumerable - I happened to witness one such incident earlier today morning - but we hardly are bothered to improve the situation. In fact, the reaction one is more likely to hear about the Mumbai suburban railway is, that it is amazing that despite all these problems, it still manages to run and ferry millions of people to their destinations everyday1 The "Chalta Hai" attitude is manifest here in the fact that we dont have demanding standards and the alternatives are so bad that we are okay even with the despicable conditions.

And this attitude has a the same nature as a contagious disease. We are 'okay' with people defecating all over the railway tracks and footpaths - afterall these poor people do not even have a place to stay - and we are also 'okay' with our kitchen refuse to be thrown just outside our own front doors. We have only recently started getting water in our taps, so we need to adjust if the government cannot organize garbage disposal yet. And this attitude also makes us accept multiple bomb blasts as something borne as a result of India's muti-ethnic populace. We always seems to be under the misconception that we need to adjust with what we have or what is thrown at us - but fail to realize that once we have accepted this, we will always get only what is thrown at us.

Another thing which is common to our response to all the bad things that happen to us is a display of rage - usually misdirected. I can recollect an incident of arguement with my friends over an alleged case of racism against us Indians in foreign countries. The reaction to such a situation was rage and anger directed at the foreigner. The arguement which I had to this reaction was that, rage against a racist remark is futile and it was as if "I can't do much about the fact that I am being racially abused, but as long as I can react to it by being angry its okay". This for me is another manifestation of the "Chalta Hai" attitude as being angry and retorting to someone will not help solve the situation.

The crux of the problem with the pschye of a majority of Indians is that we do not set high standards for ourselves. We are in moral conflict with ourselves because of this and to make up for the lack of standards we have developed a pseudo sense of bravado which demands us to react to situations and expect some counter reaction. All the time we are hoping that something or someone will step up and make the case for us and show us the path to betterment while always accepting what is thrown at us. This according to me is the main cause of India's backwardness.

Sad demise of the 150 year old Brothers...

From the Economist:

EVEN by the standards of the worst financial crisis for at least a generation, the events of Sunday September 14th and the day before were extraordinary. The weekend began with hopes that a deal could be struck, with or without government backing, to save Lehman Brothers, America’s fourth-largest investment bank. Early Monday morning Lehman filed for Chapter 11 bankruptcy protection. It has more than $613 billion of debt.

I think this photograph is heart wrenching.When whole financial systems are crashing based on investments in dubious assets, this small time trader finds his most valuable asset - the people who are his main customers, lose their lunch money! Sad, sad day! (The article here)

Push Cart Coffee Guy in front of Lehman Brothers HQ in NYC

An Example of Perfectly Competitive Market Condition

A market condition where no buyer/seller has market power - ability enough to influence the price at which a product/service/experience is sold, is called a perfect competition. Such conditions are not very common as there is a tendency for cartelization and the market condition usually becomes a oligopoly. But, I think there is one market which is a superb example of a perfect competiton example - the festival offerings market near Dadar Station in Mumbai!

The Ganesh Festival is currently underway and everyday as I walk to office walking amidst the bustling market which sells everything from flowers and incense sticks to toys and sweets, I cant help but be amazed at the number of buyers and sellers who throng these markets. There are many 'firms' which are selling 'homogeneous'- identical products and innumerous buyers. Also, anyone who wants to sell flower garlands or homemade wicker baskets can find a spot on the road and set up shop - very low entry barrier; well, there is a threat that some goons or a police guy might object to you sitting in that particular spot - but finding another spot nearby will not be difficult. All these conditions indicate towards a perfectly competitive environment.

I did a small dipstick survey to test this hypothesis the other day. I went around asking prices for one yard of a flower garland. The market can be classifed into three distinct geographical locations- as the sellers who are close to the entry of the rail station, those who have set up shop under the flyover and those who are on the pavements on the roadside. The price was uniformly in the range of Rs.6 to Rs. 6.50 for one foot of the flower. This price was probably on the lower side as I asked the questions in the evening and the quality of flowers was not as good as in the morning. Those under the flyover whose product was safe from the rain and sun during the day asked for Rs.6.50, but the number of people buying from them was much lower (This could also be because the area under the flyover is limited and the crowds feel suffocated). The ones near the station entry had poor quality products - dried out flowers. Probably because of the sheer number of people who move in that area during the day and the heat. The ones on the roadside pavements had the bulk of the business and uniformly charged Rs.6 for one foot. I asked quite a few people on the road for the price and all of them concurred with this amount.

I tried demanding, for a foot of flower, to be sold at Rs.4 and found nobody willing to sell. Market information is also high among the producers (another classic condition of a perfectly competitve environment) and they know that no other in that market would sell to me at Rs.4 and they are willing to forgo my business not offer an attractive price (Although, the quantity I was consuming was very small, I doubt if they would have budged from the price had I mentioned even a bigger volume of purchase). On the other hand, although there was no way for me to test it, the information of price and quality was high among the buyers also. Most of the people buying were women who are streetsmart and have an 'andaz' (right estimate) of what needs to be paid for the product.

This is an interesting market to study economics in. The dynamics of the market are purely competitive. I wish I could have spent a longer time in the market to see how the price transition from Rs.10 per foot in the morning (estimate), when the flowers are fresh to Rs.6 in the evening happens and where amongst the three geographical sections of the market does this happen. Is this price an equilibrium price which comes after fluctuations or is it a straight drop in price. This could be an interesting school assignment on economics if someone is willing to spend sometime in all the grime and brave both the rains and sunshine!