The Flawed and Tormented Genius

At the onset, I must specify that the ideas of the flawed and the tormented genius can, and often are, exclusive and distinct ideas, except for our fascination for them. The genius who gets his success as a return for his hard work is barely appreciated. However, the genius who is able to perform well despite putting in lesser effort is the one whom society looks up to. What makes the flawed genius so appealing to our sensibilities?

Firstly, there is a sense of enigma around the flawed genius - how does he/she do it? Second, there is the appeal of something forbidden, and the flawed genius often does things that are forbidden by society. Thirdly, we want to be like the flawed genius because people appreciate the flawed genius, and hence in this sense it is a self-fulfilling prophesy.

Is it fair to those who've worked their way to the top that at the top they feel like an empty clap, because all applause rings for the flawed genius? Well, not really. The problem essentially is that there are the pretenders - those who're not really the flawed and tormented genius, but pretend to be so because of the adulation it brings. How does one differentiate between the real one and the pretenders? There is almost certainly no way - some people are good actors, and some are able to program themselves to behave like this flawed genius. Hence, to the world outside these people seem like the flawed genius.

I think the flawed genius thrives in a pool of mediocrity. For those who've tasted success, and for whom the lure of success is not great, the appeal of the flawed genius is non-existent. It is only for those who're a part of the masses, and for whom success holds a lot of value, that the flawed genius is an appealing concept.

Applied Economics - the story of the Phillip's Curve

The accusation most often leveled against economics as a subject is that it is ex-post in nature, i.e. it explains things after they occur, and hence are of no practical and applied consequence to the world around us. For example, they say that while economists have in hindsight explained what caused the recession of 2008, they failed to prevent it. Hence, what is the point of economics as a subject?

This is something that many economists and economics students too agree to. However, while reading my second year macroeconomics textbook, I came across the Philip's curve. The Philip's curve, in its original form, was an empirical relationship between inflation and unemployment, which concluded that if a Government wants to reduce unemployment (which results in higher growth), then it has to live with a certain bit of inflation.

The 'discovery' of the Phillip's curve, first in the U.K by Phillips and then in the US by Solou, was used extensively by macroeconomists and eventually policy makers in the 1960s. This trade-off that was observed by the Phillip's curve was exploited by policy-makers to ensure that the 1960s were a period of unprecedented growth in the developed world (coupled with the apparent success of Keynesian economics, this was the golden period of Keynesian economics). Hence, to those who say that economics is an ex-post science, an entire decade of growth was sustained on the basis of what economists observed. Rather, not only observed empirically, but argued theoretically.

However, in the 1970s, the theory behind the Phillip's curve began to falter (basically, that people began to expect inflation). However, this break-down was also predicted by a group of economists led by the monetarist Milton Friedman. Hence, even here economics was an ex-ante science, rather than an ex-post science.

Hence, for all those who say that economics is a useless science with no practical applications, it is a fitting rejoinder that one entire decade of high growth (of the sort unseen in modern history) was because a bunch of economists thought of a trade-off and showed it empirically. Truly, the power of economics.

Lessons from Economic History : Cutting Expenditure

Early 1990s: India, faced with a much-publicised balance of payment (BOP) crisis, had to turn to the IMF for help. The Washington-consensus, at that time, was to trim fiscal deficit (in layman terms, the Government's expenditure minus the Government's revenue) and go in for more balanced budgets. Thus, India was obligated to trim it's fiscal deficit.

Now, Government expenditure has two components - capital expenditure and current expenditure. I'm forgetting the exact difference between the two, but it goes somewhat like this - current expenditure includes things like salaries, subsidies etc. (which provide no long-term benefit) whereas capital expenditure would be on things like infrastructure projects etc (which provide benefit over a longer time span).

What India did at that time to reduce fiscal deficit was to cut capital expenditure. Almost two decades later, we see the results. The constraint to India's growth story today is the infrastructure shortfall, something that might not have happened had there been no reduction in capital expenditure.

Reducing this lesson to an individual level, a college student too is faced with two kinds of expenditure - current expenditure (movies, food etc), and capital expenditure (clothing, books, stationery etc). Unfortunately, what often tends to happen is that faced with a budget constraint, the average student tends to cut down both expenditures in an almost equivalent proportion. However, as the story above shows, capital expenditure should not be cut down that easily.

