Technologies That Will Change The Future Faster Than One Thinks

The premise of the whole book is that the dozen different technologies in the pipeline - are going to converge and revolutionize the world like never before. The author starts off with the example of how one technology “internet” alone changed the whole world. And then he goes on to imagine how much the world can change from these upcoming technologies.
This coming together of these technologies at the same time is what he calls “convergence”.

The technologies he mentions are as below accompanied by my understanding/take - 

• Digital Payments

• Along with depreciation of cash I include Blockchain as well in this category. Doing away with cash definitely has its own advantage in reducing corruption and having a trail. Benefits of digitization outweigh the cons in my view! But on top of that Blockchain technology adds its own advantages. 

• Having a decentralized ledger which is immutable in itself is a great step above.
  
  

• Artificial Intelligence

• The term has lost its significance because of how much it has been used loosely by companies and everyone. But it still doesn’t diminish its potential.

• For example - A smart-assistant which can take care of things for you keeping in mind your preferences and other things seems too good to be true but that is the long term goal. Yes, it can be eerie in some aspects but will be very handy.
  
  

• Drones/Robots

• Great use in terms of last-mile delivery and other aspects too like medical and rescue missions excluding military uses which is their own can of worms.
  
  

• Space Economy

• Now it is well obvious why it’s important for humans to be interplanetary species, the side benefits are very important as well. In the course of making space travel safer, cheaper and accessible - eventually we will master suborbital travel technology as well. This can reduce the current time to fly via planes from one part of the world to the other. I think this milestone will be crossed much earlier and will have far-reaching effects.

• And we haven’t mentioned electric vertical take-off and landing (eVTOL) vehicles yet! Flying taxis in layman terms.

• Imagine the impact on real estate when one can commute to work 100s of miles away in a matter of minutes and then back.
  
  

• CRISPR/Gene-editing

• Many diseases are caused by gene corruption aka genes are the source of it.

• Through this technology, the idea is to repair those genes once and for all and cure the disease. It can also ensure the disease stops being hereditary. The potential is much more than that - theoretically one can design babies by laying down their characteristics like height, IQ, eye color etc. Here it becomes a moral issue.

• Worth mentioning though that silencing a gene has effects which are not well-understood yet. For ex-  function of a gene is different in a liver v/s in other organs. But nonetheless, lots of companies are working on therapies and research happening on it.
  
  

• 5G

• This one is easy to explain. Faster internet helps in so many ways especially when we are going to have Internet of Things (IoT) i.e every device working with an internet. 

• Also, in certain areas which are in difficult terrain it is hard to lay down infrastructure for communication. There are ambitious projects to beam the internet down to those areas from the sky (space). With that everyone is now connected and can have access to information.
  
  

• Precision Medicine

• This field is about designing medicines and dosage specific to every individual. The same dosage isn’t ideal for everyone. With the advent of this field, we can have medicines designed specifically. Also, also have medicines which are so “smart” that they go in your body and work only on those areas/regions which they are supposed to.

• 3D printing

• "3D printing" can refer to a variety of processes in which material is deposited, joined or solidified under computer control to create a three-dimensional object, with material being added together (such as plastics, liquids or powder grains being fused together), typically layer by layer.

• It can be revolutionary as you can now customize any part and reduce the time to make any product. 

Overall, all the above technologies are quite revolutionary in themselves and with all converging at the same time they are going to have a profound impact. But if I were to rank the sectors most likely to change, they are - 

1. Transportation

2. Real-estate

3. Healthcare

4. Insurance

5. Shopping/Entertainment

The book in itself is a good primer and confirms the belief that the world is on a cusp of huge change. Imagining it is both exciting and a bit terrifying as how everything will shape up. But change has always been inevitable! 

20 lessons from the 20th Century

This thin book by Timothy Snyder is a pocket book version of things citizens should do to make sure democracy survives as world over democracy seems to be be under assault and ideas like free speech, liberty and equality are being chipped away gradually. I heard about the book on Trevor Noah's show and was quite impressed to later find out that the author can speak 11 languages!! No wonder he's an authority as he has a rare feat of having read most of the European literature in its original version. I was not able to relate to a few ideas but appreciated the list, the examples accompanying them and the insights he shared.

