Introduction
This book explains the difference between what people hear and what actually the truth is. My motivation to write this book started when I was forced to step back into the so-called emerging world, and to struggle to look for opportunities there, when I had once already tasted the comfort of the developed world.
After listening to all the growth stories, and the hullabaloo about the emerging world, I was almost beaming with some kind of excess pride that I belonged to a part of it. But, I was almost always confused whenever the Professors boosted an emerging market in the class. The projections would go straight, without any pause or haste, until 2050 or beyond. And then, in the same breath, they would continue to say that the growth is ‘sustainable’ and that the time is not far when India would become a Superpower or when China’s economy would surpass that of US. There were absolutely no second thoughts about it, before anybody could even start to ponder or doubt if all this was realistic, we were already there in the future, discussing how differently the world would then be operating, and how rapidly is it currently changing.
Enthralled, excited, and equally confused, I would always ask myself at the end of the class – “But it has been only 6 months since I came here, how on earth could a place change so much so soon?” Probably, the problem was that I was instantly visualizing almost anything anybody would use to describe how India would look in another 25 years, or China in another 10 years.
Well, probably I was destined to get a chance to validate all this using my own senses. And really, I regret to say that I cannot. The world is not the way you hear about it, it is quite different from what it looks to be. When I say ‘looks’, I refer to the way individuals ‘visualize’ it to be after they hear any such growth stories. In fact, in one of my classes, I noticed that after much had been said about China early on during the class, an American student could not resist asking our Chinese teaching assistant – “Shanghai must look just like New York, right?” The TA was apparently going back on vacations to Shanghai.
So, what was it that I experienced as to invalidate any such story? When I went back to Mumbai, India from US, and stayed there for 6 months, I felt and realized that though the growth numbers may be true, the reasons behind such growth are not strong enough to confidently say that it is sustainable. Yes, there is no improvement in the state of the common man. More importantly, the way people think and the approach they carry towards life is still far from satisfactory. In fact, at some places, it has only deteriorated.
This book is a sincere effort to get these things straight in the mind of the ‘Visualizers’. However, this book does not stop here. After developing an understanding of this World, there is some reverse-engineering to get to the roots to help us to live a better Life, the requirement for which would be to simply understand it. A better understanding of Life would lead to a better World. Thus, with the consent of you all, I shall proceed to explain how we can connect these two via understanding Spirituality to enhance our Philosophy and thus, improve Reality. Everything falls under these 3 categories – they are absolute.
I want to keep the Introduction very short, but it is very important for me to mention that the main focus of this book is upon the ‘Importance of Common People’. There has been a deliberate effort to focus readers’ attention towards the role of common people in the formation of a society. The quality of a place is best adjudged through speaking with a common man in any locality.
The way in which a common man thinks and behaves is the result and directly proportional to the sincere effort put by the people in power to change or enhance various systems and policies. India has been mainly picked up as a representative of the so-called emerging world, and it is evident with various examples that there has not been much improvement in the standards and quality of an average Indian.
This practical and qualitative insight is then put into contrast with the quantitative analysis in terms of various growth rates and sustainability of this growth that is falsely believed by the society. It is not society’s miscalculation, but rather a result of lack of practical and in-depth understanding of the experts who produce these growth rates from outside India, insufficiently based upon their otherwise large and extensive research teams.
This realization is expressed in terms of the term called, for the purposes of this book, ‘root-cause problem’. Finally, the fixation of this root-cause problem is believed to produce, what is termed, ‘Real Progress’.
The nature and the characteristics of this ‘Real Progress’, when put in contrast with the double-digit ‘Growth Rates’, at which such countries are believed to be growing (or, in other words, progressing), is debated, and, in fact, contradicted.
This is done via various chapters, which, in my view, are inputs towards developing a better understanding of this Life and this World, which if understood, results in Real Progress of an individual’s life, a society, a state, a country, this world, or any such biggest set that would encompass everything - something that is absolute.
Thus, towards the end, there is an attempt to explain the absolute in a different way via the only 3 broad ingredients that form the Absolute – Spirituality, Philosophy, and Reality.
Finally, I would like you to note that though the first and the last chapters are based on highly personal experiences, they represent a very broad but deep thinking, that are two extremely important ingredients towards understanding this life and this world.
In fact, I would not fret to say that the above two, in my opinion, are the two ‘most important’ ingredients. If you have had a chance to experience them by your own self, I am sure you already agree with me, but for those of you who have not, which of course shall form the majority, I have made a serious and deliberately detailed attempt to do so.
Chapter One
Integrity
Well, the simple reason I have started my book with this chapter is to introduce myself to all the readers. Yes, I was charged with an Academic Integrity Allegation during my MBA final semester at my B-school in U.S. Before I proceed any further, I shall first declare that the charge, if seen only with the legal lens, seems fair and correct. However, I still refuse to accept the charge!
Strange, right! You must be thinking – “What the hell! I wasted my money buying this book, just another story from a frustrated soul!” Wrong, keep reading; this book has much more to offer! The reason stated above may have been ‘my’ reason to put Integrity as the lead chapter, but certainly this word also attracts many more important reasons as to why it should be treated as a priority while operating countries, corporations, universities, families, and even one’s own self!
However, my disappointment and cause of refusal to accept the charge is not the result of any disagreement with the amount of importance that is attached to this word in today’s world! In fact, I very much agree and support the idea of treating it as a top priority! Rather, I am very disappointed with the lack of effort and initiative that is taken by the authorities to make it crystal-clear as to what they mean by Integrity, and how they would like their employees, students, etc. to interpret it! They should also stress on the dreadful and adverse consequences and results that any such Integrity Violations may bring along with them, stating any previous examples! In fact, before all these corporations place those huge boards with unclear, imprecise and almost identical ‘Mission Statements’ at their respective Convention Halls, they should first put down, in bold letters, their interpretation and definition of the word ‘Integrity’, and a very clear message as to what their expectations are from their employees, customers, suppliers, etc. on this account!
Jack Welch, the former GE CEO, in his famous book Winning, refers to ‘Integrity’ as something of a fuzzy word! However, he also happens to give the most holistic definition for this word I have ever come across! No doubt, it may be the most sensitive, and thus difficult, word to define in English vocabulary, but I could not get any better than Jack Welch in defining the almighty! “People with integrity tell the truth, and they keep their word. They take responsibility for past actions, admit mistakes, and fix them. They know the laws of their country, industry, and company – both in letter and spirit - and abide by them. They play to win the right way, by the rules.” – says Jack!
Let us concentrate on the part that says ‘they know the laws of their country, industry, and company – both in letter and spirit – and abide by them’, and analyze it a little further! True, one should know the laws of one’s habitat, but the very fact that he has been made part of the habitat explains that he is already found in tune with, or apt for, the status. Then, why not work along with him, and make sure that all laws, byelaws and regulations of the habitat are thoroughly understood by him, both in letter and spirit!
And then, you shall experience that you hardly come across any such Integrity Violations, provided your selection criteria for inhabitants is sound at the very first place. Because if your selection criteria is sound, then the only reason the inhabitant may end up breaking rules of the habitat is if he was not aware of any, as otherwise he would never do it intentionally!
The point I am trying to make here is that it is just as important to make your people aware and thorough with all possible actions that may result in violation of the respective laws, including the measures one can take to avoid any such violations, as it is to induct the right and ethical people at the very first place.
Another extremely important reason why you should be very careful before taking any such decisions is the severe consequences that they bring along with them. To say the least, as it always happens, both sides may try and blame it on each other, but really, it is embarrassment for both sides!
Jack Welch has also talked about the causes and consequences of firing people in his book! He starts with Integrity Violations, and this is how he puts it:
“Integrity Violations are no-brainers. In such cases, you do not need to hesitate for a moment before firing someone or fret about it either. Just do it, and make sure the organization knows why, so that the consequences of breaking the rules are not lost on anyone”! Who disagrees with that, nobody right! And even if you do, you would prefer keeping shut, isn’t it!
Actually, it is true that there is nothing much to disagree with what Jack says! But there are 3 broad reasons, that when things like Integrity come into picture, you should not take it blindly at its face value, but rather try and provide fair opinion and justice, missing which, any wrong decision can be excruciatingly painful for either one of the sides involved! The 3 reasons are as follows:
(1) First, given how sensitive any such case is, many avoid any involvement with it rather than making sure that they are strictly adhering to it! This ends up in only promoting the activity, which in itself can be seen as unethical on the part of people who choose to ignore it! Below are some facts taken from plagiarism.org that shall support my point:
A study conducted by Ronald M. Aaron and Robert T. Georgia: Administrator Perceptions of Student Academic Dishonesty in Collegiate Institutions found that 257 chief student affairs officers across the country believe that colleges and universities have not addressed the cheating problem adequately.
According to the Gallup Organization (October 6-9, 2000), the top two problems facing the country today are: 1) Education and 2) Decline in Ethics (both were ranked over crime, poverty, drugs, taxes, guns, environment, and racism, to name a few).
A national survey published in Education Week found that 54% of students admitted to plagiarizing from the internet; 74% of students admitted that at least once during the past school year they had engaged in "serious" cheating; and 47% of students believe their teachers sometimes choose to ignore students who are cheating.
And although many instructors are aware of the problem, most feel powerless to stop it.
A study conducted by Donald L. McCabe titled Faculty Responses to Academic Dishonesty: The Influence of Honor Codes found that 55% of faculty "would not be willing to devote any real effort to documenting suspected incidents of student cheating".
"With respect to cheating, I'm just in denial. I just don't want to deal with it because I know it is a huge problem." -- San Luis Obispo professor, as reported in Net Learning.
"Who wants to sit around looking for websites trying to find out if a paper is plagiarized or not... pretty soon you're a private investigator." -- a Stanford University professor, from an article in TechWeb News.
"[Plagiarism] is one of those areas in the academy that no one wants to talk about and is often rewarded for not addressing actively." -- an Associate VP of Student Life, as posted in The Chronicle of Higher Education's "Colloquy."
"Too few universities are willing to back up their professors when they catch students cheating, according to academic observers. The schools are simply not willing to expend the effort required to get to the bottom of cheating cases" -- as stated by The National Center for Policy Analysis.
Thus, to make sure that we are being fair, we should always delve much deeper into any such Integrity issue, and before making our decision, should completely understand as to what is the general atmosphere and mindset of people within the concerned community, institution, organization, etc. towards such issues! We can also crosscheck this with finding out if a fair and regular check is being kept over such activities, or is it that such activities have generally been noticed, but still ignored!
(2) Second, let me point out to a very critical fact, which is inherent in almost all Integrity cases – Always beware of who is reporting an Integrity Violation and against whom! Is it a Professor-Student relationship (or vice versa), a Boss- Subordinate relationship (or vice versa), one colleague against the other, etc.! We should always take very special care when evaluating the past relationship on a personal or professional basis between the two parties involved! I shall try and address this point with my very own personal experience:
*“The allegation against me was filed by my Professor, with whom I shared a student – professor relationship for 1.5 years by then! I had taken one of his courses earlier, and though managed to impress him early on, could manage to finish the course with only a B! I was pretty vocal during class discussions, and worked hard towards the subject! Though he sensed my commitment and passion towards the subject, he probably saw some lack of professionalism! Also, since he built his career in Investment Banking, my most desired field of work, I continuously looked out for his advice, but never really got a wholehearted response! In fact, many a times he ignored my requests and was plain arrogant! Then, during the last semester, I registered for a Finance course thinking that some other Professor is teaching it! Unfortunately, it turned out that he was conducting the course for that semester! He was very indifferent and arrogant to me during all the semester, and even made some false promises! For example, when I once walked up to him to seek his counsel on preparation for an upcoming interview, he promised me some material, which I never received! I once also asked for a Recommendation from him, for whom he took a weekend to decide and, of course, at the end said ‘no’! The refusal was not my problem at all, but what kept me wondering was why he would take a long weekend to decide to say a ‘no’, when I already indicated that I was short of time, and that it was urgent! To give another example, he had posted a link for the purpose of discussions on the course matter electronically! The link could be accessed by all students registered for the course, and was a good way to clear out any doubts, or discuss in general! Several times, students ended up posting any such comment, which he thought was inappropriate, and thus he respectfully indicated the same to the concerned student through the electronic discussion board itself! However, once, when I posted one such message to which he had some objections, he was plain rude in his reply, and even then alleged me with breaking Integrity rules and the like! He was not even considerate enough to call or email me to discuss it personally, and rather posted it on the discussion board, for all to see! At that point, it was enough! I never posted a message again and he had already lost most of his respect in my eyes, and I never again treated him with all the respect I always did!
Now, coming to the real incident - He required each student to do a case study on any such company which the student thought had created value over the past few years. I picked up ‘Goldman Sachs’ – Goldman Sachs is my dream company, and he happens to be an ex-employee of the company! Even when I chose this company at the beginning, he had some inhibitions as to my example of Goldman Sachs as a company that had created Value, which sounded extremely odd to me, since nobody who is even remotely familiar with the Financial Services industry doubts that Goldman has consistently created value for its shareholders, whereas he having worked in it for 10 years, coming out as a Vice President, surprisingly doubted this otherwise known fact! He served at Goldman from 1986-1996, and sometimes I wonder if he got laid off, as Jon Corzine, the new Chairman at Goldman in 1994, gave effect to lay-offs in 1995, soon after he came into power! I also wonder if the company regarded him well, since it normally took 8 years on average to make it to the Partner-level in those days, when Goldman was private, but he came out only as a VP even after 10 years of service!
Thus, looking at any such allegation by itself without appropriately probing into the relationship between the suitor and the plaintiff may make it look as it is not!
*(3) Last but not the least, it is also extremely important that you select a right team/committee comprising of your most reliable people, to take decisions on the case! For example, in my case, to maintain fairness, the committee comprised of an equal mix of 2 students, 2 administration people, and a committee chair! They had put MBA students to make sure that fairness is maintained at all levels! However, I had personally seen one of those 2 students who happened to be in my section in the first semester, cheating in a Finance mid-term exam! I could not have raised any such issues, and rather felt helpless when she was given the authority to decide my fate! ‘Unfair’!
Thus, a very special care should be taken while selecting members to form committees related to Integrity issues, and each committee member’s relationship with the suitor and the plaintiff shall be adequately adjudged! In case any feud is known to be present between any of the committee members and the suitor/plaintiff, there is no harm in forming different committees for different cases!
I will provide you with 2 pieces of documents, one before and one after the incident, to reflect both upon both how exhausting and complex it can get while you are into it, and also how harmful and heartbreaking it can get if decisions are taken against your favor! Not to forget, sometimes it can get really unfair (as stated in (3)) and, thus, revengeful as well.
First, please find enclosed the letter I sent to the administration in my defense, after the allegation had been filed against me! This letter pertains only to the incident:
*To: Diana Beck
From: Gaurav Joshi
Date: April 28, 2006
Re: My work has been completely misunderstood
I have read Professor’s allegation report against my paper on ‘Goldman Sachs’ finished under ‘Financial Strategy and Value Creation’ course. Before I move forward with my defense, I must say that I am extremely hurt and harmed to know that my sincerity and passion to learn the industry and the firm I want to join, has been so severely misinterpreted. I have been in touch with Professor Mathew since I took BAFI 460 course under him during 2005 spring, and very highly regard his credentials and work experience. I have always sought to take courses under Prof. Mathew and have time and again, clearly indicated to him, my passionate interest in the industry and particularly, in Goldman Sachs. Professor Mathew is himself a Goldman alumnus, and I feel so disappointed and broken that he has misunderstood my fair intention towards my work. I hereby request you to please not treat the rest of this letter as my defense against Professor Mathew but as an honest description of the intention behind my work.
During the course of the preparation for the write-up, I met Professor Mathew and told him that I am following the format of Morgan Stanley Research Report and their Valuation Methodology. The conversation went something like this:
Myself: Professor, I am following Morgan Stanley report from Investext (I showed him a draft of my paper which already contained the Morgan Stanley report format).
Professor then went on to his computer and actually opened the report. This was his response:
Gaurav, these analysts do this for their living, do you think you can do this even if you take 1 month.
I, of course, replied ‘no’.
Then he went on to reply – So, I do not have any problems with it as long as you understand it. If after you submit your paper, I call you to explain this to me, you should be able to do that.
I said: I of course understand it Sir.
Now, I do understand that, at places, I have referred to the work in the text as ‘I analyze’, etc. but all the exhibits explicitly list the source at the bottom. What I only meant is that I have redone the calculations myself after understanding the models, and believe in them. If I really wanted to cite it as my work, why would I attach the exhibits with the source listed and why would I do it for something I already discussed about with Professor Mathew in his office. I think it was simply my overestimation of the strength of my relationship with Professor Mathew. I am so confident that if Professor Mathew had met me even once before filing this allegation, he would have never done this, as he does understand my sincerity and hunger to learn.
Moreover, I have also submitted this report to 4 professionals at Goldman Sachs with whom I have interviewed earlier. If I would have done this simply for the purposes of an A grade, do you think that I would ever give this report to the recruiters, with whom I am seeking employment.
About the Annual Report part, once again, during my conversation with Professor Mathew in his office (I met him twice), I explicitly told him, that, Sir, I am following Goldman’s Annual Report and I think that Goldman’s conservative Risk Management approach is a major input towards its Value Creation for its Shareholders. I read and understood each and every word of the Annual Report, especially the M, D&A part, before I started my paper. By the way, there are 5 or so pages in my paper, that are from the Annual Report, let me tell you that Goldman’s Annual report consists of 100 pages, and I read all of them. Do you really think that if I wanted to cheat, I needed to do that? What I have only tried to do for my paper is that I tried to pick parts from the Annual Report, which I think, helps Goldman to create Value for its shareholders. Again, when in my paper I mention phrases like – ‘I think’ etc., it only reflects that I have understood it, and that I do think that it makes sense. I am surprised that Professor Mathew chose to ignore the intense effort I put in this paper with so much passion. I am so confident that he is aware of my relatively higher levels of understanding, and knows that I know what I am doing. In fact, in the past, during the beginning of the project, when I and Professor Mathew held opposing views as to if Goldman creates value, I sent Professor Mathew an email, explaining why I think Goldman creates value, and how much I want to do this company, to which Professor Mathew replied that he does understand that I know what I am doing (for his memory, when we ran into each other at the Lower Level at PBL). Here is the copy of the string of some of the emails that went back and forth between Professor Mathew and me, when I was trying to convince him of my choice:
“Please find attached some numbers, which I think support my argument that Goldman Sachs is a long-term value creator. Moreover, I also think that the macroeconomic factors and the rapid globalization are in favor of Goldman Sachs' huge and aggressive investments in the emerging markets. Goldman Sachs' investment management portfolio has increased many folds recently. I also confidently support Goldman Sachs' aggressive involvement in the Emerging markets through Private Equity.
However, if this explanation and the attachment do not suffice, I will choose some other company.
Thanking You
Sincerely Yours,Gaurav Joshi
----- Original Message -----
From: Professor Mathew
Date: Thursday, March 9, 2006 12:51 pm
Subject: Re: Term Research Project on Goldman Sachs
Hi Gaurav, It's up to you. I think it's a great company. My only concern was whether it has really outperformed other firms like it from a value creation standpoint. If you think it has, go ahead. But things like VaR, etc. probably shouldn't come into play in your final analysis. Prof.
Let me try it out Sir. As you might agree, our aim in this course is to learn how value is created and not whether it is created or not. As I mentioned in my paper, I want to get an idea how differently do the niche securities firms like Lehman and Goldman operate as compared to the middle guys like Morgan and Merrill, and even more importantly the giants like Citigroup and JPMorgan. I think a lot of it in Goldman's case is Corporate Relations, for example, the new building deal (Battery City Park) they struck, I don't think any other NY headquartered firm could have done that. But anyways, I want to get my own judgment as to who is the winner in the long-term, the all-in-one guys with fat balance sheets like Wachovia or Citigroup, or the niche ones like Goldman or Lehman. The argument is that these fat balance sheets are fat because of the commercial banking side of their business, and they argue that we can do well even when the market is down under and stuff. On the other hand, I support guys like Goldman and Lehman and they excite me more, in fact Morgan more than Lehman, given again, the corporate relations Goldman and Morgan has. Here again, I think, there is a lot of difference between Wachovia and Citigroup themselves, and Goldman and Lehman. Let me crank it out.”Gaurav Joshi
For the SWOT Analysis part, it is true that I took the points from the paper I prepared for the Investment Banking course under Professor Mathew, but why can’t I take input from my own work
*. Do Goldman’s Strengths, Weaknesses, Opportunities, and Threats change on a daily basis? In fact, I read the whole Case Study on Goldman Sachs that Professor handed out in his Investment Banking class word by word once again, to thoroughly understand Goldman’s history and its inherent strengths, weaknesses, opportunities and threats. Here is the point – I work to learn, I do not work for grades, and neither am I grade-obsessed. As Professor Mathew himself mentioned in class, I looked forward to this assignment as a way to better prepare myself for any potential future interviews I may have with the firm, and also to thoroughly understand the firm and the industry.
Here is the copy of an email I sent to the 4 professionals at Goldman and a student at HBS who interned at Goldman Sachs. I am willing to show you the email (it is in my Microsoft Outlook).
Dear All,
Please find enclosed my research project on Goldman Sachs. Though I submitted this as a project for Financial Strategy and Value Creation course purposes, I continue to research on Goldman Sachs business model and how it makes money, until I actually get into Goldman Sachs, and watch it as an insider. With those regards, I am meeting Professor with the same research focus during this week. Any input would be highly appreciated. I thank you in advance for your time and consideration.
Sincerely Yours,
Gaurav Joshi
The Professor mentioned above is referred to Professor Prasad, with whom I decided to meet later in the week (after the submission of the project), as he did not have any time earlier. Professor Prasad focuses on Financial Institutions Groups. My desire to meet Professor Prasad even after the project’s submission due date clearly shows my honest desire to learn more about the company and the industry, in general.
Lastly, I typed in each and every word on my project report rather than doing a copy and paste, as it helped me to better understand the content. I am willing to show you the hard copies of the Annual Report, the Case study, the write-up I completed for the Investment Banking class, and the draft I showed Professor Mathew during the course of the preparation of my project, when I met him twice in his office.
That’s it in my defense. It was extremely hard writing this letter, explaining my passion to others. I respectfully ask Professor Mathew to reanalyze his understanding of the student in question, and accordingly give me a letter grade. If however, he insists, I am willing to write a new paper for him, but then please ask him to shut me in a room with him, and ask me to do it, otherwise, God knows, he may again misinterpret my work. I request you all to please be very careful when you make your decision, as I am graduating on May 21, and also, cannot afford to lose credits for this course, as otherwise, I will fall short of the credit hours required for the completion of the MBA course.
Second, I would like to provide you with the essay I wrote when I was under probation, to get back to school, and to exhibit to the authorities my understanding on the subject:
My understanding of Plagiarism and its impact
I have read the Academic Integrity Policy guidelines by Case Western Reserve University, and have made sure that I fully understand plagiarism and its impact. After reading the Policy, I understand that there are several types of violations including Cheating, Plagiarism, Misrepresentation, and Obstruction. Cheating refers to copying someone’s work, falsifying the data used, or using other unauthorized material such as notes, books, calculator programs, cell phones, or pagers. Plagiarism refers to using somebody else’s words or ideas without properly attributing the ideas, or submitting the same assignment for more than one class without permission of the Professor. Misrepresentation constitutes of lying, or incorrectly documenting to postpone assignments or exams, or taking an exam for another student. Obstruction refers to another student’s inability to learn, such as by theft or destruction of notes, books, or papers.
As described under Case’s Academic Integrity Policy, I shall take precaution to uphold standards of academic integrity. I shall reduce opportunities for academic misconduct while not inhibiting inquiry, create disruption or distraction in the testing environment, or create an atmosphere of mistrust. I shall also take reasonable precaution to prevent instances of academic dishonesty.
I have realized that Plagiarism can have severe implications on a student’s career and academic record. After having faced it myself, I think all students and faculty shall take special care of this topic, and do a complete job of educating themselves as well as others on Plagiarism.
To completely understand Case’s efforts towards upholding its academic integrity principles, I browsed
www.cheatingculture.com, which incorporates David Callahan’s viewpoint of “cheating to get ahead”. David Callahan gave a keynote address during the integrity week at Case.
The Center for Academic Integrity (CAI) has defined academic integrity as a commitment (the CAI refers to commitment even in the face of adversity), to 5 fundamental values:
Honesty;
Trust,
Fairness,
Respect, and
Responsibility.
I read ‘Fundamental Values of Academic Integrity’, and some of my favorite quotes are listed below:
The best measure of a man’s honesty isn’t his income tax return. It’s the zero adjust on his bathroom scale. – Arthur C. Clarke
Integrity – When you do the right thing even though no one is watching. – Anon
If you want children to keep their feet on the ground, put some responsibility on their shoulders. – Abigail Van Buren
Self-trust is the first secret of success. – Ralph Waldo Emerson
It is not sufficient to be worthy of respect in order to be respected. –Alfred Nobel
I shall place responsibility upon myself to balance high standards with compassion and concern. I shall also give proper acknowledgement in the form of citations or explicit statements of thanks and shall never seek to take credit for somebody else’s ideas or words.
I am currently selected for the Capital Markets program at Bombay Stock Exchange, and have, first, sufficiently familiarized myself with the Regulatory Framework. The field of Brokerage, Investments, Finance, and thus the Stock market operations are highly regularized in India, as elsewhere, and thus we are required to be trained and taught about the rules applicable herein.
There, of course, have been some scandals earlier, the most famous ones being that of Harshad Mehta and Ketan Parekh, where investors’ money under these brokers went unaccounted. In fact, Ketan Parekh by himself had forced a bank into bankruptcy, while he made false promises to the bank, and galloped all its money, putting it all into stock market. He owed several hundred crores of rupees (in $ billions) to the bank, which he is required to pay back within a stipulated time period. The period has been extended, as Ketan has made serious efforts to pay back the money, and has paid back the majority of it by now. All these scandals bring with them a new layer of byelaws by Exchanges, and some more regulations by SEBI (US equivalent of SEC).
I have stressed on this to emphasize upon the growing importance of regulations, and more importantly, its implementation, in this rapidly globalizing environment, where more and more economies are opening up, and operations are becoming increasingly centralized. During all this time, the biggest strength lies in the honesty and integrity of people involved. I thus agree and understand, that, I as an individual, or for that matter any individual, shall first uphold ‘Integrity’.
*Integrity is something of a ‘fuzzy’ word. As defined by Jack Welch in his book ‘Winning’, which I recently read after this incident, people with integrity:
Tell the truth, and they keep their word.
They take responsibility for past actions, admit mistakes, and fix them.
They know the laws of their country, industry, and company – both in letter and spirit – and abide by them.
They play to win the right way, by the rules. It is after reading this definition that I have come to realize that I actually ‘missed’ it. As is known to all of us, I emphasized during my entire defense that I never intended to break rules, but it is only after reading this, I realized that it is your work, not intention, what really matters.
I guess I ‘missed’ the last one. I simply never understood the complete meaning of this truly ‘fuzzy’ word. I never bothered to know what the rules were, for example I never understood that it is essential to put sources and references on paper, even though if I have verbally/informally spoken about it with the Professor, and also, no matter how obvious it is, you need to put them on your paper, regardless. In fact, I now feel better that it happened to me at an early stage, when all where I can go is only upwards. What if it happened while at my job with Merrill Lynch, or what if I ended up violating a serious country law by itself? I admit I was plain absent-minded.
Finally, I would like to reiterate a part of Jack Welch’s answer to one of the questions he faced at a technology and innovation conference, as it emphasizes on the ever-growing importance of corporate governance (in my words, integrity). The question was in regards with the Sarbanes-Oxley Act after the post bubble corporate scandals and its effect on corporate boards. He said:
“Boards also gauge the integrity of the company. That’s huge. They must visit the field operations and conduct meaningful conversations with people at every level, eyeball to eyeball. It is in this subtle, nuanced integrity watchdog role that boards can make a real contribution”. I understand!
The impact of Plagiarism and why it should be disallowed:
With the above 2 pages, it should be quite clear that Plagiarism accounts to violation of Integrity, and thus all institutions, organizations, etc. should take special measures; first to prevent it, and second, to appropriately deal with any such case so as to ensure that it is not repeated.
Hence the resultant question: ‘Managing Plagiarism’
Plagiarism is the pig-in-the-python of academia, highly visible yet endlessly undigested. We all see more plagiarized papers than we know, and in the interests of time and service to our better students and our programs, allow many to pass that we do recognize.
[1]To me, it sounds very similar to what we call ‘Risk’ in the world of High Finance! We see it all around us, all the time, but even though we cannot eliminate it, we try to ‘manage’ it! I think, similarly, we need to manage ‘Plagiarism’, and as we need ‘discipline’ to manage risk in a role of, let us say, a Portfolio Manager, we need ‘rules and laws’ to manage Plagiarism, in a role of a true and honest citizen of this world! Otherwise, if ignored, it can eat up the integrity and strength of the underlying system, and the very motive behind its formation, within no time!
Let me try and prove this with a corollary:
Let us say that no institution adhered to any rules or imposed any laws against Plagiarism, and students were free to do what they want, and how they want to do it. This, in turn, would corrupt and rust the underlying system, i.e. the institution, and the very motive behind it, i.e. ‘learning’.
Ok, let me end it this way - Here are some recent findings:
A study by The Center for Academic Integrity found that almost 80% of college students admit to cheating at least once.
According to a survey by the Psychological Record, 36% of undergraduates have admitted to plagiarizing written material.
A poll conducted by US News and World Reports found that 90% of students believe that cheaters are either never caught or have never been appropriately disciplined.
The State of Americans: This Generation and the Next (Free Press, July 1996) states that 59% of high school students let someone else copy their work in 1969, and 97.5% did so in 1989.
[2]So, as said earlier, you can be sure that various rules and laws have not even come close to eliminate Plagiarism, but like risk, it can definitely be ‘reduced’ by inculcating ‘self-discipline’!
Lastly, before I end, after having myself lost my job, my degree, and my legal status in U.S., I personally suggest to please try and emphasize more on educating students on Plagiarism rather than punishing them, because with the latter, you are only more likely to have done an unfair job, since you can’t catch all, and are not even sure if student was educated! But if you educate all your students, then even if you punish, you know that at least that particular student plagiarized! I am saying this only because its results are very adverse, so let’s make sure we are doing the right thing.
Now, until now you have heard only one side of the story, but, to be honest, my final paper does look very carelessly written, and even I was surprised when I saw it after having been charged with the allegation! So, strictly pertaining to the matter in question, i.e. the case study on Goldman Sachs in this case, my paper may look deserving of only a punishment, but after listening to the whole story, I am sure that you will be much more careful and wary, before you conclude anything! This aspect of due diligence is what is often missing when most of the decisions regarding Integrity and any such sensitive issues related to it are made! They are suppose to be dealt with quickly and with maximum amount of evidence, which results in people making their decisions in a hurry based upon what seems most correct at the outset! After all, if you defend the plaintiff, there is a huge risk that you will be looked upon as responsible for even the slightest of the mistakes he makes in future, any of which would already be looked upon with an extra lens of skepticism, since he has already received so much negative publicity! Thus, most people in most organizations prefer ending it quickly with an ‘objective decision’ (which means that you are more interested to look only at the proofs in front of you), rather than to delve into the softer aspects of the conflict like the past relationship between the suitor and the plaintiff, hence turning it into a subjective process! This is completely understandable!
Now, to end this otherwise potentially controversial chapter in good spirit, I would like to focus your attention on a dialogue by Alfred Nobel that I have stated in my essay above – My Understanding of Plagiarism and its impact! He says:
“It is not sufficient to be worthy of respect in order to be respected”!
It is in this sentence that this chapter truly relates to the title of this book! In fact, I would say that this is the only chapter/subject (Integrity) that wholly encompasses both the areas of focus that I am trying to address through this book, this ‘Life’ and this ‘World’!
If you understand life, you are worthy of respect, but it is only when you are actually respected, that you have understood both, this life and this world! However, if you are respected but you are not worthy of it, you are only ‘demanding’ respect (rather than ‘commanding’ it), but such a phase would only be temporary and would eventually fade away! This may be the case when you understand the world, but do not understand life, or you don’t understand either! Please refer to the chapter ‘The Concept’ to relate to this!
Chapter Two
Background and its Importance
Somebody called me a ‘ Disorganized Genius’ during my first semester at my B-school!
[3] And, I must say that the compliment was more than offset by the prefix attached to it! Now, to elaborate on this point, I shall digress a little from the title of this chapter, and then come back to it!
