The Beginning of the Economists' Era!

Best Chronicle of Beginning of  the Economic Era!

I finished listening to The Economists' Hour by Binyamin Appelbaum, narrated by Dan Bittner on my Audible app.

Try Audible and get it free: https://www.audible.in/pd/B07QD22FF4?source_code=APITMANDROIDAPP0824160004

In the beginning of the book, until chapter 5, it seemed to be a very weak effort to chronicle, what the author considers as the Economists' Hour. 

From the 5th chapter he takes up more incisive look at the intervention of economists emphasising on successful qualification of many variables in the economy and the role of regulation. He, as is the case with most of the economists, struggles to explain Deregulation of Financial innovations and resultant Financial Meltdown of 2008. Rather rightly in August 2005, Dr. Raghuram Rajan (RRR) had raised concerns of destructive potential of the 'financial innovations', unleashed in the Deregulation era of Dr. Alan Greenspan. And RRR was chided ad hominem by Larry Summers as a Luddite!

In the conclusion, which is rather an afterword, the author delineates the developments initiated by the leaders, most of them ultra-nationalist, inward looking ... ones starting with Donald Trump all the way to Brazilian President, until 2018.

The book concludes with the author's amazement at the emergence of service economy and its probable & presumed deleterious effects on humanity. 

In my view, we are at the cusp of understanding economics, as was the case with us as far as physical sciences at the beginning of Renaissance, we have barely quantified the elements of economics. We still lack competency, capability, tools & techniques to model, analyse and arrive at the right solutions!

My Notes

Part II 

Chapter 5

Sony first blockbuster Product Transistor Radio came out because of AT&T 

Sherman Act in 1890s

Law is consistent with economic activities

Economics offers Terra Firma for the decisions regarding economic activities.

Chapter 6:

Michael Levin? Luvine?

Airline regulation was started sponsored cartelization!

Alfred Kahn: Deregulation

Margaret Thatcher: privatisation, British Telecom scared public of electrocution

It's easy to forget that markets are human creations because humans have created so many markets!

Jean Tirole: Keep the investment sufficiently high and lease prices low.

Chapter 7:

John F Kennedy appointed Robert McNamara as Secretary of Defence, Assistant Defence Secretary: Charles J Hitch as Economist

Hitch started the trend of Cost Benefit Analysis in Government through his book:  Budgeting of Defence in Nuclear Era... Led to cost benefit analysis of Defence forces. Russia made 10,000 copies of his book to train & help the Russian military!

Value of Life ... Insurance business started as betting on others' lives in Britain. ....

Chapter 8

Global trade, $ replaced gold as the international currency ... thanks to Brettenwood Agreement soon after WWII

Global Trade now @ irreversible 60% × 25% in 60s?

By 1969, West Germany alone could statue claim to all the gold in Fort Knox! ... and then came ... the floating exchange rate!

Camp David Meet to float $!

George Schultz: rare underrated Economist because of his better understanding of politics & economics. Henry Kissinger could appreciate his capability & competence to run the country! His memorable idea: Let economy have freedom to run on its own.

International Money Market!

Chapter 9

Though largely about Chile & Chicago Boys

Taiwan growth model: redistribution of land 37.5% rent, thrust on tactical exports

Yin insisted on planting new companies in open international markets after identifying the strategic benefits. The next leader also an electrical engineer by training identified for in economic theory in US on Economic  competitive /comparative theory: the was no place for new enterprises (in my view, that's a byword fair innovation)! Evenground playing field & innovation are the keys for prosperity!

Chapter 10

Paper Fish: There are idiots; Look around!

The Knights In the Castle in the Wharfs! ... Bubble Trouble!

Alan Greenspan's ascent through New York? University Economics, Ayn Rand, Consulting company, PhD based on his articles, 2 Bakers! 1987 Chair Federal Reserve... RRR August 2005 questioned aboutv risk mitigation of the financial 'innovations', and invited ad hominem attack from Larry Summers for being a Luddite!

Icelanders dramatic rise and fall within a decade! Paper Fish!

The Foundation of Prosperous Humanity

https://www.harpercollins.com/products/the-prosperity-paradox-clayton-m-christensenefosa-ojomokaren-dillon?variant=32207525511202

Prosperity Paradox, in my view, is a culmination of Clayton Christensen's life long journey with his breakthrough innovative ideas on 'Disruptive Innovations' Theories'. Whereas, he showed the whole world how Disruptive Innovations, disrupt the existing markets from the bottom; he also showed how Jobs to be Done Theory opens new markets for all the players in almost every market!