I liked how in the beginning he laid out a few things derived from Greek history and then proceeded to share his 20 lessons.

• Aristotle warned that inequality brought instability. 
• Plato believed demagogues exploited free speech to install themselves as tyrants.
• Fascism and communism were responses to globalization.

1. Do not obey in advance.

• People are remarkably receptive to new rules in a new setting.

2. Defend Institutions

• Mistake is to assume the rulers who came to power through institutions cannot change or destroy those very institutions.

3. Beware the one-party state

• Eternal vigilance is the price of liberty.
• Americans certainly have the same danger which Ancient Greeks had oligarchy. The fact that donating money to political campaigns is acceptable is a big problem because it implies that the very rich can then have more say.

4. Take responsibility for the face of the world

• The small choices we make are a vote thus choosing to buy from a company that pays its workers poorly, adopts anti-labour practices is a vote in favor of such practices.
• Symbols of loyalty should include your fellow citizens rather than exclude them.

5. Remember Professional Ethics

• There is no such thing as "just following orders".

6. Be wary of paramilitaries

• In a democracy, it is kind of implicit that only the state can use violence/force legitimately. Because if others could also use it legitimately then there would be no peace.

7. Be reflective if you must be armed

8. Stand out

• People often blindly follow orders because they often do not want to stand out.

9. Be kind to our language

• Watching TV is like looking at someone who is also looking at a picture.
• Read books.

10. Investigate

• Support Print Journalism as the internet is full of quantity but lacks quality.
• It is odd that we pay for a plumber or a mechanic but demand our news for free.
• Journalism is hard.

11. Make eye-contact & small-talk

• Helps to know people you can trust.

12. Practice corporal politics.

• Make friends across stratas of society;
• Support their cause so if and when the need arises - they will consider supporting you.

13. Establish a private life.

• Use less internet
• Words written in one situation make sense only in that context.

14. Contribute to good causes

15. Learn from peers in other countries

16. Listen for dangerous words

17. Be calm when the unthinkable arrives

• Tyrants will use it to change the status quo
• Suspend rights and habeas-corpus.

18. Be a patriot.

• Nationalist -> encourages us to be our worst and then tells us we are the best.
• Patriot -> Wants us to be the best of ourselves.

19. Be as courageous as you can.

20. Believe in truth

 

Debt: At the Center of Every Interaction

I was prompted to dust my notes on this gem of a book I had picked up at a random coffee shop after I read the news that the author of this book, David Graeber, passed away. This is an anthropological account of Debt - how the concept of money and debt has evolved in the past 5000 years. I'll be honest it is a tough read - but if you persist, it has many wonderful concepts and ideas in it. This book used to be my companion during my commute for a few months couple of years ago. And I felt satisfied going through my first anthropological book of any kind.

Overall, he called debt “an assault on the very idea of community, and an assault on the commitments that we make to each other through the medium of government.” 

I think this article describes his work very well - How David Graeber Changed the Way We See Money. The book explores how debt is now at the center of everything we do and also at the center of all social problems - tonnes of debt on students, farmers, home owners and everything.

Quoting from the above article - this paragraph aptly describes the premise of the book. 

What was debt? What was its history, where did it come from, and how did it take such a central role in our personal and economic lives? Why was our language of obligation and morality the same as the one used to describe our credit card bills? Why does the Lord’s Prayer ask God to “forgive us our debts as we also have forgiven our debtors”? 

Below are my notes from the book -

• Adam Smith in his book "The Wealth of Nations" wanted to state that the discipline of Economics is governed by laws just as Physics.
  
  
• Money is an accounting tool. Example of IOU.
  
  
• It was Richard Nixon who unpegged the dollar from the Gold Standard and introduced the system of floating currency regimes.
  
  
• Debts have an underlying assumption that they have to be repaid. It is weird/intriguing how this assumption has solidified - because the lender is supposed to accept a certain degree of risk?
  
  
• On that note, in light of recent news about how China is buying out Africa? - by giving them loans which the African companies will never be able to payback and thus caught in the vicious cycle of being forever subservient to China.
  
  
• All revolutionary movements have a single program - cancel the debts and redistribute the land. 
  
  
• Money lenders have a consistently bad image. 
  
