Business to the Buddha

Tag: Joseph Stiglitz

  • Has the time for this idea come?







    When I wrote Problem of top 5% blog I was little too concerned due to various reasons. One was, I – being a centralist – am not a good judge of the situation in completely capitalistic societies. Second was – I myself was at the center of the example. How can I judge myself. I may get biased was the very obvious possibility. I shared the draft with Prof Mankad, again various reasons. He knows me, he has lived in the US for many years, he is an economist etc. His response was –

    QUOTE# – The solution lies with top 5/10%. Regulators – teachers, principals – also bank on 10% and would not want to do anything to hurt them. (Refer to a very long article in Huffington* Post yesterday -26th Sept 2014 – on ‘culture’ at FED NY to ignore the trespasses of Goldman’s.)
    With current socioeconomic yardsticks of success, it will take time for the 10% to shed their arrogance. The society may attempt to generate a social consciousness to move away emphasis (not d-emphasise) top 10 %. Can we start with admissions to prime colleges? Take an honest, mathematically random system of selection of say 50 from top 500? Such a system would retain the academic standard and defuse the arrogance of top 50 and perhaps reduce the commercial exploitative practices of coaching classes.
    Same practice may be chosen in recruitment of employees. (And perhaps in selection of brides!) [that “bride” part a “late cut” – as Prof Mankad calls it 🙂 – on me]
    This would be revolutionary. Who will start the revolution? UNQUOTE

     

    So the possible solutions Prof Mankad suggested starts from the top. Top 5% or 10% need to shred their arrogance (read Problem of top 5% a figurative real life example of representing our society, economy and even schools).

    An interesting case happened recently in India. A Gujarat based Jeweler – Savji bhai – has gifted generously to his employees this Diwali. Apparently he is a standard 4th dropout! Mahatma Gandhi used to say what Prof Mankad suggested in his opinion – “…the wealth of the owners is distributed among the workers and when this situation is arrived at, only then would India grow in real terms…”

    According to reports Savji Bhai has given Diwali gifts based on a loyalty program, so even though he did not study typical “Employee Engagement” and “Loyalty Marketing” or any other jargon of an MBA. Additional interesting this is – he supports pilgrimage of his employees families, has made stadium in Surat.

    Just to conclude – Mahatma Gandhi said wealth distribution as the way for Swaraj, Top 5% are hoarding the wealth (reference Dr Joseph Stiglitz) and even Govts are afraid of top 5% so we have a creative solution which Savjibhai experimented with recently. Has the time for this idea come? Wish we see Business and the Buddha co-exist positively to make this world a better place to live and be enlightened.

    NDTV interview (I am yet to watch it though)

    Savjibhai in a brief speech (Gujarati) 2012 – when not many people knew him.

     

    Note –

    # The blog Problem of top 5% was published on 11th Oct, draft created was on 26-27th Sept. Prof Mankad shared his opinion on 27th Sept.

    * I read Huffington Post article which Dr Mankad referred, however currently not able to get that link, so here is related link – http://www.propublica.org/article/carmen-segarras-secret-recordings-from-inside-new-york-fed

  • Problem of top 5%







    screen shot 2014-09-28 at 2.32.00 pm.pngWhen I was studying in 12th, I had hoard of intelligent classmates. About 10% of the class was very good in Mathematics. We had completed a couple of chapters of 12th Math in advance. When these chapters were discussed in Math class session we did what we could do the best. We were wicked – as any smart fellow can be – we used to solve these problems in no time before rest of the 90% could even understand the concept. Than we used to start discussing the topic between/among ourselves. Our teacher used to be disappointed, she could not tell us anything – as we had solved the problem, we were discussing the problem (how to solve it faster and not a movie). She used to feel that she is missing on her responsibility of teaching the concept to the rest of the class.

    We were wicked, we were intelligent, we were brutal (for our other classmates) and we were trying to make as much out of our class time that we can be more competitive. The reason was whole of our class was preparing for State Pre-Engineering Test (MPPET) – 19 or 25 of us made it to Engineering out of 70 students  (which was a record for school). My friend and me were among some toppers! So, we were doing whatever we could do to get to the topics which were tough for us. One way was completing other topics faster [because we were not able to force the teacher to start topic of our choice].

