July 14, 2006

Of Geeks, Nerds and Terrorists

Posted in Current Affairs, Links at 11:51 pm by falstaff

Just a few links from my Inbox:

“What I tell you three times is true”

– Lewis Carroll

Now that I’ve been told three times that I should read the Writers Against Terrorism blog, I figured I’d do what one always does with good advice – pass it on.

Go read. Some exquisite writing. Some excellent points. And a LOT of incoherent ranting. I’m told that people deal with trauma / grief in three stages – first they experience numbness and shock. Then they undergo emotional upheaval – including feelings of anger, loneliness, disbelief or denial. Finally they reach acceptance. Writers Against Terrorism is fascinating because it offers you a superb opportunity to observe all three phases in play – all at the same time.

It’s also a wonderful demonstration of just why terrorism is so difficult to respond to. Everyone has a different idea about what the appropriate response should be (ranging from hawkish bluster to saintly resignation), everyone tries to apply analogies from completely different contexts – wars, natural disasters, etc. [1] and the end result is that we end up fighting each other more than anyone else. And that, surprisingly enough, is probably a good thing. Because it means we’re still opinionated, stubborn and pedantic – in other words human – and haven’t turned into the kind of brainwashed zombies that we’re trying to fight.

So – a noble effort. Though I’m curious to see how long the enthusiasm lasts.

***

In other news, meanwhile, a reader writes in to ask me what the ‘m++++’ in my Geek Code stands for, seeing as it’s not standard Geek Syntax. Finally, someone who noticed.

m is my own addition to the Geek Code. It stands for music. The categories are (roughly):

m++++

I’ve stopped talking to people because surgically removing my iPod from my ears is too painful

m+++

I spent more money on my stereo system than I did on my car / I don’t own a car because with all that music in the house who wants to go anywhere?

m++

I have a CD collection that’s colour coded by genre / Sometimes I just sit around running my fingers along the spines of my CDs and feel happy.

m+

I listen to music all the time in the car on my way to work / I have a subscription to Yahoo Music

m

I don’t listen to music much, though sometimes I’ll leave the radio playing in the background

m-

The only kind of music I listen to is the kind they play in elevators

m–

I am a Britney Spears fan

m—

I am a doorknob

m—-

I am Yanni

***

And finally, the Falstaff Award for best book title of the month goes to:

Far From the Madding Gerund

The new book from the folks over at Language Log (Go UPenn!) that argues, if Slate is to be believed (I haven’t read the book, though I have read the blog) that ‘correct’ language is language as it’s generally used. We yam what we yam, and why bother with all this grammar-shammer.

Notes

[1] Let’s get one thing straight people – ‘War against terror’ is just a catch phrase. Terrorism is not war, any more than it’s a flood or an earthquake or a riot or cancer. You can’t apply the same methods of engagement to terrorism as you would to a war. That’s how you end up bombing innocent civilians in Baghdad, or invading Lebanon.

July 12, 2006

11th July 2006

Posted in Current Affairs, Poetry at 2:56 am by falstaff

 

How shall we answer such hatred?

How shall we stitch together,
Word by careful word,
This torn page?

It is not a question
Of condemnation
Or forgiveness –
We have strength enough for neither.

Nor is it simply a matter
Of measuring the wounds
And adding them all up.

Statistics will not help us now.
We cannot hope to understand
What is inherently senseless.
We can only try to acknowledge
The truth of it,
Bear witness to it,
The way the negative bears witness to the image.

We can only try
Not to turn away.

And yet there can be no doubt of our judgement here:
For the windows of our city
Shake with outrage,
And against such horror
Even the light is defiance.

We are afraid, yes,
But fear too is an affirmation –
The trembling of leaves
That denies the wind.

If our silence has been shattered
So that we no longer recognise ourselves in it;
If our very shadows
Have turned to ghosts;
Do you really think we shall let this defeat us?
Do you really think we shall give in
So easily?

No, tonight we shall find no comfort
In our own safety,
But live, in our imagination,
In a stranger’s house,
In a stranger’s place.

Except that there are no strangers now,
For the spilling of our common blood
Make us all family –
What we feel in these first moments
Is not sympathy,
But the grief of our own loss.

Time will mend all, we are told.
But Time cannot dismantle the explosions,
Or undo the pain;
Time can help us to forget,
But do we really want to?

It is up to us to retain
Our diminished humanity;
Up to us to recognise
That Death is not a visitor
We would wish on any other.

It is up to us to defuse
The anger ticking away inside us,
Waiting to explode.

It comes down to this then:
That we dare neither heal our wounds
Nor celebrate them;
That we can no longer tell
Relief from guilt,
Hope from complicity,
Moving on from desertion;

That our very need for prayer
Makes God impossible.