The reason I say that the compliment (Genius) was more than offset by the prefix (Disorganized) is that as far as intelligence goes, you need to be just ‘above-average’ to conquer this world, however it is absolutely essential that you are ‘organized’! It is like any fund manager’s performance - As long as you are ‘over-performing the market’ (read ‘above-average’), you are good, but as soon as you lose ‘discipline’ (read ‘organized’) in your greed to outperform even more, you are already under-performing!
In fact, why do you think most successful people have the most radical life stories? Because in their quest to succeed, they were initially almost blinded towards the realities of life, only looking at the ‘big picture’, while completely missing ‘attention to details’, and thus ignoring the nitty-gritty of the various little things involved that ultimately make the big thing! So, at this stage, in spite of being extremely capable, full of desire, and highly ambitious, they find themselves traveling south! It is then that those who realize their absent-mindedness and restructure their own ways of life start moving ahead on their path to success! Abigail Van Buren once said; “If you want children to keep their feet on the ground, put some responsibility on their shoulders” – And that is why I say, ‘Successful men always grow with responsibilities’! Take any example, from Australian tycoon Jim Wolfensohn to Indian businessman Dhirubhai Ambani! They failed before they got almost anything in life, but with each stage, they were improving! Jim Wolfensohn could not pass a single subject in his first year at university, but then he only became better with every added responsibility!
[4] Even after accumulating substantial wealth and also one of the world’s classiest Rolodexes, he had to wait 15 years after he had first set his eyes on the World Bank President’s job! As Sebastian Mallaby puts it in his book, ‘The World’s Banker’ – “Surely Wolfensohn’s story is a sort of saga in our times? It is a tale of ambition multiplied by ambition, and of ambition’s limits.” If you read this wonderfully written book, you will realize that even Wolfensohn constantly behaved like a child all throughout his Presidency, while ignoring the Bank’s senior people and not paying ‘attention to detail’! But then at each stage, he had the wisdom to fall back and restructure things when his ways did not work out!
However, Wolfensohn was a typical example of the best-of-the-best resumes’ with participation in the Olympics, an MBA from where else but Harvard, and work experience at where else but Wall Street! But success also comes to the likes of Dhirubhai Ambani who did not even finish his schooling, because success does not look for the material things as in Wolfensohn’s case, but solely for what I had stated earlier – ‘A big picture outlook along with an attention to detail’!
A lowly employee of the oil giant in Aden, Yemen; Ambani dreamt of owning his own oil company one day. His is an amazing rags-to-riches story, the stuff of which legends are made. Vir Sanghvi, editor of the influential Hindustan Times daily newspaper and a long time Ambani-watcher, has this to offer, "The answer, I suspect, is that whatever the rules of the game, Ambani will just play it so much better than the rest. If the name of the game was manipulating rules and politicians he was the champion. Now that the game involves globalization and the free market, he is still the best player in the country."
Here, Mr. Sanghvi is reflecting upon Reliance’s success in both pre and post-liberalization eras of Indian economy!
[5] Before India opened up its economy in 1991, Mr. Ambani was often accused of adopting unethical ways, using Reliance’s muscle power to influence political decisions, and even got politicians to change policies in a way that suited his own needs! All this even involved wooing politicians with suitcases of money and gifts!
In fact, the Ambani reach extended much beyond imagination as Hamish McDonald, the former New Delhi bureau chief of the Far Eastern Economic Review and author of the unauthorized Ambani biography, The Polyester Prince, discovered to his dismay. “The book, brought out by an Australian publishing house, Allen & Unwin, is not kind to the Ambanis. It tells frankly what obliging journalists have hidden all along - the sharp methods Ambani used to become one of the most powerful men in India; his wars with competitors and inquisitive media barons; controversies over export manipulation and licensed capacities; his capturing of political and bureaucratic power. Even though the book was published in 1998, it is still not available in Indian bookshops. That's because the Ambanis have threatened legal action for anything they perceive as defamatory in the book.”
[6]But, even then, Reliance has performed just as well, if not better, during the post-liberalization era!
Ok, finally the digression has ended with this example! But was this an appropriate background for a chapter on ‘Background’? The answer is ‘yes’ – Wolfensohn may not have been able to achieve all that he did in his life without an MBA from Harvard, but Ambani may have only wasted time at Harvard! Wolfensohn may not have ever been able to amass a fortune at a highly corrupt, bureaucratic and political place like India, and Ambani may have felt equally uncomfortable in between all those super-quality Economics PhDs one finds at The World Bank! After all, he could not even speak English properly!
A lot depends upon where you come from, but as for everything else in life, the good news, or for those who were more fortunate at birth, the bad news, is that all does not depend on it! However, in this chapter, we shall discuss more about the lot that depends upon where you come from (your ‘background’), and relatively little but significantly enough about how you can change, or for those who were more fortunate at birth, how you can enhance upon, where you come from (the part that does not depend upon your ‘Background’)!
The importance of one’s background applies to all entities - individuals, organizations, continents, and countries! Let me pick up the 2 extremes, i.e., an individual and a country, and explain these with examples to reflect upon the importance of ‘Background’!
As an individual, I belong to a lower middle-class family from an underdeveloped country, i.e., India! Though I may not have encountered Poverty per se, I have gone through an extreme case of typical Indian family problems! Of course, since we are talking about India, the root of all problems started from ‘Dowry’ issues, but then it extended itself to any imaginable torture! Now, living in the 21st century, nobody would have hung us on our thumbs, or clipped out our fingernails, but our lives were still close to hell until the children of the family grew up to be adults! My mother ‘was’
* married when she was at a tender age of 20, and since then until today, I have not seen any significant improvement in her life!
[7] Earlier on, soon after marriage, she was beaten-up almost on a daily basis by a bunch of characterless and hopeless people who, in relation, stand as my father, grandmother (father’s mother), and sometimes my aunt (father’s sister)! This continued almost non-stop for 9 years, until we, including my father, shifted to a new place!
[8] Though now the number of devils had reduced which helped us to get more free time amongst ourselves, physical fights still remained almost a daily affair, the language at home could had been defined as no better than obscene, and our image in the society as no better than wild! However, since the purpose of this book is not to give great details on the background itself, but to rather stress upon its effects, and thus importance, I shall now shift focus on how any such experiences can harm your personality, and take you so far away from the real-world, that you keep losing your real worth!
These things may sound very irrelevant, but I have realized it only now that the softer aspects of life matter at least as much as the material things - they teach you the way to be, and to correctly list your priorities! In fact, I strongly suggest people to take all the ‘Parenting’ articles seriously, which I myself neglected all my life! For example, since we as a family never once in our 20 years of forced camaraderie went out together for a lunch, a dinner, a movie, or for that matter, a decent vacation, I could almost never avoid feeling uncomfortable at any social gatherings I attended! Since we would never dress up properly with a happy mind to go out for a get-together or some such other occasion, it never struck my mind as to how important it is to look pleasingly presentable!
As I had earlier indicated when defining ‘success’, all these can be understood as little things that contribute towards your progress in achieving the ultimate big thing! If you get them ready-made in form of a good background, well and good! But if you do not, it can get surprisingly difficult to get out of those mindsets and those habits!
Many a times it so happened that I blindly undertook a mission, and ran for it so hard, that when I ultimately faced an accident, it hurt me with an intensity much greater than that with what I had chased my mission!
One such mission was Wall Street – I ran the hardest for it, and got hurt the most, beyond imagination! I was in complete awe of Goldman Sachs, and if you read the first chapter, ended up being charged for an Academic Integrity Violation for my Goldman Sachs term paper! This happened just before graduation, when I should have rather got a placement with the firm! I blame less the Professor, and more my absent-mindedness for the result! I spent many nights on the paper, reading Annual Report to the last word, revising all the earlier Case studies, and looking for inputs from professionals in the field, while completely unaware of the rules to do so!
What do you think the reason behind such absent-mindedness could have been? The answer lies in my ‘background’ that taught me nothing but only left me vying desperately for things that may not have been practically achievable at that particular point in time! I was desperate to get it, dead or alive, lawfully or not, carefully or carelessly, in whatever manner possible! And thus, with this desperation, I also proudly emailed my term paper to professionals at the firm itself, for their comments, while childishly thinking that it may in some way impress them! As you may have already understood, while doing all this, I was never aware of what wrong I was doing, but in fact was doing things with just the same passion and hope as ever!
However, as I said earlier, it can be changed! Though, for those of us who have suffered, we may never be able to get back those lost years of our respective lives, but if we are able to change ourselves to a better real-word being, at the end, we may only feel more proud and satisfied than anybody else!
‘Surroundings’ play the most important role when change is underway – each one of us, as a ‘system’, has to get himself/herself to be a part of the right surroundings, and that by itself may open one’s eyes to many better ways of life! Doing so needs a lot of hard work, wisdom, and the ability to think ‘out of the box’, since we did not already belong to such a circle! Even Warren Buffet, the world’s greatest investor, suggests all investors to remain in their ‘circle of competence’ (read ‘suitable surroundings’) to do well in the business of investing!
In fact, most people who never really mature or move ahead in life are the victim of their own surroundings! Unless nobody in your reach is any different than you, you fail to envisage better ways of leading life! And then, rather than competing with those whom you call members of the high society, you content yourself with admiring them, while sharing those admirations with those surrounding you, who of course do the same!
My search for a case study to reflect upon one’s shabby background, while one tries to get itself out of that mode and give up its messy surroundings to look for its own circle of competence, ends with my own country, India!
If you know anything about India’s history, you must be aware of India’s brutal assault by the so-called elite British for almost two long centuries!
[9] One of the biggest blows the colonial rule dealt on this country was on its soul: the agriculture! Though the British stayed here for 190 years, they had rendered India fit for bankruptcy within 12 years since Robert Clive had first entered the Province of Bengal in 1757 after winning the Plassey war! All these intruders, starting with Robert Clive, were shocked and stunned to see the fat treasuries of Indian maharajas! They had never before seen that kind of wealth! Insecure that they may be thrown out anytime by the strong army of the Indian kings, if they ever decided to get together, they made it a practice to first loot the treasury every time they intruded a province, so as to loot as much as they could during their short stay in India! But, unfortunately, the looters stayed very long, both by choice and by consent, as the Indians never got together!
That is the ‘culture’ (read ‘background’) that has always been so prevalent among Indians - individually very smart and talented, they have almost always performed pathetic as a team! That is why I call India a democratic country that is not ‘meant’ for democracy! But somehow we call ourselves the world’s largest democracy, and proudly so, or shall I say, shamelessly so! Hopefully, it is changing now!
[10]Look at how well Indians do outside India! In fact, in U.S., Indians, who comprise of 1% of the continent’s population, enjoy higher per capita income than the White Americans! So then, why do their brains, their capabilities, and their ability to work so hard – all shrink so drastically when they are on their home soil, their motherland? The reason is hidden neither in the soil nor in the people themselves, but in fact, the true reason is our ‘wrong culture’, which not only us but all in this world, so desperately try to preserve! And, foolishly so! People may call me disrespectful when I say that cultures can be ‘wrong’ too, or probably they would not, since they just found someone who said what they always wanted to say but the only reason that they may not have said it themselves may lie in the sensitivity of the issue in question! Thus, though you may not have ever heard anybody pointing towards ‘culture’ as a reason for one’s setbacks, you may have heard them say that the legal system is not strong enough, the infrastructure is weak, the legislative system is not in par, or that the corporate governance is far from desired!
Though you may never see or hear anybody pointing out towards the mother of it all, the ‘culture’, I repeat, culture can be wrong too!
As I mentioned earlier, even English themselves could not envisage the fact that they would end up ruling an immensely large, wealthy, and powerful India for 2 centuries, but then once they struck the right mantra to do so in India, i.e. ‘divide and rule’, they did it effortlessly! Some Indians gave it to them themselves, without them even asking for it, while trading integrity and the lives of millions of fellow Indians for doing so! Their compensation laid in the fulfillment of their own petty little self-interests! In fact, Indians made the mantra even easier for British to implement – they converted it to – ‘We Divide and You Rule’!
British introduced the ‘zamindari’ system, and the Indians followed; they levied such heavy taxes on farmers that turned agriculture from a profitable industry to a losing preposition, and the Indians followed! As I mentioned it earlier, that is where it all started – Agriculture! And then the scope for India’s destruction and exploitation kept multiplying with Britain’s greed, ‘fueled’ with cruel ideas and strategies! And where do you think the English looked for all the ‘inputs’ required to give ‘fuel’ to such ideas and strategies, since they themselves could not think or prioritize? Of course Indians, who came as a package of mighty brains, selfish interests, unethical mindset, and hopeless hearts! It was all imbibed in India’s culture - if not British, someone else would have exploited it, and if not in 1757, a little later! But Indians, with such a culture or background, could not have ever preserved their might and wealth for too long!
So, to better our future, we shall rather blame ourselves for our past, and not the British! Similar to as I earlier mentioned that I should rather blame myself for the Integrity charge and not my Professor! I will keep meeting such seniors in my future life; there does not exist only one such person, so to better immune my future to such events and any such people, while making it foolproof, I shall better change my ways rather than cursing my destiny while again falling prey to many more of such events and such people in future! The same goes for a country, in this case India, and that is why I have so aggressively, and probably repetitively so, emphasized so much upon concentrating on the inherent cause of setbacks whose roots lie in the underlying, i.e., the ‘people’! People form people’s ‘background’ – it is how your predecessors treat you, what they teach you, and how they deal with you and in general, that forms your background! And in a country, which is under-performing as a whole, it is more likely than not that the majority of these predecessors have left their successors with a wrong mindset, a wrong way of thinking, strong opinions, and inflexibility – basically, a wrong ‘background’!
[11]But has it changed? Has Indian culture changed towards the better - more practical and open-minded, yet an appropriately cautious approach? I would say we are still far from it! Even though there may have been some small improvements here and there, but cohesively, it still looks far from strong! In fact, my inhibitions were only confirmed and strengthened by the recent tussle that crept among the members of Lok Sabha in the Indian Parliament over whether the singing of ‘Vande Mataram’ should be made mandatory in schools!
[12] How can you ever impose such rules on schools assuming that it may inculcate patriotism? Rather, such activities should be left to the student bodies, organizations, etc. to decide and act upon themselves - if they feel good enough and proud of their place, you will see it all naturally coming back to the country in some way or the other, though not necessarily in the form of singing Vande Mataram in a choir!
You treat them right, and they will treat you right! It has to be a trade; it cannot ever be a one-sided affair! Only if they get something from their country, will they give it back to her, or otherwise, it shall be a quiet bye-bye in search of better opportunities!
However, it is to be realized that mentoring any such ‘change’ in people’s mindset is a humongous effort, and it may take decades before we begin to see the results of this change, unless of course you happen to enjoy more than your share of ‘luck’! However, that does not say that you can implement any change without luck! It is always important! Both these concepts of ‘change’ and ‘luck’ have been more elaborately discussed in later chapters!
Though a part of these decades will be spent on thoroughly implementing the change; it shall require a long time for the absorption of this change by the whole society while it proliferates itself down to the lowest level! The latter part of this process is what I have referred to as a phenomenon of ‘lag’, which has also been touched upon in chapter six titled ‘Importance of Common People and their Thoughts’!
Earlier in this chapter, I raised the question saying if India’s cultural base and general outlook has changed! The answer was no! But now I shall raise a more important question – Has the change at least begun? Some may be forced to answer yes, and this answer may seem even more obvious in case the same question was asked about China? But then, what about my earlier statement that said something like – India is a democratic country not meant for democracy! In fact, I feel pretty much the same in Brazil’s case! Is it that these countries are doing the right things under a wrong framework? Though I cannot say with pure confidence that they are doing right things, I must say that they are now, more than ever before, at least inclined towards doing the right things!
However, to the advantage of my doubts, I leave this for you to decide! But, I think ‘Background’ shall be the right title under which I may touch upon one of the most important concepts that have been raised in this book – ‘Relativity’!
The word by itself may sound confusing, but what I mean to say is that while we look for solutions for a particular country, organization, or an individual, one should be completely aware that at all times we are being ‘relative’ or ‘comparative’, rather than ‘absolute’!
My message would have been best conveyed, if for all such entities that I have praised or cursed in some manner or the other, I would have prefixed the sentence with words like ‘relatively’ or ‘comparatively’! But for the simplicity of my writing, and for that matter your comprehension, I have decided to pick upon this very important, and often forgotten, concept through this separate note!
I have touched upon a myriad number of different aspects like Integrity, Background, Wisdom, Change, Luck, People, Efficiency, etc. through my book, which in my understanding, make up this ‘Life’ and this ‘World’! However, though all except ‘Background’ can be understood as part relative and part absolute, Background is absolutely ‘relative’! I shall elaborate upon this in the ensuing paragraphs!
Try and think of it this way – for all of the different aspects you see in the last paragraph, measure them all, one by one, among yourself while thinking that you are the only entity that exists in this world, and that there is nobody else surrounding you or for you to compare with! You would notice that though you are able to measure all these aspects up to a certain extent, it is almost impossible to measure the effect of your ‘Background’ and thus realize its ‘Importance’, without any comparison!
You can look into yourself and measure your Integrity standards to form a reasonable conclusion or opinion about yourself on its grounds; the same goes for Wisdom and Change – you can look back at your past and see how you have evolved over time and this should give you a very decent picture on where you stand on these grounds! Once again - Efficiency of one’s own self can be measured to a decent extent without comparison! Though after a certain point in time you may need to compare to see what exactly you can improve upon and how you could do it, but to begin with, there shall always be some things that are so obviously being operated inefficiently, that you can assess them by simply looking carefully at your own way of doing things!
Now, People and Luck may sound more relative, but as I said earlier, though none of these aspects can be understood as absolute, they can be understood as part absolute and part relative – I think this sounds significantly true for, at least, Luck!
People, on the other hand, gets very close to Background since both these aspects are very difficult to be measured without any comparison!
[13] However, I still think that the effect of one’s Background and its importance remains the most difficult aspect to measure without any comparison! To give you a feeler why I may think that Background is more relative/comparative than People, think of it this way - At least wise people can pass a reasonably correct judgment upon themselves and their thoughts, however, in case of measuring the impact of one’s Background and its Importance, even a wise person is only as foolish as anybody else unless he has got some tool for comparison which allows him to say that for what he got readymade from his predecessors, or for how he was brought up by them, he holds a clear advantage over those who were not-so-privileged, or vice-versa!
Now, with the hope that I have made myself clear on the above grounds, we shall proceed to see, in general, how we can compare different parts of this world, and form an educated opinion about how various backgrounds have helped or hurt the various entities being talked about!
In my efforts to sound least personal, I shall try and pick up examples of nations, organizations, etc., rather than those of individuals! Basically, we shall talk about a group of people, rather than any one person in particular!
However, while comparing and contrasting various such entities, I shall use the concept of ‘risk’ and ‘return’, more familiar with the professionals in the field of finance!
I understand that the following paragraphs may sound a little complicated, but I think this is the best example I could have used to succinctly express my point!
Some of you must be aware of credit rating agencies, the most famous ones being Standard & Poor’s
*, or Moody’s! These organizations rate everybody from organizations to countries based on their respective risk profiles! And surprisingly, you may see some organizations with a better credit rating than some countries as a whole! Now, though it may not be appropriate to compare countries with organizations, but roughly what it means is that these countries by themselves are perceived to be more risky than some of these organizations!
Now, think about this – Do you think it is possible for an organization to be rated higher as compared to its own country?
I know it is a difficult question, but the answer, in general, is ‘No’! It, at most, may be rated as well as its own country, but usually it does not get any better than that!
Why? Because, they both share a same ‘Background’! So, to that extent, they are equal, and then the one that has more powers and authority (secondary factors), wins! For an interesting and more elaborate example of this answer, please refer to the Sidebar below!
*Countries’ Ratings as a Reflection of their Backgrounds
What is a country all about? Primarily, it’s Government, right! For example, if we say that India is borrowing at 10% from the international markets – it means that the lenders perceive as much risk in investing in India as to demand 10% rate of return for lending money to India!
[14] And who is actually borrowing – The Indian Government, the money goes in the Government’s kitty, and then it accordingly allocates the money towards different projects, as per its plan!
Now, with this in mind, I shall give you a quick comparison of the sovereign debt rating among different countries!
[15] Foreign currency long-term sovereign debt ratings
[16]The table is updated as required
MOODY'S
STANDARD & POOR'S
Fitch-IBCA
Investment grades
Aaa
France, Germany, Netherlands, Austria, USA, Switzerland, Finland, Norway, Denmark, Ireland, United Kingdom, Sweden, Spain, Iceland, New Zealand, Canada, Singapore, Australia, Japan, Luxembourg
AAA
France, Germany, Netherlands, Norway, Austria, Switzerland, USA, United Kingdom, Singapore, Denmark,Finland, Ireland, Canada, Australia, Sweden, Spain, Luxembourg
Austria, Finland, France, Germany, Netherlands, Norway, USA, Switzerland, United Kingdom, Ireland, Singapore, Denmark, Spain, Sweden, Canada, Luxembourg
Aa1
Belgium
AA+
Belgium, New Zealand
Australia, New Zealand, Belgium
Aa2
Portugal, Italy
AA
Slovenia, Hong Kong
Portugal, Japan, Italy, Slovenia
Aa3
Taiwan, Slovenia
AA-
Japan, Taiwan, Italy, Iceland, Portugal
Iceland, Hong Kong, Kuwait,
A1
Czech Republic, Estonia, Hungary, Hong Kong, Greece
A+
Kuwait, S. Arabia
Cyprus, Taiwan, Korea
A2
Cyprus, Israel, Latvia, Kuwait, Poland, China, Slovakia, Chile
A
Cyprus, Malta, Chile, Greece, Estonia, Korea, Lithuania, Slovakia, China
Malta, Estonia, Czech Republic, Chile, Greece, Saudi Arabia, Slovakia, China
A3
Korea, Malta, Lithuania, Malaysia, Saudi Arabia
A-
Czech Republic, Malaysia, Israel, Latvia
Israel, Latvia, Lithuania, Malaysia
Baa1
Mexico, S. Africa
BBB+
Poland, South Africa, Hungary
Poland, South Africa, Hungary, Russia
Baa2
Russia, Kazakhstan
BBB
Croatia, Mexico, Bulgaria, Russia
Bulgaria, Mexico, Kazakhstan
Baa3
Croatia, India, Bulgaria
BBB-
Romania, Kazakhstan,
Croatia, Romania, India
Non-investment grades
Ba1
Egypt, Romania
BB+
Egypt, India, Macedonia
Egypt, Macedonia
Ba2
BB
Montenegro, Brazil
Brazil
Ba3
Vietnam, Brazil, Turkey
BB-
Vietnam, Turkey, Serbia, Ukraine, Indonesia
Vietnam, Indonesia, Serbia, Turkey, Ukraine
B1
Ukraine, Mongolia, Indonesia
B+
Pakistan
Mongolia
B2
Turkmenistan, Pakistan, Bosnia
B
Mongolia, Argentina
B3
Argentina
B-
Moldova
Caa1
Cuba, Moldova
CCC+
Caa2
CCC
Caa3
CCC-
Ca
SD
Argentina
Last update: 4 August 2006
Once again, these ratings are based on the risk perception of the underlying country! Though it may keep changing a notch up or down, any progress towards a permanent positive change (by solving the ‘root cause’ problem) shall involve a long process, during which a sovereign may make steady progress towards better ratings!
Now, back to the original question – Why an organization may not receive a higher rating than its own country, at least in the domestic market? Because the lenders’ money is guaranteed only to the extent of the solvency and the well being of the company, i.e., the company should not go bankrupt! However, the Government, with all its power and authority, can raise taxes, or even more fundamentally, print more money to pay off its lenders even if it falls short of funds!
[17] Thus, an organization under the umbrella of its country (government) may raise funds only at a rate that is marked up to the one at which its government borrows! That is, Borrowing Rate for an Organization = Borrowing Rate for its Country (govt.) + X!
[18]*Now, let us twist the earlier question a little – Would it be possible for a particular organization in some country to be rated higher than some other country as a whole?
If you have understood what I have been saying (please refer to the sidebar above), you may have already uttered to yourself – ‘Of course, yes’! Yes, it is possible for an organization of a different origin to score over a country as a whole, even though a country, as an entity by itself, enjoys much more powers and authority (secondary factors) than any single organization!
Why? Because, they both belong to a different ‘Background’! This truly reflects upon the importance of ‘Background’! So, even though a country is a much more powerful entity by itself, a petty little organization is able to score over it primarily because it was born and brought up better, at the right place, and with the right surroundings!
[19]Such is the leverage that can be provided by a good background, a good start – and thus my repeated emphasis to pay all attention and focus towards fixing the root cause – in this case the country or the government by itself, rather than playing with small little creatures – in this case the organization, and feeling good when it performs a little better – basically enjoying the fluff!
[20]Such fluff shall only be temporary, and thus to get into effect any sustainable solution, one should urgently reflect upon the background of the issue in hand, and start solving the problem from that point! It may take much more time than it takes to give effect to any of this fluff growth, but in such a case, the effect shall be permanent!
[21]Chapter Three
Difference between Wisdom and Wise
How many times have you looked forward to an Economist to understand what’s going on in this World, and in people’s lives the world over!
In contrast, how many times have you looked forward to a Social Worker to understand what’s going in this World, and how different life can get for different people!
Well, my guess is that most of you would choose to read an International Bestseller from a famous Economist, or look forward to attending the next ‘big-idea’ conference in your neighborhood, with some chief economist as the main speaker (of course, not to mention the heavy marketing that made you notice it)!
Not claiming any superiority, while aware that I am different and radically positive, I shall suggest to you to look forward to a Social Worker, whenever you find yourself a victim of any such curiosity next!
Chances are heavy that Economists’ answers to most of your questions would be common and redundant! And that may be because you always turned to an Economist whenever you faced any such curiosity, or perhaps, got entangled in a deep ‘solutionless-looking’ dilemma!
Well, my bet is that each time you talk to a new social worker, regardless of whether you earlier consulted an Economist or some other Social worker, you will find great new insights, and depending upon the quality of the person, may be some sort of enlightenment as well!
And, by the way, this view is in no way a result of my personal experiences – I am just as respectful of Economists as I am of Social workers!
As far as I know, Economists and Social workers both attend classes in university’s ‘department of social sciences’ building, and leaving aside the modeling and any particular dissertation materials, are expected to delve into and put forward solutions for broadly similar issues!
Not only this, by the very nature of their work, it is very clear that any Social worker is as much of an Economist as of a social worker, and any Economist is ‘suppose to be’ as much of a Social worker as of an Economist! This statement may start looking stronger to you if I replace the word ‘Economist’ with something like ‘Development Economist’, but really, if you rather start thinking stronger, you shall realize that the statement remains just as strong even without replacement!
Recently, I read an article titled ‘Economics is very, very hard’, authored by Howard Burton!
[22] Well, the sub-heading was even more interesting! It said:
‘To study economics is to study people – and that makes it complex indeed’
Well! I do not know about the title but I agree with its subordinate! Economics is to study people - So true! It is complex - So true again!
Economics is to study people is true, but that economists never study people is also true! And since Economists never study people, they make Economics complex is also true!
Devoted Social workers study people, and though that in itself may be complex, they understand that the Economics behind that is not so complex – just that not as many people listen to them as to Economists!
Economists gain ‘Wisdom’ in the Department of Social Sciences building; Social workers apply the same ‘Wisdom’ gained in the same building to become ‘Wise’!
Many gain ‘wisdom’, but not all are ‘wise’ – you can mark my words!
And, the above two sentences precisely single out the difference between ‘Wisdom’ and ‘Wise’!
As I may have also stated elsewhere in this book, you inadvertently gain wisdom with time, because time gets along with itself your share of joys and sorrows, which are derivatives of your various struggles, setbacks, surprises, and relationships! Thus, your age by itself gets you wisdom, unless you had shut all doors to it, which is not very common!
However, like anything else in this world, even this is not perfectly balanced! Some people have to live with more than their share of sorrows, while some others enjoy more than their share of joys!
Who do you think need to be concentrated upon – the ones blessed with more joys, or the ones with more sorrows?
With not even a slightest factor of envy or jealousness towards the former, my answer shall favor the latter!
Most high-flying Economists belong to the former category - while unwilling to shed off the slightest comforts of life, they hardly deal face-to-face with those for whom they devise solutions!
Rather, where would you put Gandhiji – most of us understand him as more of a Social worker than an Economist, though he probably knew better Economics than anybody else! Even the Noble committee recently cursed itself to have failed to ever award Gandhiji with a Nobel – they explicitly stated that Gandhi could do without a Nobel, but whether the Nobel can do without him is a big question mark! Gandhiji worked for people, and more importantly, with people – and thus we call him a social worker! An Economist shall do the same, if he claims to have devised solutions for people!
Where do you see most of the Nobels going – Economists, right! Why? Because there is a separate award called ‘Nobel Prize for Economics’! There must be at least a dozen social workers who have missed it just because they never got an economics PhD! Crazy!
No matter what work you do, you are vastly better off getting an economics PhD! Strange!
If Economics is about People, then let us be fair to people, and rephrase the award as ‘Nobel Prize for Service to People’ or ‘Nobel Prize for Social Work’! Or otherwise, if you are interested in awarding Nobels subject-wise, then let us cover all subjects – Economics, Zoology, Philanthropy, Music, Dance, or even regional languages!
Anyways, I am happy that Dr. Muhammad Yunus received the 2006 Nobel Prize for Peace!
[23] Dr. Yunus is one of the few economics PhDs who decided to work with people, for people!
I shall give you a small example, which shall help me to express my thoughts with more clarity!
Recently, a very highly regarded and respected economist who missed 2006 Nobel by less than a whisker delivered speeches on India’s economy and its current state of affairs, during his latest visit to his motherland! An outspoken advocate of Globalization and the most favorite proponent of free-trade (including mine), he suggested ‘Liberalization of Indian Agriculture’ during the conference!
I hardly doubt the worth of this man, in fact I most highly regard his might, but still commenting on Indian agriculture without being close enough to it (i.e. close to the ‘people’ involved in Agriculture – the ‘farmers’) may result in a wrong commentary!
With an unending curiosity, and with the same kind of unsolvable-looking dilemma you may have faced, I did what you may have done - I spoke with another Economist on the same subject matter!
However, I did it a little differently – I made sure that the one I am speaking with is a resident of India and thus breathes the country, and is also personally involved in Indian Agriculture and thus carries its soul! Not only this, I further applied a margin of safety to my due diligence by complementing my research through speaking with a devoted Indian social worker - a 2006 nominee for globally prestigious Jonathan Mann award and recipient of many others, who sleeps with the farmers in Indian urban-rural slums!
Well, not that I was looking for like-minded people, but as per my expectations, I encountered completely different views compared to what the free-trade master proponent had suggested!
One of them went on to the extent of declaring that the term ‘Liberalization of Agriculture’ is meaningless, and rather, we need ‘Liberating of Indian Agriculture’!
After enquiring about the same during a short personal encounter with the free-trade proponent on the same matter, my Indian economist and agriculturist friend received a response that signaled towards the rewards of liberalization reaped by the Indian Manufacturing industry, which shall thus support the case for ‘Liberalization of Indian Agriculture’ as well!
Well, Indian Agriculture cannot be compared to Indian Manufacturing! Manufacturing boom in India is a result of ‘Entrepreneurship’, whereas Indian Agriculture is still in the state of ‘Livelihood’, as was also rightly pointed out by my social-worker friend!
To elaborate, what we mean is that though the manufacturing sector started blooming as a result of industry liberalization because it tested Indian people’s Entrepreneurship acumen - a test that the budding Indian entrepreneurs rocked; the story is not quite the same with Indian Agriculture industry – Agriculture is mostly Livelihood for Indian farmers and is their sole dependence for existence! Thus, Indian Agriculture does not enjoy many ‘degrees of freedom’, given which; the ‘terms of trade’ are not in favor of Indian Agriculture!
As was pointed out by my Agriculturist friend: Unlike India, Agriculture is Agri-business in developed economies (mainly U.S.), and thus it may not be a good idea to consider Agriculture at the two places in parallel or tandem – as may have been the thinking of our respected free-trade proponent friend! You cannot extend the idea of Agriculture Liberalization in developed economies, and take the model to the developing ones! The roots and the basis are not quite the same, and the culture a whole lot different!
In fact, even in Developed Economies, Agricultural reforms are variable and inefficient! And, by the way, we are not saying this – this is an admitted position of OECD!
