Capitalism and Socialism

Last week is the most dramatic of all the weeks in known history of our generation (who had missed the great depression) and has redefined many conventional thoughts about the capitalistic markets and free economy. The week started with the fall of Lehman’s and was epitomized by the Fed’s bail out of monstrous AIG to the tune of 85 Billion dollars.
Capitalistic economy as per Adam Smith’s is governed by the invisible hand and is to be governed by the participants and with basic governance by regulators. Those who are smart could make money irrespective of their background and those who are not would lose money however mighty they may be. The free-economy had been the pioneering face of the democratic countries and is the basis of the consumerism and global addiction towards luxurious life style.
When the going gets tough, tough gets going and when the world was tired of conventional financial instruments, there emerged a bunch of smart traders who devised complex terminologies to sell the toxic assets (Credit Default Options and Credit Default Swaps have become household items now) and there was nothing wrong in what they did till the market busted. As they say “Success is a great Liar” and makes to be unaware of the possible consequences in the longer run and adding to the human behavior of denial, nobody wanted to blow the whistle.
In fact, nobody blew the whistle and it got blown by itself and eventually the market got shaky and the rest is well documented. But the very interesting part in the whole story is the fact that definitions of capitalistic society are being redefined and earlier foundations are being forgotten. This said, what the definitions of a capitalistic society are?. In my view, there are 3 top things which are the building blocks of the capitalism. First, the market exists by its participants and by their competitiveness. Those who are highly competitive survive and less competitive ones get eliminated (Survival of the fittest). Market is open for newer and legitimate ways to make money.
A socialistic economy based on Karl Marx philosophy advocates protection of interests and encourages governments to tightly govern the industries and advices them to build or own huge non-competing industries leading to state sponsored monopoly. After all the effort that has been spent in curbing communistic policies the US govt has sponsored bailout of Bear Sterns, AIG etc and has created a kitty of 800 Billion dollars to act upon any failures.
Though my intentions are not to undermines the intentions of different countries efforts to safeguard interests of public (me being one of those), but I have a feeling that with the revised laws of the game, the distinction between capitalism and socialism ( I hate this ) are lost and its time where we rewrite laws and come up with something like capocialism which is a balanced approach between best of both. Till that happens lets all start our days praying that we would be able to keep our jobs and pay our mortgage bills, Do you differ?

Img courtesy : http://www.luckythreadz.com/large/images/the_communist_party_large.gif

Simplicity vs Complexity

It has been a long time since i blogged last , the world has been the usual in these days with the oil prices going up (and down recently) people talking about unstable economies, inflations and terrorists mindlessly bombing and dopists still trying their luck in Olympics. All of these things have become something of a norm and doesnt strike us much in our routine life.

I led a very simple life of no internet for nearly 2.5 months thanks to ever confusing ISP's Sky and BT who kept me agitated, frustrated, disappointed (finally i settled down for Sky where i started with) so on.

Talking about simple life, it becomes extremely complex to be simple. Being simple is a very philosophical thing which ordinary mortals like us find very hard to attain.Great saints and yogis were able to remain simple as they had realized the truth which removes the complications and their whole purpose of life become to teach simplicity. (The simplicity that i talk here is the simplicity of thoughts and not wearing meagre clothes and living by fruits and milk ;-) . Late Indian Prime Minister Nehru once (jokingly?) commented that it is very costly for the congress party to keep Ghandhi simple (in the ways ghandhi wanted).
But that path towards simplicity is not all that simple as we are brought up in a complex world full of people with complicated thoughts and harder situations.

Our thought process is inherently complex as humans are gifted with a brain with 100 billion neurons and a processing speed of 100 million MIPS (million instructions per second), with this much of processing abilities , there is no wonder that we tend to process too much about a situation/person and make our life very complex.