Again, that is contingent on certain conditions. Primary among them (and again drawing from India's economic history) is the utilisation of capital. Often, to utilise capital expenditure (eg books) effectively, you need to have a consistent current expenditure (eg. food). Hence, there is a certain 'optimal balance' between capital and current expenditure, and I suppose it will take everybody not less than three years to find that out.

Impatience - virtue or bane?

As I get along life dealing with the lethargy of societies and the administration in college, I keep thinking about what my brother used to say when I was really young - 'you're very impatient'. Along the way, I often termed this impatience as passion, but I now suppose that it was that, impatience, that expressed itself in impassioned forms.

Impatience is a great recipe for success. What that ensures is that things in life are moving faster, that you do not procrastinate over things. To an extent, it also helps you distinguish between what you really like to do (which you'll do more impatiently) and something that you don't (which you'll keep on hold to do the former). Applying the concept of future and present value that we learnt in our Grewalian microeconomics class today, it will (I suppose) ensure that in the present you do more pleasurable stuff, and hence ensures that you're generally a happier person [I'll try, once again, to work out a mathematical model for this, but that shall wait because writing this blog is now more pleasurable to me].

However, is that necessarily true? Is impatience really going to lead to more happiness? What is the cost to impatience? Dejection; and this dejection primarily emanates from delays in your external environment, and hence is exogenous to the proposed model that I set up above.

This post actually proved to be shorter than I had expected it to be, primarily because I seem to have arrived at a conclusion faster than I thought. The conclusion being this, that impatience leads to a better state of living as long as we are able to control the externalities. Hence, in things such as cleaning your room, exercising, playing video games, reading novels etc., where there are not too many externalities involved, impatience is a great virtue. However, in the cases where you are dealing with rather insurmountable externalities such as the bureaucracy, college societies (in some cases) and the college administration, then impatience can be a recipe for depression.

Living with Bronchitis

It has been three days, and hence an unusually long time for my current bout of bronchitis to last. Yes, the CWG did have a legacy - a legacy of extremely high SPM count. For me, it is a sense of deja vu. It is now decade since I was diagonised with bronchitis, and in between I went to Visakhapatnam for two years (where the air quality was far superior), and came back to a CNG-enabled Delhi that I grew to love. But now, with the SPM count on an upward trend again, life has truly come a full circle in a decade.

Living with bronchitis has surely been one of the highlights of my last decade. The most severe bout was, of course, back in 2003 when I came back to Delhi from Visakhapatnam and when, in the midst of a SARS scare, I had a severe bronchitis-and-fever round that lasted over a week and infected everybody around me. There were also the two incidents when because of the two jerks to the spine, I couldn't breathe. The first was scary, I felt I was going to die, and the second seemed rather routine. Yet, like every thing that tests you, living with bronchitis teaches me a lot too.

For one, it teaches me the power of hope. Hope not in terms of things improving, but in terms of things and bad phases passing. Often in life, we're depressed and we don't think things can improve. In this situation, i am always reminded that I have to life with bronchitis and other respiratory ailments for the rest of my life, but that they'll come infrequently and hence, that bad times come infrequently too. Bronchitis attacks are the aberrations, good health the regime. Similarly, sad times are (and should be) aberrations, and good times the regime.

Bronchitis has also taught me not to give up. Several times during a bronchitis attack, I lose the energy to persevere to breathe, but I know I can't. Every time that my body asks me to rest while trying to continue with breathing, I have to get my act together and try once more to carry on the divine rhythmic act of breathing. No questions asked, you just continue. Similarly, in life several times there is a temptation to quit, but there has to be the strength and stamina to carry on.

Would I like to be cured of bronchitis? For sure. Do I regret getting bronchitis? I don't know. Every dark cloud truely has a silver lining. Bronchitis has taught me discipline (waking up at 5-6 in the morning doing Baba Ramdev's asanas is not fun) that has helped me achieve so much more in life. It has taught me the importance of health, which though I won't claim to have completely attended to, I have not ignored. Most importantly, bronchitis has made me accept loneliness as a state of being - because at the end of the day, it is I who has to drive myself to take the next breath in. That day, that moment, I am alone.