[24]This confrontation or clash in viewpoints may be a result of staying away from the crowd, while trying to talk their language! You may be very smart and full of wisdom, understanding, and a very deep knowledge on the subject, but unless you get in personal touch with the end-user (in above case, the farmer), it may become very difficult to suggest a wise solution!
Hitler knew how to beat; Gandhi knew how to get beaten,
Hitler only knew Violence; Gandhi solely knew Peace,
Hitler loved to be dreaded of; Gandhi even without any self-publicity was already declared Mahatma!
But both men were ‘Wise’!
They practiced what they preached! They lived their passion! And, most importantly, they shared and used their wisdom, of course in their own ways, to become wise and make people wiser!
Your richness, your fame, your status, your reach, may all combine to form very good tools to measure your ‘wisdom’; but never by themselves shall they be enough to declare you ‘wise’!
I am no Robin Sharma – a motivational speaker or a life coach! And thus, I always try and give reasons behind what I say!
[25] Let us consider any of the tangible or intangible assets mentioned above that we acquire over our lives – wealth, fame, status, or reach! Don’t you think that in some sense or the other, one is resultant of the other – wealth may bring along fame, or some sudden fame may bring wealth, wealth comes along with status, or your reach may bring you fame!
Whatever, they are in no sense truly independent! But, you become ‘wise’ in isolation! It is one precious asset that you acquire when you are with yourself, true to yourself, and completely clean in your own eyes, before anyone else’s!
Sometimes people tend to use the word ‘wisdom’ to measure how ‘wise’ you are! But, that is faulty, absolutely faulty! Wisdom is only a step towards getting wise; it is in no way a tool to measure how wise you are! Because it cannot be measured, being wise is absolute! It is just one spot, one level; it is not a scale or a range along which you can measure its extent!
If everything in you, each and every part of your body, says that you are right; you are right! There cannot be any two ways about it! When you know you are right, you are right! And, that is wise! But if you know something, and you say something, which mostly happens (me included), I don’t know what you are, but you are definitely not wise! Again, that does not say you can’t become one, you can – with ‘Change’!
[26]You may be a little perplexed as to what this 25-year old is trying to convey!! And how on earth has he, before anyone else, gained so much wisdom, and applied it all, to teach us what ‘wise’ means!! Moreover, he claims that he is different and radically positive – Boy! What’s going on!
Good questions!! Well, first of all, I am not trying to teach you anything – I am just sharing! And, second, though I repeat that I am different and radically positive, I am in no sense claiming that I am ‘wise’ – that is not for me to decide! Probably, that is for no one to decide!
In fact, you can be assured that one who claims to be ‘wise’ is, if not otherwise, at least not ‘wise’!!
So much so for my philosophy and psychology lessons!
However, if you think deep over what I am going to say now, you shall agree with me!
Almost all subjects or courses in this world can be broadly divided in two:
Philosophy and Psychology!
In fact, there is no real reason why I should have put an ‘almost’ at the beginning of the previous sentence, but I always like to apply a ‘margin of safety’ since I am operating in the real-world!
Think about it: Philosophy is a study of principles, while Psychology is a study of mind! So, while Philosophy covers the subject, Psychology covers you; and thus an agreement or understanding between the two shall assure success!
Let us take this theory to the corporate world, and apply it like an Economist! So, while as a company - its sales projections, mission statements, market share targets, or product-line extensions shall reflect upon its Philosophy; its culture and integrity shall reflect upon its Psychology! When these two move in tandem, when these two are in tune, when these two complement each other; you can be least assured that the deal is done!
Aha, mentioning the word ‘deal’ immediately strikes our mind with M&A activities!
[27] And those who understand what such activities are, also understand that more fail than do actually succeed! The simple reason is a mismatch between two firms’ philosophies and psychologies – the difference between their gained wisdoms and their reflection upon being wise, or otherwise (never forget to mention these last two words)!
Yes! Philosophies always reflect upon gained wisdom, and Psychologies always reflect upon state of being wise, if at all!
Earlier, I said that your age itself gets you wisdom; but does that mean that wisdom depends upon and is directly proportional to experience??
Well, if that is the case, then in any such M&A activities, two companies with even slightly different ages shall never be able to merge successfully!
No, of course not! That is not true! What it only means is that there is a much higher chance that you may have gained wisdom in 20 years, as compared to in 2 years! But that in no sense shall mean that you cannot gain it in 2 years! I hope we are all clear on this!!!!
Once again, as is the case with the state of being wise, wisdom by itself is not something you accumulate over time, but it is something that you achieve, you acquire!
A series of struggles, sacrifices, hardships, and thus understanding, gives you wisdom, and this wisdom in turn makes you wise! The only requirement here is that you learn at both stages: you learn from your hardships to gain wisdom, and you learn to apply what you have learnt to act wisely – ‘wisdom is theory; wise is practice’!
And this may be the exact reason why a 25-year old may look wiser than a 55-year old! It all depends on how quickly you learn, and ‘change’ is almost a requirement to learn!
(You know why I used ‘almost’)!
Let me get back to Gandhigiri (as it is often called in the local language) while I delve deeper towards exploring this difference! And while I do this, you shall notice that this chapter would start relating to the title of this book! Just ‘understand’ that ‘this world’, if not constantly, does ‘change’ from time to time, and thus ‘this life’ need to be changed too!
Albert Einstein once said, “In a few decades from now, nobody will believe that a man of the stature of Gandhi walked on this earth like us”! What would you call this:
‘a tribute or a declaration’! Well, if you regard Albert Einstein as the greatest intellect, you might as well take his word for granted!
There is a difference between being a ‘believer’ and being a ‘follower’! I am a believer of Gandhi, but I am in no sense his follower! If you regard Gandhiji as your leader, then the last thing you should do is to be his follower! You may have heard of this:
‘Leaders create leaders, not followers’! Once again, I believe in this too!
As I said, one thing we all shall keep in mind is that this world changes, and that it shall keep changing! You cannot possibly follow Gandhiji during all stages of this world!
Some people say that Gandhigiri worked with the British because they had some conscience! And now that we, as Indians, have lost our character and semblance of conscience, the same Gandhigiri may not work with municipal officers or state politicians!
I completely disregard the first statement as sheer rubbish – if British had any conscience; they would not have ridden their horses over people’s chests, they would not have forced women naked, and they would not have eaten all their share of food causing people to die of famines! Leave aside possessing any human conscience; these beasts, at the very first place, were not even humans to do so!
[28]However, the second part of the statement does reflect upon some truth – it truly reflects upon the lowest-level Indian politicians at the municipal or the district level, while it is partly true for most of the other Indian bureaucrats and government officers! In fact, it is not only true for India, but for much of the underdeveloped world, clearly including Cameroon or some such other places in Africa, besides Thailand, and even China!
But it is always easy to say that Gandhigiri happened because it could have in those times - What if Gandhiji did not exist? Then, we would have probably thought of it as just as impossible as it looks today (provided if someone have had gathered enough wisdom to even come up with one such suggestion, otherwise it may not have ever struck us)!
In fact, there is a much higher chance that it may have looked much more inapplicable in those days (than today) when India was under colonial rule, and there was no real Democracy, Rights Law, Preamble, or Constitution of our own!
Now, we do not know whether Gandhigiri can be implemented successfully in today’s world, but circumspectly, I can say that we may not be in need of something so radical right now! Maybe we are, but at least we are not under colonial rule!
This is ‘Change’ – things that once worked may not always work, but then there are still a good amount of other things that may work! All your setbacks are results of your failure to change – and not just change at your own merry, but change whenever required! This gives you wisdom, with help of which, the wise learns to anticipate these requirements in advance, and act accordingly!
Some say: ‘Failure breeds Success’, and then, of course, since other people also need to earn money, some others say: ‘Success breeds Failure’! You already know which one I believe in! The process involved while your failures turn into your successes in life consists of your acquisition of wisdom (after learning from your failures) and then its application towards wise actions, which results in success! And, learning is often nothing but ‘learning to change’!
In fact, this is the reason why I have placed the chapter ‘resistance to change’ right after this one! Once you recognize the importance of Change, it may be easier for you to analyze the consequences of not adhering to it!
Earlier, I hinted upon two wise men – Gandhi and Hitler! And though, you may have expected that designation for Gandhi, you may have been surprised with Hitler being called wise as well! To begin with, both these men looked unreasonable at the beginning, but then ultimately made a lot of progress with their respective approaches!
George Bernard Shaw wrote, “The reasonable man adapts himself to the world. The unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man!”
Well, with this definition it seems like you do not need to change - You were born wise and then you change this world to think like you do! I don’t know! Maybe Gandhi and Hitler belonged to this category, but most of us need to change! And, chances are ‘almost’ nil that Gandhi and Hitler could have been any different, since all are equal!
So, though unreasonableness deserves to be very well-appreciated sometimes, you shall be able to get through most of the times with reasonableness alone!
For those of you who believe in spirituality, and for those of you do not, I am including a brief lesson from Osho which says – ‘There is no God, there is Godliness!’
Here, Osho has tried to separate the noun from the verb! God is a noun, whereas Godliness is a verb! From what I understand, he says that we attire various entities with such nouns in the real-world which has no real meaning! Instead, it is all about verbs – it is a flow, a continuum! He says God cannot be everywhere, but Godliness flows, it moves along, and thus it is always within our reach, probably even already there inside us! Osho refers to Godliness as some sort of pure and impersonal energy, and denies any existence of God in person! He says to impose any form upon such energy is ugly!
Well-taken, but why this in my book! It is very relevant – this world consists of verbs, not of nouns! As Osho explains this with some beautiful examples:
· You are seeing a flower, to call it a flower is not right, because it has not stopped flowering, it is still flowering; it is a verb! To call it a flower you have made it a noun!
· You see the river! You call it a river – you have made it a noun! It is rivering! It will be more accurate to the existential to say that it is rivering, flowing!
And everything is changing, flowing! The child is becoming a young man; the young man is becoming old; life is turning into death; death is turning into life! Everything is in continuity, continuous change; it is a continuum! There never comes a full stop! It comes only in language! In existence there is no full stop!
[29]Thus says Osho! And we all know that Osho is a declared genius! But, people, if you think and own the thought that a flower is a flower, a river is a river, or for that matter anything else, and if you are being true to your own self, everything in you says that you are right, you are right! And, that does not mean that Osho is wrong! You both are right! You both are wise! These are not contradictions, these are just different ways of thinking and somewhere they shall converge, provided the people who said it were being true to themselves!
You may not be able to immediately relate the concepts of God and Godliness directly with the real-world! So, let me pick up a recent newspaper article that touched upon an issue that I personally find very intriguing and which is very close to my heart:
[30]Most of the readers may be familiar with the Bottom of Pyramid theory promoted by one of the foremost management thinkers in the world today – Dr. C.K.Prahlad!
[31] Recently, his idea that selling to the poor can be profitable and also help eradicate poverty came under attack from Aneel G. Karnani, a professor at the Michigan-based Ross School of Business!
You can search for all details yourself – such catfights, which are not new at all, are usually all over the blogosphere! But, the essence of Karnani’s attack lies in the solution suggested by him: He says, “Rather than focusing on the poor as consumers, we need to view the poor as producers”!
Though I know that Prahlad has come up with some strong replies, without even referring to them, I can say that there is a clear miscalculation in Karnani’s statement! I personally think that it is impossible to segregate any section of a society exclusively as ‘producers’ or ‘consumers’! All producers are consumers, and all consumers in some sense are producers! However, to find out what is right and what is wrong is not quite our purpose here! Rather, I have raised the bar and now you shall handle it yourself! Please come back to the blogs and we shall converse more! But, the crux of raising this issue lies in something else, but before I get there, let me point out to a couple of more interesting controversies that the article had put forward:
Remember Tom Peters vs. Jim Collins (author of ‘Good to Great’ and ‘Built to Last’)! Tom Peters took Collins’ work apart, particularly scathing Collins’ definition of great companies: he agrees they have done well but “they haven’t led anyone anywhere”. Tom says, “I don’t give a damn whether Microsoft is around 50 years from now. Microsoft set the agenda in the world’s most important industry at a critical period of time, and that to me is leadership, not the fact that you are able to stay alive until your beard is 200 feet long”!
And then, strategy expert John Hagel attacked innovation guru Gary Hamel saying that Hamel is confusing breakthrough management with continuous management innovation!
What are all these? All these are ‘ideas’! And, all these ideas possess wisdom, provided that they are all original! However, let us try and relate this to what we have been discussing in this chapter, and give some shape to our master idea! This should become clear with the following paragraph!
Well, do you know what the article was titled: “Battleground cyberia: Ideas struggle for supremacy”! From what we have learnt, we can now say that this title is faulty since no idea is bigger than the other, provided all – Gary Hamel, John Hagel. C.K. Prahalad, Karnani, etc., were true to themselves while proposing them! And, this stands true for all those living in this world!
Thus, whenever you next propose any such idea or execute it, or better still, listen to some such idea or an execution plan from an Economist, or for that matter even a Social worker, with the greatest image in the society and a heavy band of followers; ‘do not follow’!
You may believe in it, if it is worth it, which again is very likely, but before you take any action, ask yourself to make sure that you agree to it! If everything in you says you are right, you are right! Go ahead with it! You shall be acting wisely! You shall be wise!
And, in fact, after a point in time, you may not even need to ask yourself; things will become mechanized!
Believe me, God has made all of us at least this much capable – when we know it is right; it is right! Being wise is this simple realization; it is not some sort of calculated science!
Chapter Four
Resistance to Change: Countries, Organizations, Individuals
Even the countries, organizations or individuals most resistant to ‘Change’, tasted success only after they finally implemented it! And to implement Change, you first need to grow amongst your people a ‘willingness to change’, which comes along when you gain wisdom, which you shall then implement to act wisely, i.e., towards ‘Change’!
You may understand the above paragraph better with the help of this mini-flowchart:
Willingness to Change Wisdom
Implementation of Change Wise
As explained earlier in Chapter 3, gaining wisdom doesn’t automatically turns you wise in your decisions and ways of life! Wisdom is bound to come with experience, struggle, setbacks, and then rewards of life, but then, whether one implements his gained wisdom or not decides if he becomes more wise or not! It is very similar to the concept of ideas and execution – ‘Ideas are easy, execution pays off’ – I read this wonderful thought engraved on the floor of my B-school!
Now, of course, the diagram above, forms only the ending part of what otherwise would have been a long flowchart, since there are many more phases which you need to go through before you even gain enough wisdom, or develop a willingness towards Change!
China forms a classic example of resistance towards change, followed by a realization of the need for change, and then finally followed by its implementation!
Since I could not have afforded the book at this point in time, I specifically went to a local bookshop called Crossroads today to finish reading this chapter from a wonderfully written book called ‘The Undercover Economist’, authored by a very like-minded man ‘Tim Harford’! The chapter is titled ‘How China Grew Rich’!
Though later in the chapter, Tim acknowledges that the title may have been an exaggeration since China is not rich ‘yet’, I think the steps that China has taken to get richer resemble those that I have mentioned in the earlier paragraphs!
“My God, said Fran.
When were you last in Shanghai?
Ten years ago.
How many of these buildings were up ten years ago? She thought for a moment.
You see that one?
The boxy forty-storey office building over there?
No. That one just beneath it. She was pointing to a twelve-storey red-brick building, dwarfed on every side by more modern constructions.
I see. Yes.
That was the tallest one standing ten years ago.
My God, I said.”
The above conversation is an excerpt from Tim Harford’s book ‘The Undercover Economist’! The conversation above is showed to be between the author and his wife!
Tim goes on to say, “What New Yorkers would have made of it, I don’t know. It made us Londoners feel like country bumpkins.”
*China finally adopted change only in December 1978, when Deng and his allies took over, after the death of an earlier communist leader Mao in 1976! Deng took charge in December 1978! He started China’s journey of Reforms, while getting it closer to free markets and giving way to, what Tim calls, the ‘world of truth’ into China!
[32] This world of truth led China to a 40 percent growth in its agricultural output in just 5 years! Before Deng took over, China’s output of grain, per person, was as low in 1978 as it had been in the mid-1950s, just before the ‘Great Leap Forward’!
[33] Chinese agriculture had been locally organized into collectives of twenty or thirty families! People were rewarded with ‘work points’, which were awarded to the output of the collective as a whole! There was little opportunity for personal improvement either through extra effort or ingenuity. As a result there was little of either. Thus, the author says, to improve agriculture, Deng had to get the incentives right! He started by raising the price paid the state for crops by nearly a quarter! The price paid for surplus crops rose by more than 40 percent, substantially increasing the incentive for fertile areas to produce more crops. Also, Deng’s government allowed the innovation when few collectives experimented with sub-contracting land to individual households! Households who were renting land from collectives had every incentive to work hard and think of smarter ways of doing things because they were rewarded directly for their successes! Crop yields immediately increased, and the experiment spread: by 1983, 98 percent of the collectives had switched to sub-contracting, as compared to 1 percent in 1979!
[34] These reforms were of course linked with a number of other pieces of liberalization! China had begun to travel along the so-called capitalist road, but such a journey could not have been completed on rice alone! The success of agricultural reforms created the momentum and popular support for Deng to continue! As Tim reveals in his book, an unmysterious chunk of the development of countries is based on the simple principle that saving and investing today makes you richer tomorrow! By the time Mao died in 1976, every 100 yuan invested was adding only 18 yuan to China’s annual output! This was less than half as efficient than two decades before, when the return was 40 percent! With Deng in power, to get any value out of the vast sums of investment capital available, the Chinese government began a gradual shift to a market system! Fifteen years after Deng came to power, returns on investment had quadrupled: for every 100 yuan invested, China’s annual output grew by 72 yuan: each investment paid for itself after just 500 days!
However, China, which was a victim of ‘command economy’ where families did what they were asked to, they located themselves to where they were wanted to be, and they produced only as much as they were ordered to, finally broke the shackles to move towards the ‘world of truth’, and thus the truth, and the honesty was rewarded! You shall register this point better when I talk about honesty, integrity, etc. as factors in the efficiency of markets in chapter eight!
Tim Harford has compared China’s success with other countries across the world, and has tried to explain, in particular, as to why foreign investment went to China, but not India or Cameroon!
As for Cameroon, Tim has answered the question with respect to two factors:
· Luck: In contrast to Cameroon, the Chinese had a substantial and rapidly growing domestic markets, always attractive to foreign investors;
· Education: China was committed to education, whereas Cameroon’s government wasted any opportunity it had to educate its people back in the 1970s, when the country was richer than it is today!
As for India, Tim has again answered the question with respect to broadly two factors:
· Natural advantages: The often-painful process of international economic engagement was made smoother and more effective because of mainland China’s links with Hong Kong and Taiwan! Both were successful internationally integrated economies back in the days when China was very isolated from world markets, and despite the different economic systems there were close ties of family and friendship between businessmen in the three economies. These social ties helped compensate for problems in China’s legal system in the early years of reform! India lacked Hong Kong and Taiwan!
· Welcoming Foreigners: India lacked any interest in welcoming foreigners! China, on the other hand, worked hard to attract foreign investors!
[35]However, I think that Tim has been very lenient on the two countries, namely India and Cameroon, while comparing their failure to not only attract foreign investments, but to also strengthen their own fundamentals; as against China’s sometimes unfair, but ‘committed to fundamentals’ policies! The most basic problem is that both these countries completely lack ‘Innovation’! It is not to say that China is God at it, in fact China has probably done more than its share of unfair copying and cheating of ideas, but the way in which this real-world is designed, it allows you to do that if you have a fair commitment to back it up with your own strong ideas and understanding! After all, all of the now-developed nations copied ideas from the then more advanced countries, when they were developing! In fact, it happens all the time even today, however, it is essential that you do not do it blindly, and that you have a strong understanding of the same along with a clearly laid out execution plan! Though India does not necessarily lack ideas as Cameroon does, its execution standards and organizational skills have been far below those of China!
I shall now, based on my analysis, give you my version of why India has largely been a disappointing story!
How does India fare in contrast to China? They call it ‘steady’; I call it ‘extremely slow’!
Everybody always knew that reforms were meant to be, if we were to catch up with the rest of the world, but they were too busy either covering their own ass, or protecting their political chair! You would often hear people saying that China and India are two different stories, but I think that the end to both these stories, or in other words, the sustainable solution towards their ‘real progress’, consists of very similar steps and phases (common to the ones I suggested in the beginning of this chapter)!
[36] Though I am not sure to say that China was quick, I can most confidently say that India has moved slower than molasses!
India’s growth is highly lopsided – the Manufacturing/Services sector enjoys double-digit growth, while the Agriculture sector is staggering at a shameful 2%! The horror behind this difference is further magnified with the realization that though the Manufacturing/Services sector concerns or really affects only 30% of the population, Agriculture is still the God for 60% of the same! So, though the Income has increased in the hands of the Manufacturing/Services sector, it has remained more or less stagnant in the Agriculture sector, which concerns the major part of India’s population!
Now, let me fall back upon my interviews with Mr. Chandrashekhar and Mr. Kakani to reflect upon this in greater detail!
[37] I must say that Mr. Chandrashekhar has got a knack to use correct words and phrases to put his thoughts into explanation! He said:
“In the developed world, it is a struggle for life; in India, it is a struggle for existence”!
How true is that! I can go on to give you examples as to why he may have been correct saying that, but really it is outside the scope of this book, and also it will sound very obscene!
But with this in mind, let me briefly explain to you, in more decent words, why Indian economy is in a shabby state, and why all this growth is just pep-talk with little real significance for the poorest, and thus for the country in long-term!
I don’t know how many of you will subscribe to this viewpoint, but I think that almost every cycle (product cycle, economic cycle, life cycle, etc.) in this world takes the shape of a bell-shaped curve, if you measure it right from its birth to right up till its death! Now, I do not need to explain that Agriculture, and thus Agricultural inputs, also fall among one such cycle!
Why is Agriculture so important? Because, it is about food, it is about existence, it is about the ‘basics’! Relate this to what I am saying throughout this book – we are going farther and farther from the basics, while only ‘supporting’ our basics in ‘need’ to fulfill our ‘desire’ for fancy finished goods or derivatives, whatever you call them, rather than it being the opposite!
*A desire shall not ever become a need, but you can afford to treat it more so when you are richer! And this is exactly what is happening all across the world – the unfortunate part being that it is happening ‘all across the world’! Though this is going to hurt everybody in the long-term, currently while this is in action, ‘rich is getting rich, and poor is getting poorer’
[38]!
Now let us go back and analyze why I would choose Agriculture as a starting point for this discussion!
To answer this, let me ask – What is the most important Agricultural input?
The answer is Land! But, once again, and unfortunately so, most have failed to realize that the factor of land productivity is deemed to follow a bell-shaped curve, given the way in which agriculture has developed over a century or so in this world - we have gradually shifted from ‘Organic Agriculture’ to ‘Industrial Agriculture’ (discussed below)!
Industrial Agriculture first started with U.S. in 1920s-30s, which basically led to ‘Mechanization of Agriculture’! What it meant is that, now, more ‘High Yielding Seed Varieties’, i.e. ‘Hybrid Seeds’, were to be used which were believed to increase output per unit of land! This made both the farmers and the government happy, while naturally, the use of ‘synthetic fertilizers’ also replaced the use of ‘organic fertilizers’! I must say that U.S. is the smartest country of all, not only because the results show so, but also because it understands the intricacies of the real (read ‘messed up’) world so much better than anybody else! The reason why U.S. adopted to ‘Intensive Agriculture’ is because it had ‘few tilling hands but vast land’! However, when its own domestic market needs for hybrid seeds and synthetic fertilizers, the inputs for Intensive Agriculture, approached saturation; it smartly, while garnering all the respect for being the greatest innovator, started marketing (read ‘forcing down the throat’) the same to huge ‘Agricultural Economies’ like India! India, under a mix of pressure and choice, adopted this method half-heartedly, while ignoring the fact that the reasons for U.S. to change to such method of Agriculture do not quite exist in India! At that time, around 70% of the Indian population was still engaged in Agriculture, and there was no issue of ‘few tilling hands but vast lands’! In fact, when India adopted this method, it only crept in even more ‘Disguised Unemployment’ (read ‘unneeded people’) into the Agricultural sector, as there was no better place or vacancy for farmers to earn besides Agriculture! Farmers were not educated or skilled enough to find a place for themselves in the otherwise growing sectors of the economy like Manufacturing or Services, and as a result, though the population engaged in Indian Agriculture only decreased from 70% to 60%, the share of Agriculture towards India’s GDP has plummeted down from 75% to 25%!
‘Change’ is not always needed, but when it is understood to be, it should be implemented in full without hesitance, which otherwise only results in ‘resistance towards change’!
In the case above, I am not sure if India needed a change towards ‘Industrial Agriculture’, but once adopted, it needed it without any ‘resistance’! For example, as was earlier hinted upon, China also adopted this change, but it did that without resistance! There, the scientific community backs up the farmers, goes to the farms, and gives them the requisite knowledge and input! Rather, in India, the scientific community is in fact sleeping!
[39] Not only that, if you consider the quality of people who end up in these agricultural universities in India, you will understand that it only consists of the leftover/residual crowd, which could not cut it through any of the booming Financial, IT, or any other such Services or Knowledge-based industry sectors in India!
Earlier, in the days of ‘Organic Farming’, the farmer used to develop his own seeds and fertilizers himself, and thus did not need to spend on any such inputs! But now, with farmers being forced to use the hybrid seeds, their farms need the synthetic fertilizers more than ever, but since the poor farmers cannot afford it, they are using their age-old methods for fertilizers, which is only resulting in more pests striking the fields, for which again, farmers cannot afford to buy the pesticides!
My point may be better understood if I supplement it with Mr. Kakani’s real-life experience with one of the Indian agricultural farmers! Mr. Kakani is an Editor at Commodity Research Group, and aggressively follows Gold! During the interview, he told me that Rural India is not buying Gold anymore! When I asked him to elaborate upon his statement, he explained it to me by quoting a part of the conversation that he held with a lady farmer during one of his field trips! She told him: “bauji, das saal pehle tak hum har fasal ke baad do tola sona khareedte the, ab to fasal hi nahi hai” {Until around 10 years back, we regularly used to buy 22 grams of Gold after every harvest (in April and October), but now since there is no surplus any longer, we cannot buy any}!
Earlier, while talking about the reasons for disguised unemployment in Indian agricultural sector, I mentioned the lack of education among Indian farmers! Let us keep aside farming for a while, and rather concentrate upon the education levels of Indians in general – Once again, a vast difference between India and China! China’s education system is now solid, and they do not have any domestic shortage of either skilled labor (for example educated farmers), or knowledge sector professionals (let us say economics PhDs)! China is producing talent, and thus may find it easier to sustain and reap the rewards for the innovation of its own people by itself!
[40] Let us take a comparative view on the status of India’s education system:
Before going any further, I realized that there is a serious shortage of schools in India – India is adding a new population of around 20 million children every year (i.e., a new ‘Australia’J), when the Indian schools are already saturated, and new schools need to be build up! Mr. Chandrashekhar helped me to make a quick, rough analysis on this subject:
‘Assuming that we have enough schools for all children born up till exactly this point in time, we will have to build around 18000 new schools every year, or approximately 50 new schools every day, for the next 10 years, before we can reach a level of sustainability’!
[41]Before I proceed, let me tell you that these are no genius outlooks, and that many in the Indian government may have already made many of such estimates! But the problem and the reason for stagnancy lies with their ‘Resistance to Change’ – their nervousness to implement it, and thus their ignorance to do so!
This is not the first time this has happened! It has happened before as well, when none other than Mr. Jawahar Lal Nehru, India’s first Prime Minister and probably the most acclaimed Indian political figure even till date, copied former Soviet Union’s 5 year plan - putting in massive capital into heavy industries which had a long gestation period! However, he did not realize (read ‘forgot to copy’) that Soviet Union also had compulsory and free education up to the age of 14!
Well, a heavy dose on Agriculture early on in the chapter! But I may not digress so far from the title of this chapter that it shall lose its relevance! The main motive behind this book is to realize the importance of ‘big picture’ thinking, while of course being aware of the details and intricacies! But sticking to my self-assigned job of making the big picture view clear, or clearer, in the minds of the readers, I shall contain myself within the boundaries and periphery of the title of this book, which actually means unleashing them all! This shall become clearer in the ensuing paragraphs!
If you have pondered enough and at least tried to figure out what I am trying to say in the last paragraph, I shall help you to understand it as I now proceed to try and integrate the importance of ‘Change’ among individuals, organizations, countries, etc., or any such hierarchy you can imagine between any two extremes!
The point is that every thing in this world – right from the life of the poorest individual to the life of the richest country, or even bigger extremes, operates on similar-looking cycles (something like a combination of bell-shaped curves), while the stage at which a particular individual or a country lies at a particular point in time is reasoned by its current surroundings, its willingness to change, its background, its exposure, its circumstances, and all those other good and bad words I have tried to get straight via this book!
Falling back upon the same example of Agriculture, and analyzing why I may fall back upon it to explain the big-picture, shall integrate the different entities of this world close enough on a common platform (i.e., Agriculture) for you to understand that this world operates on such integrated, but yet so fragmented, ways!
How Integrated?
If you step back into history, and trace the emergence of the now developed economies, you will find that in almost all of these economies like Switzerland, Germany, etc., there was a more or less common shift from an Agriculture-based economy to a Manufacturing-based economy!
However, it is only when you begin to try and answer the question ‘then why fragmented?’ that you start delving into greater details realizing that though developed countries and industrial powerhouses like Germany and U.S. employ only around 2%-3% of their population in the Agriculture Sector while being net exporters, a developing country like India employs around 60% of its population in Agriculture, while it is only importing more wheat by the day!
So, what it means is that though, in the developed economies, this small segment consisting of only around 2% of the population is able to feed the entire rest 98% of the population while also producing surplus for exports; 60% of Indian population engaged in Agricultural production finds it difficult to satisfy their own needs, leave aside satisfying those of the rest 40% of the population!
So, if you now feel helped after seeing how different countries can be integrated together on a common platform such as Agriculture to try and understand the inefficient ways in which this world operates, the following story of a daughter of farm-laborer parents will only help you to further understand that if you implement Change with all your gathered courage, determination and wit, and if your intentions are positive, you can benefit yourself as well as your society, your country, your world, your …., in a great way! So, in the spirit of the title of this book, I shall now unleash all boundaries and give you an example of an individual (or probably a very small group of individuals – a self-help group) who has successfully implemented Change, while setting up a clear example for big countries, and an even bigger world for implementing Change in a wise way! The following is a combination of several excerpts taken from an article published in ‘The Times of India’ newspaper:
[42]‘This is a story of a 20-year-old woman from Andhra Pradesh, India, who we will call Julie for the purpose of this story! Julie dropped out of class 10 because her farm-laborer parents did not have a regular income. They earned barely Rs. 1,000 a month. Her mother was a member of a self-help group, and once attended a meeting, which discussed whether girls should participate in training for service jobs! The decision was probably made when Divyamma, a 47-year-old group leader, said, “I got married at 14 and look at me now. Beaten every day by a drunken husband, no money to educate even my sons. Let us give our children a chance to a better life.”
Julie took a bus pass to the training location and she willingly participated in the program along with one hundred boys and girls from neighboring villages. A simple test given to her showed that she was friendly and had flair for customer relations management.
Today, she works at a McDonalds outlet earning Rs. 4,000 per month and often thinks of the despair she has wiped out. Her younger brother is back at school. Her parents have gained new respect in the neighborhood. Julie’s dream, she says, is to become a businesswoman and employ several rural girls like her from underprivileged families.’
The author has explained that there is a severe shortage of young people like Julie in India’s booming services sector, where skilled workers are so scarce that attrition rate is nearly 40%. She further explains that, yet, about 100 million graduates remain unemployed in rural regions; nearly two-thirds of them trained in skills that have no demand in the labor markets.
Ms. Shenoy expresses her opinion saying that Governments think that companies merely pay lip service to social causes, and that corporate social responsibility means little more than a section in annual reports!
I think that this is true not only in case of India, but to a good extent, all across the world – there are definitely some companies, more so in Western Europe (particularly in Switzerland) and U.S., that take social responsibility seriously, but almost all governments think they do not!
And probably this is why the author goes on to say that the Governments need to look at ‘visionary entrepreneurs’ (read ‘individuals with courage, wit, determination and a fair intention to change societies, countries, and this world in a positive way’), who are already investing in stronger communities.
Ms. Shenoy provides us with examples of a couple of such individuals from India:
· Anji Reddy of Dr. Reddy’s Lab – she started the Livelihood Advancement Business School for the socially and economically impoverished!