  
• "In the secular world, morality consists largely of fulfilling our obligations to others and we have a tendency to imagine those obligations as debts." 
  
  
• Even Karmic justice is viewed as a business deal.
  
  
• Credit Systems existed long before cash.
  
  
• All human relations have been reduced to an exchange infact even our relation with the cosmos.
  
  
• The author described Barter system as a double co-incidence of wants. 
  As from the book Macroeconomics - Finding someone who has the item you want and is willing to exchange that item for something you have is both difficult and time-consuming.
  
  
• As per him, it is not a particularly ancient phenomenon but really became widespread in modern times.
  
  
• And the author also strongly refutes the often popularly understood cycle of Barter -> Money -> Credit Systems.
  
  
• History of Money !=  History of coinage (not equal to).

Primordial Debts

• I remember struggling to understand what Primordial means. It means existing in or persisting from the beginning.
  
  
• Here the author explores how "debts" fit into the scheme of things in the ancient world. Interestingly, earlier the idea of taxes was unknown to the citizens of the ancient world. "Classical Greeks" even looked upon direct taxes as tyrannical. Usually, a tribute fee was levied on the people of conquered territories. 
  
  
• Fast forward to today, we pay our taxes so that the government can provide us with services. It is remarkable how this idea of "social contract" has evolved. Taxes are a measure of our debt to the society. The author also references ancient texts here like the Mesopotamian and Vedic texts where debts was synonymous with debt and guilt. In one of the passages in the Brahmans it says - we are born as a debt to the GODS.
  
  
• Also, in medieval times penalties/fines were in terms of things and items in the household.
  
  
• Also, just like we are considered to be in the debt of our ancestors - we are also in debt of our parents. In normal affairs, repaying a debt means you have nothing to do with that person anymore. Now keeping that in mind, will we want to be square with our parents?
  
  
• In ancient India - a man was viewed to be in debt of the GODS. So will "sacrifices" be considered as an interest payment in a loan or something like that?
  
  
• Also, much in contrast today - the Sumerian and later Babylonian Kings periodically announced general amnesties i.e "clean slates" - all debts waived off. Part of the reason they did so was because they wanted to think of themselves as the Cosmic Creator who had such a power!
  
  
• Now does it happen in present day? Maybe. Loan waiver of farmers in India would be such an example.
  
  
• Interestingly, since "man" was considered to be in the debt of GODS who have everything - in that case how would you negotiate or even pay him back.

 

Cruelty and Redemption 

• The author puts forward a very interesting argument between religion and debt. He links the argument by Nietzsche and Adam Smith that "our ideas about responsibilities to other people first take shape in strictly commercial terms".

  
  
• And even in religion, life and relationship with GOD is in commercial terms. No wonder in Christianity, Christ is called "The Redeemer" (the salvation itself, the sacrifice of GOD's own son to rescue humanity from eternal damnation should be framed in the language of a financial transaction).

  
  
• And it is the same in other religions too.
  

  Redemption was a release of one's burden of sin and guilt and the end of history would be that moment when all slates are wiped clean and all debts finally lifted.

• Even in society, ancestors are considered to be someone who we owe to. The tribe exists only because of its sacrifices and achievements of its ancestors and people have to pay them back with sacrifices. 
  
  In summary, Debt and religion are interlinked.
  

   

The Moral Grounds of Economic Relations

• The language of debt has come to pervade every aspect of human life even the moral and religious tones.
  The author then claims to try and understand the moral grounds of human life through the small things and details of human/social existence.
  
  
• Here it is worth remembering that a man gets his first sense of justice and morality from his/her parents.
  
  
• "From each according to their abilities, to each according to their needs". 
  Some might identify the above principle as "communism" but the author reminds us that one of the scandals of capitalism is that most capitalist firms operate communistically.
  
  
• Also, human society is based on the everyday morality of sharing. Solitary pleasures will always exist but for most human beings - most pleasurable activities almost always involve sharing something.
  
  
• Also, in many cultures sharing of food is an extension of friendship i.e never harm one other.
  
  
• In this chapter, the author is trying to link debt and our actions in the societal context. Debt features when you break bread with somebody.
  
  
• It is very fascinating to see how Debt affects gift accepting situations.
  Responding to a gift "requires infinite artistry" and involves lots of nuances.
  
