Without friends and family around, NY Eve is just another evening at home.
It would be depressing if I was in Mumbai and sitting at home, even in Baltimore or in the Bay area, maybe. But in LA it aint even depressing.
Sunday, December 31, 2006
In defense of capitalism
A zinger of a last para in an article from 'The Economist'.
"To find the market system wanting because it does not bring joy as well as growth is to place too heavy a burden on it. Capitalism can make you well off. And it also leaves you free to be as unhappy as you choose. To ask any more of it would be asking too much. "
"To find the market system wanting because it does not bring joy as well as growth is to place too heavy a burden on it. Capitalism can make you well off. And it also leaves you free to be as unhappy as you choose. To ask any more of it would be asking too much. "
Friday, December 29, 2006
Why is a man paid well?
This has been a question that has made many a man go sleepless.
Why does Mr. Jones or Mr. Chen or Mr. Patel next door make more money than I do? Why does that guy, in my jnr. college, whom we all used to think of as the dumbest ass that walked the corridors make more money than I do? I was smarter than him. I should be making more money and having an easier and more comfortable life. But thats not the case!
All he does is spends time counting money...money made without personal effort or any considerable intelligence.
What exactly makes some men more money than others?
Money is a fickle lover. Entices some who had never much thought of it and yet makes its lovers and worshippers pine away for years.
Being more analytical minded (and a consulting type) I had to plot it on a graph...hopefully without the z axis, which would have been more realistic.
So, taking the principle of parsimon(e)y into consideration, let's say money coming to a man (or woman) is directly related to the risk the person is taking and the value he/she is adding.
Sure, in consultant speak, the word value is thrown around more often than anything else.
What does value mean?
In my mind I think I'm clear about the concept and let me put it through to you.
Value is the difference ONE sip of water makes to a parched person compared to the difference it makes to someone who has just had a few pints of the colourless, wet stuff.
Therein lies the essence of value, especially when you can do it for a hell of a lot of people.
What exactly is risk?
Risk is going outdoors in the rainy season without an umbrella in your finest clothes.
Sometimes you have access to a weather report or look at the sky and make a judgment call. Sometimes you don't. What you decide to do depends on your appetite for risk.
But the biggest adjustment here, is adjusting for luck. Lot of individualists don't believe in luck. I do. Why some oil rich sheiks are rich because of oil, something they dont really have a role to play in, can't be explained by risk or value. Why your neighbor won the $75 M lotto while you still live in a trailer home isn't explained by risk or value. It's just good ol darned luck and there ain't a darned sight you can do about that.
OK So let's try to look at the spread of values in the risk/value v/s return graph.
Let's walk through a few random examples of professions that are known to make more (or less) money and their risk value profiles.
1) Doctors- Heck I am one (or was one). Kinda natural that this be the first profile examined.
These guys put in donkey's years getting a degree. Especially, in this day and age you can get into med school wanting to be a cardiologist and come out become a gynecologist or a radiation oncologist or just a pill pushing primary care guy.
You might love the heart but might end up being a nut specialist (that makes you either a psychiatrist or a urologist- take your pick)
So there is a lot of risk, will you get the specialty you like, will you get a lucrative specalty? Will you get a specialty education at all? Or would you be left licking the leftovers at the bottom of the pecking order?
Doctors, make a big chunk of money, in any society because they do take risks...but even more so because they add value.
They actually go about the business of trying to understand the most complicated machine ever, the human body. And then they tinker with it when it is messed up and in ill health and restore your health and vigor.
That's value as value comes.
Ne'er is there been more joy than in robust health.
I believe it is this value, more than the risk, that makes many doctors the kind of returns that we see and hear about.
Even within this group, the ones who work with the riskiest areas, the heart and brain make more money.
Surgeons more than physicians is also based on a very similar risk as well as value proposition.
2) Finance professionals
Now these are the guys that make the big fat pay checks.
In this profession, risk (and risk analysis) is king. More the risk, more the return.
The riskiest of the lot- bond traders, commodity traders, derivatives chaps, leveraged buyout gangs are the guys that make the biggest bucks in this kettle.
They work a good 16 hr day, burn their soul taking risks constantly on trades and either make (or lose) a lot of money. A few others are number crunching machines with a lot of brain horse power. I have seen a few complex risk models and to be truthfully it made me feel woozy in the head looking at it...leave alone trying to make one of my own and make it work!
On the other hand, your friendly neighborhood equity analyst doesn't make as much money while the hedge fund guy does.
This is all risk play and the value is the returns they bring to their investors.
Take the example of the fund managers for the world's largest endowement fund. The Harvard alumni endowement fund. Some $20+ BILLION fund. Most folks, with that kind of money, can make it grow fairly well.
