On age and experience and respecting elders

A lot of commentary about the financial crisis of 2008 spoke about there not being anyone around who had experienced the Great Depression of the 1930s. The American Economy was largely stable till the end of the 1970s, they had argued, because the memory of the Depression was fresh in the minds of most policy-makers, and they made sure not to repeat similar mistakes. With that cohort retiring, and dying, however, in the 1990s and 2000s there emerged a bunch of policy makers with absolutely no recollection of the depression (in the 1990s, most policy makers would have been born in the 1940s or later). And so they did not hedge themselves and the economy against the kind of risks that had brought America down to its knees in the 1930s.

Now, think back to a society which was far less networked than ours is, and there was little writing (“no writing” would take us too far back in time, but think of a time when it was fairly expensive to write and store written material). This meant, that there were no books, and little to understand and experience apart from what one directly experienced. For example, one would never know what a storm is if one had never directly experienced it. One wouldn’t know how to light a fire if one had never seen a fire being lit. You get the drift. Back in those days when societies were hardly networked and there wasn’t much writing, there was only one way in which one could have learnt things – by having experienced it.

I suspect that this whole concept of elders having to be unconditionally respected had its advent in one such age. Back then, the older you were, the more you had experienced (naturally!), and hence the more you knew! There was no other way in which one could accumulate knowledge or understanding. In places like India, even education didn’t help, for “education” back in those days consisted of little more than learning the scriptures by rote, and didn’t teach much in terms of real knowledge. So taking the advice of elders naturally meant taking the advice of someone who knew more. It is natural to assume that these people who knew more than the ones around were respected.

With the advent of books, and later (post Gutenburg) the advent of cheap books, all this began to change. It became possible for people to know without having experienced. It became possible for people to get more networked, and the direct impact of both of these was that it became possible to know more without having really experienced it. In this day of highly networked societies and wikipedia, it is even possible to know everything about something without even pretending to have experienced it (attend some high school seminars and you’ll know what I’m talking about). There is no connection at all now between age and how much you know.

Culture, however, doesn’t adapt itself so quickly. It didn’t help that “elders”, whose position as the “most knowledgeable” was being threatened thanks to writing and networking, were also the people in power. In any case, the real reason of respect for elders had probably been lost, so it was easier for them to extend their reign. And so it continues to extend.

Older people nowadays fail to recognize that younger people might know more than them, and get offended if the younger people tend to argue with them. Yes, experience is still a great teacher, but the correlation between experience and knowledge has long since been broken. As the pupils sang at the beginning of the Vishnuvardhan starrer Guru Shishyaru (the teacher and the pupils), “doDDavarellaa jaaNaralla, chikkavarellaa kONaralla, gurugaLu hELida maatugaLantoo endoo nijavallaa” (elders are not wise, youngsters are not buffaloes, what the teacher says is never true).

PS: As I was writing this, it struck me that this whole “respect for elders” paradigm is more prevalent in societies (such as India) where education was largely religious. Societies where education was more secular don’t seem to have this paradigm.

Travel agents and investment bankers

The more I think about it, the more I’m convinced that travel agents perform a very similar role to investment bankers. In the olden days, not everyone had access to financial markets. In order to buy or sell stocks, one had to go through a brokerage company, who would be paid a hefty commission for his services. The markets weren’t that liquid, and they were definitely not transparent, so the brokers would make a killing on the spread. With the passage of time, advent of electronic trading and transparency in the markets brokers aren’t able to make the same spreads that they used to. Customers know the exact market price for the instruments they are trading, and this results in brokers not able to make too much out of these trades.

It is a similar case with travel agents. Vacation markets (flights, hotels, etc.) are nowhere as liquid as financial markets, and will never be. Sometimes, when you are booking holidays to a strange place, you know little about it, and hence commission a travel agent to find you a place to stay there. Given that you know little about that place, the agent can charge you hefty commissions, and make a nice spread. Of course, nowadays such opportunities are diminishing for agents, as you have websites such as Agoda which allow you to book hotels directly. Now, at one place you can compare the prices of different hotels, and have better information compared to what the agents traditionally offer you. The spread is on the downswing, I must think.