The Economics of Durga Puja

Over the past few days, roaming the streets of Kolkata and watching in sheer awe the effort, creativity and, well, money invested in organising Durga Puja in Kolkata, my thoughts repeatedly went on to the same question - exactly how big is the Durga Puja in Kolkata? There would be no less than a thousand medium-to-large puja pandals in the city, and more smaller ones. With budgets for these pandals ranging from a lakh to a few crores, your mind would begin to spin looking at the sponsors for these events and other means of fund-raising. Also account for the fact that in preparation for the Puja, the Government of West Bengal and the Kolkata Municipality makes several arrangements (such as marking-off of walking space for devotees). Truly, Durga Puja in Kolkata is a large affair.

Any student of economics would probably understand the reason for my seemingly irrational exuberance - yes, the multiplier effect, and also something I learnt recently from Vedant one day - the splintering effect. Hence, you combine the two and then you realise why its a big deal. Every cog in the Durga Puja wheel has become a separate industry - idol making, flowers, the dhak (Bengal's percussion instrument) and may I dare say even the priests' services. Hence, the multiplier effect, I estimate, would be significantly greater in the Durga Puja 'industry' than it is in other parts of the economy.

Also, let us finally get down to the scale of the rather 'ancillary' activities. Go to any pooja pandal or a restaurant at night after 9 PM during the pujas and you'll understand what I mean. Every other pandal has a serpentine queue outside it, and waiting time of a up to a couple of hours. Ditto for restaurants in Kolkata. Hence, every part of the travel and tourism industry - transportation, restaurants etc - see a huge, massive jump in footfalls this time of the year. Taxi drivers demand, and receive, a premium over the regular fare. Basically, the entire population of Kolkata is out of their homes this time of the year - and businesses make a killing.

To conclude, something that I was asked when I was buying an ice-cream at 7 AM in the morning at a Puja Pandal - raatier-er ki sholak-er?. A close approximation is 'night (tourist) or day (tourist)?' Hence, imagine that people leave their homes at 11-12 in the night, and reach back well into the day. This isn't a rarity, it is a phenomenon.

The only problem here is that I do not put in numbers to this argument. Hopefully, some day I can sit down and put numbers. Probably it will happen soon - hopefully, in the next issue of the F&I newsletter, WTF. A little bit of free advertisement at this stage: to subscribe to the F&I newsletter's e-version, write a mail to us at wtf.fni@gmail.com with your details.

Signing off!

Who causes poverty - the poor or the rich?

This was just a passing thought as I passed by a huge hording of Mamata Bannerjee. Yes, she's all set to displace the left, but is she capable of developing West Bengal, specifically Kolkata, and pulling it out of decadence? Well, most people say 'no'. In that case, who is responsible for this mess called Kolkata? Of course, those who vote these people to power.

Arundhati Roy and other 'social activists' would say how it's sad that billionaires hold such high assets, whereas 80% of India's population earns less than $2 per day. Who is responsible for their state and the ineffectiveness of poverty alleviation programs? The Government. And who elects the Government? This 'majority' of 80%.

This is one of the arguments behind making cities like Mumbai a union territory. That would help because then those who govern this city will be directly elected by the people of the city, and not those sitting in the villages of Vidarbha. Will that result in a massive loss of revenue to the Maharashtra government? Well, there can be a memorandum of understanding under which this demerger will take place, which can ensure that flow of funds to Vidarbha isn't stopped. Anyway, most of funding in India comes from the central government, rather than the cash-strapped state governments.

Hence, the basic point being that you can't blame the so-called 'rich' for the poverty of the poor. It's a vicious cycle. They remain poor, hence they vote for the wrong guys, these wrong guys hamper effective policy-making, and hence they remain poor. It's not fair to lay all the blame for poverty on the likes of Mukesh Ambani. Okay, that guy earns a lot, but he isn't hampering your administration. Probably the blame for the mess in the slum next to our houses lies with people in the slum. Partly, but definitely.