Until the last days of his life, in the last 3 decades, Clayton Christensen has touched every market with his Disruptive Innovations' Theories. 

Clayton Christensen, along with his co-authors, laid the foundation of new way of looking at the world through the glasses of Market Creation Innovations delivering prosperity to the humanity. But the Market Creation task is quite arduous! The book offers the basic structure to envisage & build markets by leveraging technologies through innovations. Since the scope of the book is extensive, deeper analysis & pinpointing of specific issues are missing but serves well in its purpose of envisioning humanity driven by the dream of building prosperous future for the whole humanity.

I get a sense that Clayton Christensen had started putting the foundation for a General Theory of Market Creation. And this was the first book in that direction.

Seminal Work Unifying the Social Sciences

The Narrow Corridor by Daron Acemoglu James Robinson is a definitive seminal work, which brings all the 'social sciences',- Politics, Economics, Governance, Anthropology, ... together to get a sense of the State of almost all the Nations of the day. They try to capture this sense in a model defined through the Axes of Power of States & Societies.

They have collected and distilled comprehensive & exhaustive information on all the nations.  Then, they have analysed the information through the lenses  of all the social sciences, while maintaining the 'textbook' boundaries of those social sciences. The authors have leveraged their power of captivatingly interesting narrative skills with scholarly incisive skills come out with an interesting model by measuring the governance, politics, economics and anthropology (with distinct thrust on history).

Their hypothesis of dynamic interaction between Rule of Law and Social Norms & Mores leads to the optimum space called Narrow Corridor. They also share many more interesting phenomena including Red Queen inspired by Lewis Carroll's Through the Looking-Glass, Paper Leviathans inspired by Paper Tigers,... They end up with lively painting on the global canvas. This book serves as the foundation for further study to arrive at a Unified Theory to help humanity to build more prosperous & happier nations.

Orangutan in Tuxedo & Paper Leviathan ...!

Daron Acemoglu & James Robinson have done extensive & exhaustive study of almost all the nations of the world. Their insightful & incisive study covers anthropological, societal, political and Economical aspects of these nations to come out with very interesting discoveries!

The study covers American, African & Asian continents and Russia with the exception of Japan, Korea and Canada. They come with the interesting descriptions about the state of the nations: Orangutan in Tuxedo and Paper Leviathan! The whole picture of different state of the nations, including India clearly shows that they are torn between the respective Cages of Norms and Weakened and Misdirected and almost lost Leviathans! In my view, it looks very natural, being in India! The Leviathan of Law of the States, the authors propose seems natural for the authors, is very obvious because they have experienced it through a couple of centuries! 

But most of the nations covered in the study have the natives still stuck in their respective Cages of Norms for millennia. Though these natives were subjected to largely European colonials' Leviathans of the Laws very extensively in patchy manner, wherever they could be overlapped. This point is clearly perceptible in terms of education level of the natives and the reach of the institutions of Laws of the States in these respective nations. 

In a rare incidence of Costerica's progress into the Narrow Corridor. In such cases, the highly evolved State & Society can broaden the corridor depending on the dynamic interactions of their respective competence, capabilities and common goals & objectives. The study by the authors suggests that Costerica also has progressed into egalitarian and equitable Economy. As per the study it's attributed to Costerica's founding leader's approach in providing the public land to most of the citizens and keeping smaller military paraphernalia. 

In fact, when we take a look at various kingdoms in India prior to our independence, those kingdoms had reached different points both within the Narrow Corridor and without.

In fact, the current Covid Crisis is throwing an interesting picture about various nations. Most of the nations haven't risen up to the challenge except for a few countries like Germany, South Korea and interestingly China (For which, one may attribute the success (real or fabricated) to highly controlled & censored communication with the external world.). In a way, the current crisis gives a stark image of different nations with the requisite contrast to differentiate between the failed States! In my view, it also throws the light on WHO mainly, and other global institutions, in their preparedness and effectiveness.

Evolution of the States & Economies

Source: https://www.penguinrandomhouse.com/books/555400/the-narrow-corridor-by-daron-acemoglu-and-james-a-robinson/

On my own quest to understand the evolution of humanity, I have been looking for the literature which can throw light on evolution of politics and economies. Though I have come across many books which provide history of different countries, continents, states ... over centuries and millennia, none of them could provide comprehensive perspective. 