But the Aetna gang seems to make it grow really well and make double digit million packages (or so we heard) as compensation. Lot of people are not very happy. How can managers of a non profit fund make so much money. But the simple fact remains that even after their big fat pay checks, the managers still make better returns for the fund compared to other investors.
Go figure.
3) Businessmen
Whether you sell marriage type ghagra cholis at Manish market or duty free imported smuggled maal at Heera Panna or have a confectioners business or are a high end chip manufacturer, chances are that you make way more money than the avg salaried Joe-Shmoe.
Businessmen take risk-risk of failure of the enterprise, risk of slow downs, risk of increased costs or competition, risk of supply chain issues, risk of labor issues, risk of regulatory and licensing issues, risk of a few hundred thousand different issues that come with handling a P&L.
Businessmen also add value.
They bring products to customers and competition to the market place, which are both lofty achievements in a capitalist set up.
They bring bread to our table, newspaper to our loos, chips with salsa and chips in our computers. They create every single thing we use all through the day, all through our life. From the humblest match box to the mightiest gadgets are made by these risk taking entrepreneurs and old businesses.
4) Government office babu
This 35 hour working, 90 mins lunch break taking, life long one job guy is for me the ultimate symbol of the risk averse man. A fair bit of these guys have no significant expectations from life, save two square meals a day for self and family. Sure, they would love more, and therein lies the reason for the unchecked corruption in the sclerotic babudom but when return for risk and effort is considered, your friendly neighborhood babu wants it as low risk as it comes.
Even better when the Govt provides subsidized housing, an office car with a flashing red light on the top, so their family can use it like a family car, a few more freebies maybe and a foreign junket thrown in, squares it up nicely.
Add to this the fact that the job and its accompanying perks near lifelong.
In short you have a situation of fairly low risk low value high returns. No wonder then that the Civil services are so widely sought after.
5) Joe-Shmoe pen pusher
When this is a 'not so empowered' person...I think it's just life. But when I see an empowered person mired in a 'going nowhere' slow job it rouses the worst of my emotions. Especially when the person is doing the job out of his own free will.
Sure sure I respect the individual freedom that our system bestows upon us to make choices but what I end up not respecting is the choice the person made.
The choice (and its attendant drivers) go against my core values of ambition, individualism, achievement and contribution.
For all the BS people will peddle to you about work life balance and 'there are lot of good people out there'...here's the secret lt out of the bag. There arent enough good people to go around. Good people who would make a significant difference.
They say "With great power comes great responsibility".
If you are smart and have the requisite tools and you decide to cool your heels because you like the slow life...I tend to see it as an abdication of responsibility.
This is the low risk low value low return scenario.
It is a sad story of our society that many people wallow in this category for want of effort or that of ambition.
At the end of the day a lot is unsaid and undiscussed.
A matter for a book maybe.
Why does one person become a Steve Jobs? and another person doesnt?
Why does one bright idea become Google but another idea doesnt?
How are some people able to monetize those ideas and some people cant get a penny for their thoughts?
Why does Mr. Jones or Mr. Chen or Mr. Patel next door make more money than I do? Why does that guy, in my jnr. college, whom we all used to think of as the dumbest ass that walked the corridors make more money than I do? I was smarter than him. I should be making more money and having an easier and more comfortable life. But thats not the case!
All he does is spends time counting money...money made without personal effort or any considerable intelligence.
What exactly makes some men more money than others?
Money is a fickle lover. Entices some who had never much thought of it and yet makes its lovers and worshippers pine away for years.
Being more analytical minded (and a consulting type) I had to plot it on a graph...hopefully without the z axis, which would have been more realistic.
So, taking the principle of parsimon(e)y into consideration, let's say money coming to a man (or woman) is directly related to the risk the person is taking and the value he/she is adding.
Sure, in consultant speak, the word value is thrown around more often than anything else.
What does value mean?
In my mind I think I'm clear about the concept and let me put it through to you.
Value is the difference ONE sip of water makes to a parched person compared to the difference it makes to someone who has just had a few pints of the colourless, wet stuff.
Therein lies the essence of value, especially when you can do it for a hell of a lot of people.
What exactly is risk?
Risk is going outdoors in the rainy season without an umbrella in your finest clothes.
Sometimes you have access to a weather report or look at the sky and make a judgment call. Sometimes you don't. What you decide to do depends on your appetite for risk.
But the biggest adjustment here, is adjusting for luck. Lot of individualists don't believe in luck. I do. Why some oil rich sheiks are rich because of oil, something they dont really have a role to play in, can't be explained by risk or value. Why your neighbor won the $75 M lotto while you still live in a trailer home isn't explained by risk or value. It's just good ol darned luck and there ain't a darned sight you can do about that.