It comes down to this:
That the familiar ways are lost,
And the route back to peace
Is long and difficult.
It will be some time, at least,
Before all of us
Are safely home.

 

What can I do, in times like these, but write?

This post in special appreciation of the efforts of the folks at Mumbai Help, who did an amazing job last night of helping people get in touch with their loved ones.

July 11, 2006

In memory of those killed in the bomb blasts today

Posted in Current Affairs at 2:15 pm by falstaff

Ifs and Butts

Posted in Current Affairs, Humour at 1:32 am by falstaff

And so, to the now (in)famous Zinedine headbutt.

Personally, I laughed myself silly watching re-runs of the thing on TV, and continue to maintain that it was an act of comic genius (as I argue in the comments here). I mean, can you imagine a wackier and more unpredictable way of ending a career? It’s positively inspirational. The day I finally get my PhD my advisor had better be wearing a sternum guard.

I’m even more amused by the reaction of Zidane fans. First, there’s this whole racial sledging thing. Everywhere I look people are going around speculating on what Materazzi must have said to Zidane to provoke the headbutt. Aside from the fact that at this point this is all unproven hearsay (even if Zidane does finally come through with a statement, I don’t see any reason why we have to take his word against Materazzi’s), I’m amazed that anyone would think that anything Materazzi might have said was justification for Zidane’s actions. The argument is not, as some people have suggested, that Zidane should not have reacted because it was the World Cup Final and he had a critical role to play. The argument is that, outside of Dharmendra movies and Shiv Sena Headquarters, it is not okay to respond to things you percieve as insulting with physical violence. That argument applies as much to Zidane as it does to the rioters protesting the Danish cartoons or the ‘desecration’ of Mrs. Thackeray’s statue. Physically assaulting someone on the playing field because they say something insulting is behaviour better suited to eight year olds. In a civilised society we don’t responds to words with fists. Or headbutts.[1]

I’m also amused by the convenient fiction (implicit in much of the moaning about Zidane’s actions) that Zidane’s exit was the reason the French side lost the match. It’s certainly a wonderful face saving device, isn’t it? The fiction writer in me is almost tempted to speculate that maybe the very purpose of the headbutt was to get Zidane sent off so the French would have a ready excuse for losing.

Finally, I can’t help being a little curious about the headbutt per se. Who responds to insults with headbutts? Punches, yes. Kicks, possibly. But headbutts? Is this a cultural thing? Are there societies out there where the headbutt is the ubiquitous form of social assault? Do people actually go around saying “Say one more word and I’ll headbutt you in the sternum”? Are there martial arts movies where the hero and villain fight by exchanging headbutts? Has Zidane watched too many Animal Planet specials on the mating rituals of antelopes?

Or was Zidane, perhaps, concerned about using his hands in a football game? Because THAT would be a foul?

[1] The desire to escape being insulted is, of course, the principle reason that the French don’t speak anything but their own language – that way they don’t know what the English are saying about them. You could always try insulting a Frenchman in French, but the odds that you’ll actually pronounce it right are so low that it’s not a serious threat.

July 10, 2006

Are we there yet?

Posted in Current Affairs at 12:43 am by falstaff

Okay, so I can’t resist having my two-bit say about Pankaj Mishra’s Op-Ed piece in the NY Times

For the record, there’s a lot that Mishra says that I agree with. My biggest problem with the piece is Mishra’s inability to articulate, to others or to himself, just what it is he’s opposing. Implicit in Mishra’s arguments, there are, I think, at least 4 different claims that have been made about India:

1. The liberalisation and globalisation reforms of the early 90’s have been beneficial for India – leading to a spurt in growth and improved standards of living for at least some sections of the population.

2. India is fast emerging as an important global player economically – both as an important market for MNCs as well as a pool for talent and services.

3. India is well on its way to becoming the world’s dominant economic superpower

4. India’s development has been broad-based and this century will see the majority of Indians enjoying lifestyles comparable to those in the West.

These are, in my mind, four very different claims – the links between which are tenuous at best. I personally happen to believe, for instance, that the first two are true, but that the last two are not.

What amused me the most about Mishra’s article is that he starts of by taking exception to the claim that India is a capitalist success story and argues against this by showing that the vast majority of people are still poor. Huh? Since when has capitalism been about prosperity for the masses? Everything that Mishra says in his story actually suggest to me that India is the quintessential capitalist success story – where the elite bourgeois amass large amounts of wealth while the common people continue to live in deplorable conditions.

At any rate. Here are the things that Mishra is saying (or at least, I think he’s saying, or trying to say) that I agree with:

1) The belief that large majorities of Indians will someday enjoy standards of living comparable to those enjoyed by people in the West is highly questionable, if not entirely untenable. Just given the sheer size of the population involved, the levels of growth and resources required to make that come true simply don’t exist.