  
  Suppose a friend of an economist takes him out for dinner. 
  i)  He would not feel diminished.
  ii) But if he was taken out by Bill Gates/George Soros, he would feel that he received something for nothing and leave it at that.
  iii) If he was taken out by a junior colleague or a grad student - he would assume he was doing the other person a favor by accepting the invitation.
  
  
• There is a certain element of hierarchy involved as well when it comes to debts. Remember, how famous works of poetry and philosophy are often prefaced with sycophantic praise for the patron who provided some meagre stipend.
  
  
• Debt is always between equals and later on one party becomes lower in stature. Funnily the quote, "always owe somebody something then he will be forever praying GOD to grant you a good, long and blessed life.
  
  
• Example of African tribes where there wasn't a government/authority who was in charge of circulating currency. Everything worked on the system of barter/human life. In case of any crime (like murder) - human life was equated to human life only and nothing else. To appease the victim party - precious gifts like shark teeth/camwood/roffia cloth were given with the understanding that a human life was still owed. 
  
  
• Usually, that "owed human life" was a young woman. The way the exchange/pawnship for women worked is definitely reprehensible by today's standards, but back then it was the norm. 
  Violence happened usually over claims over women. They were called pawns/wards. Interestingly. only men could have pawns and not women; thus confirming their second class stature back then. 
  
  
• There was a "human economy" in place where 
  

  Money almost always arises first from objects that are used primarily as adornment of the person. Eg - Breads, Shells, Feathers. 
  As a general rule, it is only when governments and then markets, enter the picture that we begin to see currencies like barley, cheese, tobacco or salt. 

• Islamic Law didn't eliminate slavery.
  
  
• The author I think tries to link slavery and debt. 
  In some medieval societies, cattle and people were the currency/denominations of currency. In Celtic systems, the law code was so defined that every free person in the society had a "honor price" - the price one had to pay for an insult to the person's dignity.
  Honors of kings/nobleman - was measured in slaves and the slaves were human beings whose honor was 0. More slaves would notch up the honor of the master.
  
  
• Another great point brought up here - Is honor the willingness to pay one's monetary debts?
  
  
• Origins of patriarchy can be traced back to Mesopotamian Civilization. 
  
  
• Also, based on the stories and the evidence shared - it was clear that the more militaristic the state, more harsher its laws towards women. 
  
  
• In the past, it has been like Conquest -> Taxes -> Markets.
  
  
• Explosion of debt turned everything including (for soldiers and administrators) - women into commodities and harmed the human relations. 
  
  
• As commercial economy arrived in Greece, people developed ways and means to settle debts and devise ways to punish those who couldn't repay their debts. As usual, those who were poor had to give away their daughters and women in their family while the rich (nobles/clergy) were left untouched. 
  This masked a steady deterioration of women rights as women honor started being equated with price and debt.
  
  
• Advent of commercial markets -developed all types of social problems like debt crises, debt resistance and political unrest.
  
  

The Axial Age

• That period is called the "Axial" as in pivotal. Karl Jaspers coined this term as he noted that eminent personalities like Pythagoras, Buddha and Confucius were present around the same time in history.
  
  
• Here the author takes us on a tour of how currency evolved which I found informative.
  
  
• Coinage started around the Yellow River in China, the Ganges valley in Northern India and the shores of the Aegean Sea. 
  
  
• Main driving reason was to turn chunks of metal into genuine currency - create enough coins that people begin to use them in everyday transactions and the existence of markets was convenient as you could provision large standing enemies. Also, coins were brought into prevalence by - (i) Paying soldiers (ii) Paying general public for attending townhalls.
  
  
• Typical Axial Age pattern : Fractured, political landscape, rise of trained professional armies and creation of coined money largely to pay them.
  
  
• Here in the Axial Age - people started thinking of profits/losses.

The Middle Ages

• In Middle Ages, the commodity markets and universal world religions begin to emerge. 
  
  
• Talks about how upper castes oppressed lower caste in India - there are accounts of molten lava being pored into the ears just over hearing recital of sacred texts. 
  
  
• Caste determined the interest rates in that case. Interestingly, it carried over for 3 generations.
  