OK So let's try to look at the spread of values in the risk/value v/s return graph.
Let's walk through a few random examples of professions that are known to make more (or less) money and their risk value profiles.
1) Doctors- Heck I am one (or was one). Kinda natural that this be the first profile examined.
These guys put in donkey's years getting a degree. Especially, in this day and age you can get into med school wanting to be a cardiologist and come out become a gynecologist or a radiation oncologist or just a pill pushing primary care guy.
You might love the heart but might end up being a nut specialist (that makes you either a psychiatrist or a urologist- take your pick)
So there is a lot of risk, will you get the specialty you like, will you get a lucrative specalty? Will you get a specialty education at all? Or would you be left licking the leftovers at the bottom of the pecking order?
Doctors, make a big chunk of money, in any society because they do take risks...but even more so because they add value.
They actually go about the business of trying to understand the most complicated machine ever, the human body. And then they tinker with it when it is messed up and in ill health and restore your health and vigor.
That's value as value comes.
Ne'er is there been more joy than in robust health.
I believe it is this value, more than the risk, that makes many doctors the kind of returns that we see and hear about.
Even within this group, the ones who work with the riskiest areas, the heart and brain make more money.
Surgeons more than physicians is also based on a very similar risk as well as value proposition.
2) Finance professionals
Now these are the guys that make the big fat pay checks.
In this profession, risk (and risk analysis) is king. More the risk, more the return.
The riskiest of the lot- bond traders, commodity traders, derivatives chaps, leveraged buyout gangs are the guys that make the biggest bucks in this kettle.
They work a good 16 hr day, burn their soul taking risks constantly on trades and either make (or lose) a lot of money. A few others are number crunching machines with a lot of brain horse power. I have seen a few complex risk models and to be truthfully it made me feel woozy in the head looking at it...leave alone trying to make one of my own and make it work!
On the other hand, your friendly neighborhood equity analyst doesn't make as much money while the hedge fund guy does.
This is all risk play and the value is the returns they bring to their investors.
Take the example of the fund managers for the world's largest endowement fund. The Harvard alumni endowement fund. Some $20+ BILLION fund. Most folks, with that kind of money, can make it grow fairly well.
But the Aetna gang seems to make it grow really well and make double digit million packages (or so we heard) as compensation. Lot of people are not very happy. How can managers of a non profit fund make so much money. But the simple fact remains that even after their big fat pay checks, the managers still make better returns for the fund compared to other investors.
Go figure.
3) Businessmen
Whether you sell marriage type ghagra cholis at Manish market or duty free imported smuggled maal at Heera Panna or have a confectioners business or are a high end chip manufacturer, chances are that you make way more money than the avg salaried Joe-Shmoe.
Businessmen take risk-risk of failure of the enterprise, risk of slow downs, risk of increased costs or competition, risk of supply chain issues, risk of labor issues, risk of regulatory and licensing issues, risk of a few hundred thousand different issues that come with handling a P&L.
Businessmen also add value.
They bring products to customers and competition to the market place, which are both lofty achievements in a capitalist set up.
They bring bread to our table, newspaper to our loos, chips with salsa and chips in our computers. They create every single thing we use all through the day, all through our life. From the humblest match box to the mightiest gadgets are made by these risk taking entrepreneurs and old businesses.
4) Government office babu
This 35 hour working, 90 mins lunch break taking, life long one job guy is for me the ultimate symbol of the risk averse man. A fair bit of these guys have no significant expectations from life, save two square meals a day for self and family. Sure, they would love more, and therein lies the reason for the unchecked corruption in the sclerotic babudom but when return for risk and effort is considered, your friendly neighborhood babu wants it as low risk as it comes.
Even better when the Govt provides subsidized housing, an office car with a flashing red light on the top, so their family can use it like a family car, a few more freebies maybe and a foreign junket thrown in, squares it up nicely.
Add to this the fact that the job and its accompanying perks near lifelong.
In short you have a situation of fairly low risk low value high returns. No wonder then that the Civil services are so widely sought after.
5) Joe-Shmoe pen pusher
When this is a 'not so empowered' person...I think it's just life. But when I see an empowered person mired in a 'going nowhere' slow job it rouses the worst of my emotions. Especially when the person is doing the job out of his own free will.
Sure sure I respect the individual freedom that our system bestows upon us to make choices but what I end up not respecting is the choice the person made.
The choice (and its attendant drivers) go against my core values of ambition, individualism, achievement and contribution.