2) The benefits of India’s growth in the last decade and a half have gone disproportionately to a small minority of Indians. Therefore, claims in the popular media about India’s development (e.g. India Shining) are premature and excessively optimistic. Unless serious thought is given to the very real issues facing India – both in terms of infrastructure and in terms of equity – these inequalities will perpetuate, and absent institutional efforts to enhance social welfare, they are unlikely to be ‘naturally’ overcome.

3) In the absence of equitable growth, income disparities between the rich and the poor will become more glaring and social unrest will increase over time. Worse, given India’s democratic context, the lack of equitable distribution of benefits will make it difficult to create strong political support for further reforms. Until the common people see a tangible pay-off from the liberalisation to themselves, they will continue to vote based on issues other than economic performance, and if the masses don’t care about it then the government won’t either.

4) Given all that, there’s good reason to be more cautious about India’s potential. India is far from well-set on the path to being an important global superpower. It’s too early to be celebrating India’s rise to global dominance.

Notice that none of the above implies any of the following:

1) That India would somehow have been better off by sticking to its pre-reform regime. There is no case, in any of this, for turning back reforms. The reforms have led to real growth – that the growth has been uneven is, at best, cause to reflect more closely on the welfare implications of some of the changes made. The fact that some people are getting richer while the majority remains poor doesn’t mean that development won’t eventually spread – if anything, high incomes and therefore high savings may well be critical to the accumulation of capital needed for rapid growth. We certainly need to think about how the disparities created by that shall be managed, and how the growth achieved will eventually be funneled into real development, but that’s no reason to dismiss the growth that has been achieved. That at least some sections of population are enjoying dramatically greater prosperity is an achievement, and cause enough for some celebration, however guarded.

2) That India can only play an important role in the global economy if it achieves broad-based development. Or that India becoming a key global player will necessary mean prosperity for all its people. This would be nice, of course, but it’s not, in my view, strictly necessary. I think Mishra is ignoring the sheer size of India, and exaggerating the unsustainability of unequal growth. It’s not hard to imagine an India where 5% of the population has extremely prosperous life-style while the remaining 95% remains little better off than they were originally. Yet that 5% alone could make India a key player in the global marketplace.

Understand that I’m not saying that such a scenario is desirable. Only that there’s no basis for Mishra’s assertion that India’s emergence as a key global player is contradicted by its poor performance on human development indicators. India is large enough to be a key global player even without development for all.

3) Echoing point 1 above, there’s no reason to believe that creating more broad-based development will require state intervention of the kind associated with the pre-1991 days. That government policy has a key role to play in ensuring the sustainability of India’s development is unequivocal, and that government spending is required to make development more equitable is certainly true. But none of that implies a return to a system where the government hijacks the role of the market and sets up inefficient and bureacratic monopolies to ‘serve’ the people. There is no reason why the government can’t intervene through the market to aid in the redistribution of wealth. And there’s a vast difference between the kind of clean, deregulated policy we need to let the market operate and the kind of policy that tries to replace and manage the market, which is what we’ve traditionally had.

Of course, Mishra isn’t necessarily saying that we should return to the old days or that the reforms are bad either. But it’s a pity that he doesn’t really articulate what he thinks the right answer is, leaving the door open for people to assume that a return to the pre-reform days is what he’s advocating.

Overall then, Mishra makes, I think, a convincing case for why India isn’t a superpower yet and why it’s yet to be proven that it ever will be. And in doing so, raises important and relevant questions about the distribution of growth and the challenges of growing inequity. What he doesn’t give us is any reason to believe that the changes over the last 15 years are in any way inimical to India’s chances of becoming an important global player. Saying we still have a long way to go isn’t the same thing as saying we haven’t made any progress. Just because something is overhyped doesn’t mean there isn’t some truth to it.

P.S. Mishra also says some exceedingly silly things about communist parties being voted to power, US nuclear policy towards India being driven by rich Indian-Americans and India not being able to serve as a counterweight to Iran and China because it trades with them. I’m just going to ignore all that, as not being worth comment. Notice though that if India can’t be a counterweight against Iran and China because it gets oil from the former and trades with the latter, then one wonders how the US can possibly be opposed to Iran and China to begin with.

July 7, 2006

Mittal-urgy

Posted in Current Affairs, Rant at 11:30 pm by falstaff

Will everyone please get over the Mittal Deal? Or at least explain to me what all the exuberance is about?