· Narayan Murthy – he opposes reservations in jobs and education, and has invested in training dalit students at IIIT-Bangalore!
[43]Further, Ms. Shenoy reveals in her article that companies feel governments are not comfortable working with the private sector on market-determined principles (once again, I think, this is largely true all across the world, even in the developed economies)!
For India’s case, in particular, she explains that the distrust of private sector lingers in employment exchanges, where jobs are still defined as “government jobs”. Not surprisingly, less than 0.5% of the 40 million people registered with the employment exchanges actually get jobs!
The way in which McKinsey’s Rajat Gupta puts it shall give you the briefest version of what I have tried to say via this book
[44] - He says: “The simple truth is there is no hope for development without business and, in the long term, for business without development!”
Ms. Shenoy, in the capacity of Director at EGMM, shows what governments can do with the help of the private sector. She explains that EGMM teams up with corporate foundations, private companies and multinational corporations to do pilot training programs in the districts. Last year, it trained very poor young people from remote villages in services, securities and textiles. Julie was one among them. By scaling up successful pilots, it provided jobs to 15,000 youth like Julie. The project aims to make 1.5 lacs (150,000) such youth employable in the next two years.
Change is continuous! It will definitely happen, no matter you adopt it or not! The only difference is that if you force it to adopt itself, rather than you first adopting it yourself when the time indicated so, it is more likely than not that this Change will have a negative impact on your life, and thus in some way or the other, on this world!
Not everybody thinks like Ms. Shenoy! That is not surprising, since no two humans in this world think alike, but what is surprising is that how differently the two of them can think! And what forms one’s thinking is solely a factor of his/her surroundings, background, personal and professional experiences, circle of competence, etc.!
28-year-old Dilip Mhaske is an M. Phil from India’s top-ranked university, both nationally and internationally, and holds a masters degree from the prestigious Tata Institute of Social Sciences!
[45] Mr. Mhaske now has a offer from WHO (World Health Organization) in Geneva, Switzerland which measures at around Rs.100,000 per month! Mr. Mhaske has however decided to drop his offer, and rather work with the people in the slums of Mumbai to help them better their lives! With no income, Mr. Mhaske has arranged for a loan to carry forward his work for the poor! He sleeps on a bed borrowed from one of the poor families, and arranges several events for the poor, while fully sharing along with them their joys and sorrows!
Here is a man, who has a proven track record as one of the brightest and most capable Indian citizens, or for that matter, World citizens, but has decided to use his worth for the poorest rather than for himself! What is this – this is Change! Do you think that when he was himself born in a poor Indian landless farmer’s family, he brought along with him this desire and commitment to stick to that lifestyle, and never leave such surroundings overflowing with poverty!
Probably yes, but most probably no! His times have changed him – the way he interpreted his education, combined with his personal and professional experiences, has led him to believe that his soul shall rest only with the upliftment of the poor! This is an example of pure change, backed by a lot of courage, fierce determination, strong wit, and of course the kindest intention! Don’t you think that with a Rs. 100,000 per month offer (which is at least 10 times the earnings of an average Indian); his family, co-workers, and well-wishers would have tried to persuade him to take the offer! My guess is ‘of course, yes’; but it was this man’s gained wisdom, which grew in him such willingness to change, followed by its implementation (the way in which he implemented the wisdom he gained from his education, his personal and professional experiences, etc., to become wise) that he stuck to his ideals and heard his inner voice!
I also have had some very strong urges during the course of my life, as almost each one of us has, but never found myself courageous or determined enough to break the shackles of family, society, and other such bindings, to do what I was meant to do, thus refusing to better my own self!
But why would you need all the courage and determination to implement change, after all, it is towards your own betterment! Because, Change is not understood the way it should be – sometimes it is felt to be not required and sometimes we run away from it even when knowing that it is required – because it is difficult to change our habits, in fact addictions, with which we lead our lives!
I agree that at some stage or the other Change requires Sacrifice, but people fail to understand that Change by itself is not a Sacrifice! People misunderstand the sacrifices needed to implement Change with the result of implementing Change!
Chapter Five
And then, a little bit of Good Luck
This world consists of approximately 6.5 billion people! And, approximately 80% of this number is living in the poor countries! Out of this 80%, billions are dying out of poverty! The difference between the rich and the poor countries is appalling!
How do you explain this: though, in general, this World means Poverty, it can also mean a fantastic, comfortable life, which respects humans! Given this, you can say that life can suck just because you were born at the wrong place!
When Mr. Mhaske, social worker, told me that 36% of Indian population lies below poverty line, I almost instantly changed the topic and started asking for his viewpoint on the role of destiny! After all, what good or bad work can one do even before coming to this planet as to one may take birth in a billionaire family, and the other born between those who do not even earn a dollar a day!
Maybe our definition of Life is wrong, maybe Life encompasses more than one birth, and thus this birth is a result of what we did in our last one! But then even when two people work equally hard with good intentions in the same birth, it sometimes happens that one may enjoy better fruits of his labor than another!
I am uncertain if it is all precisely calculated and that success in life is pure science, sharply based on your hard and soft skills! Maybe there is something more, and to me it seems that that something more is ‘Luck’! Luck is that little extra chocolate cream or nutmeg on your coffee or that little extra malai on the top of your lassi that, though small, plays a huge role! It is the decider! It is the decider because you may stop visiting a coffee shop if they are not gentle enough to provide you with enough of those extra toppings! After all, there are many more coffee shops, in fact, one of them just across the road, which provides you with a very similar quality coffee, at the same rate, while also cares for your taste and gently provides you with those extra little things! Similarly, you may stop visiting a lassi shop if the shopkeeper doesn’t put that extra spoonful of malai on the top of your lassi, when the other lassi guy just besides the corner, completely fulfills that desire of yours!
‘Luck’ to me is like that little extra spoonful of malai, while all of us are candidates like those various coffee or lassi shops!
So, though the malai (your luck) is in very small proportion to the lassi in your glass (your hard work), it is the decider!
That is why; though you may only need a little bit of Good Luck, you, most importantly, need it!
But then, of course, those who had it and are running high won’t tell you that! They will rather tell you stories about their hard work! But then again, you can’t blame them for that, because, though you, who didn’t get it, have been harping upon it ever since that the other guy had luck and you did not, the other guy wants to make you realize that it is not only Luck, and rather, a lot of hard work!
You forget in your anger, frustration and sadness, that though the other guy may have had more luck than you, he also worked as hard as you, which you know was a lot! Hence, we, while avenging our defeat, fail to appreciate other people’s achievements, which is extremely harmful for the society!
Cribbing about what others got and you did not, you basically engage yourself in a very futile argument, which does not add any value! And, while you waste most of your time cribbing, he multiplies upon what he has already achieved!
This is what I call the ‘multiplier effect’! Bogged down, and a self-declared loser, you stop; while your competitor, who clinched it with that extra bit of malai, accelerates!
This spreads even more inequality amongst that already little part of this world that was born equal! Thus, people, I say, keep working, since even though you may get less than deserved (if luckless), you shall get more than what you would otherwise!
Help is required by everyone; big or small! And this help may come in form of internal (Luck) or external help! After all, this world runs on a very complex inter-relationship between various beings! The big is not big until the small exists, and the small is not small unless he encounters someone bigger! However, it is best if you acquire that help through luck, since then you can publicly count it as a part of your self-effort, and also, no external help may be needed! Moreover, you gain better respect for having done it yourself!
People tend to decide upon big and small, based on their most passionate desire or obsession! People, among whom wealth counts foremost, may count the wealthiest as the biggest; people, among whom self-realization counts foremost, may count Osho as the biggest! However, still, in general, most humans tend to measure success via wealth!
For those who are at the top of that, like Bill Gates, Warren Buffet, or Laxmi Mittal; luck may have played a role! That is not to say that they by themselves do not deserve it! In fact, they by themselves must be prolific human beings, and probably deserved even more! But the point is that luck is needed as a finishing touch, a decider, and that to measure luck also lies in the hands of the interpreter!
Some may say that Warren Buffet got lucky with a few investments, and that that set him a mega-fortune! But then, after deeply going through books like ‘The Warren Buffet Way’, etc., I may confirm that this man puts in a gigantic effort and research into his investments! But, again, it is not that others do not do that! Even Laxmi Mittal, the London-based Indian-born steel tycoon, has a gargantuan appetite for wealth!
Warren Buffet’s investment portfolio is a mosaic of many businesses! Few know that Buffet also deals significantly in Fixed Income and Derivatives, besides Stocks! But, for what I see, Buffet may not have been where he is today if he would have missed Coke, Gillette, and Wells Fargo! You may add Washington Post as well!
I am not saying that Buffet did not put work behind these stocks, in fact he was very clever and shrewd with these stocks, a genius to an extent! But still, Buffet was all the same with other stocks as well, and nobody could have pointed out in the beginning, including Buffet himself, whether Coke will make Berkshire more money, or that other candy shop that Buffet owned!
[46]Let us talk about an even more interesting and particular example! Most of you who follow financial news must be aware of Mittal Steel’s recent acquisition of Arcelor! Mittal is the most businesslike entrepreneur - it was clear in the way with which he dealt with the Arcelor saga!
The whole European gang was after him, and this gang involved none other than the Luxemburg and the France Prime Ministers! I call it a gang, because that was their claim – that Mr. Mittal lacked European culture, since he is an Indian – this is what they meant, they may have said the same thing in other more businesslike ways (read ‘elite insult’)!
But anyways, Mr. Mittal won because his was, though hostile, a true capitalist’s offer! Still, how many of you think that the Indian government did not somehow help Mr. Mittal! And that how come, he who had never before really even looked at India, immediately got so closely involved with other Indian corporate shenanigans, while also starting talks with Orissa to set up a huge steel plant!
[47] This may look like a typical business-like political move, but there was definitely a factor of external help or sheer luck attached to it!
Even a billionaire of Mr. Mittal’s stature needed help to close the Arcelor deal! And, as I had indicated upon earlier, closing matters! The end matters the most – that is the ‘decider’!
Or, for that matter, leave aside individuals; let’s talk of countries! In nature, I do not know of anything more unpredictable than weather! And, that is exactly where from U.S. received some help last winter! With crude prices hitting the roof, any further rise in prices of natural gas, heating gas, etc. would have surely affected consumer behavior, and a severe winter, I think, could have even taken U.S. to the mouth of a long recession, probably a period of ‘depression’!
[48] So, you may look at it and say that U.S. was lucky, since last winter was not the worst the country ever had! But, looking at it a little differently, you may also not deny the fact that the 2 devastating hurricanes, Katrina and Rita, hit U.S., exactly when any such calamity would have harmed her the most! Already the refinery supplies were very tight, and the prices escalating on account of rising import-dependence! However, as expected, U.S. opened up its Energy reserves!
So, though, luck exists and is important, the best way is to not include it in your calculations! In this way, though you can welcome it whenever it arrives, you may not feel helpless when it decides not to!
I hope that you might have got some contrasting insights on luck or destiny, whatever you may call it, with the above three examples! My point is very clear: As is the case with anything else in life, there are n numbers of aspects to this also! You can look at your destiny and say that you lack it; you can look at it and say that it does not exists, or you may look at it and say that boy, you know what, I got it, and I can really rely upon it! Needless to say, the last one is the most dangerous! Hence, to recapitulate on my point, the good news is that all need to keep working, and thus, if you are, chances are that you will do just fine in life!
However, this is not a chapter in rhythm with something like ‘The Luck Factor’, or any other of Thomas Wiseman’s books! I think they are more about ‘self-help’ rather than about ‘Luck’, which is absolutely random! Luck is separate from personality differences, organizational skills, skilled hands, or for that matter, skilled minds! Luck is absolutely random which separates two very similar people, who otherwise may deserve the same! I think Thomas Wiseman, in his book ‘The Luck Factor’, has thoroughly confused the very meaning of Luck! Luck, by its very definition, is not in hands of the concerned!
Now, of course, as is applicable to most other things in life, Luck is also applicable in two old forms: ‘Good’ and ‘Bad’! However, as I understand, they are not opposites of each other! In fact, as I look at it, I see that an opposite to ‘Good Luck’ may be something ‘devoid of Good Luck’, rather than Bad Luck! Bad Luck would be a whole different ballgame!
It looks very similar to what you may have noticed in Finance! An opposite of ‘buy’ may not be ‘sell’, but it would rather be ‘short sell’!
[49] Selling is a whole different ballgame!
For an even more interesting example, those of you who are even slightly versed with the world of financial options may have noticed that the opposite (or mirror image) of the payoff for ‘buying a call option’ is not that of the ‘put option’, but rather, simply ‘selling a call option’!
[50] Good and Bad Luck are very similar in nature to the two examples mentioned above!
I shall give you a horrifying example of life, and you can decide for yourself if you can simply call it ‘Bad Luck’! I came to know of this incident from Mr. Deelip Mhaske, an internationally renowned social worker!
‘Truly Indian’
Recently, in a village close to Nagpur, a decent city in India, a mother and her 17-year old daughter were paraded naked, raped and killed in a village! The two sons of the family aged 19 and 21; were also murdered in public! An upper caste mob of 38 men armed with bicycle chains, axes and bullock cart pokers, attacked their hut on September 29th evening!
In fact, the first photographs of Priyanka, the 10th and 12th standard topper, showed rods sticking out of her genitals! Her body was fished out from a canal!
Such incidents are not completely new to India, and this is what the True India is all about, not those 8% growth rates and that ‘feel-good’ factor that you hear all around!
The reasons for this incident may have been various! However, it is clear that they were victims of a gang of frustrated, poverty-struck, and revengeful men, who learnt nothing better than this in life! I find it very hard to relate such incidents to Luck, or even to call them consequential!
Such inhumane activities do not find place anywhere in the Luck arena! It is most impractical to relate such sad and helpless stories simply to Bad Luck!
The girl topped the 12th standard - before this atrocious day happened in her life, someone may have recognized her for her talent and her hard work, and decided to take care of her – I may have called it ‘Good Luck’! Since, though, she put in a lot of hard work, and perhaps deserved it, the same thing may not happen to all such hard-working slum girls! So, we may have said that the girl was lucky to have received such recognition! But, to call what happened as ‘bad luck’ is indigestible! Surprisingly, many people do it!
This may have been an extreme case, but any such bad or demolishing events in life are less a cause of ‘bad luck’, and more so a result of one’s surroundings, own mistakes, misinterpretations, or sheer stupidity! It is clear that in Priyanka’s case, she fell victim to her surroundings, which were obscene at best!
On the contrary, I think good things may happen to you as a result of your ‘good luck’, and it often acts as a decider! For example, as I had mentioned earlier, Warren Buffet may have made his money or Laxmi Mittal clinched his deal, as per their good luck, but people with similar potential who could not do quite the same may not be right if they say that they suffered with bad luck! They may be right saying that Messrs. Buffet and Mittal had good luck, and that they did not have it, but to say that they themselves suffered with bad luck is not quite right, since Luck never does anything bad to anyone, it may only add!
So, while Messrs. Buffet and Mittal had all the good luck by their side to get that extra ‘malai’, the others did not! That is all it says - Luck does not harm anyone, it only helps, though not all!
In that sense, Luck by itself may be a motivating suggestion to all of us to continue work hard without doing many pre-calculations of the result;
* but not in the sense that it is explained in ‘The Luck Factor’, or any other such books! These books completely misinterpret the meaning of ‘Luck’, and rather make it look consequential of a human’s activities and his ways of living life!
To reflect upon the only way in which Luck may exist, that is in a positive way, consider the following example in contrast to the one given above, and decide for yourself if you can attribute it to ‘Good Luck’!
‘Hardly Indian’
Recently, in the nearby town of Kurukshetra, a six-year-old boy got trapped in a borewell for 2 days! The boy named Prince slipped into the open borewell on 21st July, 2006!
However, the Indian Army personnel rescued the boy! In fact, every day in the morning during the kid’s 2-day ordeal, he was given tea and biscuits, and oxygen was pumped into the borewell! Not only this, the fire brigade team from Mumbai had also headed to join the rescue effort!
What more, while talking to my mom about the incident, I learnt that the kid was promised free education abroad by one of the well-wisher families, and many promised grants and financial aid to the boy’s family! The kid rose to national fame within no time!
Not to play down upon the child, but I do not think that Prince did anything particularly brave, sitting there and crying, as would have any other child in his place!
However, if not on a daily basis, I am sure that there is one such incident occurring somewhere in India at least once in a month, given the amount of potholes India carries, and the condition of its rural villages!
So, what would you call this, I may not object if someone calls this ‘Good Luck’!
Thus, comparing ‘Truly Indian’ and ‘Hardly Indian’, you may realize and agree that, to begin with, though Luck is not a factor behind your original state, the state you belong to, the circumstances you are engrossed in, and the life you are a part of, i.e. the very basics, as in the case of Priyanka; Luck may act as that extra malai, which gives you that ‘all important extra push’, as in the case of Prince!
Hence, Luck is always for good, and never for bad!
Having said that, I must add that a little bit of it is always needed!
Even though ‘Good Luck’ is important, it may work only if it is used to leverage three basic ingredients for Success: Intelligence, Talent, and Work ethic!
Though the discussion on Luck by itself is over, I find it important that we shall briefly discuss these 3 ingredients!
‘Intelligence’
If I would have been you, I would have been most surprised to see Intelligence as an ingredient!
Why?
Because I explicitly stated it in chapter six that all people are equal!
However, if you read it more carefully, you may have noticed that I particularly said that all people are ‘holistically equal’, or equal on an overall basis! And, Intelligence is only one part, though a highly significant one, of such a vast conglomerate that may consist of a plethora of various qualities that any human possesses!
So though all humans may be equal holistically, the extent of any particular quality may vary from one human to another!
Also, I firmly believe that there is a particular pre-requisite support level for each quality, and this level stands at ‘above-average’ in case of Intelligence!
As I have stated in chapter six, you only need above-average Intelligence to conquer this world, but, more importantly, you do need to be ‘above-average’!
If you think about this more carefully, this by itself defines the different achievement levels that we notice amongst people, even when all of us are equal holistically! If you are above-average, you are definitely above more of us than you are below, and if above-average is the pre-requisite, then automatically the candidacy for conquering this world runs only among a minority!
Now, as is the case with anything else, how one measures and interprets these various qualities depends upon one’s own independent research, experiences and understanding!
However, I have a suggestion for Intelligence:
Intelligence is ‘raw’! People often use ‘raw intelligence’ as a separate phrase, somehow giving an impression that they understand it as quite different from simply intelligence!
However, that is what Intelligence means – it is always raw, basic, the amount you were born with! I do not know what this amounts depend upon – maybe hereditary, genes, the hospital you were born in, the doctor who took you out, or the nurse you were hitting upon at birth, or any other such funny thing; but the fact remains that we are all born with different amounts!
Personally, I think, my intelligence is based upon the nurse I was hitting upon at birthJ!
Jokes apart! I feel that intelligence does has something to do with your genes, hereditary!
‘Talent’
Some tend to relate talent to intelligence in one or the other way! And, I was a part of that team until not long ago!
But, with time, I have come to understand or realize that they are entirely different!
Your intelligence levels may help you to acquire a skill; but a talent, again, is something that you are born with!
Some are born with a beautiful voice, and they may go on to become wonderful singers; some are born with a flexible body, and they may go on to become wonderful dancers; some others possess natural physical stamina, and they may go on to become wonderful athletes! But overall, your talents are your comparative or relative ‘sizeable’ advantages above most of your contemporary colleagues!
However, I must point out this very important difference between talent and intelligence:
Talents may go wasted, but intelligence is almost never wasted!
And this is because intelligence is something inherent; you can apply it to all and sundry! However, talent is one very particular thing that may get washed off or wasted if not capitalized upon or developed at the right time!
Though it is true that intelligence and talent both need development, but intelligence almost always receives recognition, although talent may not!
I say this because the optimal utilization of any quality broadly depends upon two stages of ‘recognition’ and ‘development’! However, again, the importance of any particular stage may vary from one quality to another!
Intelligence is so broadly reflected upon anything one does in life that it is very unlikely that it may miss any sort of social recognition! However, talent does not demonstrate itself so regularly in people’s lives, and thus one’s talent may remain hidden while it passes the crucial time during which it should have been recognized, and then duly developed!
Intelligence and Talent both need development, and it is very rare that the development is full! However, there is a good chance that, though, the use or the benefit that one can draw from any one of these two qualities, without development, may be nil in the case of a talent, it is never quite so in case of intelligence!
Moreover, in case of talent, I am completely clueless where it comes from –hereditary does not seem as evident as it does in intelligence’s case!
‘Work ethic’
Work ethic is a completely different ballgame!
Neither are you born with it, nor is it any thing that you develop!
Strange! Once again – ‘Neither are you born with it, nor do you develop it’ – Boy! What does that mean!
It means that work ethic is absolute – it does not depend upon whom you were born to, or what shape and form your life takes!
Also, as I said, work ethic is absolute, so there is no pre-requisite support level that exists for work ethic – either you have it or you do not!
The closest synonym to work ethic may be hard work, but it is quite different from Integrity, though Integrity by itself is extremely important, as I stated in the first chapter!
And, that is why I said that work ethic does not depend upon the shape or form your life adopts over time!
It does not matter whether you work in a terrorist group, or you work as a social worker!
The fact remains that if you are loyal to your team, prudent in your work, and committed to your profession; you have the ‘work ethic’!
Now, whether you should work as a part of a terrorist group, or as a part of a social organization, is a separate question altogether - that may be answered by ‘Integrity’!
Once again, as I stated in the first chapter, though Integrity is an extremely important quality by itself, and probably a pre-requisite by itself, leave aside any pre-requisite support levels; I have refrained from using it in this chapter! The reason is simply that it is too important to be included! In other words, here, we are talking about any such quality ingredients, which may be used as a basis to leverage one’s Good Luck in his quest for success!
Thus, though Integrity’s importance does not increase or decrease with existence or non-existence of Good Luck; the benefit from one’s Intelligence, Talent and Work ethic may come into effect if one is fortunate enough to leverage these three basic ingredients with his ‘Good Luck’!
To conclude upon these 3 basic ingredients that I mentioned, I repeat that these three qualities work best in conjunction with Good Luck! It does not quite matter if you are a terrorist; if you have Intelligence, Talent and Work ethic, and fortunate enough to leverage these with your Good Luck, you may quite become an Osama Bin Laden - though to me that is not quite attractive, but you know all are not the same!
To sum up this chapter, I must clarify that though these three basic ingredients, besides Integrity, are almost essential; there are many more that exist, and an even more important factor than the sheer existence of these qualities is the correlation among them!
To draw upon a similarity, you can think of a financial portfolio, the quality of which may depend more upon the correlation between its different individual assets than the individual assets themselves!
[51]Chapter Six
Importance of Common People and their Thoughts
It is amazing to see the variety of people surrounding us in this world, but this experience translates into true knowledge and satisfaction only when you can understand and feel the reason behind this variety! I think it can all get very close if we can provide a level playing field for everybody!
No doubt, some people are more capable than others, but almost everybody wants to do well, so if you keep balancing the playing field regularly, making sure that it is level at all times, those who earlier encountered failure because of their inherent incapabilities shall now change, and though they will lag their earlier more capable counterparts, they will eventually get there! Then, the variety in this world will purely be a result of this phenomenon of ‘lag’, rather than the inherent distinctions between people that we see and experience in today’s world!
Now, the big question: Will the world ever get there
[52]? Forgive me if I am mixing things together, but I think the answer lies in what economists call ‘globalization’! However, I would like to replace this hot n happening word with what I call ‘true globalization’! This word is talked about so much these days – no matter what you are talking about, the craze for this word has reached such an extent, that even a fresh MBA would only be cursing himself at night, if he forgot to mention this ‘concept’ at the job-networking meeting he attended earlier during the evening! I urge all, professionals and non-professionals, to not formalize this word into a concept, but rather understand that the need for it can only be truly felt in your heart, and respected by your mind, if you experience the ‘world’ yourself, because ultimately, the underlying behind this so-called ‘concept’ covers the whole world, right!
Now, I understand that you cannot possibly travel around the whole world covering all countries to make sure you understand globalization, as I myself neither have the intent nor the money to do that! But, at least, for those of you who are more blessed financially, I suggest that you try and visit the truly representative countries of each of the 2 parts of this ‘world’
[53]! Now, visiting does not mean that you go to New York for shopping during the Christmas season, and to Brazil for women during the carnival timeJ! You have to go not as tourists, but as the true citizens of this globe, while trying to feel the place, understand it, and then looking for reasons as to why it is so as you found it to be! The moment you are able to come up with such reasons by yourself, you will know that you understand the ‘world’, and then you won’t need my assurance, or for that matter anybody else’s, to know that you know it! You will just know it, regardless!
And to understand all this, you do not need an economics PhD from Yale or an MBA from Harvard, nor do you essentially need a top-tier corporate experience at a McKinsey or a Goldman Sachs, though World Bank experience may help! All you need is the ‘will’ and ‘courage’ to ‘experience’ it
[54]! Some may think that what is so courageous about it, but I think you shall understand it better only if you walk down the streets, or travel in the buses, in some parts of the ‘poorer world’! Our humble and respectful friends from the West have replaced this phrase with a more presentable one, namely, the ‘emerging world’! I think ‘emerging’ is a very strong word, and often misunderstood! ‘Emerging’ sounds as if they are ‘progressing’ or ‘improving’, but that is not quite proven yet! ‘Real Progress’ cannot be determined by the number of new fancy corporate buildings coming up in Beijing or Shanghai, but rather, it has to be determined by the true and holistic improvement and advancement of, once again, the ‘underlying’, i.e., the ‘people’
[55]!
I think I have drawn you close enough to what I am trying to explain here! To put it simply, we need to concentrate on ‘people’, ‘people’, and ‘people’! After a long-term experience and a consistent focus on understanding it, some possible ways to measure ‘real progress’ would be to ask your own self such questions as:
[56]Has the general way in which people behave changed?
Do you now feel more comfortable discussing about the strengths and weaknesses of this world in a more intelligent way with a person sitting besides you in the local bus?
Do you now feel that your kind-hearted suggestions to a common person will be more respectfully listened to by him/her?
And then, do you think that, no matter who you pick up from your surroundings, he/she will understand the difference between right and wrong, or if not so, will understand it when explained, and in case of disagreement, will have strong, valid and logical reasons for his/her argument (basically do you now feel involved in a more educated argument than what you may have experienced earlier)?
There can be many more questions that may follow these, but once you have developed your own understanding, you would not need any such formal suggestions as to how to measure ‘real progress’, if any! You will rather ‘feel’ it yourself!
For those of you who belong to the richer part of this world, and may have never stepped out of the comfort of the developed world, all this may sound nonsense, or if not nonsense, then awkward, so let me be a little more explicit here – the questions hidden or covered behind those mentioned above, consist of questions like:
Have people stopped spitting and littering on road?
Do they now at least look like humans, and does it at least look like they have made a genuine attempt to take care of themselves?
Are they themselves careful towards general well being, environmental pollution (you can assess it by noticing the change, if any, in the amount of pollution emitted by private vehicles), etc.?
What are the kinds of words they use in their normal interactions with other people, do they now sound more decent in their general conversations?
How professionally do they now manage their business (for example, earlier he may have overcharged you for almost everything you asked for just because you looked a little better off than the other customers who entered his shop)?
Or, Are they now less inclined towards picking up fights, getting physical, or arguing, for every other little thing?
I know such questions may sound very obvious or redundant, but this is exactly what is being completely ignored, overlooked, or for that matter, taken for granted! It often happens, in this life and in this world, that we ignore solutions when they are staring us at our face, while unnecessarily probing and delving ourselves deeper into time-wasting details – one reason why Common Sense is said to be rare in existence! However, in our case, the answers to these obvious-looking questions are, unfortunately, the ‘only’ thing that can contribute towards what is called ‘sustainable growth’ in high finance! I learnt this very interesting ratio during my B-school days, namely ‘Self-sustainable growth rate’, as applied to organizations, etc.
[57]! Well, who do you think is responsible behind sustaining this growth – ‘people’, right! So, people are whose progress you need to measure, and that shall be the most precise definition for my measuring tool, i.e., ‘real progress’ – it measures the progress in ‘people’!
And, in fact, in any such discussion, the word ‘growth’ should be urgently (to put it mildly) replaced by the word ‘development’! And this is exactly the mistake our most senior and respected economists and experts around the world are continuously making! They have been, for a while now, continuously throwing out these enormous growth figures representing the emerging world, and to make matters worse, have been projecting even more enormous growth rates for the future! It often happens, we all know, that experts tend to be the first ones to forget basics, just because they have traveled so far beyond them! But, anyways, I am confident that if someone as full with commonsense as Benjamin Graham or Warren Buffet would have pursued development economics, and was made the head of such economists, the first thing he would have done is to fire the whole team!
Let me briefly explain the reason behind my urge to urgently replace the phrase ‘economic growth’ with ‘economic development’! Economic growth means more output, but economic development means not only more output but also different kinds of outputs than was previously produced as well as changes in technical and institutional arrangements, by which output is produced and distributed which results in substantial rise in the real national income and the real per capita income!
[58] Now, of course, ‘economic development’ does not completely cover ‘real progress’, but it is definitely a better way as compared to ‘economic growth’ to proceed or start towards measuring what I call ‘Real Progress’!
So, going back to our so-called concept of globalization, even with only a rough understanding of the disparities among different parts of the world and without much practical experience, if I am asked to guess its extent on a scale of 100, I would point out to a place that would be very close to 0, and I am sure, if you ask the same question to our global experts, some may point their fingers at even beyond 50 on the scale! I do not intend to claim that they are wrong, but shall rather leave it for you to decide upon it once you have read and understood this book! I am confident that if we practically change their lives such that they are required to spend equal amounts of their respective lifetimes in each part of this world, which may include places like the remotest villages of India or Africa, and thus getting to spend probably only a year or so at the centrally air-conditioned corporate offices in New York or London from where they make these estimates and then bombard the general public with the same, those fingers would speedily shift towards the 0 mark!
The point I am trying to make here is that we need to shift, or rather extend, our myopic view of analyzing globalization solely on the basis of, say, the number of economies opening up, their extent of openness, the rising scale of global trade and competition, rapid outsourcing, or increase in the number of companies going international while pursuing organic or inorganic growth (cross-border M&A activities), etc., and rather look deeper and delve further into the matter to analyze and decide whether the reasons for any such global activities lie in the inherent change of thoughts among common people, or is it just that the companies once again got innovative to increase or maintain profits.
In case of the latter, without the change in thoughts of common people in poor countries who hopelessly stare at their lives and the surrounding world, such an innovation shall only resemble one of those countless technological innovations that yield only temporary profits for a short time period, and thus have to be come up with regularly! Or, in other words, these are not even innovations but mere requirements to survive in business! A true innovation would be if we could find ways to add more hope and positive energy among the lives of the poorest! To understand this better, simply consider the concept of ‘Bottom of the Pyramid’ long promoted by world’s most coveted management and strategy contemporary guru C.K. Prahlad and instead of a single organization, start applying it to the whole world!
Now, I am aware that I may not be the first person to have raised such voice. Many in the field of Development may have realized this much before I have gained all the confidence and experience to form this opinion. However, I have a point to add here: Ever since any such efforts have been made by NGOs, Development Institutions, or for that matter, Individuals, complete focus has been laid on how to improve ways in which such Organizations, Institutions, or Individuals may work so as to achieve maximum efficiency and effectiveness in their quest to help the poor. However, I feel that this focus needs to be shared along with, or even temporarily shifted towards, the receiver rather than continuously fiddling around with the deliverer’s activities
[59]! In essence, I am trying to emphasize upon the idea of looking outside-in, rather than inside-out, and then accordingly, restructuring the inside to better suit receiver’s needs, rather than wasting time on framing Newer Development Frameworks, not understanding that the receiver is not yet adaptable to your innovative, but unfortunately useless, ideas! And useless because, they are not practical!
Let me explain this with a simple example: try talking to a poor fellow residing somewhere in Mumbai slums, and try and explain him as to how you can help him, and that you would like to spend some time with the community to make them aware of your noble plans. It is more probable than not that he would be more interested and focused on successfully running away with your wallet rather than listening to you with great enthusiasm and hope, as you might have otherwise proudly expected! There are broadly 2 reasons that come to my mind as to why he would have done that:
He might have already assumed that you are another one of those bureaucrat’s representatives whose ultimate aim is to gather votes for the upcoming election, or
He would have done it out of plain arrogance and his incapability to even envisage a better future.
