Freakonomics: A Review

After a really really long time, I have tried my hands on yet another book review. Though I was slightly late in embarking upon this classic, now is not the bad time because the sequel: Super Freakonomics' is topping the charts at book stores.

Steven Levitt (a famous economist and a Harvard graduate) and Stephen Dubner (a New York journalist) have produced an impeccable work in Freakonomics. Using statistical data to reveal grotesque connections and heterodox behaviors is the basic concept behind the book by and large. Having said that, it is important to note that the book does not have any unifying theme. The authors have chosen to call this approach a treasure-hunt approach to the art of explaining the oblivious.

Is there an incentive for real estate agents to sell their own homes for more than they sell their clients' homes? How would parents react if child care centers started charging fees when they pick up their children after closing time after it had been previously free? Who is most likely to cheat when bagels are paid for on an honor system? Why do drug-dealers tend to live with their moms? What is common between school teachers and Sumo wrestlers? How did the police break into the Ku-Klux clan in 'reality'?Answers to all of these and much more is what is contained in the book. Those answers are simple but surprising. Behavioral economics is the name of the genre that includes this type of number based behavioral reasoning.

Though the book proclaims no unifying theme, to me personally, the unifying theme behind the book is obviously to make the reader find ways to asking questions. The revised edition of the book contains additional texts which are excerpts from the Freakonomics blog and columns. What I got out of the book is a new dimension to my thinking - an economic way of thinking. The Abhorring conventional wisdom was clearly an intention of the authors. Causes of problems that seem obvious usually, might not be the real causes more often than not. Hence, questioning everything is the right starting point to decode any conundrum.

Malcolm Gladwell's thoughts are very very closely aligned to the thought process behind this book. Super Freakonomics is slightly different from the prelude. The authors have taken a counter-intuitive approach to peep into the future.

Verdict: An excellent read. Should be read at one go. Will most likely entice the reader to buy the sequel and in some cases entice the reader to buy all of Malcolm Gladwell's in wholesale. (Last point was true in my case)

Happy Reading!!

Chasing the Capitalist

"I do not know of any book that describes the impact of India's economic policies on her growth as analytically, logically and vividly as this one" - N.R.Narayana Murthy on "India Unbound" by Gurcharan Das.

The socioeconomic transformation of our nation has been well documented in this novel by the much acclaimed writer and public intellectual. If one is looking for a perfect introduction to contemporary India, it is here. Something tremendous has been happening in our country right since the dawn of 15th August 1947. India had to go through various phases in this epoch that started after the spring of hope in 1947. There was the lost generation in the era of 60s and 70s which went through Caste based demarcations, licensing blues and a surge in inequality. And then came the rebirth of dreams in the form of the "Golden Summer of 1991" and then we had a new country. We are what we are today, solely because of all the things that happened in the summer of 1991. Financial reforms came out in unbelievable speed and efficiency and the country was starting to enter the limelight.

In 1947 we were a free lot and there was a lot of enthusiasm and energy in the air. Nehru stood at the fore and showed signs of able leadership. Everything in the country started to happen in an organized fashion. Bureaucracy was the order of the day. The License Raj was at the helm. Entrepreneurs were a titular lot. This was the era of socialism. And soon, economists started realizing the negative implications of Nehru's ideologies. Things became worse when Indira Gandhi decided to build upon what her father had laid. The war in 1971 and the emergency that followed didn't help things anyway.

Our nation, which once was prey to dogmatic colonists in search of riches and treasures was becoming a poor nation after all. Harvard graduates were coming of age and the Indian top brass needed a good overhaul, when Prime Minister P.V.Narasimha Rao gave powers to two such graduates Dr. Manmohan Singh and P.Chidambaram. And then, the rest is history. The economy began to grow leaps and bounds year after year after 1991. This was when the country went through a phase called liberalization. I would prefer to call this phase-"the quest of Capitalism". The west had proved a point which their capitalist methodologies and The tigers of Asia viz. Hongkong, Singapore, Japan et al. had followed suit by now.

The country allowed investment and gave powers to budding entrepreneurs. The bourgeoisie became a buzzword and reforms were underway to get its size soaring year on year. This growth was fueled by a variety of foreign investments mainly due to the abundance of highly skilled software professionals in the country and the open society that was on offer due to liberal tax regimes.

