Sunday, January 26, 2014

How humanity is creating its own misery and how to stop creating more misery

Humanity (through government, public and private sectors) is making wrong developmental choices on behalf of living beings by only using financial value-add as a measure to compare between alterative ends. Such choices theoretically ought to get made based on the maximum longer term financial and non-financial value-add to the maximum number of living beings(through long term impact on living beings, their surroundings and their relationships).

Unfortunately these decisions get made more on the basis of short term tangible impact of the choice on the (sometimes sub-group of) local people, their relationships and their surroundings.

The foolish criteria of "cost of financial capital", which is used to guide investment decision making is hopelessly inadequate due to its miserable short termism and subvertibility. This measure focused only hides the selfishness in the intangible (non-financial at decision time, but strategic and financially relevant in the long term) impacts of investment decisions on living beings. In a highly interconnected world, where every individuals actions impact outcomes for all others, what is the sense in letting individuals, firms and government make choices based on whether they can fund the action cheaply with respect to the benefits they get (irrespective of the impact on other individuals, firms and governments and more importantly the environment and universe)? As humanity we need better mechanisms...


The capitalism of Adam Smith, which posits that self-interest constitutes a method of social organisation, around the current means of investment for production and the subsequent distribution of the needs of humanity is a bit flawed. Till all humans correctly understand their enlightened self-interest, Adam Smith's capitalism is vulnerable to subservsion by empire-building ignorant humans and groups of humans, who do not understand how their ignorance causes their own misery and that of the rest of humanity.

Potential solution

Trusting unenlightened humans or groups of human, without adequate education and training and sensitivity with the best interests of humanity is dangerous. Putting too much trust in systems and procedures to guard against the risk is not the solution.

There is a need to raise the purity of intentions, skill of implementing intentions and knowledge of how actions compare in purity and skill at all points of time.

There is need for more meritorious people at the top who get there through sequences of meritorious deeds, who actually think through the long term costs-benefits for maximum good and happiness of maximum people. And their allocative actions (i.e. choices of projects) can ensure allocation of right work and compensation to people who work on these projects, while keeping the longer term interests of these project staff too in mind

Wednesday, January 15, 2014

Guerilla banking versus Gorilla banking: The potential of community-centric bank‏ing

Today the popular legal structure for large commercial entities is “publicly
ownership” along with stock market listing. While there are benefits of this
legal structure, their limitations are increasingly becoming apparent. These
limitations include

1. Agency problems
a. Managers stealing value from owners
b. Managers robbing Peter (one owner) to appease Paul (another owner)

2. Decreasing trust of stock market prices as representative of underlying
value

3. The stock market has allowed investors to "vote with their feet" on key
management decisions. But there is no known mechanism yet to enable
investors to increase their participation in operational decision making.

4. The mass ownership reduces the ability of firms to distinguish them
selves. Masses in human history have rarely understood complex value
propositions and so the stock markets have homogenized firms and made them
very short term focused

With rapid urbanization of the global village, customers want high touch
relationships. Given the level of anonymity and impersonal behaviours germane
to modern urban life, many urban communities are trying to create the
delightful community life common in rural areas. That enables them to
increase the quality and experience of life itself.

In this context, organizing retail financial service providers as
cooperative or mutual societies is better than organizing them as
proprietorship, partnerships or as the typical publicly owned companies.
Organizing this way allows retail customers to access financial services
customized to the community that they choose to be part of. We define call
such entities as community-centric banks. The benefits of knowing each other
help in improving the customers experience and helps in reducing operational
and financial risks, including agency problems. This operating and financial
efficiency is currently not visible in the stock market prices and hence
does not get the related hype associated with typical publicly owned firms’
at least yet. Nevertheless such community store-fronts are becoming
resellers of the financial services originated by the billion dollar gorilla
banks. It is one direction that global BFSI industry is evolving towards -
pushed by IT, customer preferences, financial efficiency and operational
efficiency.

The private/public limited companies or proprietorships/partnerships
nowadays were enabled by the older technological level of the world. Pushed
too far, we now have stock prices unrelated to underlying value, excessive
short term orientation by very short tenure CEOs. The hugely popular stock
market type of corporate ownership gives higher liquidity in exchange for a
short term orientation. The short term orientation creates most of the risk
management problems in financial service providers and complex algorithms
are a poor way of managing these problems. Secondly profits are removed from
the business periodically in this form of ownership.

IT can be leveraged in operations and risk management with higher level of
benefits and less number of drawbacks from the viewpoint of the customers of
community banks.

1. Profits are re-invested into the business. There is not need to pay
dividends.

Community banks can use IT to leverage this inherent cost advantage against
competition.

