Economics and Baghawat Geetha

All along i have always been thinking that there is very little in common between Economics and spirituality. After taking an economic course at one of the citadels of modern economic thinking (yeah ..the Chicago school of Milton Friedman fame), i am now convinced that there is more commonality than differences between the two spheres. Now, i should admit that i am neither an economist nor a spiritualist (and dont feel the need to be either of them). Neverthless, i feel that some of the spiritual prescriptions that we see in the holy texts may have had strong economic underpinnings.

I have used Geetha to illustrate this point. only because i have some familiarity with it, but you can pretty much replace Geetha with Bible or Quran (with some slight changes to the story below and it will all work the same way).

In my view all religions of the world teach the similar things and their teachings have a salutary effect of achieving coordination among followers which would have been otherwise very difficult to achieve. I explain this further below.

Picture this. You are living in the ancient society some 5000 years ago. For simplicity lets assume that there is only 2 of us in a village which is in its most primitive form imaginable to modern man (well , this is not exactly true..but thats besides the point). Now lets say this period was before we had houses and we all lived precariously in the open..we now collectively imagine the idea of a hut and want to build one. both of us dont have any tools or any other help. Now lets say we had to go to forest and collect some wood (remember this is a lot of hardwork without proper tools and with wild animals chasing us). What will i be thinking ?. "Hey this is bloody hard job and i dont know if i will return home, so i better not go, let this other guy go and do the work for me and i will just share whatever he collects..i will somehow convince him to go. "

Now i can bet your reasoning will be very similar to mine as well. As a result, both of us wont be going to the forest !!! eventhough it is clearly beneficial for both of us to go and get some wood !!!

This is what the economists call a coordination problem. Even though if both of us coordinate, we could have ended up doing better for both of us, we still dont do so for our own selfish reasons !!. We end up in a situation (or equilibrium as economists call it) that is strictly inferior to both of us.

Now a god man comes along to our village and tells us about this new book called "Baghawat geetha". He tells us that the main message is "The only way to achieve happiness is to commit yourself to selfless sacrifice for others." But then why should you and me believe the book (rather we doubt its credibility). But then, he adds that this is from god directly !!

Now both of us believe in god and hence we begin to take the preachings seriously..but even then we are not quite ready to go to forest. each of us reason to ourselves, "I should commit to selfless service and should probably go with the other guy to the forest to be happy (in our case, building a hut is a cause for great happiness). But wait..in the process, i might actually die..whats the use in achieving happiness, if i am going to actually die in the process"

Both of us end up in similar line of reasoning and hence both of us are still not ready to go to forest.

Now comes the next lesson from Geetha.."Selfless service is the only way to salvation..if you dont, you have to be born again in this world and go through all the suffering that you are going through now"..now we begin to think....we realize that in our cost-benefit analysis we considered our payoffs till the end of our current lives, but were not aware that we may have to be born again if we are selfish...so we now have to take into account pay offs(negative) from the sunsequent lives as well....

Godman has effectively changed our "Pay offs" and our game has changed from what the economists call a "One shot" game to a "repeated game"

Now with this new "enlightenment" we think about our problem again.. Should i go with him to the forest? well if i go i might die, but atleast i will reach salvation and reach god directly, as i acted selflessly in going with him. If i dont die, the situation is better for both of us in this life as we get to build the hut and be happy (and we will reach salvation due to our deed as well !!).. if i dont go, i am condemned to be born again in this world and go through all the sufferings that i am going through. Plus , we live an inferior life in this world as well (without the hut)..With this new set of incentives, i now reason that i should go to forest with you..you go through a similar reasoning and you reach similar conclusion as well.

voila, we now go to forest, return with wood(most of our fears were imagined anyway !!) and we build a hut !!! we live happy for ever, with a now strengthened belief that selfless acts will indeed lead to more happiness.

This was achieved, without the need for coercion from either of us (remember we didnt even talk to each other while deciding this). we thought independently of each other, guided only by our beliefs . The only assumption that i make is that both of us believe in the concept of God (if both of us dont believe this wouldnt work). Further this probably also illustrate the benefits of believing, but thats besides the point (i dont believe in imposing beliefs !!).

the above story is a very stylysed one. The idea is not to dispute the teachings of Geetha or impute motives to it..As i had said this would work equally well with other religious preachings if intrepreted correctly.