For all the BS people will peddle to you about work life balance and 'there are lot of good people out there'...here's the secret lt out of the bag. There arent enough good people to go around. Good people who would make a significant difference.
They say "With great power comes great responsibility".
If you are smart and have the requisite tools and you decide to cool your heels because you like the slow life...I tend to see it as an abdication of responsibility.
This is the low risk low value low return scenario.
It is a sad story of our society that many people wallow in this category for want of effort or that of ambition.
At the end of the day a lot is unsaid and undiscussed.
A matter for a book maybe.
Why does one person become a Steve Jobs? and another person doesnt?
Why does one bright idea become Google but another idea doesnt?
How are some people able to monetize those ideas and some people cant get a penny for their thoughts?
Monday, December 25, 2006
The Lexus and the Olive tree
In one line:
One of the best books I have ever read.
Tom Friedman is a genius at using simple examples from life to make a relevant point- even in the complex world of globalization.
I don't always like his habit of "I like to call this phenomenon....". It tags things in too simplistic a manner but he makes up for this by making a ton of very relevant points, which are insightful and instructive in one go.
Lexus and the Olive tree is a simple portrayal of the tug of war that many countries are now facing- culture vs scientific/economic progress. These two need not be, and are not, mutually exclusive but one does come at a significant cost to the other.
Socialism/communism vs capitalism may be likened to two trains.
The former has many people at the control...the direction governed by the intentions of its drivers/motormen. There is no scheduled destination though the hypothetical destination is some Paradise on Earth. There is no specified departure time nor an ETA. "Need to go" will get you a ticket on this train...and the "can pay"s would pay for those who "need to go but can't pay".
The train hardly ever gets to the destination. Hence the passengers are destined to go wherever the motorman pleases to go and hope to God he/they know what they are doing.
In this train there is no luxury or first class car or even a sleeper compartment. The only luxury car is the motorman's cabin.
Everything is "standing only" with no bells and whistle.
And a window seat doesnt count for much since the windows are bolted shut, lest the passenger see outside and figure they are going nowhere...or worse they see the capitalist train.
Capitalism, on the other hand, is a train with no motorman. There is no one in control. But it is a luxury train, mind you. It is run, in large measure by the whims and desires of its passengers. This again, has no specified destination. It's joy is in its journey. And it tries to go through the prettiest, nicest locations possible. But not all locations have tracks on which this train can run well (or in some places run at all).
This train doesn't come within miles of such places.
This train has tons of bay windows, luxury dining cars and parlors...but every joy has a price. There is a second class and even a third class for passengers who can't (or wont) pay the premium price. "Need to go" has to tango with cash (pun intended) to get you a ticket here.
From this train you can see the socialist/communist train, a relic of the past, gasping in the distance.
The appeal of the book also comes from the fact that it is not a rabid proponent of unchecked globalization and evil capitalism.
It talks more of a better, more desirable system- capitalism with a social and global conscience. Of keeping cultures alive. Of allowing uniqueness its right to survive. Of protecting our environment. Of helping neo-capitalists get onto the fast moving capitalist train. Of creating safety nets for those who take the risk and fall. Of empowering those left far behind...so they may be able to board this train as well.
This train will pass through an olive groove and all olive tree huggers, eventually, would have to board this train. How they do it and how they pay for the ticket is the million dollar question.
One of the best books I have ever read.
Tom Friedman is a genius at using simple examples from life to make a relevant point- even in the complex world of globalization.
I don't always like his habit of "I like to call this phenomenon....". It tags things in too simplistic a manner but he makes up for this by making a ton of very relevant points, which are insightful and instructive in one go.
Lexus and the Olive tree is a simple portrayal of the tug of war that many countries are now facing- culture vs scientific/economic progress. These two need not be, and are not, mutually exclusive but one does come at a significant cost to the other.
Socialism/communism vs capitalism may be likened to two trains.
The former has many people at the control...the direction governed by the intentions of its drivers/motormen. There is no scheduled destination though the hypothetical destination is some Paradise on Earth. There is no specified departure time nor an ETA. "Need to go" will get you a ticket on this train...and the "can pay"s would pay for those who "need to go but can't pay".
The train hardly ever gets to the destination. Hence the passengers are destined to go wherever the motorman pleases to go and hope to God he/they know what they are doing.
In this train there is no luxury or first class car or even a sleeper compartment. The only luxury car is the motorman's cabin.
Everything is "standing only" with no bells and whistle.
And a window seat doesnt count for much since the windows are bolted shut, lest the passenger see outside and figure they are going nowhere...or worse they see the capitalist train.