2. Due to local nature and small scale, risks are lower and easier to manage
through operational relationship-leverage systems and procedures...rather
than over-dependence on abstract statistical models.

a. People usually understand the credit rating of their neighbours better
than those of people 2 cities away.
b. And statistics models can hardly be trusted in a continuously changing
world for any real and/or large scale decision making.

Essentially community banks are less risky and have lower cost of managing
risks, due to the above reasons - a significant competitive advantage.

3. Customer preferences can be aggregated and used to customize offerings
and operational procedures while preserving bank-end choice in the wholesale
markets. To preserve that choice, they have to operate like guerrilla's who
typically leverage their knowledge of their local terrains to fight against
larger adversaries.

This remains the key competitive advantage of community banks

The small and medium scale nature of this market makes it a delicious pie
that IT services companies could easily bite into...and leverage for rapid
growth. In many ways this is an idea whose time has come. In many areas of
modern life, institutions which are leveraging technology in ways sensitive
to the various stakeholders are becoming more and more like co-operative
societies. The NHS is a prime and recent non-banking example that I know of.
The travel industry has been like this for a long time now. In the United
Kingdom, we believe that the building society sector is best equipped to
become community banks and derive competitive advantage by leveraging
information technology to engage their target communities in a mutually
enriching pursuit of shared values going beyond money.

Tuesday, December 24, 2013

Free riders in the dalit movement

As I have described elsewhere, the dalit movement involves the daily struggle that dalits engage in the schools, colleges, farms, factories, offices, markets, whereby they rebel through excellence in their work to confront the prejudices. This is what the manifesto of the common Ambedkarite specifies as represented in the plethora of Ambedkar statues set up by common Ambedkarites all around the country. Essentially the Ambedkarite revolution involves rebellion through legally compliant excellent work under the constitution laid down by Ambedkar. There is nothing more needed to confront the wrong stereotypes burnt into the minds and hearts of many non-dalit Indians. It is by confronting these stereotypes that lasting social change will happen in India. Else we will merely have Gandhian token change. It is through such Ambedkarite excellence that the wealth of the dalit communities will expand and the inequalities with respect to the non-dalits will reduce. Essentially the common Ambedkarites will legally earn this wealth by growing Indian pie, rather than using non-ethical or violent means, which will be dangerous for India. The glass ceilings will be stressed through each stone (example) hurled at it by the common Ambedkarite with trust and sincerity of effort.

But as I mentioned above, there are free riding dalits, who do not want to engage in the above struggle to redeem the dalit identities in the eyes of remaining Indians, while solving the problems of the dalit community. These come in two varieties.
  • One category use benefits that their dalit identities give them under the Indian constitution, but hides this identity in later life, preventing the direct challenging of stereotypes that can result from the respective excellence that they achieve in their lives. I like to call them the Harijans. Some of  these Harijans do not achieve high stations in their life because they have fallen prey to the stereotypes about dalits, do not believe enough in themselves and do not try to achieve excellence which can cure their feelings of inadequacy which result from these stereotypes which they also believe. Other Harijans achieve high stations in their life, but do not assert their dalit identities in order to avoid creating problems in their respective social lives due to the negative aspects of these identities. This category typically uses "sanskritization" type of upward social mobility and denies any connection to Ambedkar and dalits. They are fanatic about compliance with their sanskritized identity and equally fanatic about rejecting their dalit origin.
  • The second category does not use benefits that their dalit identities give them under the Indian constitution and hide this identity in later life, preventing the direct challenging of stereotypes that can result from the respective excellence that they achieve in their lives. This category also tends to be Harijan and does not identify with Ambedkar.
I call both the above categories as free riders because both are potential beneficiaries of the revolution led by the common Ambedkarites but do not contribute to its success. After all, even if these two categories of dalits do not emphasise their dalit identities, there always are enough people who remain aware of these. These people feel that their sanskritized location in caste hierarchies are acceptable and they don't try to destroy the prejudices that this hierarchy derived on the chance of birth have embedded in Indian minds and hearts. It is the common Ambedkarites who through the manifesto described above will be destroying the prejudices that these caste hierarchies have burnt into Indian heart and minds. When the prejudices vanish, the matrimonial columns will depict this along with various other benefits that will accrue to all dalits (free riders included).

Mancur Olson described how rational choice meant that every social movement will have its share of free riders. Essentially every social movement pursues obtainment of public goods through collective action. But the very nature of public goods is that their benefits accrue even to those who did not participate in the collective action. There is an entire literature describing how individuals make the decision whether to participate in the collective action. My favourite example is Klandermans(1984).