  
• Confucian orthodoxy was overtly hostile to merchants and even the motive of profit. China for most of its history was anti-capitalist.
  
  
• Debt owed to parents cannot be paid. 
  
  
• "Military-coinage-slavery" 
  Slaves were the last people to be allowed near weapons. While under the Mughals they were employed as soldiers.
  
  
• During the Middle Ages - Islam started to have a view where profits were welcomed. But interests were not - which seems odd.
  
  

The Beginning of Something

• The Prophet seemed to say that in a "free market situation" - prices depend on the will of the GOD. 
  
  
• Middle Ages began with "coinage going out of fashion".
  
  
• In Christianity, views/attitudes towards usury were just as harsh as the Muslim ones and attitudes towards merchants considerably harsher.  
  It was said invoking Christ - 

  Treat the poor as you would treat the Christ himself.

  Giving without the expectation of returns and allowing the borrowers to decide on recompense.

•  "Unto a foreigner thou mayest lend upon usury, but unto thy brother thou shalt not lend upon usury."

• In 1179, usury was made a mortal sin and usurers were denied Christian burial.

• The words for "truck and barter" in almost all European languages were derived from terms meaning "swindler", "bamboozle" or "deceive". Such was the association of commerce with cheating!

• The word "knight" often perceived in a positive light has an interesting origin. Originally been a term for freelance worries drawn from the younger or bastard sort of minor nobility. 

• Overall slavery declined or disappeared as the overall level of violence in the Middle Ages. 

• I also learned about this often talked about conundrum or debates of Chinese Philosophers. 
  

  Is the world created by our minds, or our minds by the world?

  There are other versions of this quote something like how do we know we are not dreaming as a butterfly.

• Aristotle had argued that Gold and Silver had no intrinsic themselves; money was therefore around convention invented by human communities to facilitate exchange.

• In the Middle Ages, one philosopher said - 

  How is it possible for humans to have knowledge of GOD? How can we, whose knowledge is confined to what our senses can perceive of the material universe, have knowledge of a being whose nature is absolutely alien to that material universe?

• Shakespeare's Merchant of Venice has the phrase "pound of flesh" - it is an indirect reference to the practice of extraction of bodily parts in the case of inability to pay the creditors.

Lockdown Reading - Golden Gates

Strongly recommend this book for anyone interested in housing. And of-course, everyone would be somewhat interested in it because it is such a basic "goal" on almost everyone's list.

The book talks about in detail the problems that are plaguing the housing market - why at some places rents and prices are exorbitantly high, through multiple interwoven stories.

Housing is such a vast and complex subject. It has so many aspects to consider. Some of them that I can think of are  - 

• Affordable Housing
• Gentrification
• Homelessness
• Climate Change (yes even climate change. Third of the greenhouse emissions are from transport. If people cannot afford close to live close to where they work, they drive to work daily. Let's be honest on an average public-transport is poor in most of the world).
• Zoning Laws (or laws governing how houses need to be built)
• NIMBY/YIMBY
• Redlining
• Evictions

Reading it I had moments of realizations and exasperations in equal measure.

• It seems quite unfair to me that the neighbors can bully the developers to build less housing on the pretext of it'd bring in more crime, spoil the nature of the neighborhood. A new excuse now is the effect on the environment. City councils often bow down to such pressures.
   
• The above ideas can be clubbed under NIMBYism. Also, common is that people objecting are already house owners and make claims like - "...I have no problems with affordable housing but it needs to be built in the right place." 
  Emphasis on right. Also, contributing is the perverse incentive of house price. The law of economics is that if something is in short supply it'll become more valuable and its prices will shoot up.   
• Listening to an interview of the author, the significance of title of the book GOLDEN GATES dawned on me. Remember how in ancient times people who were poor used to live outside the city gates? Similarly, now we have these tendencies to thwart new housing to be built so our "homogeneous, affluent" neighborhood vibe is not disturbed. 
   
• Local politics is scrappy but that is where decisions about approving/denying housing projects are made. Most people do not pay attention to it let alone attend those meetings. But that's what helps people with vested interests (shills) to get the council to do what they want. Also, would note that legislation or passing laws involves serious amount of paperwork and technicalities.
    