I would not have been too concerned if the first of these 2 reasons was more prevalent than the second, since you can solve it by a consistent, good and caring performance for poor by the government
[60], but the more dangerous, and unfortunately the more prevalent one is the latter, which can kill the whole effort exactly when it reaches the point of execution and effect!
I shall prove my point in the coming paragraphs, while picking the largest development institution ‘World Bank’ as the representative of that noble person who tried to help the poor fellow living in Mumbai slums!
Much has been talked about the growing obsolescence of the multilateral model of giving poor countries money and advice for running their economies, on which development institutions like World Bank run today. This was in fact emphasized by the ‘Fifty Years Is Enough’ movement by NGO detractors against the Bank in the latter half of the1990s, during Jim Wolfensohn’s era! However, this obsolescence would have never come into existence, if the very essence of the way in which such institutions and organizations function would have been devised better at the first place! Formulating high quality advices for corrupt governments, and then lending them money in the hope that they will follow your advice, does not speak very highly of the Economics PhDs working at the Bank to me!
If you read ‘The World’s Banker’ written by a gifted writer, Sebastian Mallaby, you will realize that it is not as if World Bank has not tried enough to help the ailing and the poor nations, but it is rather that it is these nations themselves who have kept themselves from progressing! These nations have to change themselves - World Bank or any other such organization cannot change them, and this is what World Bank has also failed to realize! I was forced to conclude after reading the whole book that while the rich have largely remained rich or grown richer, the poor are still poor or have grown poorer!
[61] Rather, World Bank for example, could have enjoyed a much more successful history if it spotted the right places/countries, where the government and the people themselves were more reliable, and then dedicated their energy towards these nations, while supplementing these countries’ thirst for ‘real progress’ with their esteemed research capabilities! This, in turn, would have also instigated other ‘corrupt’ and ‘unwilling to change’ nations to adopt fairer means, and turn to honest and more humane means to run their country and its people!
In World Bank’s case, for example, the money comes in as loans from World Bank to poor countries (which are to be serviced at market-rates) after the Bank has approved the projects/proposals submitted to it by various nations. To me, it quite simply looks like an ‘investment operation’ carried out by a Venture Capital/Private Equity firm, the only difference being that the World Bank is not exactly interested in making exotic returns, but is more focused on the ‘Development’ issue, for which the project is being funded! However, the catch is that the World Bank hardly keeps similar kind of an intense vigil over how the money is being used, as is otherwise kept by the Private Equity firm! One reason may be the sheer size of World Bank, and the number of projects it simultaneously handles, but that should have been primarily taken care of with the decentralization of the Bank, as expert teams were directly posted at the site itself! I am trying to throw in a concept of ‘ownership’, which is talked about in ‘The World’s Banker’!
However, before I press more upon the concept mentioned above, I would like to state an example from the book, which shows how difficult it can get to channel money to the right place and for the right projects in poor and corrupt countries. The country here in question is Cote d’Ivoire which was a development success story, but with an unappealing government, sometime during late 1990s. Cote d’Ivoire was swamped in debt, and was unable to service Bank’s loans, which I mentioned earlier were lent at market-rates! In such cases, when countries were unable to service their loans, they were often granted IDA money, which they could use to repay their old loans, and carry out new projects, whose revenues could be used to service their existing or new loans!
[62] This issue of debt relief was much talked about and scrutinized at the Bank until Jim Wolfensohn came in as President and actually starting issuing debt relief to debt-laden countries! The Bank had made one such education loan to Cote d’Ivoire earlier to build and finance schools! When Wolfensohn enquired about it, he received this response: “Jim, this is an ‘adjustment operation’, not an ‘investment operation’.”
“Well, what’s the difference?” Wolfensohn asked. “Where are the textbooks? Where are the schools? You are putting in $100 million!”
“No, this is an ‘adjustment operation’,” came the response. The money was really supposed to plug a hole in the government’s budget. It did not directly finance concrete schools and textbooks.
Later, World Bank’s Africa Vice President Kim Jaycox yelled at Wolfensohn “Wake up, Jim. Wake up. That’s the way it works. You may not like it, but that’s the way it works”!
He told Wolfensohn, “I know it’s pretty damn stupid. But that’s the way it is around here.”
[63] All this while, Jaycox was hinting that the only solution to the situation was debt relief!
I never knew this is what is called an ‘adjustment operation’! As I earlier indicated, any such development organizations will have to deal with any such incapable countries with only an ‘investor’ mindset, while sharing this mindset with the countries themselves, thus making sure that the countries ‘own’ their responsibilities themselves! And thus it could only be an ‘investment operation’! I will elaborate more on this shortly with the concept of ‘country ownership’!
Kim Jaycox was perhaps right, as later Jim Wolfensohn also agreed on debt relief for Cote d’Ivoire, but the wise know that this is not the solution!
[64] There may have been several other reasons for forcing debt relief, or even worse – there may not have existed any other choice except debt relief, but my emphasis points back to what I have been harping upon – ‘people and their thoughts’! The following paragraph shall ensure how!
Are the inherent people fair, are you giving the money in safe hands, what is the past record of any such government that is in existence, and what is the mentality of the people in the ruling team! And most importantly, how can you change it and provide all with a level-playing field! As soon as you are lending with a mindset that ‘I’m the Boss’, the roots behind the very cause of creating equality and eradicating poverty become weak, and then it is only a matter of time, as to when you will face failure! Rather, as I will emphasize in my next paragraph, you shall share the ‘ownership’ of the collective responsibility towards making some ‘real progress’ with your clients, who shall share the same vision and mission. It is only then that all the parties involved are being true citizens of this world, working towards a common goal. Of course, it shall take a long time, but since this world has already gotten so messed up, it shall now take even longer to build trust amongst people, but unfortunately, leave aside being close to it, this world has not even started moving in the right direction yet! Thus, once again, that is the reason I earlier pointed out to a place very close to 0 on a 0-100 scale representing the extent of ‘globalization’, or rather ‘true globalization’ – since people are yet far from being capable of working in a team, as any successful team commands a great deal of mutual trust!
Now, to address the concept of ‘country ownership’, please refer to the excerpt below:
[65]“Uganda refined its approach to development. Ugandans rather than aid donors were gaining power over the agenda – the country was “in the driver’s seat,” as the development jargon had it – and in 1998 the Consultative Group meeting was held in Kampala rather than Paris for the first time.
[66] Moreover, it was not just the Ugandan government that had climbed into the driver’s seat; it was Ugandans more broadly.
[67] The first participatory poverty plan, completed in 1997, was soon followed by a second one; and at the same time Uganda created a new kind of public-expenditure review, through which NGOs and parliamentarians were invited to comment directly on the government’s budget. In 1998, Team Tumisiime extended the idea of participation by seeking direct input from poor people.
[68] Squads of surveyors were sent out to interview villagers: Did they feel better or worse off than previously? What would make them happier?
[69] When the results of this “participatory poverty assessment” arrived, several policies were adjusted. The survey showed, for example, that villagers wanted money to construct homes for schoolteachers rather than money for school buildings. Acquiring a teacher was more important than acquiring a classroom, and in order to acquire a teacher you had to build his family a house.”
As stated in The World’s Banker, this development model, as adopted by Uganda, consisting of ‘country ownership’ of development planning + broad popular participation, was quite different from the earlier promoted model of structural adjustment in that the implementation process consisting of ‘old-style conditionality’ would now be abandoned!
This is important, since nowhere in this world, no matter who or what is involved, nothing shall be permanently achieved by imposing conditions, be it your own son, your own company whose you are the sole owner, or your own country where you are the sole dictator! You can fall back upon history and find numerous examples that will prove my point! However, while you search for such examples, for which you would have to hardly put any effort, remember that I am talking about permanent achievement, thus once again emphasizing towards my permanent solution of ‘real progress’!
Recently, I read an article in an Indian newspaper titled ‘India is the world’s fastest wealth creator’. It said that India’s AUM has more than doubled from $268billion to $559billion over a five-year period from 2000-2005, at an estimated growth of 16%!
[70] Well, it also stated that U.S., the world’s wealthiest nation, had $31trillion in AUM!
[71] Now you understand why these ‘growth’ figures should always be taken with a pinch of salt! Let me emphasize on this with a couple of points:
It is important to note that $559billion accounts to only around 0.5% of the global pie of around $100trillion when India encompasses around 20% of world’s population;
With a population of around 300million, U.S. at $31trillion has approximately 62 times more wealth than India, which, with a meager $559billion in its kitty is responsible for serving around 1.2 billion (4 times 300million)!
So, India is basically 62*4 = 248 times behind U.S.! How can you even compare countries with such major differences in standard – and all this while, economists have been throwing the ‘growth’ numbers for India, while predicting such milestones which have no sound reason, except a couple of high growth years for India in the recent past! Until Industrial Revolution, it took the West (U.S. and Europe) 200 years to catch up and overtake world’s major economies consisting of India and China in Asia. Now even if the economists want to look at only the past and predict, how can they make predictions like India will be the world’s biggest superpower in next 50 years when the poor country has, as of yet, seen hardly 3 years of average 8% growth! Making projections so far into the future is completely nonsensical, though it may be safe for economists, since there shall remain no such existing person who listened to them 50 years from now – I guess probably that is why they share so much comfort in making such long projectionsJ!
For an exam of 100 marks, is it more difficult to go from 50 to 60 or from 90 to 100? It is exactly the same story here – the disparities between various parts of this world are so huge that making such comparisons and predictions on basis of ‘growth’ at this stage sounds foolish to me! Let us say you travel from 90 to 100, so in this case, by you going from 90 to 100 and someone else from 50 to 60, though both traveled ahead by 10 points, your % growth still remains lower than one who traveled from 50 to 60! Moreover, it should also be noted that by reaching 100, you have already reached the absolute and you cannot travel any further! Now, in this world, you can’t achieve the absolute by yourself, so even when America proceeds from 95 to 96, it is no big deal that India moved from 50 to 55! Do not get entangled in these growth figures, rather look for reasons like ‘real progress’ and ‘development’, and if you do not find enough of that, then quietly ignore such growth stories that are being thrown your way! For example, in India’s case – Where is all the money coming from? It is all foreign money – FIIs, investments by NRIs, etc.!
[72] The moment they decide to pull out their money and book their profits, that’s it – Indian economy and capital markets will go for a toss! In fact, this is the most prominent suspicion I had when I was hearing all Indian growth stories while at my B-school in U.S.! However, thanks to my current involvement with the Capital Markets Program at BSE, it only got confirmed!
[73] The truth is that with such an uneven state of affairs among different parts of the world, we probably cannot even start to talk about ‘globalization’! Because to even start talking about it, we need to get everybody a lot closer, on all fronts! If the world consisted of only U.S. and EU, we could have probably started talking about it, but not with everybody else we have, and unfortunately, the ‘everybody else’ part comprises of a heavy majority!
I read the BRICs report prepared by Goldman Sachs, and found some overly optimistic projections!
[74] However, the reason for my special respect and sound belief towards Goldman Sachs was once again confirmed with their economically sensible and internally consistent approach! But, I think even such top brains as are hired by Goldman did not do enough justice to their prudent minds as there should have been more of conservative sensitivity analysis while they assumed successful ‘development’, and especially so, when they were making projections for such long horizons, and for such volatile countries as Brazil, Russia, India, and China! I do not think there is enough proof and reason as of now to assume stability and soundness of thought among the people, and thus economic policies, of these nations. However, some of the predictions are:
BRICs expected to be bigger than G6 in less than 40 years.
[75] Presently they are less than 15%,
India to be the third largest economy as early as 2032;
India will have the most sustained long-term growth momentum out of BRICs economies;
BRICs annual spending in US dollars to exceed G6 by 2009!
Also, the GDP figures were compared at PPP rates, when in reality, the market exchange rates of the developing nations are much below the PPP rates, whereas those of developed countries are very close.
[76] This, by itself, makes the forecast overly optimistic. However, Goldman explains this by stating that with development and rise in per capita income, a country’s currency appreciates and the exchange rate proceeds towards the PPP levels. Based on this, it says, for developing countries, one-third of the growth is expected to come from their respective currency appreciation and two-thirds is going to come from real growth!
However, this does not satisfy my earlier raised doubt on the stability of thoughts among people in these countries. For example, in India, the government after announcing disinvestments of PSUs has failed to comply with its promise.
[77] Disinvestments is only one such issue, there are many others where people here are too focused on preserving their power and wealth, scared that they may fall poor if they do not do that, completely failing to realize that increased openness would only benefit all in the long-term! But who cares about all, I care about myself, right! In fact, Goldman has stressed on this point while stating that India, in particular, is still relatively closed on many measures.
Now, back to my point of importance of people’s thoughts – what do you think is the reason behind this baseless fear of losing wealth and power among these fortunate few!
Well, one is lack of Education that is so particular to India – even Goldman has stressed on this point, while introducing the challenges faced by BRICs in meeting their projections, by giving India, in particular, low marks for education indicators, particularly at the primary and secondary levels!
However, I think the more important reason is the background and past of most of these people who have themselves seen, if not experienced, such extreme levels of poverty and pathetic surroundings!
[78] So, all these people want to preserve their newly found wealth and sweet-tasting power that comes along with it with all the might they possess, while in the process, harming the interests and rights of many others, who form a huge majority! Who doesn’t want to preserve one’s wealth, but in these cases, they are extra cautious because it is actually not their own wealth, but belongs to many poor people whose conditions are a direct result of this corruption at the top level! And unfortunately, when this happens, such nature and attitude gradually trickles down to the bottom of the pyramid, and encompasses all! It thus becomes the characteristic (read ‘culture’) of the whole country, and then it becomes extremely difficult to change it, i.e., the people!
[79] You just don’t know where to begin the repair! This is exactly what has happened in cases of countries like India and China! And, this is essentially the reason behind my doubts and pessimistic outlook for the countries mentioned above!
To end this chapter, I would like to put together the various aspects that reflect upon the importance of common people and their contributions towards functioning of families, societies, communities, states, countries, and then ultimately this world!
Real Progress: It may sound very obvious since everything is rooted in and brought into effect by people, thus it all depends on where their standards lie! But there are more than many instances where our experts have forgotten to look at the bottom of the pyramid, and rather have concentrated endlessly on the fluff that is only derived from the inherent incapability of the underlying, i.e., ‘common people’!
True Globalization: The idea here to put it at 0 on a scale of 100 is that we at least need some base, some starting point, before we get globalization into effect and start talking about it! And the world is not balanced enough to have even reached such a starting point, let aside measuring globalization and its effect!
Development instead of Growth: Growth percentages and numbers will always favor the poor, and the scope will always be most with the poor! For example, in the case of an example I had stated above, your scope at 100 would be 0, whereas the one at 60 still has a whole lot of scope! So, we first need to start with development, and once we reach a point where we can start talking about the so-called concepts like globalization, only then these growth numbers may make any sense!
Ownership: This one is simple! You cannot feel the pain, or even the pleasure, unless you own it! Thinking that, if not me, someone else will solve it, or quietly continuing to earn your money through unfair means, or preserve your peace of mind by running away with your family in search of a better place, and then trying to solve the problems without actually being involved in them, is bound to give wrong, meaningless results! This is why I earlier proposed an equally distributed practical life experience among all parts of this world for all economists who wish to assume the authority of solving the problems!
Chapter Seven
Rich gets Richer; Poor gets Poorer
Before I start with any justifications, explanations, elaborations, or certifications of my choice for the title of this chapter, backed by all the various proofs, reasonings, and seasonings I could gather from my several sources, I must inform you that I struggled almost infinitely (‘almost’ since I am finally decided) between 2 options before I could decisively form an opinion and chose the one used above!
The 2 tough options were:
1. Rich gets Richer; Poor gets Poorer, or
2. Rich remains Rich; Poor remains Poor!
To be honest, the choice in reality shall not be quite that tough, since the latter is never possible! I shall expand upon this later, but to hold your curiosity, or to avoid your decision to declare me foolish, I shall briefly state why I think the latter is not quite possible:
The reason is the way in which this World works nowadays – the money circulates among various hands, and it is only this circulation which results in multiplication of money, or what we more formally and merrily recite as ‘wealth creation’!
[80] The people amongst whom this money circulates, mostly covers the entire behemoth! A part of them who ‘seem to have’ made money, fall under one of the following two kinds of developments (which again are results of the circulation of money):
1. Short-term Wealth creation, or
2. Long-term Wealth creation!
[81]However, more importantly, there is a part which ‘does not’ make money! And, for what I understand, most of the analyses leave it at this!
But, unfortunately, even this explanation is somewhat incomplete! Those who do not make money, have necessarily lost some, in ‘real-terms’!
[82]I will leave it at this, with a reiteration of the above activity with the help of a following mini-flowchart:
Money Circulation
Richer Group Poorer Group
Long-term Short-term
Wealth Creation Wealth Creation
Until now was Economics! Now, let me get into reality, and show my case with examples!
Ok, before we try and understand the ways in which such a phenomenon may occur (Rich getting Richer, and Poor Poorer), let us assure ourselves, or beware, that this cannot be understood by considering these two classes (‘rich’ and ‘poor’) in isolation! We will rather have to include all the entities involved, and thus may be better off including the middle-class in our analysis!
Now, after making myself clear on this, I shall advance to express my thought that the economic theory stressing upon the widespread existence of middle-class, in let us say, a country, may be true in its most original sense, but is false in the way it is normally understood!
To the advantage of those who understand this theory in the way it is normally understood, let me take an example of a country where the middle-class is understood to be fast-expanding and widespread, as against a country like U.S. where the middle-class is understood to be fast-evaporating!
I shall show that this theory may not be correct, as understood, and thus prove that the theory, ‘as normally understood’, may be debunked!
Let me go back and start this task with a usual pyramid-like representation, though this one may look a little messier:
Rich
High-end Middle - Class
Middle Middle-End of
Low-end Middle Class
Middle
Poor
Say, to take advantage of my niche knowledge, or growing ‘pessimism’ (or rather ‘realization’) for my own country, I once again pick India as an example of a country where the middle-class is understood to be large and fast-expanding, but it still works against the theory, as it is normally understood!
The problem:
The theory says that the existence of a large and widespread middle-class may provide strength to an economy, and the advancement of this middle-class is a strong indicator of economic growth! Now, you do not need to be a genius to figure out that the high-end of India’s middle-income class is slowly and steadily advancing towards the ‘Rich’, while the lower end is, though very gradually, but definitely, receding towards the ‘Poor’!
Now, the big question:
Then, how on earth is India believed to have a strengthening and expanding middle-class?
Well, the big answer:
The definition of the middle-class is being constantly changed, completely disproportionately to the ‘real progress’ mentioned in Chapter Six!
Before I elaborate upon this, let me quickly explain the significance of the ‘middle-end of middle class’, as represented in the one-dimensional diagram of the pyramid above!
[83]This is the actual ‘middle-class’ – only this segment! Unfortunately, this is being continuously expanded to new boundaries, where, falsely, the high-end of the middle-class is being merged into this group, as is the low-end of the middle-class!
The above paragraph may be more clearly understood, if I change the above diagram a little, and explicitly divide the middle-class into three distinct groups, thus correctly extinguishing the overlap:
High-end of Middle Class
Middle-end of Middle Class
Lower-end of Middle Class
You may have found yourself a little confused in this chapter since I have been constantly harping upon the way in which the ‘middle-class theory’ is ‘understood’, as against its ‘original sense’!
The above diagram explains this difference:
The original sense or the raw logic behind this theory is very well-appreciated by me! But, a consistent mistake committed by the very designers of this theory, forces me to say that it is incorrectly understood!
It is incorrectly understood because the very concept of ‘Relativity’ upon which this theory shall be based is consistently being forgotten!
I shall explain the ‘why’! Look at the above diagram, and what you shall interpret is that the ‘middle-class’ has been subdivided into three sections among itself! Here is the point: The middle-class should be ‘one’ absolute group, if that is what is been concentrated upon! However, slanderously, or let me say too bounteously, the designers themselves have made a blunder of subdividing the middle-class, which should be rather done with the ‘Rich’ or the ‘Poor’ class, if again, you are concentrating upon the ‘Middle-class’! The same would have held true if we were concentrating on any other class!
[84]Let me elaborate upon this before I delve into the deeper ‘why’!
Let us say that, in a country, people earning $2 or less per day are to be considered as ‘Poor’; people earning $2-$4 per day are to be considered as ‘Middle-class’; and people earning $4 and above per day are decided upon to be called ‘Rich’! Now, if you are concentrating on the middle-class, then, first of all, make sure that your $2-$4 range is very-very carefully designed! If it is not, and to make matters worse, you go on to further sub-divide this middle-class, you shall be completely ruining the analysis, possibly creating negative consequences in case it is implemented!
Now the deeper ‘why’:
This why shall answer the question as to why we shall be extra-careful while devising the range for the interested group, and even if we correctly do so, why we may still avoid further sub-divisions of the group!
Consider, for example, the middle-class range of $2-$4 per day! So, the 2 questions are:
1. Why should we take extra-caution to devise this range correctly?
2. Even if, let us say, we successfully devise an appropriate range, why we still may be better off to avoid forming sub-groups?
The answers to the above 2 questions are as follows:
Ans1. It is extremely important! Think about this:
If, according to the way in which the economy is designed and is working,
there are major differences between the ways in which the households earning
$2 per day and $4 per day operate, is it worth the comparison? The disparities
are creeping in amongst the group itself, so it negates the whole purpose of
forming a common group!
Ans 2. The answer to this question shall be synonymous to Benjamin Graham’s
approach while choosing stocks to invest! Even when, based on your
extensive due diligence, you have correctly valued the stock, it is always wise
to implement a ‘Margin of Safety’! If suppose we have devised the range
correctly, we shall only be confirming our analysis if we stick to this range as
a representation for ‘one and only one’ group of people, thus measuring the
integrity of this range across various spectrums! Let us say that after doing a
decent analysis, we conclude that the $2-$4 per day range appropriately
covers the middle-income range of people in India, since, let us say, with
income anywhere in this range, an individual can comfortably afford all his
basic needs (food, shelter, clothing) along with some low-end luxury items
like a small car, home computer, etc.!
[85] However, in consternation, we
suddenly realize that the integrity of such range is being violated, in let us say,
buying a second car for the household – though the $4 per day household is
able to easily buy a second car, the $2 per day household finds it almost
impossible to squeeze it in, even when needed! Any such discrepancies may
be great inputs to test the integrity of our devised range, and if enough of these
exist, we may consider revising our range to, let us say, $2-$3.5 per day!
Thus, it contributes towards strengthening our analysis, while getting closer to
the best possible range that may be truly representative of, in this case, the
Indian middle-class! If, however, we would have incorrectly sub-divided this
group into, let us say, a lower middle-income group and a higher middle-
income group, we would have conveniently distributed any such discrepancies
between these two groups, thus negating the above very important point! And
unfortunately, this blunder is being continuously committed! The
point is that, within any such devised range, there should exist an absolute
minimum of any such items, which may be easily affordable for one, while
being a complete struggle for another!
I could not avoid it, but this time I am serious – I think I have exhibited enough of an Economist-like role for the purposes of this chapter! So, now, let me get back to my Real-World existence as a Common Man who knows enough of English and enough of this World that he resides in to provide you with the possible explanations as to why the middle-class theory in case of my own country may be debunked!
Possible Explanations:
· Extremely sluggish growth in Agriculture;
· Lack of non-farm employment opportunities;
· Poor’s aspiration is rising, but he is ill-equipped, so this results in Migration!
I have talked about the first two explanations time and again during the course of this book, and though they are important, I personally think that the last point is the most important! Since I have already touched upon the first two at various points in this book, I shall stress upon the last point below!
This point was very well-observed by Mr. Chandrashekhar and very well-taken by me during our lengthy discussion over this subject matter!
Think about this: The Indian population is migrating from Central and Eastern regions (often referred to as the ‘Cowbelt’J) to Western and Southern states, to look for better employment opportunities and income! This may be looked upon as positive since though the Cowbelt is growing at <5%, it is more rural and thus more agriculture-driven, which is growing at a meek 2% rate, and is responsible for a cheeky 2.1% population growth as against India’s 1.8% population growth on average; the Western and Southern states are growing at double-digit rates, and enjoy a more reasonable 1.3% population growth! So, this may result in some balancing in terms of GDP/capita or population density! However, we shall remember that the Western and Southern states are already very heavily populated in absolute terms! But, more importantly, can you envisage the consequences of the fact that people are exiting agriculture! Indian wheat imports are already rising, and if it continues, the day shall not be far when 10 million tons of wheat would be needed to be imported (India is already importing 6 million tons of wheat)! And at this rate, India shall go bankrupt in no more than 10 years! And, oh yes, all this when the Cowbelt is natural-resource rich as compared to the Western and Southern states!
Remember the big answer – ‘the definition of middle-class is being changed, disproportionately to the Real Progress’! How true is that??
Usually, the way in which these classes are formed depends on per capita income! But is per capita income always a true reflection of a person’s ‘worth’ (read ‘real progress’)! No, probably never!
But then, you may ask that is it not the practice world over, and if it is, then how is Developed World maintaining its status even after forming such wrong basis for analysis!
Well, my answer is that we should delve deeper to find out how vast is the difference with which these, broadly put, two parts of the world operate! As I had earlier indicated, though not completely efficient, developed countries are far beyond the poor ones on the scale of efficiency – this means that better people generally get better jobs, better recognition, better fame, better responsibilities, better money, etc.! So, in a way, there are better incentives to be better! However, in poor countries, there is no such system! The incentives are not in line with one’s interest, capabilities, desires, and most importantly, responsibilities! In more crude words, it may be called ‘corruption’!
So, it becomes all the more important to develop the right basis for this model in case of poor countries! As I had earlier indicated, the basis for classifying people into different groups should be their ‘holistic development’ (once again, read ‘real progress’)! And, I bet that if you try and evaluate the worth of this suggestion across different classes, you shall find that it is most crucial in defining the all-important ‘middle-class’!
Thus, as I had earlier said, though I do not deny the logic behind the theory that stresses upon a deep existence of middle-class as the most important factor, I doubt the very basis on which this theory has been understood and is being implemented!
Sometimes I think, sometimes I behave, sometimes I dream, and then, sometimes I suggest like an Economist! However, I find myself the most dangerous whenever I am in the suggestion mood and mode!
The ease with which I used my comfortable Dell keyboard to type the alphabets that form the phrase ‘Holistic Development’, the evaluation and implementation of the same is at least as complicated!
Well, then, the solution: any one person is just too little in this world, or probably this universe (if that is infinite), to suggest one clear-cut solution for this! Economists understand this – though some are not, most of them are modest enough to mention that the intricacies of the problems are far too complicated for their solution to be complete! And thus, in their efforts to be complete, they give us a solution that is such a complex conglomerate of an infinitely wide array of things that much before they are done with their solution, it had already become impossible to implement!
Thus, to give respect to my non-PhD status and the simplicity of a non-conglomerate solution, I shall emphasize upon only one thing in particular as a solution towards ‘holistic development’! Once again, it may not be complete by itself, but very confidently I say that it is the best tool for poor countries to equip their people with, if they ought to advance towards ‘Holistic Development’! The ‘it’ stands for ‘Education’!
Before I proceed, I shall make you aware that when I use the word ‘Education’ at different stages in the forthcoming paragraphs, it may not always reflect truly upon ‘Education’ – Even post-graduate degrees in most poor and corrupt countries provide nothing more than ‘Literacy’ – It is a blunder to call it ‘Education’!
We may, once again, as we did for Globalization, change or think of it temporarily, for better understanding, as something like ‘True Education’!
I grew wise myself, but somewhere I gained the wisdom, right!
In this particular case, I acquired and gained it from a truly prolific man – Deelip Mhaske! As you may have read in the ‘Profiles’ section of this book, Mr. Mhaske is a tireless and devoted 28-year-old social worker, who was recently also nominated for the globally prestigious Jonathan Mann Award for 2006!
After much discussion on this topic during our first meeting in one of the many ill-conditioned slums of Mumbai, we decided to address this subject with the help of a couple of reports from NAFRE (National Alliance for the Fundamental Right to Education) and some other sources like Infochange education.
[86]Almost every corrupt and poor, rather more corrupt than poor, country, from Cameroon to Vietnam, does it, and India is in no way behind, in fact far closer to Cameroon than to Vietnam - Each one of them says that it has scarce resources, and the representatives are the ones who make it scarce – the ones who keep it in their own pockets!
In one such instance in India, during a Panel Discussion on “Current Status on the Bill and Finances”, the ministers once again managed to convince a group of Education protagonists that the resources were scarce! After being thoroughly convinced, one of the protagonists wrote: “In a situation of scarce resources, the tendency on the part of the government will be to allocate more money to areas where there is great public demand. Therefore, it will be extremely important to build up public pressure in order to get greater financial allocations for education.” Poor man, I say, little does he know that many died saying the same, without much effect!
Now, let me provide to you some other excerpts from one of the sources mentioned above:
· The IEG reviewed over 700 primary education projects in developing countries where the World Bank has nearly tripled its lending and grants and provided around US$ 12.5 billion in support to primary education since 1990.
[87]· Maharashtra’s annual education budget for 2006-2007 is Rs.10,400 crore. It also receives Rs.1,000 crore from the Indian government for the Sarva Shiksha Abhiyan (universalisation of education program).
[88]Vow! A country that could not achieve minimum levels of subsistence even after 60 years of independence, shamelessly declares that Rs.11,500 crores for only one of its states to spend on only one single agenda – ‘Education’, is scarce! The fact is that these shameless liars tirelessly divert this money into their personal bank accounts – I call them ‘Soulless Beasts’!!
Well, if you are already as angry as I am, I am ready to fire you up and burn you out!
Let us continue with the first IEG (World Bank Report) excerpt I had provided above:
Based on its assessment of projects in India, the report says: “The country has shown convincingly how Bank-supported projects have influenced enrolment gains, reduction of gaps between the more and less advantaged, positive learning outcomes for the disadvantaged, and improved access.”
“In India, national commitment to learning outcomes and their measurement is high,” the report observes. This is reflected in increased government spending on primary education. “The share was increased by 15-35% between 1995 and 2003 and India has increased its spending per elementary student from $25 to $44, from 1993 to 2002 (at 2002 prices).”
Now, with the above two paragraphs in mind, please find below an article from one of the sources that Mr. Mhaske provided to me:
12 lakh ‘missing’ schoolchildren in Maharashtra
Schools in every district of the state have been found guilty of pumping up enrolment figures in order to comply with teachers’ wishes and retain government funding
Almost 1,200,000 children listed in Maharashtra’s education department records are ‘missing’ from the classroom, a check by education inspectors has revealed. This means that in 2005-2006 alone the state squandered over Rs 725 crore on elementary schooling for children who either never existed or had long passed out of school.
Worse, while no one is exactly sure how deep the bogus enrolment scam runs, the state’s education minister admits to being aware for years that enrolment figures were being inflated by teachers to avoid transfers to schools in rural areas.
The state education department requires all districts to send in their final enrolment figures for the academic year by September 30. Funds for textbooks, uniforms and midday meals are allocated on the basis of the enrolment figures. Teachers, staff postings and the number of divisions in each class are also based on these figures.
The state spends roughly Rs 6,000 annually on each child’s education, up from Rs 147 per child annually that it spent in 1981. Maharashtra’s annual education budget for 2006-2007 is Rs 10,400 crore. It also receives Rs 1,000 crore from the Indian government for the Sarva Shiksha Abhiyan (universalisation of education programme).
The mystery of the ‘ghost children’ was unraveled only when the state conducted a baseline survey in December 2005.
When education inspectors visited the thousands of government schools across the state, they detected a huge gap between the enrolment figures sent in by the schools and the actual number of students attending class. “Schools had sent in the names of people who had died, some others were married and had children themselves,” said one inspector.
Without exception, every single district in Maharashtra had inflated its enrolment figures; of the 82,10,143 children on the state’s school rolls, as of September 2005, only 70,01,646 were found by the inspectors to be bonafide entries.
For instance, the official figures from Pune district in September 2005 indicated that 505,575 children had been enrolled. But, checks carried out in December 2005 showed that the actual number was 311,840.
Senior education department officials say teachers who did not want to be transferred from cities to schools in rural areas would boost the enrolment figures of their schools, as any fall in student numbers necessitates the transfer of teachers to schools where the teacher-pupil ratio is low: invariably, these would be village schools. “Usually we find that (when) both husband and wife are teachers, and they want postings to the same place, they tend to maintain higher enrolment figures. In the case of private schools, higher enrolment figures means creating additional teaching posts,” explains an official.