To begin with, I’m sick to the teeth of the press going to town about how this is somehow a victory for India. You expect idiocy like that from the imbeciles at the ToI, but last week’s India Today (which I had the misfortune of glancing through – forgive me, I was bored) has Anand Mahindra telling us how the merger “proves the tenacity of Indian entrepreneurs globally and will raise the aspiration levels.” And, of course, politicians like Chidambram and Kamal Nath rah-rahing about how they’re so proud. Huh? Will someone tell me in what way Mittal is representative of Indian entrepreneurs, or of the health of the Indian Economy? Is the money for the deal coming from India? Not as far as I know. Is Mittal Steel primarily an Indian company? Not unless the nationality of a company is decided by the origins of its founder, in which case the Vikings are probably the greatest entrepreneurs in the world, or, if you go back far enough, all companies are African. Are we likely to see a spate of other Indian entrepreneurs pulling off deals as large as Arcelor-Mittal? I can’t think of a single one. Then why is Mittal’s success reason for India to feel proud and celebrate?

More to the point, is it a success at all? Empirical research on M&A over decades now has generally found that returns to acquirers are marginal or negative. This is especially true when the acquisition is hostile and contested – the general argument is that competitive bidding tends to drive up the price of the target, until the price finally paid equals, if not exceeds, the value of the target to the acquirer. This is the familiar winner’s curse – the person who bids too much wins the auction, but gets no profit from his purchase. A number of researchers have suggested that escalation of commitment plays a large part in this – once acquirers are publicly committed to a deal and have invested time, money and reputation in it, they are reluctant to back out and may continue to bid even after it ceases to be profitable for them, especially if the initial context is uncertain (see, for instance, Haunschild, Davis-Blake and Fichman, Org. Science, 1994 and Puranam, Powell and Singh).

Could this apply to the Mittal-Arcelor deal? We know that the deal was hotly contested, with Severstal being brought in to resist the Mittal bid. The New York Times (June 26th) article about the deal says:

Arcelor’s foot-dragging led to other concessions from Mittal as well. The offer that was agreed to is nearly 40 percent higher than Mittal’s initial offer in January. That bid was 27 percent higher than Arcelor’s stock price at the time. The current offer also represents a hefty premium to Mittal’s last bid of about 36 euros a share, and to Arcelor’s last trading price of 35.02 euros a share.

The report also says that in getting the deal completed “Mittal made several concessions, including his family’s voting rights”.

None of that is conclusive, of course. I’m the last person to trust the NY Times’ take on business issues, and I certainly haven’t looked at the Arcelor-Mittal deal in any detail. It’s possible therefore that there are huge synergies to be had here that outweigh the premium Mittal is paying (what kind of value multiples would that imply I wonder? And how would they compare to multiples for other steel companies?). It’s possible, given Mittal’s considerable reputation for turnarounds that he can make Arcelor yield high enough profits to justify the valuation he’s put on it. Maybe this is, in fact, a good deal to have made. But prima facie at least, the evidence would suggest the opposite. Everything I read about the deal suggests to me that it’s actually the Arcelor shareholders who are the winners here – that Arcelor has successfully used a number of classic defensive tactics to negotiate itself an extremely sweet deal from Mittal. And while it’s possible that I’m wrong (I don’t claim to understand global steel) I think it would be interesting if we were to see a discussion of why exactly this deal is a real success for the Mittals, rather than empty tom-toming of the fact that the deal got made. Not all deals are worth making.

One last thought on Mittal as the great Indian success story. Assuming for a minute that in some bizarre way Mittal is actually representative of India, how much of a paragon is Mittal Steel really? How much should we aspire to emulate him? Research on corporate governance in family businesses has generally found that heir-controlled firms tend to destroy shareholder value (see, for instance, Amit and Villalonga) . In fact, Morck, Stangeland and Yeung have argued that a large proportion of a country’s wealth being tied up in the hands of billionaire heirs may actually slow GDP growth. The abstract to their article reads:

The basic finding of this paper is that countries in which billionaire heirs’ wealth is large relative to G.D.P. grow more slowly than other countries at similar levels of development, while countries in which selfmade entrepreneur billionaire wealth is large relative to G.D.P. grow more rapidly than other countries at similar levels of development. We consider several explanations for this finding. First, old wealth may entrench poor management and control pyramids may distort their incentives. Second, a sharply skewed wealth distribution may create market power in capital markets causing inefficiency. Third, entrenched billionaires have a vested interest in preserving the value of old capital and thus in slowing creative destruction. Fourth, old money becomes entrenched through control of the political system, and most especially by rearing barriers to capital mobility. In contrast, substantial self-made billionaires’ wealth is observed where such forces are ineffectual and creative destruction occurs.

Yet we’ve all seen the picture of LN Mittal and his son grinning away after the Arcelor deal, and the Economic Times informs me today that Mittal’s 25 year old daughter is on the board of directors. Again, I don’t know anything about the Mittal children. For all I know they may in fact be the most competent people for the roles they play within Mittal Steel. Still, given the empirical evidence on value destruction by heirs, it does make you wonder.