Then, recently I came across The Narrow Corridor authored by Daron Acemoglu & James Robinson. I wasn't sure about the book providing the insights into evolution of the States & Economies. The book takes off with the conflicts in Middle East and Africa. In the beginning of the him itself, the authors propose the idea of The Narrow Corridor where the societies evolve from Cage of Norms to Leviathans of Despotic Overlords, Kings or Emperors, who get Shackled by either the Societal Norms or Laws to enter into peaceful reign to deliver Economic progress.

The book takes us through different nations at different times to show how exactly some nations have entered into the Narrow Corridor and are reaping the benefits of highly developed Economies over the centuries. The study by authors is unique in the sense that they bring anthropological perspective to delineate the evolution of societies and consequently the respective Economies. 

If their findings about the mechanics and dynamics of the evolution of societies and Economies is correct, then we have access to the right tools and solutions to help the nations and their respective Economies to succeed. Though it is almost impossible to implement the right tools and solutions to deliver the right results for the nations; at least, we have the right toolchest handy. 

The Quest Continues Beyond Range!

https://davidepstein.com/the-range/

Recently, I went through David Epstein's Range: Why Generalists Triumph .... He takes us through the excitingly meandering course to conclude with a very illustrative graphic image of the quest for the ultimate truth and the most optimum solutions for the betterment of the ecosystem around. Every super specialist takes a deep dive into his superduper speciality 'trench' and thus loses sight of the other trenches. In addition, largely, the ecosystem around us also appreciates & encourages this kind of trench digging and dwelling! It takes the exceptionally intelligent to persevere through the ecosystem to seek the ultimate truth and solutions. 

When we take deeply penetrating look at human evolution, especially through Renaissance, Enlightenment, Scientific Revolution, Industrial Revolution ... all the way to today and beyond, we notice that such deep dives into the trenches actually lead the seekers to the adjoining trenches once they reach certain depths.

For the large masses, who constitute the majority, it is natural that they seek specialization to serve their immediate needs. The institutions, systems and processes around us cater to such needs of the majority. Then, there are also enough constraints on the ecosystem to optimize its resources.

The exceptional seekers persevere through the ecosystem around them and still deliver the innovations which benefit the humanity for generations to come, exponentially! Shakespeare, Leonardo da Vinci, Michael Angelo, Isaac Newton, Albert Einstein, Mahatma Gandhi, ... represent such rare individuals.

So the challenge is in identifying such rare personalities and nurture them.

Enabling Environment for Eternally Enhancing Enlightenment!

Source: https://books.google.com/ngrams/...

Humanity has evolved over millennia on its own unequally and naturally. Until Renaissance, Enlightenment and Scientific Revolution people all over the world were pretty helpless and clueless to address the natural calamities, more so when the diseases stuck. Since then, we have made great strides till date on health side. Formation of UN, WHO ... held us in good stead. Especially, UN has been highly successful in ensuring reduction of avoidable conflicts. WHO also has done commendable job till date, though it could have done better, more proactively and comprehensively, in the present crisis.

The present crisis throws far more challenges than the institutions can handle. But that also has thrown far greater challenges to necessitate the initiation of new institutions. 

Far greater threat has been 'benightment', which in my view, is diametrically opposite to Enlightenment! Even after centuries, the Enlightenment hasn't been the core foundation of everybody's thought process, though we all enjoy the fruits of it, especially the more downtrodden have been impacted the most. That said, many of the topmost beneficiaries, of the Enlightenment through out the centuries, are vociferous and highly effective preachers & practitioners of the most malignant benightment! 

There is a serious need of building the institutions to ensure the Enhancement of Enlightenment amongst the masses all over the world. The far greater objective of such institutions is to eradicate benightment completely! This may sound too ambitious and idealistic. The ground realities are way too clear that the time has come to have such institutions, and those institutions should start delivering the results from the word go!

I have shared the above graph to show that  even after centuries, we don't have a word which is diametrically opposed to Enlightenment. In addition, 'benighted' word itself has lost its way! Though benighted was used more before and after the emergence of the Enlightenment, the usage has gone down drastically. This could be because the Enlightenment really addressed benightment effectively, at least in the early days. But benightment wasn't eradicated completely! ... And benightment has reared its evil head ferociously, viciously and virulently! 

The benightment needs to be recognized as The Disease of the day and should be eradicated altogether and banished from humanity; thus paving the way for the enabling environment for Enhancement of Enlightenment, Eternally!

The Most Definitive & Relevant Book on the Pandemic!