The book touches each of these eras and paints a clear picture of the Indian economy's trajectory over the past 60 years. Our economy has been one that should be placed right at the center of an imaginary line drawn between socialism and capitalism. The learned top brass that we have as our representatives today have carefully sketched the coordinates of the point on that imaginary line. Arguably, that has been the main reason for India's nonchalance and tactical brilliance in having avoided the traumatic consequences of the recent global slowdown.

Verdict: This book offers layman friendly discussions of economic theories of poverty and serves as a key guide to the country's recent past.

How about this one to beat the recession?

I was stumbling upon the internet on a lazy Saturday morning and i noticed this thing about a campaign in USA called the "Recession 101".

It was a little common sense on the Billboard. Those were a few i liked.

Winners in the Downturn

Recession has quite visibly taken almost everyone for a ride. From the stock market investor to the well-paid CEO to the lower middle class retail chain customers, everybody has tasted the bitterness of this downturn. Nonetheless it has been compared with the Great Depression of 1929. What is intriguing in this downturn is that there are many isolated winners amidst this chaos. Firstly, In any economic downturn, in every sector of the economy there will be businesses that fail. There will be businesses which struggle through and survive, and there will be businesses which grasp the upside of the downturn and emerge as winners. It is not a surprise that new age indian entrepreneurs saw an opportunity in this recession.

Bharti Airtel makes a good example to showcase how recession can be turned as an opportunity. A recent article in Business Today pointed out many reasons that made Airtel a run away winner in this downturn. But i strongly felt that only one of those many indicators was very critical in bringing profits to the Q3 and Q4 balance sheets. Airtel started the initiative to extend it's market share in the rural areas (commonly known as 'bharat'). Airtel did not resort to lower rates to attract customers. The focus was just to extend the market into the rural areas. The prime reason behind such an initiative, in my opinion, is that The buzzword (recession) was least heard in the rural areas. A strong belief about recession is that It´s all in your MIND! And we actually FUEL this recession much more than it warrants. And the rural market consisted of people who actually did not contribute to the "fuelling" process.

Challenging times are the true test of great leadership. Now is the time for owner managers to show the vision, determination, resilience and courage of the great leader. A lot has been talked about what caused this recession which is turning to prove a number of economic theories wrong. For instance, recession in economic terms is defined as a period of dull growth and plummeting GDPs for a period of 6-18 months. We are already crossing the upper threshold of 18 months. Federal agencies and governments are making almost vain efforts by introducing stimulus packages. But these are certainly not the solutions to the problem. These are just steps to reduce the impact on common man. The solution certainly should come from the consumer, from the common man. To be a winner in the downturn one has to be in control, be confident, be distinctive, be strong, be wise and be ready. If the consumer tries to be all those that i listed, We are definitely moving towards a strong bounce back.

Election Corner

India during election times is like no other place in the world.The whole look of a city changes. Banners are hung across every street. Posters are hung on every inch of space. Loudspeakers blare campaign slogans constantly. Every party holds huge rallies for their supporters and often distributes food or blankets to everyone who attends. Things have improved a lot in the last 10 years. The key to the change has been awareness. Everybody is very interested in the news, and they discuss political issues (and movie stars) constantly. When people are illiterate, often one person who can read will read the newspaper out loud to a group and then they discuss the issues. Every newspaper, even in rural areas, contains a lot of news about the rest of the world, not just local news. The most important factor that helps awareness, of course, is the television. In our state, Tamil Nadu, for example, the government ordered that every village must have at least one television. People in these rural villages can watch programs in their own regional languages. Political parties know how important television is, and most have created their own cable TV stations. All said and done, most difficult aspect of democracy in India is the caste system. The caste system is a ranking of traditional, hereditary levels in society that have determined a person’s occupation and role in Hindu society for thousands of years. Caste system has reined the vote bank these days.

For the first time I have decided to come forward and cast my vote in this year's general elections. It is high time we realized how caste based votes and winners who emerge out of it are changing the way democracy is viewed in the Indian perspective. We were one of the earliest democracies. Today we are among the largest democracies. But corruption and the titular politicians of today are leading us in a wrong direction. One important step from the voter's side is to change the way these politicians get elected. People who understand the depth of corruption and the dirty political hand which rules this country are those who dont take the pains to go and exercise their fundamental right to vote. If a mass from this class of people come down to vote we can be sure of changin the way we decide our leaders. A more discernible way of voting will definitely change things.

Come forward to vote Young Man!!!!!!!