Minister for Elementary and Secondary Education Vasant Purke acknowledges that although education department officials are aware that enrolment figures are routinely inflated, they are shocked at the extent of the malpractice and the money that was wasted in one year alone.
A ‘vow’ once again – this time the place of the protagonist has been taken by World Bank: Probed that India has increased its share of spending from 15% to 35%, and increased its spending per elementary student from $25 to $44, World Bank is convinced on India’s development on Education front, though little informed that no less than 1.2 million children, and probably many more, listed alone in one of the many 25 states, never received Education!
‘My God’- must be the reaction from all of those who are new to this!
And those of you who are familiar, must be uttering – ‘Well put, Mr. Joshi!’
However, I shall point out that convincing World Bank must be easier than convincing the Protagonist I had mentioned earlier!
Reason: the World Bank itself does a part of convincing, since otherwise it may land itself out of business! World Bank needs to receive loans to grant loans! If it does not show any success on paper (read ‘reports’), the U.S. and its allies, basically the lenders and the donors, may soon stop lending to World Bank, thus quickly driving it out of business!
Thus, though, in this case, a part of the convincing was done by the ‘fooling experts’ in form of corrupt Indian bureaucrats and politicians, the leftover or residual convincing was, happily, merrily, and after much celebration, with loud drumbeats, taken care of by the World Bank itself!
No matter whether you say ‘my god’ or ‘well put’, the fact is that this is the truth! Yes, it happens! So, once again, I urge you all to please make such information public in any little way you can, and let us all try and show these worthless people the true worth of being a human! Please, let us try and ‘change’ this world!
A Special Addition to this Chapter:
As you might have earlier read in Chapter 2, my mom hadn’t had one of the nicest lives, and in the midst of all the struggle, she also had to find herself employment at an age of around 40, when sustaining on my dad’s income was becoming increasingly difficult for the family – not because he earned too little, but because he had too little a heart to spend any, and my mom had access to none!
During these times, my mom took a job as a primary teacher in a rural area of Uttar Pradesh, one of the backward states in India! This special addition concerns her experience!
Recently, my mom came over to Mumbai to join me for Diwali, one of India’s most celebrated festival! With my excitement for this book increasing many folds with each passing day, I finally broke my resistance levels to tell my mom about the book, and she, as any other orthodox religious Indian mother, immediately started praying, though I had little clue of what she was praying for!
Now, with a sense of obligation that I should discuss more about this book with her, I opened up a discussion on Primary Education, since I was at this stage of my book! Little did I know that she could provide me with such valuable inputs! You see, I myself did what I accused all experts of doing in my earlier chapters
* - Assuming a common man to be too common, while foolishly looking for information from other sources! Here was a primary teacher sitting right in front of me, staring at my face, while I, priding myself to be another one of those intellectual asses, was writing about her job! Thank God I discussed! In case you first read the Acknowledgments section, as I normally do, remember that Retailer concept I used with regards to Mr. Mhaske – the same applies here!
My mom pulled a transfer from Uttar Pradesh to the outskirts of New Delhi to stay with the family! This year, after her summer vacations, she was all set to join back school to teach and earn! However, once again in consternation (as it usually happens in India), my mom learnt that the already existing teachers of the school were being transferred to the rural areas, ‘in bulk’!
Reason: To bring in new teachers into these schools, who have been bribing the responsible state and district officials since long! Aha, not only that, these officials actually do smarter things than we can even think of – they knew that once they would force the already existing teachers to rural areas, these teachers shall also come back and try to bribe them to remain in their existing schools – SHEER GENIUS – they understand it all – this life and this World!
Not only this, my dear friends, look at this one:
In the meeting held in May, the Minister had himself declared a 1:40 teacher:students ratio! However the order for transfers, as declared on 14th July, was given effect according to a highly manipulated 1:70 teacher:students ratio, so that they could transfer as many teachers as possible, and thus ‘earn’ as much bribe as possible!
I hope you now agree that my urge to ‘change’ this world is valid! Please just don’t read this, let us all start our share of work towards it! And you are welcome to do more! Believe me, we all (selfless and selfish, both) need to, or otherwise, we all may decay! First may be the selfless, but then surely the selfish as well! So, for our own self, and for social interests – let us all pledge to work together towards this!
Conclusion – Inequality is on the Rise:
You may have noticed that, often in my book, I have fallen back upon examples of India and U.S. to prove my points! The reason for this extends beyond my personal and practical experiences at these two parts of this world – I very firmly believe that these two countries form true representatives of the ‘poor’ (India) and the ‘rich’ (United States)! Most of the things about India are ‘poor’, and most of the things about U.S. are ‘rich’! It shall cover everything from ‘the way people dress’ to their ‘quality of thinking’! It shall cover everything from ‘how much wisdom they have gained’ to ‘how wise they actually are’!
The ‘Rising Inequality’ is true across all spectrums: Inter-state to intra-state; Inter-country to intra-country; Inter-continent to intra-continent, or for that matter any other such extremes that you can imagine!
With this in mind, please find below a couple of excerpts that shall further prove my point:
[89]· “While the poor, with an identity of color, get further alienated from mainstream economic and political processes, inequality is on the rise. The Gini index (measure of income inequality on a scale of 0 to 100) of the US is 41, the highest in the developed world. A study by Emmanuel Saez shows that the share of aggregate income going to the highest-earning 1% of Americans had doubled from 8% in 1980 to 16% in 2004. Now an American chief executive earns 300 times the average wage, ten times more than in 1970. Though unemployment is relatively low at this point, other indicators such as the proportion of people working, stagnation of income levels of the middle class etc point towards vulnerability. A possible hike in oil prices may exacerbate the condition of the economy. There are an estimated 37 million poor (with an income of less than $14,680 for a family of three) in a nation of 300 million. The poverty rate of 12.7% is the highest in the developed world. Poverty in the US has both color and gender dimensions. The majority of the poor are people of color – African Americans, American Indians and Hispanics form the vast majority.
· The average Indian produces only 10% of the amount of carbon dioxide generated by the average North American. In fact, the average English child consumes eight times as much of the world’s natural resources in terms of energy as a child born in any non-G8 country.
‘These figures have only grown worse’!
HENCE PROVED!
Chapter Eight
Assumed and Misunderstood: ‘h’ of Markets
If you have ever been related to management at any level, you may have heard that ‘Good Governance results in Market Integrity’! However, you may not have heard it as often that ‘Better Governance results in Better Market Integrity’!
You may have also heard that ‘Markets are Efficient’! However, again, you may not have heard it as often that ‘Markets are Brutal’!
This results from the tendency of people to speak in absolute terms! It is like you are either ‘good or bad’, ‘hit or flop’, ‘an Einstein or a Blonde’J, etc., and that there is nothing in between! Before I get into ‘Efficiency of Markets’, let us first try and form a consensus on what we would call a ‘Market’!
A market can be for anything – there can be a ‘vegetable market’, a ‘fruit market’, a ‘textile market’, a ‘job market’, and then of course, a ‘capital market’!
Capital in simple terms means ‘money’! So, basically, a ‘capital market’ is a market for money, similar to a market for fruits, vegetables, textiles, jobs, etc.!
In a vegetable market, you go looking for vegetables; in a fruit market, you go looking for fruits; in a textile market, you go looking for textiles; in a job market, you go looking for jobs; and similarly in a capital market, you go looking for money! This holds true if you are a buyer, and then a seller comes to this same market looking for you! So, basically, a ‘market’ is a platform through which buyers and sellers meet each other!
However, unlike others, Capital Markets are said to be a ‘zero-sum’ game! This is exactly what I am going to argue about in this chapter, but before we move further with Capital Markets, let us get clear about the basic components of the market for money!
So, going back to what I said earlier, one visits a ‘Capital Market’ for money! Now, what are the basic ways in which we can arrange money for ourselves – either we put it down from our own pocket, or we borrow it! In a more formal lingo, putting down money from your own pocket is called ‘Equity’, and borrowed money is called ‘Debt’!
Now, my argument in this chapter revolves around an analysis of the so-called fact, or shall I say ‘myth’, that the capital markets are ‘efficient’! And further that, if we would call capital markets a ‘zero-sum’ game, why wouldn’t we call all other markets the same! Well, one immediate answer may be that the other markets are more need-driven, but I think that a more correct answer or an extension to an earlier answer may be that all markets are ‘intention-driven’, and that intentions differ in different markets!
Let us say that you go to a fruit market looking for an apple! More often than not, you do not go looking for a bargain when you go looking for an apple; you are probably just looking for a right, reasonable price!
[90] Or sometimes, when it is more need-driven, you may also pay well above a reasonable price, as long as you get your apple!
Now, how similar or different are the transactions in a capital market:
1. First, buyers are almost always looking for a bargain, otherwise why would they ever come to this market at the first place!
2. Second, in this case, the buyer-seller relationship is less of a consumer-producer relationship, and more of an investor-speculator relationship! For example, you rarely go to an apple market with an intention to trade apples, but rather to eat it, whereas in a capital market, you are a dynamic player, while interchangeably playing the roles of a buyer or a seller!
To the extent you say that somebody’s gain is somebody else’s loss, the zero-sum game theory looks simple and arithmetically sound! But it actually works on an inherent assumption that the markets are efficient, which is not true! The nature and quality of markets differ at different places, and thus markets are not equally efficient, or for that matter inefficient, at all places! And with an increasing freedom for all to participate in all markets at all times, the difference in the operations and efficiencies of different markets are being exploited, thus making the market which results out of the interaction between these different markets even more inefficient than the individual markets themselves! So, if you ask me to rank the U.S., the Indian, and the resultant market arising out of the interactions between the U.S. and the Indian markets, in an order of inefficiency, the resultant market would be the most inefficient!
The resultant market is like a conglomerate that is collectively worth less than the sum of its individual parts! To reflect upon this, let me explain this to you in context of the Indian and the U.S. markets!
A country’s capital markets are often understood as a barometer for its economic progress or wealth creation! However, under the Indian context, this barometer could be faulty! This is not to say that it is perfect in America’s case, but it would definitely be better!
The barometer is faulty as a result of highly inequitable participation or contribution of people towards the Indian capital markets! For example:
· Though more than 60% of Indians are involved in agriculture, they contribute only 20% towards the Indian GDP! Thus, this whole mass is highly underrepresented by the Indian Capital Markets!
· The Indian Capital Market can be said to be an ‘Elitist Market’ – only around 5 million or 0.5% Indians are actively involved in Indian capital markets!
· Also, the Indian capital markets are gyrated by the FIIs (Foreign Institutional Investors), who are essentially speculators chasing too few assets with too much money! During my interview with Mr. G. Chandrashekhar, this is how he succinctly put it to represent India’s story – “Cart (read ‘Capital markets’) is in front of the Horse (read ‘Real Economy’)!”
· And, at last, my favorite one – if you choose to say that capital markets is a ‘zero-sum’ game, how on earth then could it ever represent any economic progress or decline!
Though in America’s case, the Capital Markets may not completely reflect upon the economic condition of the country, it gets much closer to doing that than it does in India’s case! This is purely a result of much better governance, and thus much more efficient U.S. capital markets! Thus, when two such inherently inconsistent capital markets interact with each other on a common platform, it only creeps in more inefficiency, with market players constantly speculating, while trying to take advantage of the existing inconsistencies between the two markets! For example, there may be differences in:
· Availability and accessibility of information (speed and quality);
· Investors’ levels of education and sophistication;
· Level of experience among market players;
· Integrity and Fairness of markets, etc.
among the two markets, which shall result in an unbalanced flow of funds, combined with an irrational thinking and a wrong mindset!
Wherever we go, we hear that the markets are efficient, that there are very few opportunities for arbitrage, and that the market always corrects itself! Professionals who tell us this are mostly professors, senior employees, or other such people who are content with the way their lives are moving (monetarily or otherwise), and who do not themselves have the shrewdness to go looking for arbitrage in the market! Traders have always made money from arbitrage, and they will always make money from arbitrage, they cannot be such fools to stick to the profession when they are making losses in it!
The previous paragraph does not intend to promote or encourage arbitrage in any way, but it is just a realization that there is no real difference between speculation and investment! In fact, all speculations are in some way an investment, and all investments are speculations! So investment is just a form or a part of speculation, and thus can be known as a subset of speculation! Here, by investment I am referring to the traditional meaning of the word, i.e., long-term horizon with tested fundamentals, etc., etc.!
Language is a powerful thing, in fact extremely powerful! It is the cause for all the mistakes to happen, and then also the cause for a mistake to not happen! Basically, no language defines any word clearly – We do not know how to separate mistakes from what are not, and we do not know whether we should separate them at the first place!
Which investment in this world is not a speculation! When a wise investor himself says that he cannot predict the future with any certainty, then with what logic does he separate an investment with a speculation! All players enter with one aim – to make money, and all can make money! It may be simple, contemporary, fashionable, and arithmetically correct to say that markets are a ‘zero-sum’ game, but then if we all agree that we all can make money in the market, how can it be logically possible! The trick is to separate economic losses from accounting losses! Let me explain it with an example: Let us say I bought a stock at $20, and sold it at $40, but the stock travels up to $60, so here any professor would tell you that the seller’s loss at $40 is $20, which is the buyer’s gain, thus convincing you that it is a ‘zero-sum’ game! But, in case I am making such profits in all the stocks I hold, will I ever crib about it? Of course not, as long as I am making money!
On my accounting book, my realized losses are 0, and it is all gains, so as long as I can keep owning stocks and do the same with every stock, does it really matter if I miss the part where stock travels from $40 to $60! I gained, and the one who bought at $40, also gained! We both won! This also seems just as arithmetically correct, doesn’t it? The only difference is that this looks at only one part of the equation, while still recognizing both the winners and the losers! Just that it does not equate the winners with the ‘could have been’ winners, and the losers with the ‘could have been’ losers! For example, in the above example, I, as a seller at $40, would have been a ‘could have been’ winner when the stock price traveled above $40 to $60!
Market participants first enter with the aim of ‘profit and no loss’, and only then ‘maximum profit and no maximum loss’! In fact, it always remains at ‘no loss’ and the ‘no maximum loss’ part is never true! The reason I say this is because when you look at the market from the ‘zero-sum game’ viewpoint, you are inadvertently assuming that the market participant has come in with a mission of ‘maximum profit and no maximum loss’! This in itself is faulty for 2 reasons:
1. Any seller or buyer cannot define his maximum profits in advance! It is not like a corporate putting it down on its Mission Statement that they want to be the #1 market players with the highest market share – In this case, a corporate can say that because it has some relevant data in place like who are the market players, and how far or behind they are compared to the one with the highest market share at present, etc., etc.! Whereas, in case of the buyer or seller, he cannot predict the future or the movement of markets with any certainty, and thus defining his mission as ‘maximum profits’ would be foolish! With this regard, the buyer or the seller can come into the market with hope of making ‘profits’ and just that – lingo like ‘maximum profits’ cannot exist in relation to the dynamics of capital markets!
Example: Let us say that A buys a stock at $20! Now, the stock travels north to $40 and A sells the stock to B at $40! If A sells the stock at $40, and it travels further north to $60 and remains there, A missed a part of his ‘maximum profit’ of $40 ($60 - $20)! This ‘maximum profit’ comprises of two parts:
· The actual profits made by A, i.e. $20 ($40 - $20), and
· The ‘could have been’ profits lost by A, i.e. $20 ($60 - $40)!
[91]Moreover, it is also important to realize that A anyways made a profit at $40, which served his purpose! So, as long as A is making profit on every stock he holds, it really does not matter how much profit A is making on each stock!
2. Zero-sum game looks at markets strictly with the perspective of ‘maximum profits’ and ‘maximum losses’! Basically, the extremes that could have happened! The market player avoids ‘losses’, and not ‘maximum losses’!
Example: Let us now say that after A bought a stock at $60, the stock travels south to $40! If A sells the stock at $40, and it travels further south to $20, identical to the case above, A has escaped a part of his ‘maximum loss’ of $40 ($60 - $20)! Again, this ‘maximum loss’ comprises of two parts:
· The actual losses suffered by A, i.e. $20 ($60 - $40), and
· The ‘could have been’ losses escaped by A, i.e. $20 ($40 - $20)!
[92]Once again, it is important to realize that A anyways made a loss at $40, which defied his purpose! So, as long as A cannot avoid making losses on any stock he holds, he should rather close shop and not be too concerned about how much loss he is making on each stock!
The ‘could have been’ profit part should be treated as a ‘missed opportunity’, and the ‘could have been’ loss part should be treated as ‘sunk cost’, since the trade has already happened and A has already booked his profits or losses! If you do this, you shall be gauging the performances of buyers and sellers discretely, rather than netting them out! You shall then find that all make money, and that the zero-sum game is a faulty interpretation of the market!
[93]However, it is human psychology that we express more grief on a loss than we celebrate on a same amount of profit, and thus we tend to follow the ‘zero-sum’ game!
[94]Now, after having made clear my inhibitions on the ‘zero-sum’ game, I shall now explain how it actually works on an assumption that the markets are efficient, and that the markets in reality are nowhere close to efficient!
Simple! Think about it the way I had explained it earlier – you go to the market looking for a bargain – now, the very fact that you are able to find a bargain represents the inefficiency in the market! People have always looked for bargains, have always got them, and have always made money, simply because market at all times is just as inefficient as it is efficient! The key is once again – the use of language – how do you define ‘Efficiency’?
Some more thoughtful professionals have worked out theories like ‘Efficient Market Hypothesis’, but to give respect to all those senior and well-paid professionals who never get tired of enchanting the mantra that ‘markets are efficient’ (basically, following each other), let us momentarily assume that the markets are efficient! But, heartbreakingly, the moment lasts for too short a time period for us to even start celebrating, since, to make matters worse, markets are not even equally efficient across all spectrums – all geographical locations, all countries, etc.!
[95] Whereas, to say that the markets are efficient should mean that the markets react in similar ways to any similar actions in the U.S. or the Indian markets, or in any other market! This is inherently faulty! And my courage to mention this has developed after having frustratingly heard the same market behavior theories at BSE, as I heard in my B-school!
[96]How can Indian and U.S. markets, both, be efficient, when one is still so highly regulated, and the other makes more sense of what we call a ‘free market’! Simple example – In Indian stock exchanges, we have a circuit filter of 20%, which means that if a stock price fluctuates more than 20% of its original price in a day, the trading may be stopped for that particular stock! Moreover, the Settlement of transactions happens only 2 days after the trading day in the Indian market!
[97] The endless layers of regulators in India may have done this with a good intention and a cautious approach, but what may be the rationale behind them putting such restrictions?
They may want to limit investors’ losses or any speculative gains, and thus have taken the baton in their own hands, to decide, on behalf of investors, the boundaries within which any market player may play! Well, the simple answer to the question asked above lies in regulators’ lack of confidence in the knowledge and sophistication of a common market player in India! However, it may so happen that the regulators are undermining the awareness of a common investor, and that free markets may work better in India! But whether that is the case or not, the point is that how can we measure both the Indian and the U.S. markets on an equal footing, when both are believed to be consisting of players with different level of skills, expertise, understanding, information, availability of products, etc.! Basically, how can we use a common term ‘efficient’ to represent both the markets! Thus, I say that the level of efficiency differs with different markets! And also, for that matter, any market is only as efficient as it is inefficient!
So, does it mean that no matter what shape and design you give to the markets – it will always present itself with inefficiencies; in fact it shall present itself as just as much inefficient as efficient?
No! If all the players who participate in the markets are equally equipped with resources on all fronts, belong to a land of common rules and regulations, and share similar mindsets, though not necessarily common opinions (otherwise there may be no sellers for buyers, and vice-versa), the markets shall behave efficiently while giving meaning to the ‘zero-sum game’ theory, since there shall be no profits or losses available for anyone at the very first place!
This means 100% honesty, integrity, equality, etc. combined with 100% ability among all market players to foresee the future accurately – Basically, no projections and valuations shall go wrong!
So, let us say if there was perfect globalization, and that it measures to 100 on the 0-100 extent of globalization scale we had earlier talked about in Chapter 6, then that world market would get closest to efficient!
[98] And I say closest to efficient, but not efficient, because though perfect globalization may consist of exactly equally informed and equipped people, along with complete honesty, integrity, etc., there may still exist human incapability to predict the future with certainty – but though this may result in erosion or creation of wealth on mass basis, it shall never mean that one man’s profits are another’s losses! However, even this incapability will cease to exist, since in a state of 100% globalization, the world would be in a state of complete ‘nirvana’ – there will be no uncertainty to future, people will be no longer running after profits, there would be no one competing against anyone else, etc., etc.!
[99]But, rather fortunately, this does not happen and there is money for all to make! Look at the irony – the same professionals we earlier talked about would call it unfortunate that markets are not efficient! But rather it is only because markets are continuously inefficient that there is an opportunity for all to make money at all times!
Now, with the last few paragraphs and footnote#99, you may have better understood the relevance of this chapter to the title of this book! Delving deeper into the title of this book, you may realize that it encompasses almost everything known to us, i.e. the known knowns! Life is something that you deal with at the most personal, individual level imaginable, whereas the World is just that – the World – it encompasses everything we know, and thus exploring the ways in which our life interacts with the world we live in allows us to think across a very broad spectrum of topics, some of which I have tried to cover through my book in form of various chapters! I found the real-world markets that we live in and play in a very important piece to be mentioned, and thus this chapter!
So, when we think about efficiency of markets, we are thinking about efficiency of people – and then, when we are thinking about efficiency of people, we are thinking about equality among people – to cut it short, when we think of equality among people, we are thinking of only 1 single world market – and, as I mentioned earlier, this is where we limit ourselves, the known knowns!
This is the limit of my book, but to go beyond that, when we think of 1 single world market, we would be thinking of 1 single universal market! And to express what all this 1 single universal market would encompass, I would take help from the quote once made by former U.S. Defense Secretary, Donald Rumsfield! According to him, it encompasses of:
· Known Knowns – things we know we know;
· Known Unknowns – things we know we do not know, and
· Unknown Unknowns – things we do not know we do not know!
However, I would include ‘Unknown Knowns’ to it, i.e., the things we do not know we know! In fact, this particular piece is the most common in our lives! Isn’t it?
· Isn’t it the cause of us always performing below our best?
· Isn’t it the basis on which we say that there is always scope for improvement?
· Isn’t it the reason why we say nothing is perfect?
All the above questions are the twisters, but the ‘Unknown Knowns’ are the most basic, most frequent and the most prevalent part of this life and this world!
It is always when we discover something we know, but never knew that we knew it, and implement it, that we achieve success! In fact, the ‘Unknown Knowns’ are the most common cause for setbacks, failures, discomfort, bad phases in life, or our inability to get out of any such bad phases!
Donald Rumsfield has proven his very high worth, and his quote that I restated above only reassures us of his deep and great thinking, but once again, I shall say that people who are such experts and in fact so close to a genius, mostly miss the basics, once again as I earlier stated in chapter six, just because they travel so far off from them, and at such high speed!
The journey from basics to advanced should be made at a very steady, stable and uniform rate and neither too fast nor too slow! If you tend to go too slow, you tend to forget your basics by the time you become an expert; and if you go too fast, you quickly lose track of the most basic things you learnt in life, while you become an expert!
Alright, after hitting ‘efficiency’ at its very extreme, let us come back to the real-world to define efficiency the way it is understood, or ‘misunderstood’, in the real-world!
The easiest way I find to define it is the way I learnt it in my Thermodynamics course, while doing my engineering! It defines efficiency as a dimensionless number =
Output / Input, with value between 0 and 1, and when multiplied with 100, gives us a %!
The way we concluded ‘Efficient’ markets in the first six pages of this chapter, basically says that the Input itself is the Output! Thus, at this stage, if we were to calculate efficiency for ‘efficient’ markets – it would be 1 or 100%! Please note that though efficiency may range from 0 to 1 or 0% to 100%, ‘Efficient’ shall strictly mean 1 or 100%! With this in mind, we can say that our conclusion of ‘efficient’ markets suffices the real-world definition of efficiency as well!
So, in the real-world, at what level of efficiency do our markets operate?
Well, if everything is as coherent as we discussed earlier, then with globalization being so close to 0 on our scale of 0-100, efficiency should also be somewhere very close to 0!
True! However, please remember that though globalization is one thing in itself, there is no one market which by itself represents this whole world! As I said earlier, there are different markets at different places that are highly inconsistent with each other, and thus we do not have a common platform to measure the efficiency of world markets!
So, to be honest, I do not have a clear answer on where to put world markets on a scale of efficiency, and as I have earlier surrendered and given you the say several times while writing this book, I shall do it once again, to my advantageJ!
However, to give you a periscopic view of the various means and tools with which efficiency is attempted to be measured and improved in today’s world, I shall take help of some excerpts from a very radically titled article I recently read in a newspaper: ‘Is your company ambidextrous?’
[100]Excerpts:
1. ‘To succeed in today’s fast-paced business environment, it is not enough to be highly efficient in managing your existing product lines and servicing your existing customers – you also need to be flexible so that you can respond to emerging customer demands and bring new technologies to market ahead of your competitors!’
2. ‘My preferred approach is to build ambidexterity into the heart of the organization, so that individual employees make their own choices between efficiency-oriented and flexibility-oriented activities in the context of their day-to-day work. For example, should a salesman focus on an existing customer account to meet quota, or should he nurture a new customer with a slightly different need?’
I have perhaps not given you anything new in the way of these excerpts! You have probably read as many of these articles as I have, since I assume that those who have picked this book from the shelf are avid and curious readers, as, though the title sounds imposing, the author is little known! Nevertheless, in order to be politically correct and formally assured that we are on the same page, I included these excerpts!
Now, it may seem a bit irrelevant, but I shall first inform you that this article has been authored by none other than Julian Birkinshaw, who is a professor of Strategic and International Management at London Business School and co-founder of the Management Innovation Lab along with Gary Hamel! This says that we just looked at the real-world meaning of efficiency from the lens of the most coveted gurus about the matter, and there must be some substance attached to all these talks!
I agree! Though I earlier proved, in line with the title of this chapter, that efficiency is ‘misunderstood’, it can be assumed as ‘understood’ in case we clearly state our assumptions! However, it must be clear to you from footnote#98 that I do not like the world of assumptions!
Assumptions are a way to convert ‘false’ into ‘true’, ‘meaningless’ into ‘meaningful’, ‘foolish’ into ‘intelligent’, and then the most important and the one consistent with the title of this chapter - ‘misunderstood’ into ‘understood’! However, still, I must state that the people who possess the power to state all assumptions behind the meaning of their point are real-world geniuses!
Take the Black-Scholes model for example, a Nobel-prize winning innovation in the field of Advanced Finance – extremely detailed, brainstorming, intelligent, and yet simple model – however, the assumption of ‘volatility’ makes it look just as foolish!
[101]So though I would love an assumptionless world already existing in my imaginations, I also realize that the only way to proceed towards it is through assumptions! And thus, these assumptions result in my ambiguity towards clearly answering the extent of efficiency of world markets! And thus, my ambiguity leads to my solution in giving you the responsibility to solve the matter yourself!J
Just kidding! After having laid our foundations clear, and understanding the real-world intricacies while having the big picture very clear in our minds, we shall all together proceed towards solving the matter! My suggestion would be that we start with making our assumptions clear before we start doing any work on the markets! As the title of this chapter says – Assumed and Misunderstood: ‘h’ of Markets – it is both assumed ‘and’ misunderstood, and it is assumed only because of the realization that it cannot be fully understood! So, though it still remains misunderstood in the sense that it is not fully understood
*, the fact that we have laid down our assumptions to convert our ‘misunderstanding’ into an ‘understanding’ shall encourage us to say that the markets are understood!
Chapter Nine
The Concept
This chapter shall perform the task of explaining to you the meaning of the title of this book in around ten pages!
This chapter is mainly a motivation from a very true statement that is very common across ‘enthusiastic’ and ‘eager to learn’ readers! You will often find them saying that you cannot ever guess the content and quality of a book looking at its cover page!
Ok so let us revise the title of this book! It says: ‘Understanding: this Life and this World’! Obviously, careful readers shall verify the worth of the author behind the title of the author’s book! It shall look funny if Bush starts writing on World Peace, or if North Korean dictator Kim Jong-il starts explaining the importance of International Relations!
[102]At various points in time while writing this book, I also felt guilty with a doubt as to if I correctly understand this Life and this World myself! But then I cross-checked my various thoughts across the various spectrums via the well-believed ways of life! For example, I would try to match my viewpoint with how different leaders of the real-world would respond to it, while simultaneously also contrasting it with the ways of life as suggested by say Osho!
It may sound naïve and hard to relate to, but I think it should become more clear with the following example:
In chapter three, I picked up a thought from Osho that said that you cannot call a flower so unless it has stopped flowering, or a river so unless it has stopped rivering! I in a way negated that saying that it may not be so if you holistically believe that it is otherwise! There is of course more than one way to anything in this life, but some of the well-known ways do realistically make a lot of sense unless you forcefully try and find reasons against it! For example, after further interpreting the meaning behind what we discussed above, we understood that Osho is reflecting upon the fact that this world or this life is a continuum, and supplemented it with wonderful examples like a child is growing into an adult, an adult is growing into an old man, life is turning into death, or death is turning into life! With this concept of ‘continuum’ in mind, try and relate it to chapter eight where I have talked about efficiency, or rather inefficiency, of markets! The only thing that can keep markets in continuum is inefficiency, because otherwise, as I explained in chapter eight, efficient markets would mean that there are no opportunities to make money in markets! Both these thoughts fit very beautifully into each other!
And then, similarly, try and relate the concepts of ‘nirvana’ and ‘perfect globalization’ that I spoke about in chapter six! Nirvana is a state of enlightenment where your mind is empty and not a slave of various worldly things! The above comparison, for example, was based on my firm belief that this world will experience its end, or rather its prelude, not through a world war, but through a state of complete peace – a state where there would be no different countries (no geographical divides), no social divides, no vested interests, no greed, no superiority, and hence no inferiority – a state of perfect globalization, to the farthest stretch of imagination possible!
For a very brief gist of what I want to convey through this chapter, you may want to revise the last paragraph of the first chapter – ‘Integrity’! Here too, I tried to combine the real-world concept of Integrity with Alfred Nobel’s such meaningful statement – ‘It is not sufficient to be worthy of respect in order to be respected’! However, I shall elaborate upon the last paragraph of chapter one in the ensuing paragraphs!
Understanding: this Life and this World!
Through this title, I seemingly separated the two: ‘this Life’ and ‘this World’!
Hard and probably even incorrect to disintegrate the two, I found it important to do so for better and easier understanding! And if understood, it takes a full circle to in turn explain to us the integrity between this Life and this World!
Let us disintegrate the title under the following four parts:
1. You understand Life and you understand the World, both!
2. You understand Life but you do not understand the World!
3. You understand the World but you do not understand Life!
4. You neither understand Life and nor do you understand the World, none!
1. Well! People at this state of mind, body and soul are genius! They have cracked it all! They have conquered it! And, they have traveled much beyond wins and losses! Failure does not happen to them anymore, and winning has already become a habit! They understand themselves, and they understand others, and then they act accordingly!
2. No problem! Yes, this is kind of a ‘no problem’ state! You have not done anything extraordinarily genius but you haven’t messed it up either! People belonging to this state may be attired with titles like cool, carefree, content, satisfied, etc.! They would earn a decent living, they would have a nice family, they shall be well-respected in the society though there may not be anything particularly special about them, they do not unnecessarily land themselves into trouble, they know the ways of life, they are generally not too full of desires and ambitions, and they are usually strongly and emotionally attached to their near and dear ones! Basically, at this state you may not be a nobel-prize winning problem solver but you may still live a respectful and decent middle manager/manager kind of a life!
3&4. Aha! Surprised that I clubbed these two together! After all, understanding this
complex world takes a very sharp mind! True, very true! But the way I
disintegrated the title of this book by separating this Life from this World means
that I have basically separated the inside from the outside - the you inside you
from the you you are made up of! The you inside you is your life and the you you
are made up of is the result of the world you live in! After reading the above
sentence again and again, you may realize that, very clearly, the ‘real’ you is the
you inside you, that is the real stuff! Whereas, the false you – the way you have
been made to be by this real-world, is diluted - it is not completely pure! Thus,
though understanding this world may help you, the more important piece is to
understand this life, i.e. yourself, your life, the reason why you took birth, the
reason why you were given a life, etc. – basically the softer-looking stuff! Once
you understand Life, you are apt to live at least a decent life, and then you may
improve upon it to become a real-world hero, and thus the genius I talked about in
1! However, if you are only a real- world hero who can crack the toughest-
looking physics problems or can devise the increasingly complex-looking risk
management models at the drop of a hat, but does not understand the reason
behind your existence, does not understand that Life goes much beyond any such
Physics, Finance or Economics models, and does not understand that you need not
prove yourself to anybody but to yourself; you shall lack the all-important
principles and values, the integrity, the wisely approach, the respect for others,
etc. and thus you may be only as good as the biggest fool existing on earth who
neither understands this Life nor this World!