• To be realistic, the government alone cannot fix this problem. Cue innovation and technological disruption. Housing Construction is one of the industries that has not seen enough advancement and improvement in terms of productivity. 
  This is where lots of companies like Blokable building modular homes - can come in to help. Imagine a factory churning out houses which just need to be nailed together at the site. Such a process can help a great deal with the supply. However, there's another problem with these - the stigma!   
  Notice how there's a certain kind of perception on those living in trailer homes? What is to say it won't happen with modular homes? What if people from an affluent neighborhood object to modular homes being set up near their area? Do you think the VC or the founder of such modular homes companies would themselves live in this modular home? I think the only way this perception problem would get solved is perhaps if big giants like Amazon jump into this business and make it acceptable and we would see a change in perception in matter of a generation.  

Overall, it's a good read if you want to understand what plagues the housing market.

Lockdown Reading - Adaptive Markets

I don’t remember from where I picked up a recommendation for this book but what a great investment buying this turned out to be. It will not be an exaggeration to say that I really enjoyed this book. It was indeed informative but what made it enjoyable was how easily the transition was between points - concepts supported by anecdotes, stories and research studies and how beautifully in the end they all tie together to frame a powerful, optimistic call to action. The author’s work does make him sound like a good professor. 😃

The book is a collection of a lot of interesting concepts - 

• It talks about how human behavior, emotions influence our financial decisions. It is one of the reasons why the Efficient Market Hypothesis(E.M.H) doesn’t hold true.

• It does critique E.M.H and provides two strong points -

• If the market is really efficient with all the info priced in then what’s the point for any investor to do some work getting new info or numbers when everything is already priced in ?

• Also, if the market is really efficient with all the info priced in then how come George Soros’, Jim Simons’ and Warren Buffets of the world have made billions of dollars?

• It gives a good glimpse on how the concept of “money” has not been around forever and is relatively recent on an evolutionary scale. So the idea of losing money generates similar emotions as “fight or flight” in case of a physical attack.

• Using advanced technologies such as fMRI it has been found that similar centers in the brain are activated when there are prospects of making/losing money.

• Humans are not rational beings and are influenced by emotions of fear, panic and pleasure and thus that is what makes them take irrational decisions in the context of money.

• Concept of probability matching with the help of an experiment:

• Consider the game Psychic Hotline. Either letter A or B will be shown on the screen. If you get it right +$1 else -$1. 

• After a few rounds, the participants observe that A appears more often than B. Say 75% of the times it is A, and B appears 25% times.

• So the optimal strategy is to always pick A.

• But people try to mix it up which is called “Probability Matching” and that is sub-optimal thus reducing the earnings to only 62.5% times.

• It is definitely worth pondering that our DNA is 97% similar to an orangutan but the 3% difference is big enough to keep us on different sides of the fence.
  
  
• Emotion isn't the source of irrationality. The author's proposition is that we wrongly conclude that emotions are the reason for our irrational actions when infact they are the reason of rationality.
  
  
• The author reminds us that although there were so many attempts to draw inspiration from Physics to apply to Economics - it is infact more similar to Biology. Both are equally complicated fields.
  
  
• The author puts forward a new theory to beat the E.M.H. He talks of Adaptive Market Hypothesis.
  This theory is about revolving around heuristics.  It blends in the concept of "bounded rationality" too. A very good example of this is how we may have 10 shirts, 10 pants, 5 ties and 5 jackets. We don't try out every single of them every day before going to work. Because in our minds already have a heuristic/idea about which shirt will shirt well enough with a pant. 
  
  
• Also, going by the word "adaptive" we continue to adapt and learn from our experiences and surroundings (dressing appropriately is an example - while going to a function we don't try out running shorts - adapting and cutting down our choices. This is another example of bounded rationality).

The example that blew my mind was around Biological Evolution. It was fascinating to see how the concepts of risks - system

ic and idiosyncratic can be tied to evolution.

Here's my attempt to summarize it -

Let's say a hypothetical creature which could produce only 3 offsprings (Tribble) has a choice to dwell on a plateau or a valley. Odds are such that in the

a) Valley - 3 offsprings are guaranteed.

b) Plateau - 50% chance for 2; 50% chance for 4 offsprings. Net being still 3.

