Friday, May 21, 2010

The problem with today's problems

Centuries of evolution of the democratic systems and millennia of human evolution is proof enough for someone like me to believe that our system has been set for life, and we can expect a certain degree of predictability and safety from the way the world is run.

But all is not quite right. There are major anomalies.

Let me take an example, and start making myself clearer. I was watching television yesterday afternoon, and happened to glance through all business channels - CNBC, Awaz, NDTV Profit and UTV Bloomberg etc. The free fall of the stock markets due to Euro-panic was splashed across the screen, punctuated by the terror-struck faces of the anchors, and the sagacious tones (most of them artificial ones) and heavy baritones of many of the experts, collected from every nook and cranny of this grand nation. Each one of those experts was waxing eloquent about the reasons for the crash, and the road ahead. All of them sounded sullen and morose, sad and despondent, and "wise" at the same time!

Wait a minute. If you are so wise, and if you can analyse this crisis (this new one, the Euro-panic one) so well, you should make lots of money betting on the bearish trend already? Shouldn't you?
(Maybe you can't in Germany due to the ban on short-selling but everywhere else you can)

So it appears that these wise people are wise only in hindsight. And a surprisingly shortly timed hindsight at that. So are they really wise? My answer - NO. They are charlatans, most of them, struggling to look wise on TV, so we can keep watching their stupid analyses presented through the most slick graphics by some of the most attractively painted and dressed women and men in this country.

And something very interesting happened with me today. I started to philosophically analyse what was happening with my mind. My mind, imagine! So who's analysing whom? My mind is analysing itself! I went blank, stopped hearing anything, and looked into the vacuum of the TV that was in front of my eyes, and started seeing and hearing different things. I totally avoided listening to the economic nonsense of European crisis, and went to the basics.

There are obvious truths around us that we simply choose to ignore. We choose to rationalise.

What's this Euro-crisis anyway? Is it any different than the American crisis that started to happen just around 36 months ago?

Fundamentally, it's the same. At the root of both these crisis (and I suspect most such crisis) lie some simple things
  • Greed - more, more, more, more, more...
  • Nonsense - 'more' will not lead to collapse
  • Leverage - i can always pay back later, let me borrow now
  • Irresponsibility - i'm a sovereign, so the crime can be made to look like a veiled virtue

It so turns out that some European governments (Portugal, Italy, Greece, Spain) borrowed so much from markets (international ones) that they are in no position to pay back their debts that fall due. It also turns out that these nations are independent sovereign nations (with their own militaries, elected governments, constitutions and the entire range of paraphernalia that we count as insurance against delinquent behaviour) that have chosen not to control their rapacious greed (in borrowing and then spending the borrowed monies recklessly). Also, it turns out that the Euro currency is so designed that the bad behaviour of these nations will severely dent the currency, and so other 'good' nations must now come in to protect the currency (Read - must now come in to offer loads of monies to these stupid nations to tide over the crisis).

By the way, did you notice the wonderful poetic justice in the acronym derived from the names of these nations? PIGS.

I was wondering - decades and centuries of civilisation's hard-earned wisdom and work, all down the drain so fast? Nobody could stop this from happening?

There are some simple lessons we have to learn from these developments. These are striking, shocking lessons, that make a humble reading.

  1. Experts are mostly cheaters. They often tell you things that are untrue. Market experts, Economists and Governments cheat tremendously. Nassim Taleb (of 'The Black Swan' fame) says that the Nobel prize for Economics is one of the biggest frauds!
  2. Media does not understand the deep, intricate technicalities of any situation. They perhaps don't need to. What they do need are advertisements - desperately - and hence are forced (by the nature of their business) to present things in a "grossly simplified format" to us. This is creating huge problems of its own, as populations are getting accustomed to reading simple analysis of even extremely complex situations! Most such analyses are shorn of the subtleties and nuances that define the problem.
  3. Problems are simply rolled over, never solved. Each government (democratically elected) simply rolls the gargantuan problem (as it can no longer be solved) to the next government! And the next, and the next.
  4. Problems are fairly complex, but can have very simple solutions. Refer to the greed, nonsense, leverage and irresponsibility stuff I wrote above.
  5. Nothing is predictable at all about the world anymore, and problems - when they arise - will be big in nature, and generally beyond the immediate control of the government on the spot at the time.
Are these things the way these things are supposed to be?

NO. We are supposed to have governments and systems that work. We elect them! We pay every conceivable kind of taxes to them! We follow all rules (speaking for myself - I try to).

For what? Such irresponsible behaviour?

Now just apply this entire analysis to the Naxalite problem that India is facing. And you may find that it applies there as well! A fully-grown nation, with a strong democratically elected government, a strong military, a strong media and a hugely strong willpower is seemingly totally meek in front of those who choose to carve out another nation out of its heartlands. Amazing!

Take this entire analysis and apply it to the recent oil spill off the coast of Mexico and US, by some BP owned oil-rig. The fact that even after a month they are unable to bring it under control, despite massive political pressure from the White House to do so, speaks for itself.

So it turns out that the world's problem are getting nastier, and the solutions more troublesome than our faith in technology and modernity would warrant.

So, let me summarise the problem with today's problems
  1. We expect very quick solutions to even complex problems, due to over-simplification of communication in media channels
  2. We trust our experts too much, while most of them are relying on data from a past that no longer exists! (in most industries)
  3. We expect positive solutions always - while many solutions require a compromise
  4. We are magnifying our local problems into problems of a gargantuan scale due to internationalisation of everything
Interesting times we live in!


Ritesh Sharma said...


The way you describe and connect the problem of media,government,and people is such tremendous.

This technology made us lethargic,we don't want to go inside of the cause. Because everything is ready and available.


Unknown said...

Nice one...

Sir I am very happy with the range of topics you are selecting. Every time you are giving us some new insights for a totally new topic.

Thank you so much for that.

Vidhi Shah

Shenky Agrawal said...

Great post sir,
The link between the life and economy is great.I totally agree with you sir on all issues especially on naxalide issue.Sir,I think govt. must use air force to combat these increasing problem recently 76 CRPF in dantewada ,a bus with 28 passenger and 4 police officers,six police officer.... list is endless.Home ministry has to take some stiff action to combat these problem.
Thanks sir for these nice topic.

PT Shenky Agrawal.

Abhishek Soni said...

I am very happy happy that you gave words to the thoughts about the current uncertainty which is prevailing in the world.
I also want to tell you that, we are in such a huge dilemma that we don't even predict the end result of any of the problems, not even the Government.
Abhishek Soni(Fall '08)