    Just to give you an example – Teacher was teaching Probability theory, we used to solve the problems in no time, as most of us (the 10%) were good in that. Probability otherwise was not a simple thing, so 90% were trying to grasp the concept; we are already talking in class. The 90% used to get hassled & were not able to understand whats going on! Ma’am was little too supportive to us – we were at the top! We (the 10%) wanted to finish Probability quickly and go to Vectors and 3-D Geometry. We were learning that ourselves and wanted to support our learning with class sessions. This nonsense kept on happening starting Calculus to XYZ to Probability sessions. After a while, Ma’am realized that these guys are beating the system. The “probability” of same happening in Vectors and 3-D Geometry session was increasing day by day.

    One day before start of the mathematics class, she called us (the 10%) of the class in a different class room. She told us – in as simple words as she could – “I know you people are intelligent, I appreciate it. You are very good at Mathematics. But you know what? I have a responsibility to teach the other 90% of the class as well. I would suggest you people to abstain from class for next couple of days, because this will help your other classmates to learn better!”

    We were not able to understand her this very simple message or a very polite order. We felt she was being sarcastic. We started being more regular. Kept on beating the system. Even the Principal could not do much as everyone in our school knew – all these people are “actually” toppers whatever subject you take. This happened in 1996-97 during our class 12th.

    Now, I am revisiting that time and thinking to replace – teacher & whole school staff with the Govt of any nation. We (the 10% of us, toppers) with the top 1% or 5% of the wealthiest/powerful of that nation. Rest of the 90% of my classmates as rest of the population of the country. Did you see any ways the top seated people are beating the system? If no, please re-read the story I narrated above. Change the situation – now do you think the teacher/principal (Govt) needed (needs) to do something different? Something to perform their duty better and manage the wicked, intelligent, smart, brutal and selfish “we the top 10% students” (the top 1% or5%)

    This is the problem of top 1% or 5% or 10%, they want to maximize their own profits, most of the times beating the system. Sometimes, we need to think – if I produce something, there should be enough money in market so that my prospective buyer can buy what I produce.

    At times, its about collectively growing!

    Disclaimer – The author could – at best – secure 2nd position and remained in top 10% most of his academic career.

    Image source – http://static1.businessinsider.com/image/542851c7eab8ead666120b0a-619-457/screen%20shot%202014-09-28%20at%202.32.00%20pm.png

    If you have more time read this – http://www.businessinsider.in/Cash-Hoarding-Is-A-2-5-Trillion-Problem-In-Asia/articleshow/43753643.cms

    Note – Check image above Corporate Cash Holding in Japan and Japan’s economy – read recent blog – Did Keynes fail Japan?

  • Moral markets!







    Do markets have morals? When I read Mr Rajeev Mantri’s article “The morality of markets” (Link) in the Livemint, I asked this simple question to myself.

    Various things came to my mind – i. financial meltdown(s) there are numerous examples of past; namesake recent one in 2008 ii. real estate bubble (again namesake – Mumbai, I have read of similar bubble in China) iii. stock market speculations (working on scrips – I think in India markets traders call it scrip चलाना) iv. crony capitalism*. All these thought made me think the title of the article itself is an oxymoron.

    I am not against free market economy, I am neither a leftist or socialist. When it comes to economics (and politics) I prefer to take the middle path. Just to give you a perspective on why I am not completely agreeing to the point of view of Mr Mantri, watch the following video (reference – my Oct 2013 blog – The Price of Inequality) –

    [youtube=http://www.youtube.com/watch?v=QPKKQnijnsM]

    Capitalism has its own’s problems, and morality is questioned more often in those economies – be it environmental damages, besides few points I raised above. I believe we should not assume development that happened in the US/Europe as the only way to grow and to prosperity. In fact, we have written records of prosperous India even before anyone knew of USA. We have history of Utopia – Ram rajya. How was it achieved? Do not you think we should try to study that as well? There are more ways than the Left and Right approach we take.