Now if everyone of the tribble chooses to live in the valley - they will be safe from sunshine but not from floods. If everyone of the tribble chooses to live in the plateau - they will be safe from the floods but not from sunshine.

So which option should they choose? Let, f be probability of choosing the valley. 1-f be probability of choosing the plateau.

Here, even though more tribbles chose to nest in the valley - all of them would be wiped out as soon as there is a heavy rainy season. So, what should be the optimal percentage of tribbles residing in a valley. This is where the principle of Probability Matching ties back in. f should be same as the probability of the sunlight. By probability matching, the reproductive bets will be hedged so that the expected number of offspring will be same, no matter whether it rains or shines. Sparing the complex maths behind it, so you've to trust this!

Another variation of this would be - every tribble family have their own individual experiences ie microclimate. Each family faces rain or shine in a separate and independent toss of a coin that is something like sunshine 75% of the time and rain 25%.

So the probability that all of them (say 10 tribble families) will be washed away is (1/4)^10 i.e 1 in a million. Basically, nature has diversified the risk of extinction via microclimates i.e diversification is necessary in an evolutionary cycle. It also explains why dinosaurs got extinct cause they didn't hedge their bets - they were all on one planet and got wiped out together when a meteor hit. Similarly, you can also argue why it's important for humans to inhabit some other planet too!

I thought this was a very cool thing I learned!

Something that gave me lot of optimism was how finance can actually help fund researches for life saving drugs or even the current Covid-19 crisis. We all are aware how governments are cutting funding for health and research. A cancer drug research takes 10 years and $200 million with a 5% chance of success. Clearly, no private investor would want to put their money in such a venture where they would lose their money 95% of the time. They would rather fund a tech startup and sell to FAANG later.

Better approach is to invest rather one project at a time than to invest in 150 such research projects. Even with 5% chance of success - you can to do the math to see that it is promising that atleast 3 of them will succeed. Now, the crucial part is funding $200mn x 150 i.e $30billion. Here's where you can issue bonds and finance more than half of the projects with long term debt; the intellectual property of 150 projects can be the collateral. And if you get fancy you can use derivatives - securitization, CDOs, Credit Default Swaps. Insurance companies can be invited to buy them too and it'd be a way for them to hedge their bets too considering they use an ugly term called "longevity risk". This $30 billion cancer bonds market will still be way smaller than the housing market. I wrote earlier here how this same principle can be used to fund Covid-19 research as well.

I'm still waiting to come across a logical argument of why this is not a feasible way to cure diseases like Cancer!

Overall, this was a fantastic book and worth my time reading during the lockdown. Hope it excited you to give it a try as well.

BookShop link - https://bookshop.org/books/adaptive-markets-financial-evolution-at-the-speed-of-thought/9780691191362

Covid Bonds

The World Health Organization declared Covid-19 as a global pandemic on March 11, 2020. The virus still is out floating around and the economic impact of everyone staying indoors is unfolding. While it is the right decision for everyone to stay indoors, and slow the spread, it has definitely brought the wheel of the economic cycle to a grinding halt. This is something that has never happened before and there is no playbook to follow. Re-starting the economic cycle will require some innovative, ingenious ways. 

 

Revenues for governments at the state level via taxes (sales tax etc) have almost dried up due to a sharp fall in economic activity. This has not only put at risk lots of government run programmes and schemes but also put severe strain on the exchequer. 

 

In a lot of ways, the current scenario draws similarities with WWII except this time the enemy is a microbe. Taking a leaf out of the history book - “War Bonds” were issued during WWII so as to finance the U.S government’s involvement. Over 85 million Americans bought those war bonds, and by 1946, it had raised over $185 billion dollars which translates to $2.4 trillion in present day terms. 

The same route can be adopted by the government. to finance its efforts to manufacture PPE, fund more clinical trials and studies for drugs to cure Covid-19 and when a cure or vaccine is found these bonds can help finance its large scale manufacture and distribution to every corner of the country. These bonds can range from a maturity period of 20-30 years, be tax-free and provide an interest rate of 3-4%.

In the current climate everyone is feeling the sting of the lockdown and even though social interactions have dropped to zero, the urge to help one another is at a peak. I’m sure such “Covid 19 bonds” will receive a very warm response from investors, hedge funds and even small households. This is not inherently a new concept - European Union is already considering it. India can move ahead and show the world how to cleverly manage its finances, care for its people and not let its institutions starve for much needed funds. 