Understanding: this Life and this World
Understanding: this Life and this World
Look at the above one-dimensional diagram! It looks as much of a flip opening towards you as it looks like one opening away from you! Completely different outcomes, but both correct!
This is what I was talking about in chapter three! This is what I was emphasizing upon that no matter how you look at this World, the point is that if you know that you are looking at it correctly, you must be looking at it correctly!
An even more important point:
I doubt that you may have already noticed it, but the two ways in that we looked at the above diagram should actually have struck us only after the very basic way in which the above diagram was drawn at the first place! It is simply a one-dimensional diagram joining two slanted rectangles, or what we call parallelograms in mathematics lingo!
Instead of looking at it this way, our mind skipped that to look at it in a rather more complex two-dimensional way – a flip opening!
This is what I insisted upon in chapter six saying that with growing expertise, we tend to forget the basics! I also touched upon it in chapter five when I admitted that I was doing the same mistake, constantly looking for outside inputs to explain the plight of Indian education system when my mom (a primary school teacher in an urban-rural area of India, and a complete fit for the common people brigade) was sitting right in front of me staring at my face! I was ignoring the most basic, because as in the above diagram; my mind had become so tuned to automatically look at the most complex thing foreseeable, that it was obvious that I would miss the basics! And, Dangerously so!
Why am I telling you all this?
The point is clear: we are revising!J
No, of course, the point is much deeper!
The point reflects upon the complex inter-relationship between any individual and the world he lives in! Every activity of yours contributes towards the making of this world, every activity of yours influences somebody or the other surrounding you, or perhaps also somebody who is not even a part of your immediate surroundings!
Ok, let us play a little more with the above paragraph and take it to the real-world! I shall explain this with the most criticized concept of this book – ‘Globalization’! However, since we are taking it to the ‘real-world’ this time, we shall talk about globalization in the way the real-world talks about it!
Surprisingly, globalization has affected all – those who have been interested in it, and even those who have not been interested in it!
How?
Well! Almost every time we talk about Globalization, we talk about the rich and the poor! But apparently this world also consists of a part that consists of middle-income countries like Argentina, South Africa, Chile, etc.! These countries have mostly remained untouched by the benefits of Globalization! In fact, Globalization has struck these countries with a kind of stagnancy! The Rich has the strong skills and the strong capital to back those skills, while the Poor has the low wages combined with improving skills to attract the capital! However the middle-income countries, though not exactly expensive, are more expensive than the poor countries like India and China, while they also do not have the same kind of high skills and capital that the rich countries possess!
So, as the Indian ‘swami economist’ Mr. Aiyar states
[103]: “The middle-income countries find it difficult to compete both at the high and low ends of the production spectrum!”
This explains that while Globalization has been happening, as in the real-world sense, and the Rich and the Poor have been benefiting; somebody else has been taking the brunt! Basically it is not missing anyone! Every such single activity shall encompass all - Nothing misses nothing (remember a couple of paragraphs ago I mentioned that every single activity influences every other single activity)!
Real-world economists would be very glad to have read the above paragraph, since with the above couple of sentences, I have kind of strengthened their ‘zero-sum game’ theory by saying that the rich and the poor are capitalizing on the sacrifices made by the middle-income countries forced upon them by globalization, while I also sanctioned their very concept of globalization at the first place!J
Well! I am not writing this ninth chapter to negate the spirit of the first eight of them, and thus I shall proudly and confidently back my point with the help of an important input I received via one of those articles authored by the ‘swami economist’ of India:
The middle-income countries like Chile with ‘strong economic policies’ have managed to benefit themselves more from globalization as against succumbing to its potential ill-effects! And I think that economic policies are a very strong reflection upon the behavior of the underlying ‘people’, though the behavior may have been forcefully or happily adopted! It gradually becomes the ‘culture’ of the place, and if such policies are adamantly kept away from ‘change’ for long, the people may in turn themselves start reflecting upon these policies (remember chapter four where I emphasized that change is continuous)!
So ultimately, in the long run, if the policies remain right, the people behave right! And thus this very behavior of people decides your fate with respect to the changing dynamics of the outside world (remember in the sixth chapter I mentioned that the behavior of the governing people at the top gradually trickles down to the bottom, and ultimately it shapes up as the culture of the place)!
Now, of course, the behavior of people as a group is formed by the behavior of the underlying individuals! And thus, we all, each one of us, is influencing this world in some way or the other, and since our actions affect this world in some way, each one of us has some power to change this world simply by changing our own behavior (remember the concept of an unreasonable man – though I exhibited it in chapter four that it may not always hold true, such thought by itself seems sensible)!
Now, of course, as I had earlier mentioned, this change in behavior is extremely difficult – it requires ‘wisdom’ to behave differently, if needed, from the herd surrounding you (remember the importance and effect of Background)!
If you notice carefully, via a last couple of pages, I have tried to capture all the various issues mentioned in this book like Globalization, Zero-sum game, Importance of people and their thoughts, Unreasonableness/reasonableness of their behavior, Culture, Wisdom, and Change; while I have also tried to integrate the way in which this World works with the way in which every single individual that forms a part of this World works!
Vipassana teaches us that ‘what you see is your own truth’! Whatever you give comes back to you! As you may have heard: ‘Life has come a full circle’! And then, you may have also heard: ‘World has come a full circle’! Both are true, and thus, this book is true!
When I recently started social work, I, like any other social worker, faced anger, discontent and compassion! I learnt that there is something unjust, but then, I also learnt to deal with it after understanding that I must have been once unjust myself since it is now coming back to me!
Let us once more exclusively get back to the real-world and visualize this while we talk about the concept of Money Circulation as I touched upon in chapter seven!
You see, ever since countries started printing notes, money represents people! I shall relate it to this chapter, which shall help us to understand that while our money (our thoughts) travels around this world, our actions during this period of circulation decide our returns (our state of being)!
Remember the GM catastrophe – nobody can estimate how many people would have went bust along with GM, and especially GMAC - thanks to the world of Derivatives!
[104] The collaterized debt obligations (commonly abbreviated as CDO) have extremely deep and complex roots, and immensely widespread!
[105] Its reach is so vast that most of its end-users are even unaware of what they are into! Many did not know that they were invested in GM, and came to know about it only when stories like GM may go bust starting hitting their respective radar screens!
However, someone, either the investor himself or his portfolio manager, was, all this while, making decisions on where to invest the money and on how to keep it invested! Let us say that he sent out $1M from his kitty into the market, which of course changed many hands in the process, got split or multiplied depending upon how its various contemporary users used it, and then came back to the originator!
[106] Aha! It is important to note that the contemporary user of your $1M may not have used it the way he did if your decisions would have been different! Your actions during the time he was using your money would drive his behavior, and ultimately, your returns!
However, the ratio of the proportion of the extent of change in your decision to the extent of change in his resultant actions may not be 1! Your $1 decision may result in his action on $10 (though the action by itself depends upon his own philosophy – that is why I said that money represents people)! Thus, in this way, your decisions, while your money is under circulation, decide your returns!
Money or any other such thing that represents people in one way or the other is simply a medium via which people’s thoughts interact with each other in a particular fashion, and the resultant actions of these interactions decide the way in which this world operates!
This reemphasizes upon my earlier point that any such concept that may integrate the world (for example, globalization) such that it operates in one single common way is not yet into effect, as for what we see today, there are still huge disparities in the way the different nooks and corners of this world operate!
It should also reflect upon the theme of this chapter since it shows that every single activity influences every other single activity! And also that each one of us has the power to change the way in which this world operates - just that the power needs to be discovered and those who posses the right combination of Intelligence, Talent, Work ethic and Good luck to discover it, shall behave as true citizens of this world and try to distribute it equally (remember the concept of level playing field I proposed in chapter six)!
Lesson: Though we seem to be only Users, we are also Originators – each one of us!
And we have powers; both as a User and as an Originator - As an originator to indirectly influence the outcome through affecting the actions of various users, and as a user to directly influence the outcome through affecting our own actions!
But, most importantly, since we behave as a user and an originator simultaneously, we have an almighty power to introduce ‘change’!
This book is a continuous effort to understand this life and this world across the spectrum of three broad ingredients - Philosophy, Spirituality and Reality!
And then I have tried to test the outcomes of our understanding by contrasting it with the real-world examples!
I have refrained from referring to Psychology in particular; since any effect of it shall be encompassed in Philosophy itself, as Philosophy is an outcome of Psychology! Psychology is Input – Philosophy is Output!
Life is Psychology, World is Philosophy – Life is Input, World is Output!
Once again, forgive me for being repetitive, but I shall take this last opportunity to stress upon it – This book has tried to cover the widest range, right from the smallest matter known to the biggest matter known (as earlier mentioned, the known knowns)!
How you lead your life decides in some way the world you live in! Your Psychology is the study of your mind while your Philosophy is your beliefs, your thoughts!
Ideas happen according to your Psychology, while execution is a result of your Philosophy! And the conglomerate of such results of each individual’s philosophy forms this World! This world then becomes a reality that we all ought to face and shall change continuously (once again, by changing our own philosophy, and not being resistant to change)!
It is in this sense that the spectrum across Philosophy and Reality is intertwined to form the basis behind all the real-world examples!
Where does then Spirituality pitch in?
An outsider in a sense, but in no sense unimportant! Spirituality enhances the quality of your Philosophy! I say this based on the concept of inside-out: The better you can make the inside, the better you can make the outside!
Spirituality works towards the enhancement of your own self – simply and purely by realizing it - what we call ‘self-realization’! As it is normally understood, it is not needed only in bad times – it shall help you anytime!
Given its hidden, and often ignored, importance; I shall discuss Spirituality in the next two pages before I close this chapter while finally reintegrating Spirituality, Philosophy and Reality – the only ingredients that this World comprises of on an absolute basis, nothing more nothing less!
However, before I proceed, I shall clarify that Spirituality is ignored not by choice, but due to sheer lack of understanding – almost a compulsion, since Reality does not leave us with enough time to devote some to its complementary counterpart – Spirituality!
However, once we realize this, it shall become easier for us to ‘optimally’ (it does not necessarily mean ‘equally’) divide our time between enhancing our Philosophy (Spirituality), forming our Philosophy (Philosophy), and finally, implementing our Philosophy (Reality)!
Through this book, I am trying to make sure that we all at least realize that we need to divide our time across all the three ingredients, however the optimal allocation of time across these three shall depend upon person to person, and I find myself too little to suggest on that, perhaps somebody like Osho may have been able to help us to do it better!
Spirituality is presence of a Higher Power!
Many think of it as detaching one’s self from the real-world! However, I think of it as enhancing my real-world presence!
Myself being a disciple of Osho, I recently attended an Osho Meditation camp during the next week, when I finished writing my book! I was constantly reminded that I am not allowed to take anything inside the Camp, including my laptop, celphone, diary, etc. or any other such thing which may distract me to not be able to absorb the ‘Dhyaan’ (Meditation) fully!
However, I have been constantly negating this and am always asking them to let me in with the things I want to! What purpose shall it serve if you once again dispossess somebody of the material things that he or she may want to possess! I am telling you all this since I want to tell you about Spirituality in the way I think it ought to be!
Spirituality does not mean ‘Tyaag’ (Sacrifice)! It rather means Enhancement, Excitement, Acquisition, Growth, and thus ‘Gyaan’ (Knowledge)!
Spirituality does not answer your questions, it rather shares with you its thought that most of them are unneeded and that you shall thus be better off if you vend most of them off!
Vipassana or any other such ancient forms of meditation are not consciously designed for you to gain courage or accept truth, but such gains are rather the automatic results of true meditation!
Meditation simply helps you to empty yourself, but that in no sense means that you shall lose your memory – if that would have been the case, then I may have agreed that Spirituality is an isolation from the real-world, or that it is sacrifice – but it is clearly not so!
You empty yourself of unwanted thoughts that waste your time, undesired worries that spoil your imagination, or for that matter, any other such thing that does not give you a clear comparative advantage – whose value is lower than its opportunity cost!
This does not mean that men stop thinking about women; women stop thinking about men, or both stop thinking about sex! No! Ask yourself – Is sex unwanted for you – If yes, then you may shed it off; but if no, which is most likely, then please keep it, do it!
No thought is dirty! All are pure, if the thinking behind them is pure!
Spirituality is Purity! Spirituality is Enlightenment!
And it is in this sense that Spirituality helps us to live life ‘optimally’ while we use the limited resources of this world in an optimal way, thus making world a better place!
I think now we are reaching a stage where we all shall, collectively, close this book while we reintegrate Spirituality, Philosophy, and Reality!
People, I could not have taught you the World, but via this book, I think I have shared enough, as much as I could, so that we all can at least understand Life! And then, it should not be very difficult for us to travel that extra mile to understand those Physics, Finance or Economics models I earlier talked about!
Purify your Psychology via understanding Spirituality - the only way you can do that is by experiencing it! Then use this Psychology to enhance your Philosophy – for this you need not put any extra effort, it shall happen automatically! Finally, implement your Philosophy in the right way to create and later contribute to Reality that you shall proudly be a part of!
Since the above paragraph is one of the most important of my book, I would like to be a little more explicit!
When I say, implement your Philosophy in the ‘right’ way, I mean that you shall distribute this power that you just discovered ‘equally’ (remember I mentioned it a couple of pages ago)!
When I say, implement your Philosophy in the right way to ‘create and later contribute’ to Reality, I mean that unless all others do not complete the discovery process that you just attained, you shall ‘create’ Reality, and then once we all attain the discovery, we all shall ‘contribute’ towards Reality!
In this way, Reality shall be the one we could be proud of!
And thus, in this way, we all shall proceed towards understanding this Life and this World, both!
However, please do not commit the blunder of trying to delve too deep into the real-world models without understanding yourself! If you feel guilty while reading this, please take time off to realize yourself, and then get back to contribute to this World in an optimal way! Thanks!
By the way, I was doing the same mistake you may be currently doing! In fact I was not even wise enough to have myself stepped out of my sub-optimal real-world way of living Life and take some time out for self-realization! Rather this time-out was inflicted and forced upon me with the recent Academic Integrity Allegation! Please do not unknowingly wait for any such forced time-out, and rather do it yourself – to your own advantage, for your own benefit!
However, this is not to say that all are behaving sub-optimally! Some of you may be playing it optimally already! For those of you who are already implementing your discovery the right way - Thanks again!
Chapter Ten
The Feeling of Pride
All Indian names have a meaning attached to them! In India, when a child is named after around seven days of his birth in a fairly big ceremony called ‘Namkaran’, a good amount of research is done along with local panditjis to give child his/her name!
My wife’s name ‘Bhavna’ means ‘Feeling’ and my name ‘Gaurav’ means ‘Pride’!
So, if you were to say Gaurav’s Bhavna (since she is mineJ), you would be saying:
‘The Feeling of Pride’!
When do you think you learnt the most – with your first engineering course, with your first music class, with your first gold medal, or with your first ‘Relationship’?
It is all about humans! And thus, it is all about Relationships!
Relationships can be of several kinds, but the ones where we can express ourselves the most, where the least is hidden, and where there is physical openness and intimacy, are the biggest ‘learning’ experiences!
It is all about ‘openness’! The more you open yourself to others, the more you open yourself to yourself, and thus, the more you realize yourself! It is true in all cases, once again, be it individuals, countries, or any other such entity!
The countries that have recently opened their economy to the rest of the world are reaping the rewards, as they are learning a lot more from their new relationships with the rest of the world! The same is true for you and me as entities! All of us learn a lot from relationships, because they help us to open ourselves, express ourselves, and thus get lighter! Sharing always helps, be it joys or sorrows, and thus when we have somebody to share them with, we feel better, our hope strengthens, our confidence boosts up, and our morale touches a new high! Thus, once again, no material knowledge enhances us as much as another human! You see how simple it is – and we still have been stupid enough to ignore humans, to ignore people – what I have been stressing upon in my book!
You may have often heard: ‘Behind every great man, there is a great woman’!
Well, it may be true otherwise as well! And, it may also be true that there is a great man behind a great man, or a great woman behind a great woman! After all, people may be homosexuals! But the point is that normally your physical partner can play a huge role in shaping up your identity, if the only reason for your relationship is not physical motives!
I may not be great to the world yet, but I am great to myself! And the reason is – you guessed it right - I have had enjoyed a great learning relationship with my better half – Bhavna Mathur!
Though this chapter may revolve around Bhavna, the motive behind this chapter is much broader and savvier! The motive is, once again, ‘self-realization’!
You must have heard: ‘The most important ingredient we put into any relationship is not what we say or what we do, but what we are!’
Thus, your relationship is what you are! Your relationship shall be your ‘self-realization’! Both the things are synonymous; the only shortcoming may be that not all people are fortunate enough to fall into true relationships!
I fell for Bhavna when I was 21, and I had already started learning! And in the four years since then, I have learnt a lot more – basically, I have been learning continuously!
This relationship taught me how difficult a sacrifice could be; however, it also taught me how easy a sacrifice could be! This relationship taught how difficult a favor could be; however, it also taught me how easy a favor could be!
Basically, you do not need to fall into a Relationship to realize that it is difficult to make sacrifices and do favors! However, true Relationships besides reemphasizing that sacrifices and favors are difficult; also make you realize that they can be just as easy!
This Life runs on a relationship with one’s own self, and this World runs on a relationship between various different selves!
The pretext in which I refer to Relationship above hints upon a relationship as if it is only between two different entities! However, you can also have a relationship with your own self! In fact, when I had just started my relationship with Bhavna, I wrote this in my diary (daily journal):
“One does not need a man/woman to rectify her/his existence! The most profound relationship we will ever have is the one with ourselves!”
– Gaurav Joshi
When I started to rise (since I hate to say fall) in love with Bhavna, the amount was so huge that more than I enjoyed her presence, I feared losing her! And with the realization that this fear can turn into a reality, I wrote the above thought!
I came across another anonymous but wonderful thought that said:
‘The purpose of a Relationship is not to have another who might complete you; but to have another with whom you might share your completeness!’
You can apply this across all entities – individuals, organizations, continents, countries; or, for that matter, anything bigger or smaller – and the result (the conclusion) shall be the same!
I shall explain it with a radical example – you may have heard of the theory of ‘Comparative Advantage’ that encourages trade among countries!
The theory of comparative advantage basically states that a country shall produce only what it is relatively more efficient at, and trade that for other things at which others may be more efficient relatively!
Let us say, country A produces wheat at $1/ton and rice at $0.5/ton;
whereas, country B produces wheat at $0.5/ton and rice at $1/ton!
So, in this case, both countries may be better off if country A produces rice, and country B produces wheat! Country A can then trade rice for wheat from country B, and both of them shall be better off since their cost of production reduces!
Now, everything else remaining the same, let us say that country B instead of producing wheat at $0.5/ton, produces it at $1.5/ton! In such a case, country A has an absolute advantage over country B, since it produces both wheat and rice at lower rates than country B!
Does this mean that in case this world consists only of countries A and B, country A has nothing to benefit from trade?
No! Let us say that both countries produce 100 tons of wheat and 100 tons of rice! So, without trade, A spends $150 on production while B spends $250 on production! However, if A trades 100 tons of rice for 60 tons of wheat, A spends 40*1 + 200*0.5 = $140 on production, which is less than $150 it would have otherwise spent on production without trade! Similarly, B would spend 160*1.5 + 0*1 = $240 on production with trade, which is less than $250 it would have otherwise spent without trade!
So, assuming that rice and wheat are the only ingredients that are desired and required in this life, and that only 100 tons of each is needed by the only two countries, A and B, existing in this world; A and B are complete by themselves (since each can produce 100 tons of rice and 100 tons of wheat by itself)!
However, still, both A and B are better off if they share their completeness (via a trade relationship) with each other!
This is the benefit of Relationship!
However, of course, here we are talking about a ‘true relationship’!
So, in the above case, it is assumed that countries A and B enter into this trade relationship without any false intentions! This true trade relationship between these two countries can be understood as the Ricardian model of Comparative Advantage with the world of ‘assumptions’!
[107]Love is of course the most obvious ingredient, in fact a requirement, of Relationships!
True Relationships are made up of True Love!
The difficulties we face while we preserve the trueness of our Love makes us experience Life, and the pleasure we get while we experience its trueness makes us appreciate Life! And, this cycle of difficulties and pleasure makes us understand Life!
There is no doubt that initially you ‘fall’ into Love! But then you only ‘rise’! You fall only to rise, and you rise much more than you fell (provided it is true love)! And, there is a reason behind it – Love is no magic, as you may have otherwise heard!
Any time you may have fallen for somebody, there is no doubt in my mind that you would have found the person much greater than what you found about yourself, you must have felt little in front of the person, you would have strived to find weaknesses while you just could not help but fill yourself continuously with admirations for the person! To put it simply in one line, you would have found somebody who you think is clearly much ‘better’ than yourself, and the best for you!
Vow! But then it shall be obvious that this is the case with your counterpart as well, if he/she also fell for you at the first sight!
How can two people be so much better than each other? What’s going on?
Yes! It is possible! Exactly as I said earlier in chapter five, we all have relative strengths and weaknesses, and though the person who has gone ga-ga over you may most ‘desire’ the qualities he is striving to develop, he may still ‘value’ those qualities the most which you possess! The same is the case with you – you are also infatuated by the greatness of the person for the qualities he possesses, as those are the ones you personally value the most though you may still only desire the ones you are striving upon to develop yourself!
Of course, all this while, I am talking about true Love, true Relationships – you shall have no particular motive behind following the person; be it physical, professional, or any other such self-driven worldly incentives!
What does that mean: it reflects upon what we look for in others! It may be that you are completely crazy about ‘beauty’, but your real-world desire may still be wealth! So, when you fall into a ‘true’ relationship, it is most likely that you would fall for someone really beautiful (as you may define it) rather than for a wealthy person (which would have been the case if you were running after a selfish motive unlike in a ‘true’ relationship)!
And yes, this world also runs on relationships!
But alas, these relationships are mostly not ‘true’!
If you could recall all that I said earlier – that theories like Globalization, Growth are faulty - you will now realize why I said it!
However, just to revalidate and reemphasize upon my point – the reason is that such theories are based on an assumption that they are based on ‘true relationships’, which is of course not true! And you know that I like an assumptionless world (chapter eight)!J And also that though I agree that assumptions dilute the strength of the objective, they are almost always unavoidable, and thus those who clearly state their assumptions behind their work may be called wise for doing so!
Still, some assumptions are faulty! And working on an assumption that the relationship is true is one such faulty assumption! It does not only dilute the objective, but it rather negates the whole purpose of it! Thus, it is in this sense that I disapprove the whole aura and era of Globalization and the ‘feel-good’ Growth factors that we are surrounded by in this world!
I am confident, and I know, that my relationship with Bhavna is true! My desires are quite different and I share something very different with Bhavna! Bhavna does not seem like a missed piece of a puzzle called Gaurav, rather she is one with whom Gaurav shares his thought to solve the puzzles surrounding him, and the same is true for Bhavna!
Gaurav is Bhavna, and Bhavna is Gaurav! It is intertwined! It is one!
And this is how they share their completeness! Bhavna for Gaurav and Gaurav for Bhavna are mediums through which they have come to realize this completeness, rather than to fill-in for their incompleteness!
This chapter is not intended to declare my love for Bhavna! That is known to both of us! And, it does not need any public declaration! But the real motive behind this chapter is the realization that true relationships are very different from the ones we see all around us, and also that at the same time, it is very plausible – because, after all, we all are complete; we just need a partner who is interested in some true sharing!
A true relationship is beyond culture, race, color, or even sex! A man-man or a woman-woman relationship can be just as strong!
The strength of networking has always been stressed upon in B-schools, or the corporate and the business world! The simple motive is to form long-term true relationships, and once you find somebody who is willing to share such a true relationship with you, I find it very hard to believe that you would be unsuccessful!
But, to my experience, true relationships are extremely rare in this world! So rare that some people even deny to believe that they exist!
This is no magic again! There is a very clear reason as to why true relationships are rare!
And the reason is that most people (or any such entities for that matter) do not fulfill the pre-requisite for a true relationship! The criteria for qualification is that you shall first be complete yourself, or may I say that you shall ‘feel’ complete; because, as I said a couple of paragraphs ago, true relationships are all about sharing your completeness, and not filling in for your incompleteness, or rather the feeling of your incompleteness!
I do not mean to be rude in any sense! And I am not saying this just because I happen to enjoy one such true relationship! But, rather, I am asking all who have not experienced it yet to throw away that extra modesty – modest to the extent of losing confidence – as this is one reason why they fail to ‘feel’ complete! As you may have also experienced, I have also come across many such people who, though very successful materialistically, endlessly struggle with their own selves! And the reason is their lack of confidence in their own self – their feeling of incompleteness!
And this is not only true for individuals, but also for any such biggest group of individuals!
Let us go back to our earlier example and let us talk about trade between ‘countries’ (a huge group of individuals)!
The countries that did not open up their economies earlier, or some of them even now, shared amongst themselves a common feeling of incompleteness! They made excuses but the benefits of trade had never been unknown to them!
Think of this world if the free-markets theory would be complete without assumptions! This world would be one, and all the arbitrage opportunities (the ones existing in an untrue relationship) should gradually die! This world should be one entity (like ‘The Feeling of Pride’) intertwined to consist of various true relationships!
Rather, these various countries try and tweak the free-markets theory so as to serve their own selfish interests (objective of an untrue relationship)! They have proudly and respectfully formed organizations like WTO (World Trade Organization) not to promote free-markets but to rather formalize and legalize their ways to get through these selfish objectives!
[108]Thus, this world, as in current stage, consists of a plethora of untrue relationships that are influencing the society, and in turn weakening the identities of those who are a part of it (me included)! However, I congratulate those who have been able to understand this world, and have rather kept their confidence and hope alive, while also being able to understand this life as they enjoy it via their respective true relationships!
To make my point on relationships even more clear, I would like to hint upon the difference between Good Relationships and True Relationships:
· Good Relationships need to be maintained, whereas True Relationships always remain the same!
· Since Good Relationships need to be maintained, ‘change’ is very important to maintain them; however, there is no such requirement for True Relationships (here the only requirement is that you feel complete with yourself)!
· Good Relationships can often be many; but True Relationship is often only one!
· Good Relationships may fluctuate; True Relationship is forever, its perpetual!
There are some relationships that, though not true, may be reasonably good! Such relationships are mostly real-world relationships where the selfish motives, though hidden, are known! For example, I think, the relationship between U.S. and Japan can be safely assumed to be good! Similarly, we, as individuals also experience at our workplace or any other such competitive setting that though all our relationships cannot exactly be called true as per the above criteria, they can be safely assumed as good!
Such relationships need to be ‘maintained’! In case of countries, they may be needed to be maintained to remain a favorable trade, economic, or defense partner; while in case of, let us say, an individual’s professional relationships, they may be needed for promotions, salary rise, etc.! However, true relationships are ones that do not need any maintenance! True relationships are not self-centered but are rather based upon your affinity towards your partner – a strong bond where not only mind, but also your body and soul are involved, as against a good worldly relationship which works only if you use your mind well!
Thus, good relationships are ones where ‘change’ is required! We all are engaged in many relationships, and to maintain most of these, as is the case with anything else in this real-world, ‘change’ is required! However, though in case of other real-world hullabaloos, change may often be required in your ‘surroundings’; it almost always helps to change the ‘system’ in case of real-world relationships!
[109] No such ‘change’ is required in case of true relationships – the very reason that such a relationship happened is because of the way you are! Also, any such change that is implemented to maintain your real-world good relationships does not change you as you are in a true relationship!
I mean to say that you yourself are not holy when engaged in such real-world relationships, and change in such a state often means that you travel, a step closer, towards your holy state!
However, in a true relationship, you are at your purest at entry itself, as only two entities that are completely pure with each other ought to get into a true relationship with each other - It just so happens that we are not pure with everyone!
In fact, since the real-world is so messed up, it becomes almost certain that we would not fall into another true relationship once we have already discovered a partner to share our completeness! And that is because we would not even try after we found one such partner – because this purity is no more a part of our character, it is only one of the ways of our behavior, our multi-faceted being!
Thus, if there had to be one world in which all relationships would be true – this world would have to be in a state of nirvana, a state of perfect globalization, a state of 100% h - where you get the deserved output for the input you put in!
It is even more important to realize that such a state, once achieved, would be perpetual! It would be forever! I find it very hard to believe that people after once having reached such a state, would be willing to change! They would love and enjoy it so much that they shall remain there forever! You can call it ‘Moksha’, you can call it ‘Vipassana’, you can call it whatever you want to!
Needless to say, this is hardly a case with real-world relationships, as are existent today!
All my relationships today are not true, but my relationship with Bhavna has at least taught me how it would have been if all of them were! I thank Bhavna for sharing so much with me, and it is a given that she would have just as much to thank me! Same shall be the case with all of you who have been fortunate enough to experience it!
My being with Bhavna is that of my being with myself!
However, as I earlier mentioned, there is a very subtle aspect to all true relationships – that of physical openness and intimacy! But, though difficult, true relationships are possible even without physical intimacy!
For example, when I think of my relationships with my mom and my sister Vandana, I think they get very close to it! But then in each of the above cases, we share a long history of camaraderie, sharing, and some sort of dependency that helps us to build such a relationship! It may not be comparable to what I experienced with Bhavna where we were already sharing our completeness within no more than three months!
So, in essence, this is how this chapter relates to chapter three, chapter eight, or for that matter any other chapter, where I have tried to say in the words of Osho that this world is a continuum, or in my own words that this world is running on inefficiencies!
As I said earlier, assuming that one is moving in the right direction, with continuous change in one’s own self, one gets closer to a universal state of a single true relationship with the rest of this world! But, with new lives coming in and new deaths leaving us, our task continuously keeps increasing - since again we have to build new relationships with our new colleagues, and we lose those with whom we had already made some progress!
If you read the above paragraph carefully, the assumption is critical, and to make matters worse, it is definitely not faulty! There is no evidence that this world is moving in the right direction! But at least I can get a pat on my back to clearly state the assumption (remember chapter three)!J
Well, no! I can do without a pat!J I think the solution to this is to simply know the assumption! This awareness alone, I think, shall be the solution, since I am confident that the people I live with in this world still possess the character and the semblance of conscience to realize it (remember, in the second chapter, I quoted somebody who claims otherwise)! This applies to all my fellow citizens of this world, not any particular country, race, color, or gender!
As is the case with efficiency, as I described in chapter eight, relationships are not only assumed, but sometimes also misunderstood, to be true!
True Relationships shall never inculcate stagnancy, lack of motivation, too much satisfaction, or a feeling of contentment to an extent that you might start deteriorating, or that you might become too lazy to strive for progress!
I have personally known some very smart people who have fallen much behind their worth after say a marriage or a serious relationship! And then, they would tell you stories of how happy they are in their relationships!
But the very fact that the relationship has permanently slowed them down shows that there is not enough sharing of their completeness with their respective partners, or perhaps it may even be that they are not with one who is sharing their completeness but probably one who is simply filling up for their incompleteness!
And thus, as soon as they start experiencing this artificial sense of completeness, they fall back in Life, and start to love relaxing to the extent of being lazy!
True Relationships are always original; you can sense and smell the Originality!
It is a merger of equals at the first place, and then it is one that adds a lot of value!
Rather, in kind of relationships that fill in for your incompleteness, this merger is actually a failure, and you realize it when you have to once again suddenly face this world – ‘all-alone’! After all, your partner cannot accompany you everywhere!
I could very clearly sense, smell and feel the originality even when I was entering into a relationship with Bhavna! Talking to Bhavna is no different than talking to my own self for me! She very clearly knows how good I am, and then also, she very clearly knows how bad I am! She very clearly knows how intelligent I am, and then also, she very clearly knows how stupid I can be! And then this goes on…..
However, still, she is with me! She just cannot be otherwise! And thus, ours is a true relationship!
A True Relationship is not about two perfect entities getting together, but it is rather about two entities sharing their extent of perfection!
Thus, though all of us may not be perfect; all of us can share true relationships!