The idea is to provide an economic rationale grounded on modern game theory as to why some of the teachings may have actually worked.

I feel that modern economics hasnt changed anything fundamentally - if anything it has only deepened our understanding of how things worked..We all work with a set of incentives and make decisions based on them. and religion is nothing more than another instrument to nudge us towards making the right choices that maximises the welfare of the whole society and not just ours. Ofcourse along the way, some twisted and turned these original rationale to suit their needs and thus began all the problems that we see with some of the teachings today..

So we dont have to "blindly" believe in the spiritual teachings, we can actually understand the economic principles that underpin them and appreciate the rich solutions that they offer.

Beautiful ...and..the powerful Mind !!!

in the past few months i have been reading a lot about our mind !!

The most stunning fact that i have come across is this : the processing power of concious mind is 40 instructions per second whereas that of the subconcious mind is 40 million instructions per second !!! wow..our subcincious mind is million times faster than the concious mind..

And yet all the spiritual teachings and scientific research encourage to use our concious mind - one that is million times slower...why is that ??
Subconcious mind is like a computer...It has great processing power..but will just carry out the programmed instructions based on past experiences, learings and results.. Once the conputer starts its programs there is no re-course and results are also fairly predictable.
Thats what happens with our subconcious mind. once you give it the control, thats it..all the actions just happen (just like you breathe every second, digest your food, and umpteen other functions that you carry out day in and day out without ever distinctly remembering them..and without much choice on how its carried out)

But concious mind, even though, extremely slow compared to its subconcious cousin has one weapon up its sleeve...It can choose !!! it can choose to do some thing or, more importantly, choose NOT to !! This power of choice also give it the power to re-program the subconcious mind !!

And how do we excerise this power ?? Literature right from the great Baghavad gita and Bible to the very latest "New Earth" by Eckart Tolle suggest the same thing - Focus on the present moment..That helps to the concious mind to take control from its infinitely more powerful cousin..
Come to think of it...there is only one solution for all the ills of the world..if only people are able to always have their concious mind in charge of themselves and help teach the subcincious mind the right things..and then let the power of this newly programmed subconcious help them achieve new heights !!

SlumDog Success !!

By now everyone is talking about it… From the slums of dharavi to the CBD in LA. The Dan Boyle directed Slumdog millionaire has been a smash hit in terms of success it has achieved at the Oscars as well as various film awards all over the world.
And of course, the Indian Maestro A.R.Rahman has swept all the categories he was nominated for…Jai ho is indeed a good number, but one of the questions that immediately comes to my mind is , why this one ?? Rahman has certainly produced music which have been far better in their quality and richness starting from his first number – Chinna China Aasai.
That brings us to an interesting question – what is it that is different in Slumdog millionaire compared to thousands of movies that have been produced in India in the past ? why has SlumDog been able to achieve such a roaring success which no other film produced in India has been able to?
While the media have been talking about how novel the story line is, how brilliant the actors were – the one thing that remains true is there have been better movies produced in India. But the key difference is, because SlumDog millionaire was originally produced for an English language audience (essentially as a Hollywood movie), it was able to nominate itself for most of the categories at the Academy awards..whereas typical Indian movie can enter only in one category - “The best Foreign Language film” where the competition seems pretty tough among all the non English movies all over the world !!
I think the key difference is this – SlumDog millionaire is perhaps one of the very few Hollywood movies produced in Indian setting with a cast and story that is tellingly Indian and with a story line which has a strong indianness to it – that’s why everyone in India right from our Rashtrapathi ji has adopted this as an Indian success…
Coincidentally, last time a famous movie about India was produced in Holly wood- “Gandhi”, it also won Oscars !!
So key to note here is this – its not as if India has been lacking in talent all these years and with one SlumDog millionaire, India has announced its arrival at the world stage. Its rather the other way around, it has taken all these years for Hollywood and the rest of the world to realize the true potential and talent in India to shoot a movie with a complete Indian cast based in India– and when they did, the Oscars came along..its really as simple as that.
Another funny fact is how Politicians in India have claimed that the movie is their national pride !!! – This is like native people of the land that calls itself Hollywood today, feeling proud that they found Columbus in 1492 AD– Columbus had more to gain from the discovery, not the natives !!!