I finished listening to The Great Influenza by John M. Barry, narrated by Scott Brick on my Audible app.

https://www.audible.in/pd/B079VKD2NB?source_code=APITMANDROIDAPP0824160004

The most definitive book on 1918 Influenza, which the author, John M Barry started writing in 1997 to sensitize the nations about impending gloom which almost everybody in the know were aware. But 1997 H5N1 outbreak happened and the author and every virologist, epidemiologist, ... knew that it can happen anytime. The book was published in 2004, but whatever concerns he had raised about our,- including all the institutions in the world,- preparedness he had expected in 2004, ... it is certain, we are not yet there, even now! Very sad!

The following are the most critical aspects of RNA Virus pandemic.

Swarm: When the RNA Virus attacks a single cell, it replicates and erupts out with 1,000s of Quasi-Species RNA viruses, due to mutations, to attack the next cell. It all happens just within a single body from one cell to another probably in few seconds to minutes.

Passage: Due to the above, the virus may get more and more virulent and violent, exponentially, after passing through a few patients!

So when such a pandemic erupts, not only doctors are grappling with tremendous known unknowns and many more times unknown unknowns too.

Since this issue is so scary even for the virologists, epidemiologists, ... whole community of health professionals ... and can't be solved with the present collective intellect, knowledge, wisdom, technology ... of entire humanity

It can't be expressed. It becomes more difficult when people without any knowledge start offering HCQ or something else as the most potent weapon against the virus and some others gun for Antivaccine lobby!

But still, transparency coming out of courage of conviction is very much needed out of leadership to address the issue.

Our world leaders from different domains have to focus on their respective domains and come out with the solutions to address their own fields and simultaneously they need to engage the other leaders to address their own fields in the most synergistic manner. This need to be done out of utmost sincerity, integrity, honesty and altruism.

How Anarchy Crushes the Order!

While the fools, idiots, stupid start dominating. They start indulging in persecuting & repressing the hapless, the poor and the wise. That starts creating the systemic anarchy, because whatever advancement has been achieved till date, is based on very nuanced & fine balance built in the system both within & without over long period of time painstakingly.

In summary, whatever progress, peace, prosperity which are built are on the basis of very fine & fragile systemic arrangement over a period through the wise & visionary leaders through systems & processes.

But systemic anarchy, viruses, natural forces, ... are so dominant & rapid they crush the development, advancement and progress of centuries within days and even within minutes. And the powerful idiots create conducive environment for Anarchy to set in,  unwittingly in their greed to grab wealth & absolute power.  In my humble view, this mechanism of nature was weakly & vaguely captured in Theory of Anarchy. While Chaos Theory tries to explain the causes, connections & correlations leading to anarchy.

All the great civilizations which were painstakingly built over a period of centuries were demolished almost overnight due to the single blow of Anarchy, our own Mohenjodaro Harappa civilization is no exception to the rule. Though our limited collective knowledge & wisdom hasn't figured out how till date.

When we hand over power to the stupid idiots just because we like them and think they safeguard us, we need not be afraid of God but let's be afraid of the looming Anarchy. The choice lies with us.

The Acme of Excellence of Medical Institutions

https://www.ndtv.com/india-news/coronavirus-outbreak-world-health-organisation-executive-director-michael-j-ryan-india-has-tremendou-2199553

India is a very populous country and the future of this virus will be considered in a very highly and densely populated country. India led the world in eradicating two pandemics, small-pox and polio so India has a tremendous capacity

That's the strength of institutions built and strengthened by the founding fathers of the nation. That was done inspite of the resistance by the self-serving power hungry orthodox.

The greatest strength of our medical community & the institutions heading them is highest level of integrity, professionalism, and above all no self promotion or bragging. In fact, they actively support promotion by others including celebrities & politicians. If that helps to achieve the larger good faster & better. The polio vaccination has largely become the preserve of politician & film celebrities.

In 2018 May, there was Nipah epidemic, with above 50% fatality rate (Corona Fatality is >1%), breakout in Kerala. It was contained by 10 June 2018! And there wasn't any bragging or self promotion even till date! ... 

In Art of War by Sun Tzu it is said: see victory only when it is within the ken of the common herd is not the acme of excellence. [7]

Neither is it the acme of excellence if you fight and conquer and the whole Empire says, "Well done!" [8]

To lift an autumn hair is no sign of great strength; [9] to see the sun and moon is no sign of sharp sight; to hear the noise of thunder is no sign of a quick ear. [10]

What the ancients called a clever fighter is one who not only wins, but excels in winning with ease. [11]

Hence his victories bring him neither reputation for wisdom nor credit for courage. [12]

He wins his battles by making no mistakes. [13] Making no mistakes is what establishes the certainty of victory, for it means conquering an enemy that is already defeated.