Capitalism, on the other hand, is a train with no motorman. There is no one in control. But it is a luxury train, mind you. It is run, in large measure by the whims and desires of its passengers. This again, has no specified destination. It's joy is in its journey. And it tries to go through the prettiest, nicest locations possible. But not all locations have tracks on which this train can run well (or in some places run at all).
This train doesn't come within miles of such places.
This train has tons of bay windows, luxury dining cars and parlors...but every joy has a price. There is a second class and even a third class for passengers who can't (or wont) pay the premium price. "Need to go" has to tango with cash (pun intended) to get you a ticket here.
From this train you can see the socialist/communist train, a relic of the past, gasping in the distance.
The appeal of the book also comes from the fact that it is not a rabid proponent of unchecked globalization and evil capitalism.
It talks more of a better, more desirable system- capitalism with a social and global conscience. Of keeping cultures alive. Of allowing uniqueness its right to survive. Of protecting our environment. Of helping neo-capitalists get onto the fast moving capitalist train. Of creating safety nets for those who take the risk and fall. Of empowering those left far behind...so they may be able to board this train as well.
This train will pass through an olive groove and all olive tree huggers, eventually, would have to board this train. How they do it and how they pay for the ticket is the million dollar question.
Sunday, December 24, 2006
The quarter that was- prelude
As per a fairly new start I do quarterly analyses of where my long term plan is headed. A long term plan that should, really, be updated, renewed, refreshed every year.
When I was out job hunting I had to dwell on the constant question : What is your long term plan?
I feel I have at least a blurry vision of that long term plan. If it works, I'd be a visionary. If not, I'd be the bright kid o the block that didn't quite deliver.
Before, I digress widely, the time is here in a few days when I do some introspecting on the quarter that was, assess developmental needs, set goals and prioritize for the quarter and year to come.
But I have a feeling this year is going to come off as a winner.
The last quarter has zoomed by in a blur of late nights in the office working and some weekends spent having some cool fun.
I never did this kind of analysis...the more laidback folks would think this is stretching a good thing a tad bit too much. But I have come to see someone's point of view. Life span is finite and the years of strength and vigor more so. These are the years that make us or break us. If we don't optimize their use it's as good (or bad) as a lifetime lost.
Sure, most folks do SOME informal analysis after a few pegs: What the f%$k am I doing with my life? Where is all this leading to?
But this is not half as good as doing it on paper...and possibly with a live person who can act as a sounding board.
When I was out job hunting I had to dwell on the constant question : What is your long term plan?
I feel I have at least a blurry vision of that long term plan. If it works, I'd be a visionary. If not, I'd be the bright kid o the block that didn't quite deliver.
Before, I digress widely, the time is here in a few days when I do some introspecting on the quarter that was, assess developmental needs, set goals and prioritize for the quarter and year to come.
But I have a feeling this year is going to come off as a winner.
The last quarter has zoomed by in a blur of late nights in the office working and some weekends spent having some cool fun.
I never did this kind of analysis...the more laidback folks would think this is stretching a good thing a tad bit too much. But I have come to see someone's point of view. Life span is finite and the years of strength and vigor more so. These are the years that make us or break us. If we don't optimize their use it's as good (or bad) as a lifetime lost.
Sure, most folks do SOME informal analysis after a few pegs: What the f%$k am I doing with my life? Where is all this leading to?
But this is not half as good as doing it on paper...and possibly with a live person who can act as a sounding board.
Sunday, December 17, 2006
Snow boarding
Started the transition from the sad, poor student to the joie de vivre kind...in very material terms-splurge and enjoy.
Yesterday, very atypical of me, I decided to go snow boarding, on the spur of the moment.
I like spur of the moment stuff, just havent done that so much lately. So kinda felt doing doing it, but it HURTS.
This was my first experience snow boarding...the first time I was in fairly heavy snowfall in Calif (i.e. I havnt been to Tahoe) and it was hella fun. Took quite a few falls, though I think I got a fair hang of starting up and of moving fast but braking was the problem.
Result- a bruised knee, torn tracks, and painfully stretched muscles...but all in all it was fun.
The drive to Mountain High was hella long, the 10 being really crowded on a weekend close to the holiday season. But it was like being back in college, a drive with desi music, stopping for hot chocolate, snow near LA (how sweet is that?).. I think I'm going to snowboard more...especially if and when I ever move to San Fran and go to Tahoe.
Also got to do a quick detour via Claremont, saw the old place that I have mixed feelings for. Met Senman and his family and his new house. He definitely looks happy there.
Got my carton and quite a bit of stuff from there.
So I'm stocked and ready for a long stay here. Sadly my TT racket wasnt in the carton :(
Wonder where I left the Excalibur.
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