May we banish Poverty from our Mother Earth !!

“You can’t solve the world hunger in a day”- this is a saying that’s mostly used with a tinge of derision to shoot down anyone who attempts for a meaningful resolution for one of the most vexatious problems in this world. While the saying itself is true, it’s also true that for achieving true progress for the human race, the problem of hunger and the larger issue of Poverty which drives it has to be resolved, if not in a day, some day .

It is truly abominable to even think that someone in this world of plenty has to go to bed without having his share of a square meal – I truly wonder what other pressing problem can be so great for our society and its leaders, that it should ever distract us from resolving the most basic of all problems . And to me Poverty is the root cause of all the social evils in this world.

A common approach that everyone takes is to provide “Free” anything to the poor – free lunch, free money, free shelter etc. But is this any effective? Economic theories suggest that anything without a cost has no value. Donations such as these are a very convenient way for the conscionable among the rich to justify to themselves that they have done their bit to solve this problem. However from the poor person’s point of view, it’s hardly a lasting solution.
For he is given the free gift without ever being told how he can use it to bring himself out of Poverty irrevocably. And often times the free gift never even reaches its intended destination, usually lost along its tracks to some form of corruption.

Anything given out free helps only breeding laziness which further takes away any remaining tenacity in the poor to fight their condition. It makes them addicted to the “free gifts” just like addiction to drugs. No wonder then that despite billions of dollars that are being routinely spent in this world, there is hardly any improvement in the alleviation of Poverty.
But there is hope.

I recently read a book by the Noble Laureate, Dr Mohammad Yunus from Bangladesh. It’s amazing what Dr. Yunus, an economic professor at Chittagong University, has done for poverty alleviation through his “Grameen” project.

he started what is arguably the first Micro credit movement in the world - system of lending small amounts as loans to the poor. The system is as elegant in its simplicity as any other micro economic model that they teach in the leading universities, but at the same time productive in its delivery of the much needed capital to the poor.

He instituionalised this system by starting a bank (called Grameen Bank), which at a profit, Provides credit to Poor. But there is no credit check, no paper work, nothing. All that is required is for the poor to come in a group of 5 and ask for a loan to do any economic activity that will generate income.
Now poor has access to capital which he/she can use to do something useful on their own and keep the profit for themselves (after servicing the loan of course). And the loan doesn’t come cheap– Grameen charges a whopping 20% per annum (but still milder than the usurious 10% per week that some of the money lenders charge these poor people in Bangladesh). And No loan is ever waived off – even if there is a calamitous flood, fire, earthquake, disease – anything. The bank will agree to extend the term, but never waive of a loan.

When you are reading this, you would be wondering how this system has any chance of working. We are all naturally trained to think that poor people are poor not just with what they have but also with what they can do!!! This Grameen system is a simple system which trusts the poor man’s (and woman’s) capacity to work hard, with any skill that they are endowed with. Poor, often, only have their honor and self respect as their only assets which they will never want to give up. They will rather work doubly hard to pay back their loans than default on it and lose their honor in the society. Grameen smartly uses this peer pressure as the Psychological security for loans rather than the usual material collateral and loads and loads of Terms and conditions that the traditional banks use, often with appalling results, to protect their loans.

And this trust hasn’t gone waste – Over 30 years of their existence, Grameen has a remarkable loan repayment rate of more than 98% with more than 2.5 million borrowers and more than 2 bn USD in loans. It is a fully self sufficient and a profitable organization – More profitable than any other commercial bank which conducts its business with the most sophisticated risk management through collaterals and credit checks..

Grameen is more notable in another sense. More than 97% of its borrowers are Women. This is another layer of security for its principal. Traditionally, poor women are more conscientious than men (even though this can be claimed to vary in different cultures, this has been proven to be true in several Grameen replications all over the world). This experiment, thus is more than economic upliftment, it’s also social upliftment for the sections which have historically been the most abused and most vulnerable among poor – poor women.