While i was drowing myself in search of simplicity with no internet among the books and library, I came across a book called 'Orign of Wealth' by Eric D Heinhocker. Eric is a senior fellow of McKinsey Global Institute and his research and the original ideas are really fresh. He argues about the logical fallacies that traditional economists have built into their models that have resulted in over-simplification of the scenario(subprime mortgage dealers?) and argues majority of current economic decisions are taken assuming that world is "full of over smart individuals acting on extremely simple situations".

He starts the story from Adam Smith who pioneered the modern economy progresses towards to walras who brought the mathematical modeling into economics through his obsession with physics and so on. He argues the need to understand and accept complexity and chaos, as economy is a massive complex adaptive system. The book is an awesome read and is a great combination of economics, anthropology, physics and other academic disciplines. It was really a great read.

The world is really complex and if we need to face the complexity, we really need to keep our minds simple and be simple. I couldnt resist laughing when two students were discussing about a mathematical equation applied to pricing of commodities(during my tube journey last friday)on my way to a meeting to explain a complex architecture with a client. I think we still have long way to go in our quest to become simple.....

Relocations - Good and Bad

Birds migrate to avoid winter, fishes shoal in search of food, locusts swamp the fertile lands, human community started migration millions of years ago from Africa. It could be called as migration, movement, relocation or in modern terms immigration, emigration etc etc. Movement from one place to another has always been the norm of life for all the living beings (that could walk). I recently moved along with my family from India to UK and it made me think of these relocations dearly.

Movement has always been in quest of something , lets say Gold, Silver, Spices, Horses, knowledge, spreading religion etc. There has been voluntary migrations like people settling down in US , Australia etc from the European countries and there been forced migrations of African people all across the world(who were sold as commodities in the slave market those days).
The inquisitiveness in the man to understand things that existed beyond his vision and the stories told to him by other travelers from far off places must have really kindled the fire in him to explore. And obviously the first traveler must have been somebody from Africa where the mankind originated and spread across the world-, but the travelers like Huien-Tsang, Marco Polo, Vasco da gama etc made some real marks and increased human thirst to explore further and Silk Road greatly helped in bridging the diverse cultures of the west and east together(Silk route is a great book to read about it).

Somebody said 'Struggle in a battle is more interesting than the victory of it', On the similar lines life becomes dull as soon we achieve what we desired and its only the quest to achieve urges and motivates to do more. Those who escape this vicious cycle become either saints or losers. So travelers unlike tourists who have a determined path an schedule are the ones who are out there in the wild to enjoy the struggle to go to a place and they just keep moving. The greatest of the great warriors have all been only travelers and a glorious victory or insurmountable wealth have never been able to confine them in that place.

There is another sad side of the coin as well,there have been many mass exodus in the history where people had to migrate from one place to another to escape tyrant king, famine , wrath of lost wars etc and etc. The very earliest sighting of this can be traced to jews from earliest bible days to world war days , and the wandering had really made the jews very intelligent by etching adaptability to the difficult situations into their genetic make ups. We can keep quoting tribes after tribe at various times in history for varied reasons.

These sad travels, after having lost their homeland, assets, relatives with only hope as an investment and trying to begin a life in a new place where they dont exactly belong, to live as a refugee (or something equivalent) compromising the dignity must really wreck the minds. The fights that these individual alien groups launch have given rise to great leaders like Mahatma Ghandi, Martin Luther king to name a few.

Those who have traveled to Gulf countries and places like Singapore would have noticed the workers who have brought in to do the hard labor in harsh conditions, this is another mass exodus from developing countries to developed countries and has tons to sad stories in it(I cant forget two laborers cutting the grass in heavy rain opposite to my home in Singapore in 2002). Leaving families back home, pledging their assets for the visa and travel, living under hostile conditions of the agents who brought them , it is very hard to put their pains in the words(the national geography did a better job with the afghan girl - shown in the left-).

We just keep traveling in quest of fulfilling our desires and all of those travels are not always sweet for everybody.