    Coming back to the article of Mr Mantri – he concludes with India having billions of dreams. I do not doubt but here my difference with our own culture comes as a stumbling block. I do not appreciate the Caste divide and therefore disagree with Mr Mantri there – there seems not to be many diverse dreams. For ages we stifled dreams by asking kids to follow a craft or business of his family caste system of old days. These things are bringing me to some circular logic – where I suggest to study old Indian economics and refute social Caste system. What is circular logic? Listen to this song you would understand – (apologies those who dont understand Hindi, it is in Hindi) –

    [youtube=https://www.youtube.com/watch?v=mchDikR-AAw]

    paisa kamane ke liye fir paisa chahiye.

    Paisa kamane ke liye fir paisa chahiye – Golmaal hai bhai sab golmaal hai…

    An English translation of this song in some future blog.

    Note – * Crony Capitalism – “Gas wars” a recent book in controversies is in my reading list.

  • The Price of Inequality







    I have read Dr Joseph Stiglitz. He is a Nobel prize awarded economist. The book I read first was Globalization and its discontents and recently I started reading The price of Inequality.

    I realized that Dr Stiglitz may not be the so called capitalist economist, he is capitalist but with a touch of a Just and relatively Equal society. So, when I started reading “The price of Inequality” I started wondering what kind of wealth difference exist in the US. Since, I have never been to the US so the picture of the USA I have always created is – no poverty, everyone having enough and more to not only survive but also a lavish life, a home with front garden, a car parking (of course too), wonderful interiors of the home etc. This picture is largely because of the Movies we watch – on a lighter note Hollywood is responsible for that ;).

    Well, while reading the book, I came across a video on Facebook (watch below).

    [youtube=http://www.youtube.com/watch?v=QPKKQnijnsM]

    Though, some may argue this video is shared for more socialistic reform e.g. healthcare reform, but that is not the point of contention for me. Watch Margin Call to understand the point of view of the bosses of the investment banks – well to sum up “They do not care! Everything will be fine in sometime.”

    My perspective is not a fight on any economic approach e.g. socialism Vs Capitalism, I favor inclusive growth and I believe for achieving that we need to follow a middle path wherein a mixed approach be used.

    Read my previous blogs related to the book – Globalization and its discontents

    Blogs here

  • #CoalGate, corruption, politics & economics







    A few days back I completed this book Globalization and is discontent by Dr Stiglitz, a nobel laureate. I wrote on that recently – Interdependent co-arising a macroeconoics example. Besides this macroeconomics example, I had this intra-country example of the same concept of interdependent co-arising. Stiglitz has written so many things more than 10 years back which are happening in India currently. However, here I am just interested in quoting a small part of the book which relates to the corruption of coal mine allocation in present day India. This example is from page 71 of the book –

    …

    There is more to the list of legitimate Complaints against Foreign Direct Investment (FDI). Such investments often flourish only because of special privileges extracted from the govt. While standard economics focuses on the distortion of incentives that result from such privileges,  there is a far more insidious aspect: often those privileges are the result of corruption the bribery of govt officials. The Foreign Direct Investment comes only at the price of undermining domestic processes. This is particularly true for investments in much oil and other natural resources where foreigners have a real incentive to obtain the conversation at low prices.

    Moreover such investment have other adverse effect- and often so not promote growth.  The income that mining conversation brings can be invaluable but Development is a transformation of society. An investment in mine – say in a remote area of a country – does little to assist the development transformation, beyond the resources it generates. It can help create a dual economy, an economy in which there are pocket of wealth. But this duel economy is not a developed economy. Indeed, the inflow of resources can sometimes actually impede development, through a process that is called “Dutch disease”

    …

    So effectively, what Stiglitz said was bribing of officials for mining in developing / undeveloped countries. Further, the dual economy this FDI may create is not best for country to develop. I would take this example of Dutch disease in my next post – “Business to the Buddha”.

    Here what I want to highlight is this – the current issue in India – #CoalGate scam is a clear example of what Stiglitz wrote more than 10 years back. Indian Prime Minister – Dr Manmohan Singh – being an economist might have been aware about this and perhaps therefore kept Coal Ministry with him. This is just an extrapolation. Otherwise why would Law ministry and Law minster would want to change parts of report? According to the Supreme Court of India, the changes are Heart of the report.