The dalit movement needs to think hard about how to reduce the free riders by increasing the social pressure for solidarity as well as raising the profile of successful common Ambedkarites. As common Ambedkarites show case the ability to not hide their dalit identity and yet succeed significantly against prejudice in education, employment and enterprise, the number of free riders will reduce.

Bhimrao Ramji Ambedkar. May his tribe increase... (A la Abou Ben Adam)

Pratap Tambay
A Common Ambedkarite.

Sunday, December 15, 2013

Win win solutions to caste problems

Throughout history battles have been fought to control and impose
ownership over resources like land labor and capital. Those who win
such wars derive rents from their lower cost of utilising these
resources to generate profits and become more powerful over time due
to increase in their personal ownership over the total pool of land,
labor and capital. Competition tends to become less and less fair
for those who start late on the entreprenership. Innovation is the
only capitalistic tool to change the social ordering. The one who
manages to innovate best at least cost succeeds most in changing the
social ordering.
Most theories state that some kind of violent confrontations were
lost by dalits and the economic and social organisation imposed
over them by the winners impoverished them and marked the winners as
special aristocrats.The idiotic theories claims that dalits chose to
clean shit voluntarily and brahmins chose voluntarily to focus on
learning. These theories are not accepted by any sensible people.So caste based reservation was self awarded in the past by imposing
it through violence in the past.Now that we are in a democracy, the aim ought to make the playing
field level, so that dalit entrepreneuers have atleast as much shot
at changing the social and economic order by creating business value
through innovation. Secondly the objective should be to grow the
economy, else the battle of the ballot boxes will be limited to who
controls how much of a fixed size pool of resources or entitlements.
And if the incremental growth is distributed more to dalits, then it
will reduce the potential for violent confrontations and enable to
come to an equal level over time, without hurting the interests of
non-dalits.Hence dalits need to be involved and enabled in the creation of new
wealth. Investment in their education and in their enterprises will
create value for the whole society.That is the only win-win solution to India's problems. All the other
solutions are win-lose or enrich-impoverish solutions with potential
for violence.






Friday, December 06, 2013

Manifesto of a common Ambedkarite in face of the legacy of Gandhi

The Pune pact between Gandhi and Ambedkar resulted in the current dispensation of joint electorates instead of the separate electorates in exchange for reservations based on caste.

Ambedkar wanted separate electorates to elect representatives to a common parliament to given better quality representatives to dalits. Such representatives would have conducted the large scale social bargaining that happens through the parliamentary process necessary for the much required social change at a very high pace. Despite this device seeming to sustain the divisions between dalits and non-dalits, it would have achieved the right amount of social change much faster and reduced the divisions removing the need for separate electorates within a few generations itself

Instead Gandhi blackmailed Ambedkar to give up this demand in exchange for reservations based on caste. Pressurised by an unenlightened Bharat and India, despite knowing that this was a poorer choice for the nation, Ambedkar relented. After all India social rhetoric since independence has been about  eliminating poverty and social inequality, but the choice of Gandhian means to achieve this objective has led to failure., The fact that Gandhianism was a poor social choice best illustrated in the quality of representatives that reservations under joint electorates have given too dalits all  these years.

Given this legacy of Gandhi, what is the manifesto of the common Ambedkarite and why does it matter for all Indians.

The manifesto of the common Ambedkarite is to engage in social bargaining in his day-to-day personal and professional life. It is to find the Ambedkar in himself and develop the Ambedkar in himself to the stellar level that the real Ambedkar achieved in his own life. It is this manifesto of every dalit that each Ambedkar statue across the length and breadth of India expresses. Denied the social bargaining through fair representative bargaining in the Indian parliament, it is the day-to-day struggle of the each dalit whether he/she is a student, wage-labourer, private/government employee/executive/entrepreneur that seeks justice and dignity through participation on equal and fair terms in the mundane affairs of this nation. It is the slow march of such Ambedkarites distinguishing themselves through the highest Ambedkarite values (those of learning and wealth through moral means and hard work that Ambedkar embodied), that social change will eventually sweep the nation.

Why this matters to all Indians is that many Indians have lost the values that Ambedkar embodied and while following Ambedkar, the common Ambedkarites will find and create a social path not tread till this date by this nation which will finally rid it of its age-old problems. Despite allowing Ambedkar to write the laws, Indians are guilty of not giving these laws the jurisprudence they need for them to impact these age-old problems. It is the growing enlightenment and spiritual strength of the common Ambedkarites which will demonstrate to all Indians that the best interests of India lie in not obstructing the formation of proper jurisprudence and in fact encouraging more jurisprudence so that the pot of gold embedded in the Indian constitution helps India solve its age old problems without detriment to anyone. Denying justice (social as well as constitutional) to dalits and non-dalits creates a load on Indian hearts. Most Indians carry a lot of load on their hearts. It is the common Ambedkarites who through their life and work will show these Indians the way to get rid of their burdens and become free. As dalits become the elite, they will show the way to all Indians.