Taxi Drivers and their own world

Taxi drivers are one among the very interesting people to observe and converse with, by the virtue of the people from different walks that they deal with they very often tend to develop good conversational skills , recently I met once such person called Tahir on my way to Heathrow airport.

Tahir is a Desi Muslim whose father was a soldier who migrated from undivided India to UK and is born and brought up in UK.

Our conversation started with his views on smoking (he had quit and has become too fat-his words-, a good reasons for smokers not to quit) and continued towards India-Pakistan partion, quran, gita , bible etc, his tolerant views towards religions and stress on the humanity was really inspiring especially in these troubled days where people get killed in hundreds in the name of religion and god. He was a first hand victim of selfish relatives, a partner who looted all of his money – never heard of a good partner so far ;-) - when he was emotionally fragile after his dads death in Pakistan. He was a very interesting conversationalist who could transpire you at ease. I was a bit unhappy the journey could last only one hour.

Taxi drivers could offer you a wealth of information especially when you are going into a new place -good pubs, nice restaurants etc- , except for those sloppy GIVE-ALL-THAT-YOU-HAVE-GOT types, they are the walking(driving) wikipedia ( using encylopedia as a metaphor has been abolished lately) and they gather countless wisdom picking it from many a passengers from diverse cultures, countries, personalities etc , mainly those who drive in big cities like London, Newyork , SFO.

Each driver is a CEO in his small mobile office. People hop-in and hop-out, there could be good people, bad people, rich , poor, preachers , benovalent, malevolent but they just carry on the routine. Being a taxi driver gives one a sense of economic independence with he being his own boss and he can decide to close the office after gathering enough for the day, the good thing is you can avoid skip those ever poring emails (but one of the drivers that I met recently had a blackberry ;-) ).
Drivers have their own business model, servicing philosophies etc and operate under stringent competition with very little differentiation – All the new york cabs looks the same to me.Its very interesting to observe the taxi driving as an economic model as well, the key factors being, the window of time that he can drive (except those call center drivers), the places where people require their service most and the number of competitors that offer similar or better service in that area. Smart drivers tend to look for steady repeat customers by engaging with you and establishing a connect and those who are not so lucky, blame it on the bad day or bad government. There is always some “cash on the table” and the most smart driver gets more.

But there are bad sides of the story as well and I could harldly resist the thought of what if the driver turned out to be psycho or a part of the gang that could take you a shady place and loot(esp in mumbai and delhi, these feeling get intense), there have been numerous cases of rapes and murders by taxi drivers(they get murdered by bad passengers as well) all around the world and we always need that caution and a bit of luck to reach our destination safely and we need to be careful about what we talk to them esp if the driver has lot of customers from the place we work.

Anyways, driving is a interesting profession where if you have luck , you could be the likes of Senna, Schumacher , Rakkinen etc or you could be waiting for the customers on the roads to ensure that you make enough to pay for the debts, mortgages etc , etc answering the calls from the impatient wife who made the dinner two hours back and the kids who have gone to sleep after a long wait.

Art of Decisioning and Karl Popper

Starting from when to wake up from the bed we start making decisions like which shirt to wear , which train to take, whom to talk to, when to respond to an email, whom to take for lunch etc etc.. we all take countless decisions everyday (strategic, operational , tactical, good , bad, opportunistic, benovalent etc) . They can be categorized easily into those that work very well (not taking an umbrella when weather forecaster says it would rain heavily) to decisions that screw up very bad (concluding that Iraq had weapons of Mass Destruction ) .

Decisioning is really an art, which decides between life or death many a times. Though decisioning is well talked about and we are all aware of how critical it is to make a correct decision, many of us fail miserably many a times. To get this art into a science form there are lot of interesting experiments by Philosophers, I recently read one such experiments (“Conjectures and Refutations”) by the eminent philosopher Karl Popper. Those who are too lazy to check out who is popper from wikipedia, Popper is an Austrian philosopher who spent great deal of time in London school of economics (LSE)(1946-1969, subsequently knighted as well) and has influenced variety of philosophers and new age thinkers. He is not a guy with whom you will share a mild relation, people either like him to the core (Like legendary Investment banker George Soros) or other Classical empiricists who hate him to the core.