There are several lessons to be learnt from this – While a capitalist system based on free market may be the most efficient way to allocate resources, it often fails to allocate the resources equitably. And often there is a tradeoff between the efficiency and equity in resource allocation. Society often delegates the responsibility to achieve equity to the governments. But as governments can hardly survive without the support of the richer sections of the society, they are often disincentivised to implement a truly equitable allocation of resources, which would mean taking away resources from their supporters – the rich.

In Dr Yunus’s words, the solution to this is to make sure that the corporation’s objective in a society is not just to maximize the profit for their owners (as the capitalist system stipulates) –but also to maximize the “social returns” for the society.

Note that it’s not practical for corporations in a society to sacrifice profits just to improve the social return. Profits are vital for the very survival of corporations. Without an expectation on profit, nobody would invest anything and there would be no development and the free market would just collapse. This is where the traditional notion of communist systems got it terribly wrong. They tried to forsake the need for individual successes (or Profits) in trying to achieve the success of the whole society. And in the process producing some truly autocratic regimes.
What we want is not a trade off of one against the other. We want to be able to achieve both in an inclusive manner!!

And the need for this tradeoff as a lame excuse to put a shackle on efforts to uplift the poor and as Dr Yunus has shown through the Grameen experiment, there need not be a tradeoff between these two objectives. Both of them can be achieved together.

If this is somehow achieved, then the corporations will have a vested interest to not exploit the poor – they will have a vested interest – for their own benefit – to invest in innovation which will improve the social returns for the society as a whole and not just to improve their own profits.
I know this is easier said than done – but with more experiments like what Dr Yunus has done in Bangladesh and dozens of other countries, this is not impossible.

Cheers
Deepak
Ps: I would like to gratefully acknowledge that some of the ideas presented here are inspirations from Dr Yunus’s book “The Banker to the Poor”.
Visit Grameen Bank at http://www.grameen-info.org/

A Truly momentous Occasion !!!

In my living memory, I cant think of a singular event that had collectively lifted the hopes and spirits of so many millions around the world as this one on 20th Jan 2009 – the inauguration of Barack Obama as the 44th President of USA.
Different people attribute different reasons for the significance of this event – most common one being the fact that Obama is the first Black man to ever call the White house his home – but to me Obama’s meteoric rise means much more than a defining milestone in America’s quest for racial equality. It’s a re-affirmation of what one can achieve through instilling positive hope rather than fear in millions of people.
And its in this aspect that Obama stands in stark contrast to his predecessor President Bush and infact, to scores of other politicians all over the world in what they routinely do when faced with a truly challenging crisis of any kind. They choose to manipulate millions towards their way by whipping up fear and paranoia – its truly difficult to unite people though positive hope and collectively solve the issue at hand.
When America was in grave crisis after Sep 11, 2001 Bush tried to invoke the prospect of Mushroom clouds hanging over American cities to advance his cause and gain consent for his disastrous wars. He time and again invoked the same fear to push to Americans in to a collective state of numbness and convince them to surrender their freedoms one by one. This was evident in numerous episodes - torturing scores of prisoners in Guantanamo bay and other secret prisons all over the world, spying on millions of Americans without their knowledge or proper legal means, letting thousands of young Americans die in a meaningless war started to settle personal scores. These and other unpopular policies had caused people within and outside America not only to hate Bush but more importantly to diminish people’s faith in democracy and free society.
However Obama presented a positive message of hope, a message of reconciliation – a promise to go back to all that America ‘s founding fathers wanted America to be – a land which would guarantee life, liberty and pursuit of happiness.
Obama should be acutely aware of the fact that the people now have very lofty expectations that he will back up all those inspirational speeches with concrete actions. However In one area he already has been the beacon of hope to millions around the world and a welcome departure from all shades of polity all over the world – when it comes to solving complex problems, its better to unite people through positive energy rather than invoking the negative emotions of fear and insecurity.
And I do fervently pray god that HE guide Obama towards success without swerving from the path that he has chosen for his journey.

God Bless America and President Obama ..and all of us!!