    After reading the book – Globalization and its discontents – I realized that Stiglitz is not against Globalization but against the way Globalization is happening. So, when you read the above part, you should not infer that Stiglitz is against Globalization.

  • Interdependent co-arising – macro-economics example







    I hae written on Interdependent co-arising (older blogs at the link) earlier.  The concept simply means – we are all dependent on each other.

    Those who want to know the concept in layman term follow this blog – interdependent co-arising example of a farmer.

    Definintion of interdependent co-arising is below with a macro-economics example. In late 90’s the East Asian countries faced a very serious economic challenge of decades. The financial system came down like a house of cards. Dr Joseph Stiglitz – Economics Nobel Prize winner of 2001 – shares the concept of interdependent co-arising (dooming in otherwords) in his book  – “Globalization and its discontent“. On Page 106-107 he invariably – and inadvertently perhaps – explains what is interdependent co-arising. Hope economists would understand this lesson, if not from the Buddha then from Dr Stiglitz.

    Beggar-Thyself Policies

    Of all the mistakes the IMF committed as the East Asian crisis spread from one conuntry to another in 1997 and 1998, one of the hardest to fathom was the Fund’s failure to recognize the important interactions amont the policeis pursued in the different countries. Contractionary policies in one country not only deepened that country’s economy but had adverse effects on its neighbors. By continuing to advocate contractionary policies the IMF exacerbated the contagion, the spread of the downturn from one country to the next. As each country weakened, it reduced its imports from its neighbors, thereby pulling its neighbors down.

    The beggar-thy-neighbor policies of the 1930s are generally thought to have played an important role in the spread of the Great Depression. Each country hit by a downturn bolster its own economy by cutting back on exports and thus shifting consumer demands to its own products.A country would cut back on export by imposing tariffs and by making competitive devaluation of its currency, which made its own goods cheaper and others countries’ more expensive. Howeer, as each country cut back on imports it suceeded in “exporting” the economic downturn to its neighbors. Hence the term bagger-thy-neighbor.

    …

    Solution to all these economic, social, personal, spiritual or other problems?

    Its interdependent co-arising itself. We all need to help each other grow – grow the pie and share it well, if not equally!

  • MBA is not about Money, Blazer, Arrogance







    Recently one of my friends – Krishna Kranthi has written a novel – “MBA is not about Money, Blazer, Arrogance“. Generally I don’t read fiction but the title of the novel made me read it. It is an interesting read and good authorship for a first time novelist. I liked it so much that I almost completed it in single reading. Many MBA students feel the same as the protagonist in “MBA is not… “. Only a few not only think but also write about it. Yet only a few not only write but also live the lessons learnt through this soul search, Krishna is one. Take an example – whatever small profit earned through the sell of the novel would go to an NGO. A very noble cause – who and how many think and act like that?

    In the novel, the protagonist asks pertinent questions. The protagonist – somewhat confused and a lot more explorer – is trying to search for the real purpose of the MBA. If I take the freedom to extend the realm – searching for the real purpose of life! The book is very good read for all students (not just MBAs) – it may help them find the objective for doing what they are doing?

    When I am writing this, I am reading “Globalization and its discontents” by Prof Joseph Stiglitz. I see through these books and connect the two things. I realized that there are more things beyond the ivory towers of AC rooms and excel sheets of calculations (as we MBAs are generally absorbed in). That something is – the drought stricken Marathwada Maharashtra (read Mumbai mirror Sunday 17th feb 13) etc. There is hope, there is opportunity for all of us to think beyond our own small goals. The opportunity to do something good for the society as a whole.

    —-
    There are two kinds of people. The Preservative and the Transformer. The Preservatives are trying to protect the status-quo, while the Transformers are trying to do something new update / innovate / improve and do something worth for self and society.

    I see a transformer in Krishna a different fellow who is different from the preservators. Who has asked few core questions for education (MBA). I think readers can find their own selves in the protagonist of novel and do some soul searching while reading the novel.