The book talks about scientific philosophy , origin of knowledge , decisioning etc and he covers them at great length at various different perspectives and sheds a great light on conventional wisdom. The part that intrigued me was that on the decisions we make, the way we form theories and their testability and falsibility. It started lot of questions and I started searching for the truth. (He has devoted an entire chapter on truth also), As we all know (in popper's words), truth is always relative and it is very hard to reach the absolute truth. When Galileo proposed his theory , it held good (after a great deal of reluctance from vatican) till newton arrived , newton's version of truth was better than Galileo's and kepler's and Einsteins was far better than newtons and so on. But individually their postulates helped to overcome and correct the assumptions that the society held till that point of time.

Leaving truth aside(it gets too philosophical and to us it is of no use),If we were to consider decisioning to be a black box , it has two main inputs , facts and assumptions (at a given situational context). The facts and assumptions are predominantly derived out the knowledge repository that we have gathered genetically as well as from our own experience. The knowledge that we gain is based on our observations and the inferences that we make out of them. He argues that unfortunately we don't do a critical evaluation of the inferences we make and we don't do it for the assumptions that we carry along as well. This could mean that we carry a sig
Popper's philosophical genre is what is being called as “critical rationalism” and he has done a remarkable work on it. Apart from treating it as a branch of philosophy , one could use his critical rationalism in variety of practical purposes , starting from psychology , economy to business intelligence etc. He mentions that this is a heritage of the greek philosophers that western civilization has accepted as a mainstream thinking which has resulted in numerous scientific discoveries (eastern society was close to invent a steam engine, they had a similar concept but used it to make rice-cakes) .

Human mind is very good in making judgments based on the known facts , but doing a critical evaluation and being driven by the assumptions that are influenced by biases have cost huge amount of lives and money from both the good sides and bad sides.

Anybody out there dying to make a bad decision?, evidently nobody would (Not sure about Bush, though) . Then, why do we keep taking bad decisions all the time? , Cant we all sit back , spend lot of thoughts and take right decisions all the time. Unfortunately that is not how it happens. We make decisions based on our prior knowledge with the time constraint a situation poses and tend to make lot of assumptions in the due course, if we are rational (a bit lucky as well) and have critically evaluated the assumptions that are the constituents of a decision making process , then it increases our probability of the decision being good, nothing else.

With an infinite permutations and combinations of events and possibilities of the occurrence of events which we are not even aware of ( only terrorists knew the flight could be made as a kamikaze bomber but not the police during 9/11) , the confidence level of a decision being successful increases . Please note this can never become an event with a probability of one (unless you decide on a fact like , today sun will appear in east and will set in the west, which is also debatable as we are making an assumption based on the observations on the laws of nature).

If decisioning seems to be such a hard stuff, why people tend to talk about it so less, unfortunately we all tend to think about things in the way we are taught to in the early part of our life and form rigid patterns of learning, we tend to develop our own convenient ways to deciphering and reacting to the challenges that a situation poses and this rigidity shuns our mind from adding more assumptions and a chance to evaluate them. But the philosophers starting from Xenophanes, Socrates and recent contemporary philosophers like Tarski, Russell, Popper etc have spent a great deal of energy and efforts into it and it is sad that this knowledge still remains elusive to a small circle.

It would be good if analytical reasoning and the views of several philosophers /scholars can be taught as a part of the curriculum for all of us as it would definitely make a better world, till that time lets keep making decisioning in our own ways and keep messing up to make the world a more interesting place. World would be a dull place to be filled by smarter people alone. Can you think of a super intelligent George Bush!

References :

Conjectures and Refutations by Sir Karl Popper

Black Swan by Nassim Nicholas Taleb

Plato.stanford.edu (Image reference)

And a bit of google and wiki.