Now, of course, as is obvious from above discussions, there needs to be a certain degree of comfort, space, and freedom for a relationship to be even called good! But then, for true relationships, these things do not matter – it is a state of nirvana by itself!
However, it is important to note that certain worldly relationships are thought to be so when they actually cannot be even termed as relationships! They are mere engagements that are unavoidable for both the parties involved, if they want to progress, or perhaps even to simply exist in the real-world!
In fact, as in case of Luck (chapter five), relationships ought to be good! Any such so-called relationship that does not even feel like or suffices the pre-requisites of a Good Relationship is not even a Relationship at the first place!
I shall add that, often, when relationships are understood to be so when they are actually not, such misunderstandings are suffered by only one side of the two entities involved, while the other may have never been interested and did not ever care about the relationship!
To end this chapter, and thus my book, I shall explain to you the above paragraph with an answer to the following question:
What do you think were the state of affairs in case of my involvement with my professor (as described in the first chapter)?
There was certainly a misunderstanding on my part where I clearly ignored some very delicate points while I incorrectly assumed that we shared a ‘relationship’!
Moreover, I was doubly foolish since I did not have any base to assume so! My assumption was not even based on some sort of admiration or likeness that we shared for each other!
I blatantly based it upon the history! I assumed it simply based upon the 1.5 years of history that we shared in form of some sort of unavoidable involvement that we had amongst ourselves!
However, though I earlier stated that a shared history might be helpful (in case of my relationships with my mom and my sister) to build a true, leave aside a good, relationship; history alone is not sufficient by itself even to form even a good, leave aside a true, relationship!
Moreover, the history shall be of significant length! I cannot assign it a particular number, as it depends upon the kind of relationship that the two entities involved shared amongst each other – whether it is student-professor relationship, a parent-child relationship, a husband-wife relationship, etc.!
And also, the history should have created a past at which you can look back and smile!
However, in our case, even assuming that 1.5 years of history is long enough for a student-professor relationship, there seems no evidence for me to believe that we ever shared a sweet history such that we created a smiling past for ourselves!
Thus, once again, here I was a victim of a major misunderstanding and a faulty assumption that I was sharing such a relationship where it is otherwise understood that in case of any doubts, inhibitions, or complaints; your counterpart would first clear them out with you before formalizing them into a legal battle or a formal challenge! Hence, it came in as a shock and a disgrace for me!
Finally, I would like to say that though all of us, at some stage in our lives, have been victims of misunderstandings, mistakes, faulty assumptions, or simply wrong surroundings; I very confidently state that we can work it all out by being true to ourselves and by being true to others, thus building and sharing more true relationships amongst ourselves!
I thank Bhavna for sharing her completeness with me and also thank those of you in advance who have decided to share more true relationships with ‘The Feeling of Pride’ after reading this book! Thank you!
Acknowledgements
This book basically started with ‘top of the head’ thoughts, which I later realized were backed by very strong reasons and experiences - no practical job or real-world experiences, but out-of-this-world experiences that I have tried to sew in with this world through this book!
Many contributed to this – basically all those who contributed towards my making and my being! The most diverse set of people who belong to the portfolio of people I owe my thanks to are my mom and my dad! My dad for what he is - taught me a lot of things indirectly – basically made me adapt for a lot of self-learning, since he was not wise enough to teach me anything directly! My mom, again, taught me a lot of things – all of them directly – because though she is a nice human, she exactly fits into the framework of people to whom this book is concentrated upon – the common people – the people who in this messed up real-world are considered too common to be treated as people. So though I learnt a lot of things through her love, her honesty, her loyalty, and her perseverance; I also learnt a lot things through her behavior, her limited thoughts, her lack of exposure, and her dependency – the typical characteristics of, though good, but unfortunately, common people!
Then, most importantly, this book represents my debt to my wife! I learnt it all, but she unknowingly helped me to teach myself to implement it (this shall sound like a revision of chapter three – ‘Difference between wisdom and wise’)!
And then, significantly, I express my deepest gratitude to the ‘real-world people’ – the people I interact with, be with, and live with! This group of people may sound lower in importance than those mentioned above, but I still pay my ‘deepest’ gratitude to this group of people! Because, ultimately, I belong to this group, and then, disappointingly, even those mentioned above belong to this group! However, among this universal group of people, I am particularly deeply grateful to:
· Mr. G. Chandrashekhar – He helped me with a lot of inputs, to which I could give shape through my ideas! He dealt it all with a lot of candor and graciousness!
· Mr. Deelip Mhaske – I met Mr. Mhaske when I was around halfway through this book, and I must say that I experienced most pure insights and complete enlightenment under his guidance! Mr. Mhaske gave me the view from the perspective of the common people! It is like talking about the consumer behavior to the retailer, the one closest to the consumer!
· Mr. Joseph A. Sabatini – A senior professional at Wall Street, Mr. Sabatini has unknowingly been the most motivating character of my life! I would not have been able to garner the confidence to write this book without his appreciation!
· Mr. Okey O. Onyegbule – Sturdy, strict and straight-forward; Mr. Onyegbule helped me to reach the man inside me, and introduced myself with my weaknesses, which helped me to gather a lot of wisdom and probably become wise, thus leading my path towards expressing my learnings in a modest yet aggressive manner through this book! His own journey from the struggles of Africa to a now peaceful, well-off life in the heart of the sprawling New York City, and my own story which I have hinted upon in my book leads us to share a resonant frequency!
· Mr. Shailendra Kakani – I thank Mr. Kakani for his valuable inputs, particularly on the Indian history and the misconceptions about it!
· Mr. Jitendra Sharma – A very senior professional at Standard & Poor’s, New York; Mr. Sharma has been a great source of motivation and purpose for me!
· Mr. Bhagirat Merchant – Mr. Bhagirat Merchant is the ex-President of Bombay Stock Exchange, and is currently running Merchant Consulting. I took training under Mr. Merchant at Bombay Stock Exchange and he has played a formidable role in strengthening my various concepts and general understanding of markets.
· Mr. Bob Chalfant – I interned under Mr. Chalfant at Comsense Technology, and prepared a detailed business plan under his esteemed guidance. Mr. Chalfant’s unmatched wit and simple approach towards Life taught me many invaluable lessons. His willingness to share his wisdom is greatly welcomed by me. In fact, I could never remember this incident – Once, after attending Dr. C.K. Prahlad’s guest speech, we were generally speaking during a networking event. Mr. Chalfant passed a very fancy and witty dialogue which also suggested the ill-effects of consuming alcohol. After the number of people in the group had shed doen to two, i.e., myself and Mr. Chalfant, I was so impressed with the dialogue that I could not resist asking him that how could get resist alcohol all his life. And, he ended it all saying: “Well, Gaurav! That is just general advice!”
References
· Mr. G. Chandrashekhar:
Mr. G. Chandrashekhar is M.A. (Economics) and L.L.M (Constitution and Administrative Law)!
Mr. Chandrashekhar has been accepted as India’s best-known specialist in agribusiness, commodity markets, international trade and developmental issues!
Mr. Chandrashekhar holds various positions like:
Chairman – ‘Agribusiness and Rural Development Wing’ of Indian Merchants Chamber (IMC);
Member, Executive Committee – National Commodities and Derivatives Exchange (NCDEX);
Member, Core Committee, Federation of Indian Commodity Exchanges;
Honorable Advisor – All India Liquid Bulk Import Export Association, etc.!
Besides, Mr. Chandrashekhar is also serving as Consultant to World Bank and is an Advisor to Agriculture Minister of India! He is also a Member of Expert Group (Sugar-10) headed by Minister of Finance, Maharashtra government!
In 2003, for the first time in India, Mr. Chandrashekhar conceptualized, designed and conducted a training program for stockbrokers to enter commodity market!
Currently, he is serving as the Editor of ‘The Hindu Business Line’ newspaper!
However, most interestingly and also to my surprise, Mr. Chandrashekhar has been a stage artiste for 30 years and is a student of Indian classical music!
· Mr. Deelip Mhaske:
Deelip D. Mhaske, as the research scholar, at the Department of Human and Social Sciences, Indian Institute of Technology, Mumbai; was the youngest participant in the World Congress of Family Law and Rights of Children organized by UNICEF and groups on children’s rights from across the world! Mr. Mhaske presented a paper on human rights of the HIV-positive children in India!
Mr. Mhaske was also nominated for 2006 Jonathan Mann Award for Global Health and Human Rights!
Deelip Mhaske’s dedication is for 1.8M landless farmers from Maharashtra for whom he was able to advocate land from Maharashtra government! For this he started his Raj Bharati Rural Development Center in Jalna district of drought prone Marathawada region of Maharashtra!
Mr. Mhaske is currently involved with 80,000 displaced families of Damunagar, Kandivali and some other slums from Mumbai, where he has done extensive work on Health Awareness and Treatment!
Mr. Mhaske has been interviewed by BBC for his work, and has also been invited to lecture on HIV and Human Rights issues in South Africa, USA, and European countries!
· Mr. Joseph Allan Sabatini:
Mr. Sabatini is Managing Director and Global Head of the Corporate Operational Risk team at JPMorgan Chase & Co. in New York and serves as the member of the firm’s Executive Risk Management team!
Prior to this, Mr. Sabatini was also the Global Head of Credit Research and served for a time in Tokyo as Head of the firm’s Mergers & Acquisitions Advisory function!
Mr. Sabatini received his B.A. from University of Cincinnati! He then graduated with an MBA in Banking and Finance from Weatherhead School of Management, Case Western Reserve University in 1981!
Mr. Weatherhead is currently Chairman of the Weatherhead School’s Annual Fund! He was also recently named to Case’s Board of Trustees!
· Mr. Okey O. Onyegbule:
Mr. Okey O. Onyegbule is the Managing Director at The Triplo Group!
Prior to joining The Triplo Group, Okey was Vice-President at BlackRock Financial Management (NYSE:BFM)!
Prior to joining BlackRock, Mr. Onyegbule founded a company that developed a proprietary electronic funds transfer (ETF) gateway (SiftPay) for processing and distribution of international money transfers by non-bank financial institutions!
Prior to founding SiftPay, Mr. Onyegbule worked at Citigroup’s Corporate and Investment Banking unit (Salomon Smith Barney) and at J.P.Morgan Chase & Co.!
Mr. Onyegbule earned his MBA with concentration in Finance, as an Albert J. Weatherhead Scholar, at Weatherhead School of Management, Case Western Reserve University! Prior to that, he earned his B. Eng in Electrical Engineering!
* The following paragraph strictly exhibits only my interpretation of our relationship, and may not truly reflect upon how Professor actually interpreted the case!
* This is a general suggestion, and does not intend to claim against any decision taken in my case!
* All names, except mine, have been changed in the following letter to maintain anonymity!
* I shall state here that though I was unaware, Case’s policy does mention that you cannot take any material from any of your previously submitted papers!
* This paragraph has been earlier stated in the chapter, but the motives to state it in each of the cases are different!
[1] As stated by: Robert Fulketh, Golden Gate University, San Franciso, USA
[2] These recent findings have been taken from Plagiarism.org
[3] This sentence has been put solely to emphasize upon my point! It does not intend to claim that I am some sort of a genius!J In fact, I very firmly believe that all in this world are holistically equal, though each one may have some ‘relative’ strengths and weaknesses in any particular areas!
[4] Jim Wolfensohn served as World Bank’s President from 1995 to 2005; he chaired the Carnegie Hall Board in New York, and ran his own firm ‘James D. Wolfensohn Inc.’ along with Paul Volcker, the former Chairman of the U.S. Federal Reserve Board! Before that, he worked on Wall Street for both Schroders and Salomon Brothers as an investment banker!
[5] Reliance is the name of the company that was founded by Dhirubhai Ambani! Before its recent de-merger, Reliance was the country’s single largest private enterprise with a market capitalization of over Rs.1.2 lakh crores ($26.67 billion @ $1=Rs.45)!
[6] This excerpt has been taken from ‘Ambani: A tycoon for all seasons’, by Raju Bist!
* I use ‘was’ instead of ‘got’, as in those days, it was a tradition in India that parents would find a match for their child, and the person himself/herself would virtually have no say in it! Though this still stands as a tradition, what we call ‘love marriages’ (when people decide for their partner by themselves) in the local language is now not so unheard of!
[7] This period counts to no less than 30 years!
[8] ‘Joint families’ have long been a tradition in India - the male child of the family continues to stay with his parents, even after his marriage! However, now this concept is increasingly changing towards what we call ‘Nuclear families’ in the local language, where more and more young couples are opting to stay separately!
[9] 190 years to be precise, from 1757 to 1947!
[10] With my hope that things have recently begun to change in India, you may want to change the word ‘meant’ with ‘yet fit’! However, I shall make it clear that from what I see and believe, things have not yet started changing, but the conservatism of my thoughts is a result of the bullish and optimistic outlook on India that I am seeing among foreigners, and more importantly, among Indians! I seriously hope that there is some valid reason behind this optimism, which I am unable to see yet!
[11] I understand I may be sounding too repetitive, but that is the whole idea behind my book! I want to stress and push towards looking deeper, and finding the root cause behind the various disparities that exist! This book is about ‘people’, and you would encounter this word again and again, but that is exactly what I am trying to convey through this book! All the 10 chapters of this book converge towards one point - the root cause! These various chapters under different titles only emphasize upon my finding of the root cause as ‘common people’, and perhaps not absolute in themselves, I have tried to form answers to fix this mammoth problem!
[12] ‘Vande Mataram’ means ‘Hail to the Motherland’! It turned itself into an infamous slogan that the Indian populace shouted during India’s freedom movement, while representing a national cry to freedom from the British oppression! It originated from Bengal, in the metropolis of the then Calcutta (now called Kolkata)! In fact, this slogan worked complete wonders such that it feared the English government, which later once even banned shouting of such slogans in public forums, and even imprisoned many Indian freedom fighters on this account!
[13] Here, by people, I mean to reflect upon a person being able to understand where he stands, how good or bad he is, and if his thoughts are well-aligned with general well-being and are progressive in nature, rather than being destructive!
* Often abbreviated as S&P!
* Sidebar
[14] These numbers are not the real numbers, 10% has been randomly taken! This example intends to only simplify the concept, rather than providing any hard facts!
[15] Please note that the following table indicates only towards the sovereign’s foreign currency debt rating! Normally, a sovereign’s domestic currency bond rating receives a mark-up to its foreign currency bond rating, since it can always raise taxes or print money to meet its domestic currency obligations! However, please note that this difference would be more prevalent only in case of countries that are rated low, since for those already rated AAA, any difference cannot exist!
[16] This data is a copyright of Czech National Bank, 2003-2006!
[17] However, for those of you who are savvier with the word of bond markets, I shall clarify that here I am referring to a country’s local currency bond market, or domestic market! Thus, the sovereign can generally tax, or print money, to meet domestic currency obligations!
[18] X refers to some random number that may be decided upon the particular organization’s risk profile! Basically, the borrowing rate of an organization must be borrowing rate for its govt. + some extra mark-up!
* Sidebar ends
[19] Besides, of course, the fact that the organization has itself also performed well! But, no matter how well it performs, it could not have scored over its own country!
[20] I have expressed caution against getting too entangled in the fluff, while missing the big picture, i.e., the root cause, in the sixth chapter as well, while trying to express my concept of ‘real progress’! Basically, it stresses upon my belief that India’s growth story comprising of past several years of average 8% growth is more of a ‘fluff’ and less a result of a permanent sustainable solution!
[21] While this effect may be permanent, its sustainability shall always be subject to the regular maintenance of standards! It is like any other profession or task you undertake in life, such as a tech start-up which has the strongest idea and management team to gather venture capital funds, grow, subsequently go public and become a Microsoft! However, once it is there, it cannot possibly sit back and relax, assuming its top position as a given! In fact, it shall keep itself updated and continuously improve upon its operations, via inorganic growth (acquisitions, joint ventures, etc.) or organic growth (expansion, new product, etc.), while leveraging its already strong base, if it wishes to maintain its position!
[22] The author is executive director of Canada-based Perimeter Institute of Theoretical Physics!
[23] Mr. Yunus is the developer and founder of the concept of microcredit, the extension of small loans to entrepreneurs too poor to qualify for traditional bank loans. Yunus is also the founder of Grameen Bank.
[24] OECD stands for Organization for Economic Co-operation and Development! OECD is basically a rich group of 30 member countries, which shares a commitment to democratic government and market economy – that’s what they sayJ!
[25] By the way, this in no sense shall demean Robin’s profession, since Robin is great at what he does – so great that he has actually instilled some meaning into this profession!
[26] I have experienced this myself, and as I said, we all can benefit by changing ourselves! ‘Change’ in a more real-world sense, with more real-world examples, is discussed in the next chapter!
[27] Often referred to as a process of ‘Inorganic Growth’ - M&A refers to Mergers and Acquisitions! However, the motive behind two companies deciding to merge, or one deciding to acquire the other, may involve more than just ‘growth’ objectives! Often, players look for ‘synergies’ (technical jargon), which basically means ‘economies of scale’ (technical jargon again), more ‘operating efficiency’, better ‘productivity’, ‘geographical reach’, ‘new product-lines’, ‘brand recognition’, etc.! Different firms may have different motives!
[28] This statement in no way applies to the British race in general, it only refers to those particular Britishers who were responsible for any such related activities! I am not cropping up ‘Racism’, I am just promoting ‘Humanity’!
[29] Since I do agree with what Osho says here, I mostly avoided using full-stops in my book! I know I could not have communicated with you via this book without using a language, in this case english, I hope that this book flows, that you keep reading when you start reading it, and that it does not look like language, but some sort of realization – you feel that your inside is coming out, that you are just talking to yourself!
[30] This article was published in The Times of India, dated October 3, 2006!
[31] Bottom of Pyramid theory is famously known as the BOP theory!
* This paragraph is an excerpt from Chapter 10 – ‘How China Grew Rich’, from Tim Hartford’s book, ‘The Undercover Economist’! I strongly suggest that you read this chapter!
[32] By ‘world of truth’, the author refers to the free markets, where you are forced to tell the truth!
[33] Under Mao, the Great Leap Forward was famously referred to China’s initial two-pronged development efforts: massive investment in heavy industries such as steel, plus application of special agricultural techniques to make sure that China’s vast population was fed!
[34] Tim Harford compares ‘command economies’ (central planning) and ‘market economies’, by replacing what are called ‘mistakes’ in central planning with ‘experiments’ in market economies! He says that, unlike command economies, these experiments remain small in market economies, and when they succeed, they make some people rich and bring innovation to the whole economy, while when they fail, which he says is more often than not, some people may go bankrupt, but nobody shall die! Here, Tim is criticizing the command economy under Mao, which resulted in a deadly famine in China, with estimates of the death toll ranging from 10 million to 60 million!
[35] If you read the chapter ‘How China Grew Rich’ from Tim’s book ‘The Undercover Economist’, you will see that here Tim is hinting upon the Special Economic Zones, popularly known as SEZs, built by China, where the normal rules of the command economy would not apply to foreign investors! India has started building SEZs now! If you trace down the economic development history of India vis-à-vis that of China, you will notice that India after first ignoring China’s activities and refusing to learn, has almost in all cases, ended up adopting the same ideas, whether it concerns massive investments in heavy industries, or creation and development of Special Economic Zones! If not China, then it had quietly and dumbly followed the former Soviet Union, but whatever be the case, this country clearly lacks ‘Innovation’!
[36] The concept of ‘real progress’ is expressed in detail in chapter six!
[37] Please look at the ‘Profiles’ section of this book to get some reflection upon the backgrounds of these two gentlemen!
* Once again, concentrate on the words under quotations! I reemphasize that we have to first realize the ‘need’ for the basics, and then accordingly ‘support’ our ‘desire’ for the fancy derived goods!
[38] There is more philosophical talk on the increasing difference between the rich and the poor in chapter seven, but currently we are looking at it as a result of some grass root deficiencies in the way in which this world operates!
[39] Here, by ‘scientific community’, I am referring to the various little agricultural universities that are set up to research and educate the farmers about the method and usage of the new products in the form of hybrid seeds and synthetic fertilizers!
[40] As far as the education system goes, I always tend to compare China and India in parallel to two different publication houses! China is the one with a strong in-house publication, backed with equally strong ideas (thanks to its strong education system) – and thus, it does not need to seek any outside help, either for strong ideas, or for a strong promotion of these strong ideas! Whereas India is a far below-par publication house with little strength to do justice to an already very few strong ideas (because of its pathetic education system), which then looks for outside help, thus resulting in a massive brain drain! So, India’s most vital and needed ideas that are already scarce quietly travel abroad along with the people who possess them!
[41] Assuming that each school is initially built with only one class with 3 class sections, and can thus intake 100 (around 33 in each section) students at the Montessori or entry-level! Thus, we will have to build 1.8M/100 = 18000 schools every year! The schools will build a senior class (again with 3 sections) with each passing year! Thus, assuming that the population growth rate does not increase beyond 1.8%, in around 10 years, we would have reached enough scale to sustain such growth!
[42] The author of this article is Meera Shenoy! Ms. Shenoy is a World Bank consultant and Director of EGMM (The Employment Generation and Marketing Mission)!
[43] ‘dalit’ refers to a particular caste in India which was considered a low caste in the days when the caste-system existed in India. These people still remain generally poor, and one of the earlier governments had thus imposed reservations for students belonging to such castes even in India’s most prestigious universities and also at workplaces. This has been a big controversy in India ever since, and like Mr. Murthy, I personally think that such reservations should be abandoned as soon as possible, and we shall rather provide free education for the poor in general. In fact, I think that the Indian Government should make education free and compulsory until high school for all, but in case this cannot be done immediately, it should immediately introduce free and compulsory education for poor children in rural and rural-urban areas. Separately, IIIT (Indian Institute of Information Technology) is a prestigious IT institution in India!
[44] Rajat Kumar Gupta is the former managing director of McKinsey & Company worldwide. He joined the firm's New York office in 1973, assumed leadership of its Scandinavian offices in 1981, and joined the Chicago office in 1987. He assumed the role of office manager there in 1989, was elected managing director of the firm in 1994 and re-elected twice, once in 1997 and again in 2000 - As found in World Economic Forum, 2004, Biography – Rajat Gupta!
[45] Mr. Mhaske completed his M. Phil in Land Reforms from Indian Institute of Technology, Bombay! IIT, as it is famously known, is India’s number one university and the only Indian university to grab a place in the world’s top 50!
[46] Berkshire Hathaway, Inc. is a holding company founded and chaired by Warren Buffet!
[47] Orissa is a backward, in fact the poorest, state of India, but very rich in iron ore!
[48] Some Economics lingo here – ‘Depression is referred to as a sustained recession, a very long recession’!
[49] Short selling is a technique where the trader who is bearish about the stock borrows the stock from the lender and immediately sells it in the market! Later, as per his expectations, when the stock price goes down, he purchases it from the market at a lower price to return the stock to the lender, thus booking his profits! Now, of course, as in all other cases, it is subject to the trader’s expectations coming true!
[50] Options are referred to as a right to buy or sell the stock! A right to buy is called a call option, while a right to sell is called a put option! However, it is most important to note that an option is a right, and not an obligation!
* In local language, a synonym to this may be the famous hindi proverb: ‘karm kar, fal ki iccha mat kar’!
[51] This is a very famous and important concept in Finance! Let us suppose that your portfolio consists of 100 different assets! But think of how many correlations between any two of these different assets may exist! Well, it would be nothing short of ------ such correlations!
[52] The word ‘there’ refers to the level playing field!
[53] According to me, the ‘world’ can be broadly divided into 2 parts: ‘rich’ and ‘poor’!
[54] Please pay special emphasis on words marked under quotations (‘’)!
[55] This is perhaps the most important sentence of my whole book, and consists of the most important word: ‘people’!
[56] ‘Real Progress’ is my version to measure for any economic or general development, growth, progress, etc.! Normally, economists use tools such as GDP growth, productivity, exchange rate, inflation, etc. to measure the same! Though they provide you with numbers, which are always important, they should only be used to confirm your results after measuring Real Progress, and not vice-versa!
[57] It is often heard about from the Valuation experts at Wall Street, abbreviated as SSGR!
[58] Primer on Capital Markets: Published by BSE Training Institute and Jamnalal Bajaj Institute of Management Studies!
[59] I refer to the development entities as ‘deliverers’ and the poor as ‘receivers’!
[60] The assumption here is that we can get these corrupt governments to work for the poor!
[61] This point is more elaborately emphasized upon in the next chapter!
[62] IDA stands for International Development Association and provides for grant financing on highly concessional terms!
[63] These conversations have been picked up from Sebastian Mallaby’s book ‘The World’s Banker’, please refer to chapter four, titled ‘A Twister in Africa’!
[64] Provided you have understood the requirements for being wise after reading the third chapter! Forgive me for picking up on words like a lawyer, but it may be the major reason why this book may become a success! It is a fact that, in today’s world, the usage of words is completely inconsistent with their underlying meaning! Probably those who do that already realize that, but the confusion created in this manner just provides them with a cushion to carry on with their unscrupulous activities!
[65] The excerpt has been taken from Chapter Eight, Uganda’s Myth and Miracle, The World’s Banker!
[66] Kampala is the capital of Uganda!
[67] This sentence succinctly stresses on my regular emphasis upon the ‘involvement of common people’!
[68] Tumisiime was Uganda’s reigning technocrat, and the chief architect of Uganda’s success story!
[69] These questions should sound similar to those I proposed earlier in this chapter!
[70] AUM refers to Assets under Management comprising cash, shares, assets in the country and overseas and money market funds! However, it excludes wealth attributed to investors’ own businesses, residences or luxury goods.
[71] Even though U.S. suffered a loss in AUM over the same period!
[72] FIIs refers to Foreign Institutional Investors, and NRIs refers to Non-Resident Indians!
[73] BSE stands for Bombay Stock Exchange. It is India’s largest and oldest stock exchange!
[74] BRICs is an abbreviation for Brazil, Russia, India, and China!
[75] G6 refers to the most industrialized group of 6 countries that contribute most to the world’s GDP!
[76] PPP refers to Purchasing Power Parity. It simply means that if 1pound = 50Indian rupees, and 2US$ = 1pound, then 1US$ = 25Indian rupees! This would be true if Indian rupee exchange rate satisfies PPP!
[77] PSU refers to a public-sector undertaking! Indian government after announcing privatization of PSUs, did not fulfill its promise, and in fact even bought back its share in some of the PSUs it had earlier sold! In fact, recently, US Treasury Secretary and former Goldman CEO Mr. Hank Paulson expressed discontent with India’s recent pullbacks towards opening up its economy, saying that it can seriously hamper India’s growth prospects!
[78] This aspect was already emphasized upon in the second chapter with the discussion on importance of Background!
[79] One reason is the ‘resistance towards change’ that is developed along with such mindsets; much has been already talked about it in the fourth chapter!
[80] I use ‘nowadays’ since the same could not have been said for the times when, let us say, the ‘barter system’ existed!
[81] I avoided replacing the terms ‘short-term’ or ‘long-term’ with ‘temporary’ or ‘permanent’, because wealth cannot be permanent in anyone’s hands, though it may stay for very long! Thus, though the terms ‘short-term’ and ‘long-term’ are also not absolutely definitive by themselves (with respect to a particular time period each may encompass), I used them for the lack of a better alternative!
[82] ‘Real-terms’ refers to inflation-adjustments! No matter whether this group of people was left with the only $100 bill they always possessed, or they were ripped off of even that and left with, let us say, $95 - they have lost money in both cases (even in the $100 case), since it takes some time for each cycle of circulation to get complete (though they are continuous), and until then, with money having lost its value (because of Inflation), they are poorer! Now, of course, this may not hold true in times of Recessions, but that is rare, and only a correction, which can be conveniently ignored! For those into Economics, you must be aware that a Recession is generally followed by an Expansionary phase, which results in Inflation; and Excessive Inflation should be followed by a Contractionary phase, an overdose of which may result in a Recession!
[83] This shall be explained in reference to the Indian context!
[84] I cannot emphasize enough upon this, but please try and understand that if you are interested in measuring the middle-class, you should have ‘one and only one’ group of people falling under a definitive range, carefully designed on a ‘relative’ basis! The same goes for the rich and the poor classes – if we were to concentrate upon the Rich, we would have had to form ‘one and only one’ group of such people, and rather, for better understanding, may create sub-groups for the other two! The same holds true for the ‘Poor’ class!
[85] Now, of course, these needs shall also be carefully devised based upon the general living standards of the specific country, or for that matter any such other community in question!
[86] Please visit
http://www.nafre.org/;
http://www.infochangeindia.org/EducationItop.jsp?section_idv=5;
http://www.sabhlokcity.com/lists/india_policy/1998/May/msg00006.html;
http://www.sabhlokcity.com/lists/india_policy/1998/May/msg00008.html[87] IEG stands for ‘Independent Evaluation Group’!
[88] Maharashtra is only one of the 25 states in India!
* Refer to chapter six in particular!
[89] The excerpts have been taken from:
http://www.infochangeindia.org/EducationItop.jsp?section_idv=5[90] Here we will assume that there is only one universal quality of apples, and that there are no different qualities with different prices!
[91] ‘could have been’ profits can be understood as ‘virtual losses’!
[92] Again, ‘could have been’ losses can be understood as ‘virtual profits’
[93] This does not prove the zero-sum game to be wrong, however, it is only an arithmetic manipulation of the zero-sum game, but I think a better way to look at the market activity!
[94] What I am trying to say here is that since we, as humans, tend to take a penny of loss more seriously than a penny of gain, we tend to think in terms of ‘maximum profit/loss’, thus spoiling the spirit of the game!
[95] This is to say that any particular market, besides being inefficient by itself, is not even equally good or bad as the other group of markets it interacts with!
[96] BSE is India’s oldest and largest stock exchange, while I attended my B-school in U.S.!
[97] Settlement of transactions refers to the receipt of their respective assets by the interested parties! For example, the seller of the stock shall get his money, and the buyer of the stock shall get his stock, only 2 days after the day they traded their assets!
[98] However, this does not negate the fact that well regulated, free, and more transparent markets like that of U.S. are much more efficient than those of, for example, India!
[99] However, even in this case I am assuming that the external factors from outside our world do not disturb us! To proceed towards an assumptionless example of perfect Globalization, you shall keep proceeding towards thinking of the biggest 1 thing which shall encompass everything, anything imaginable! But then, we may have to change the name from Globalization to Universalization (if Universe is the biggest thing)!
[100] ‘The Times of India’, dated 10/03/2006, ‘Times Business/Managing’ section, pg. 20!
[101] For those of you unfamiliar with the field of High Finance, Black-Scholes is an advanced mathematical, statistical model to price or value derivatives (options) in the market! The formula was derived by Messrs. Fischer Black and Myron Scholes and published in 1973!
* The logic behind using ‘misunderstood’ interchangeably with ‘not fully understood’ stems from the fact that thinking that you have understood something, when in reality, you have not fully understood it, is actually equivalent or synonymous to misunderstanding the whole thing!
[102] Kim Jong-il has recently come under heavy criticism for carrying out nuclear tests programs in North Korea!
[103] I call Mr. Swaminathan S Anklesaria Aiyar the ‘swami economist’ of India since he never fails to impress me with that extra bit that he provides with his every new article!
[104] GM (General Motors) is the world’s largest vehicle manufacturer! GMAC (General Motors Asset Corporation) is the financial arm of the parent group GM!
[105] CDO (Collaterized Debt Obligation) is a credit derivative contract that transfers the credit risk from one party to another! The party transferring the risk away pays fees to the party taking the risk! CDO has a sponsoring organization, which usually floats a SPV (Special Purpose Vehicle) to hold the collateral and issue securities on the collateral! Collateral (basically Assets) usually comprises of loans or debt instruments! These securities are then issued to the investors who bear the credit risk of the collateral!
[106] Here, for simplicity, we shall assume that the originator is the investor in question, though he may also be only one of the contemporary users of the $1M in question!
[107] The Ricardian model of ‘Comparative Advantage’ is true only under a certain set of assumptions like: ‘Full Employment’; ‘Constant opportunity costs’; ‘Perfect mobility of factors of production within countries; ‘Immobility of factors of production between countries’; ‘Perfect Competition’!
[108] The ‘World Trade Organization’ was established on 1 January, 1995! WTO replaced the functions of GATT (General Agreement on Tariffs and Trade), which was originally created by the Bretton Woods Conference after World War II and its first version was developed in 1947!
[109] To understand this, you need to have already read and understood chapter two where I have explained ‘system’ and ‘surroundings’!
संदेश