It is in this context that I wrote the following lines around 2004/2005.

Manifesto of a common Ambedkarite

I see pain n misery
exploitation sustainin treasury
My means are pure, my end is pure
Of my success, I am sure

Harsh words ! not my way
Immoral action ! far away
Skillful action, skillful life
Are my tools in my strife

I hate not u, I fear not u
My chains undone, I see u tied
U say u tried, I know u lied
I'll set u free, I'll be ur guide

--- Pratap Tambay 

Saturday, October 05, 2013

Rogue software - increasing scale and scope of danger

Some software is originally written for rogue purposes. Other software is later manipulated to change its purpose to include a rogue element to other innocuous software. Sometimes good software may degenerate and become rogue (from an outcome perspective) if it is difficult to correct the degeneration for some reason and one has to plan service around the rogue element

As the software density of the technosphere around humans increases, the number and significance of rogue elements of software in the technosphere for individual humans and for humanity as a whole continues to rise. Every individual already spends on preventing rogue elements like viruses/personal-data-gatherers in PC, laptop, phones already and as software becomes more embedded in consumer products and the connectedness of such software increases, the prevalence of such rogue elements will spread to them too. Most enterprises already spend money on preventing rogue software which aims to steal data and/or source code (intellectual property). Governments are setting up arms to defend countries against rogue software.

What a waste! A humanity which is not able to organise its affairs to feed some of itself, despite having the natural resources and technology to do so will definitely degenerate to increased spend on rogue software, rather than solve the real problems of humanity. As a representative of some of the most disadvantaged people in time and space, I get infuriated with the continuing inability of humanity to sort itself out. Our leaders are unenlightened idiots barely able to see and think beyond the tip of their respective noses and our systems of governance do not create the pressure for them to focus on the real problems of humanity. Islands of selfishness effectively sustain their greenery and labour prices by exporting pollution and labour exploitation to other islands and continents and yet boast about being global leaders. Technology is being wielded as a tool of exploitation under the name of more fanciful terminology and rogue software is a world domination tool. It is a tool to wreak invisible violence on individuals, firms, nations, humanity. Law and its enforcement agencies and higher level institutions are yet to evolve to catch, punish, prevent rogue software. What a waste!

As I mentioned elsewhere, the vulnerability of small and large scale software systems in our technosphere and the tendency to leak knowledge about software will result in humanity creating monsters and losing control through wilful actions by empire-builders and/or negligent actions by others. We are going to leave our progeny with a much more complex world in terms of relationships between cause and effect unless we find a new base for our legal systems, so that they prevent these things from happening. Let us pressurise our leaderships to look beyond the tip of their noses.

Regards

Pratap 

Saturday, September 21, 2013

Sustainable capitalism

The number and complexity of Human value-chains and "techno-ecosystems" surrounding humanity driving its daily operations is increasing. Through these, capitalism triggered replacement of nature's ecosystems, making multiple life-forms extinct. Food, the final frontier for mans dependency on nature will begin to be produced in factories shortly further accelerating this process till only humanity and its techosphere alone survive - impact on society and environment be damned. Oh! God forgive humans. They know not what they do.

Adam Smith and his followers taught us that selfishness operating through markets allocates natural resources to present and future needs of humanity. But the greed of empire-builders does this in unsustainable ways due to focus on here and now totally ignoring the impacts on far and later. The short-termism promoted by stock markets is incrementally destroying the stability of natural equilibria resulting in increasing frequencies of natural disasters. But nay-sayers are seen opposed to "progress" (as many understand it).

Capitalism's value-chains and "techno-ecosystems" are not even able to allocate natural resources to present and future needs of humanity in an equitable and fair manner yet. But voices asking for yielding of further power to the markets seem to grow stronger despite this. Supermen (Kings), Committees of smart men (Communism), Invisible hands (Capitalism) have failed to provide a system for managing this allocation in a fair and equitable manner. But humanity is wedded to antiquated institutions like nation-states (whose flimsiness is visible in the volatility of exchange rates and related havoc) and ineffective multi-lateral institutions like IMF, UN, etc. Should'nt this be the first item to change about the world? Maybe we need an fair and equitable algorithm to do the allocation.