Holiday in Warrnambool

We have been meaning to blog our experiences as a family for a long time now - better late than never. What better time than just after a fantastic family holiday ? When we were planning for a vacation this time - our onlt criteria was wholesome familty fun, we are not of the types who want to tick every box about a holiday destination - we would rather love to have a relaxing, serene holiday and cover as much as we could leisurely. We hit up on Warrnambool almost by accident - we decided to stay on a luxury resort this time , what with string of disappointments on "Low priced holiday resorts" in the last few years. We decided that we will stay in Mantra group of resorts - and almost as a corollary selected Warrnambool, the small, green and sleepy town, 300Km west of Melbourne.

reason ? that was one resort were accommodation was available during the busy holiday season !! our only goal in the holiday was to relax, so we didnt care about whats there to see at all - infact we didnt even bother doing any research on the place, we thought even if there is nothing else , we are at least assured of an excellent accommodation (hopefully :-))

so , on a bright and sunny saturday morning, we set about for our trip to the great south west coast - also known as ship wreck coast - apparently in the years gone by this area has been the host of some 100 ship wrecks mostly in the 18th and 19th centuries. We take the picturesque great ocean road (GOR) - From torquay to Port campbell, around 180Ks of winding road sandwhiched between the ocean and the Otway ranges - full of fantastic look out points and photo opportunities.

our first stop is Lorne - the beautiful small town near the start of the GOR. We have been here before and is one of the best place for family fun. as its a hot day, we plan to have somefun at beach.. Rahul is more interested in building castles than playing in water

- so we also end up doing that...There is a trampoline jumping area near by , and rahul and his dad enjoy jumping, eventhogh they couldnt in anyway match the height of some of the aussie kids that were jumping.. This is also a nice time to have lunch, and Ramya unpacks her delicious lunch packs and we all enoy the lunch under the glorious blue skies..

post lunch, i felt a little tired, and Ramya takes over the wheel from me - the initial deal was that she will drive only for the next 30 min or so when I take a quick power nap - but I should say, she was driving so well, that i let her drive pretty much the rest of the afternoon. that includes some of the most mountainous part of the trip into the Otways..amd Ramya did a fantastic job behind the steering wheels..

Our next stop is the “Twelve Apostles” near Port Campbell - Supposedly the pin up attraction in GOR. i must admit, to this day, i havent figured out the connection between a set of tall and thin limestone rocks standing in the ocean and the disciples of Jesus, but then that’s the least of the concern for the bus loads of tourists that join us to have a photo taken at this , arguably, the most picturesque location in the GOR.. We all take our customary photos at the sight - however Rahul is least interested in either the rocks or the Jesus - he is fascinated with the number of tourist helicopters circling the spot, he shares his excitement with us as he always does..by - 1. Spelling out the word helicopter and 2. counting the number of helicopters flying above...

For the rest of the tourists, 12 Apostles marks the end of the long and tiring day trip to GOR - readying for their trip back to Melbourne..that’s always been the feature of day trips to GOR, doing 600Ks in a day is not the most pleasurable of an experience even for the diehard tourist..However for us, 12 apostles sort of signifies the start of the holiday and not the end..so we are still very excited with Warrnie only a hour away..

Along the way, we come across Allansford - and the huge cheese factory is very difficult to miss in this otherwise sleepy little hamlet. We were amazed to hear that this is the the Cheese capital of Australia and birth place of Cheddar cheese.

We reach Warrnie at around 5:30 pm in the evening - and my expert navigator, Ramya , is ably assisted by our new iPhone through the inner roads to our hotel. For all the criticism that Optus network cops up about its coverage beyond capital cities, it does a amazing job in serving us the page after page of Google maps to guide us to our hotel.
Hotel Mantra Deep blue has been built only an year ago - and that freshness is still very much in the air as we checkin to this resort which is in the edge of the Lady Bay - We check into room no 423, a cozy little ocean facing room.

The first thing that strikes us is the 270 deg Ocean view that we can enjoy from this room - we havent got such fantastic views anywhere before, even when we had specifically booked for ocean view rooms before, all of us are excited about the prospect of staying here for the next 3 days.
We wind down the rest of the day watching TV - We have the Carols on the Domain, the Christmas carols concert in Channel 7. We get some generous helpings of our favorite carols getting us right into the Yuletide spirit.