Hence the skillful fighter puts himself into a position which makes defeat impossible, and does not miss the moment for defeating the enemy. [14]

The consummate leader cultivates the moral law, and strictly adheres to method and discipline; thus it is in his power to control success.

Source: https://www.infoplease.com/primary-sources/philosophy-religion/art-of-war/sun-tzu-art-warby-sun-tzu-6#fnt7

The institutions built & strengthened by founding fathers of our nation are on the journey to attain the acme of excellence!*

We can be assured of our perpetual success & continuous advancement if we ensure strengthening of all these institutions, going forward, especially the institutions of economics, business, governance ... & politics!

A Breakthrough Concept. Disruptive!

Clayton Christensen dedicated his life to Disruptive Innovation and helped countless organizations to solve Innovators' Dilemma. 

Job Theory proposed by him is culmination of at least 2 decades of his relentless work on disruptive innovation. The seeds of Job Theory were quite evident in Innovator's Dilemma through his insights on why the milkshakes were hired. He had to put in the two decades to propose Job Theory framework and its success with many organisations who sought consultancy at his firm InnoSight.  Job Theory helps focus on the customers' needs rather than correlation of available data hence the success of disruptive innovations doesn't depend on luck.

Job Theory takes the firms to the next level of abstraction and finds parallels in Ted Levitt's Marketing Myopia, which companies still continue to suffer. In my opinion, present business management practices suffer from too many inadequacies to gain from Job Theory because the execution based on Job Theory is going to be extremely challenging. But the startups are going to gain tremendously by winning the competition against luck!

Edgy, Entertaining Yet Elevating & Educating

I finished listening to and shared the following review on Extreme Economies by Richard Davies, narrated by James MacCallum on my Audible app.
 https://www.audible.in/pd/1473570387?source_code=APITMANDROIDAPP0824160004

There is a need for a comprehensive study of the Economies at the edge. From that perspective the title is quite inviting. In addition, I was in for a pleasant surprise. The author, Richard Davies does a wonderful job of picking up very interesting facts & insights and narrating them in interesting & engaging way. In my view, the author matches and surpasses Malcolm Gladwell's catchy style.

He chooses three frontiers: Survival, Failure & Future. Then narrates 3 Economies from each of them.

On Survival: Resurgence of Aceh after 2004 Tsunami, once in 500 years occurrence, serves as an excellent example. Resilience, entrepreneurship of people coupled with clear-cut departure from past and international help provided springboard for the take off of the economy while addressing the structural issues. Whereas, natural entrepreneurial zeal & energy of the people propelled the economy to boom; a township, built with his intention, glaringly stays as a failure! Zaatari refugee camp in Jordan which is emerging as permanent settlement offers an example of entrepreneurial spirit of the people, even in stateless state, shapes and scales up thriving Economy comparable to startup cultures all over the world! The author narrates the contrasting situation at Azraq camp too! Louisiana Penitentiary, the infamous 'Angola' thrives on informal Economy. The informal currency of the economy keeps on changing leveraging the circumstances and now the leading edge technology itself. Though the situation in Angola is hopeless, to say the least, the past inmates provide hope!

On Failure: Darien Gap continues to have great potential since Medieval ages due to natural resources and proximity to US, but fails badly because of the apathy of the people and lack of direction from the leadership. Kinshasa, erstwhile Leopoldville, is bestowed with the greatest riches of the nature in terms of minerals & forests. It's a sad picture of how a well endowed geography gets plundered & pillaged by the outsiders and then insiders to remain as the most expensive poorest city! Glasgow, though party of the successful, developed economy, turns out to be the ghost city for not seizing the emerging opportunities. The underlying causes for the drastic failure of economies with great potential are the extremely short term exploitation of the natural riches, lack of long term vision, self aggrandizement of the leaders at the cost of the whole economy and its future!

On Future: Akita in Japan provides the peep into the future of the world where the majority of the population is aged with bleak future ahead. Tallinn of Estonia provides reassuring & refreshing break from the other economies! Thanks to the leadership of the economy in the hands of the professionals & intellectuals,- with no political background and no ambition for power - the economy has embraced the emerging technologies in governance to propel the economy faster into prosperity surpassing the earlier-affluent neighbours. The study of Santiago exemplifies the increasing inequality in the face of rapidly expanding economy.

All these economies challenge the collective wisdom and push the envelopes of present day Economics!