 

ECI - Restoring credibility

Elections in India have always been a grand affair by virtue of being the world's largest democracy. And with the advent of social media it has become even grander.

Although I think it has become a cliched term to laud Indian elections as the biggest democratic exercise while itself the process is not smooth or seamless by any stretch.  And for these glitches one is left wondering how error-proof this whole process is. Infact, these headlines have been so over-used that they are now starting to be meaningless and hollow words. 

Trust Issues

Here is what I think are the key problems with the election process - 

Right from the start of the cycle of voter registration - the process is riddled with flaws. 

• Why on the voter list there are so many discrepancies:
• People find their names missing;
• Often many of the details is wrong - like the name is correct but picture is of someone else; D.o.B is wrong; address is wrong. The Chief Polling Officer (CPO) technically can disallow the person to vote on these grants. Only if you are fortunate the CPO may allow you to vote but only after you have shown 3-4 Id Proofs. You get the idea!
• It's worth asking why this basic step of conducting an election - having an updated list of voters has not been smoothened out yet. 

• Why is the office to correct names on the voting list not open throughout the year and opens only a few weeks before the election?
• Why can a candidate contest from two seats? 
• And why can he even contest while in jail (even though not convicted) - but at the same time a voter cannot vote in more than one constituency and definitely cannot vote if imprisoned - convicted or not.
  
  It is hard to understand the rationale why the founding fathers added this clause in our constitution. It seems to inadvertently grant voters a lower status. Economically speaking - the money spent to conduct a re-election after a candidate forgoes one of the two seats he/she won comes from taxpayers' money and it by no means is a judicious use.
• This is probably the most contentious issue off late - lack of transparency on EVMs.
  
  
  EVMs cannot be gotten a hold off to be independently researched for vulnerabilities within India and there’s no chance of it going abroad. There was a case where a US university professor was almost deported from the Delhi airport so cause he had earlier published a research paper calling out the vulnerabilities in EVMs (technically his Visa was downgraded to a tourist visa so he couldn't do any research).
  

  

     News link - http://archive.indianexpress.com/story-print/723897

  
  
  
  
  
  

If it is infallible as claimed then it should be open for research. This insistence on not to be allowed to taken abroad for research purposes and check for security flaws only in presence of Election officials raises eyebrows and is not a ringing endorsement of it's security features.

P.S - That professor has a free course on Coursera where he talks about his experience and explains his doubts.

https://www.coursera.org/lecture/digital-democracy/bonus-deport-on-arrival-t8uTx

• Another big issue is how the election campaigns are funded. The legalization of anonymous electoral bonds is such a farce in light of when every cash transaction of the citizen is tracked and above a certain limit you have to provide an Aadhaar card. But for the candidates people/companies can donate "anonymously" without any check on the identity. This is such a dark spot of our election process and raises uncomfortable questions.

Rebuilding Trust

I deeply admire the ECI's work in bringing some sort of order and process to how the elections are now conducted. It is much better than the earlier days where booth capturing, violence and voter intimidation was widespread. Efforts of Chief Election Commissioners like T.N Seshan and M.S Gill are to be credited for ushering these positive changes.

For starters these two steps should be taken -

• ECI considered to be autonomous in itself needs to be given more teeth and it should use those powers on candidates irrespective of the political party affiliation.
  
• ECI should be more proactive and fast. In the age of viral tweets and videos - ECI cannot sit on an incendiary speech or statement for 3 days, then conduct an investigation for another 7 days and then announce a warning notice or a slap on the wrist and all this while the person was busy campaigning. It is a challenge but to bring some sense of dignity and cleaning up the discourse in election campaign speeches ECI has to start acting sternly and swiftly.
  
• Now with different govt. issued documents floating around like Pan Card, Aadhaar, Voter ID linking all citizens - it has to figure out how to use them to streamline its voter registration process and provide an easy way to rectify those mistakes rather than running around babus in person.

I'm afraid if nothing gets done in these directions - we will keep seeing cliched headlines every 5 years and an occasional op-ed every now and then lamenting the legitimacy of the process.