The next day we start our day with the breakfast – when we had booked the breakfast along with the deal, we didn’t know what to expect – but we are served with an amazing variety to help our hungry stomachs – I must admit, we were secretly heaving a sigh of relief that we don’t have to spend much on lunch given that we had such sumptuous breakfast to start our days.

Ramya picks up a tourist guide from the reception, and we are on our way to sight seeing. We decide, on the fly of course, to go to Tower’s hill, around 17Ks from Warrnie. Now this hillock was supposed to be a extinct volcano that erupted some 30,000 years ago. We were all excited at the prospect of seeing the volcanic crater. When we reach there, we were told that to reach the crater, we need to walk up a steep hill for 1 hr – Now this didn’t exactly fit our definition of relaxing holiday, so we promptly decide to give it a miss..On our way out of the hill, we are struck by an unusual sight – a Koala at the top of a tree, and still awake !!! – In my 5 yrs in the land of Koalas, I have never come across one in the tree which is not asleep. So we promptly get out of the car and take some photos. And then we saw 3 tall Emus running towards us – rahul was first filled with excitement, which quickly turned into a scare– So we all had to quickly make our way back to the car – We did manage to take a quick photo of the tall and birds – we figured out that they were more interested in the Aussie BBQ going on in the area– We then head back to the car with a slightly relaxed pace ..

Our next stop is Killarney beach – its your ideal sort of the beach that they often show in the TV – shallow and blue waters, sandy coastline and palatable waves – throw the hot sun and mild winds into the mix, it can turn even an amateur like me with a passing interest in waters into avid surfing enthusiast. Luckily, Ramya has some swimming gear for all of us and some sun screen too – so we quickly get into the water…the next 45 min or so was absolute bliss as we take time swimming at the beach and helping Rahul build his sand castles.. I must say, killarney was a killer of a beach.

In the evening, we visit the Family park which is a stone’s throw away from the hotel. Its 20 acres of grassy land loaded with full of family fun for all ages – With numerous barbeque areas, a vast play ground, a lake with some boating on it (whoever said country Australia is suffering from drought ??), lot of kids play areas, a cricket pitch and some adventure fun. Its one of the best family parks that I have seen in Australia, we take our generous share of photos all over the park and also indulge in our own version of Aussie rules football.

The next day, is all about personal indulgence like we have never done !! yes , Both me and Ramya took a luxury package treatment at the Mantra’s Deep water Spa. We have to alternate our treatments as we have Rahul to take care. Rahul, being such a understanding kid relented to his parents wishes perfectly by agreeing to see his favorite Hi-5 in the laptop throughout the day. Ramya had a Yummy mummy’s package treatment – which involved a1 hr facial treatment followed by head and neck massage and finally with a foot massage. She tells me that the experience was very refreshing and invigorating..I then had a Geothermal spa bath for 45 min. The Spa bath was made of heated Natural water from underneath (or that’s what they atleast told me) supposedly rich all sorts of minerals. It was good , though it was too hot for me to be in the pool for 45 min !! I then had a 1 hr deep tissue massage – It was fantastic and a very relaxing experience.

In the evening we returned to the Family park for some BBQing – We prepared some delicious Veggie burgers and spring rolls with traditional india masala and curry. We follow-up the BBQ fun with a drive around the Warrnie roads – the sleepy town that it is, even on a week day, there was absolutely no traffic after 7pm or so, but the green bushy areas all over the town was a pleasant sight to watch..

Whats a holiday without some Retail therapy ??. The last day was all about Shopping– Our first stop was the Founding place of Australia’s leading Apparel brands – Fletcher Jones. They still have preserved the original factory (that was in existence some 50 years ago!!).

There is also a clearance store in the factory where we do some bargain hunting…But what struck us most was this - at the mecca of Aussie’s home grown apparel brand was the very visible “Made in china” labels in the clearance store !! Long live China !!

We then went to the Warrnie’s City centre for more shopping and by the afternoon we were exhausted and helped ourselves with some delicious ice creams.

It was then tome to head back !! We take the A1, the inland route. We are back in Melbourne in 3.5 hrs after one of the most fun filled and relaxing holidays in recent memory..

So until next time, here is signing off …

Deepak.