Then, don’t you think package tours are very similar to structured products? Structured products are nothing but a package of several risks packaged together. By acting as a counterparty on a structured product, a bank (even now ) can afford to charge fairly hefty fees. Structured products are illiquid,  and there is no publicly available “market price”, so it is easy for banks to make themselves good spreads on such products. However, all it takes to defeat this is an intelligent customer. All the customer needs to do is to try and understand the risks himself, and start “unbundling” them. Once he unbundles the risks, he can now trade each of them independently, on more liquid markets, and get a much better price than what bankers will offer him. The catch here is that he’ll need to put in that effort in unbundling.

It’s the same with package tours. Given the bundles, it is easy for the agents to make higher spreads. However, if you as a customer simply unbundle the package (hotels, transport, food, etc.), you can find out the price of each (available on sites like agoda and elsewhere) and find out for yourself the spread that the agent is making. And then you compare the agent’s premium with the “cost” of making all the bookings yourself and make an informed choice.

Apart from communication, among the greatest boons of the internet has to do with dismantling middleman monopolies. It is incredible how much use a little information can be of!

The other side of the long tail

There are several people who talk about how the advent and the popularity of the internet has resulted in markets in many a long tail. Without loss of generality, let us just take the market for writing here. Several niches which were earlier not served since there wasn’t enough of a dedicated audience in a particular geographical area for a certain set of articles and so no one bothered to write and disseminate them.

For example, it is unlikely that there was enough of a “market” for a series of posts on the Studs and Fighters Theory in the days before the internet – a market big enough for a newspaper or a magazine or a journal to bother publishing. Now, the internet not only allows me to publish it without effort or cost, but also lets me know that there is enough of a market for this kind of a series for me to bother publishing it rather than just explain it to a few friends in a smoky bar or cafe.

Now, the funda is that sometimes the long tail can exist in geographically coherent markets and not online! For example, all of yesterday, while at work i was frantically searching for sources to follow the BBMP election results. Everyone led me to this TV9 video streaming but it didn’t open on my office network and I couldn’t find any other live sources that were constantly updating the results. I had had similar problems following the results of the Karnataka Assembly elections two years back.

It was then I realized that the “traditional market” can itself be the long tail! For example, the amount of information I found about the elections in this morning’s papers was really impressive – in fact, the much ridiculed ToI had pretty good coverage of the polls, as did the Deccan Herald or the New Indian Express. Earlier in the morning, yesterday, too there were the Kannada channels which focused exclusively on the election results.

What I’m saying here may be fairly obvious, but just wanted to point out that long tail need not refer exclusively to the new media, or new channels. When you look at it in certain ways, several of the traditional media are also catering esssentially to a long tail, though when there was only the traditional media, no one really used the term.

Talking of BBMP elections, take a look at this graphic that was presented in the Deccan Herald today. Don’t you see a pattern in this?

Bangalore Map

Fighter Batsmen and Stud Bowlers

Insight of the day: Batting is inherently fighter and bowling is inherently stud. Of course there are severral stud batsmen (eg. Sehwag) and fighter bowlers (eg. Giles) but if you look at it broadly – a batsman needs to get it right every ball, while a bowler needs only one ball to succeed.

The fundamental idea is that bowling success can be more lumpy than batting success – for example the maximum that a batsman can do if he has one great over is to score 36 runs – whcih in the context of the average game won’t amount to much. However, if a bowler has one great over and picks up six wickets, the impact is tremendous.

The bowler can afford to be much more inconsistent than the batsman. He might get a few balls wrong, but he can suddenly make an impact on the game. For a batsman to have a significant impact, however, he should be able to carry it on for a significant amount of time. An “impulse”  (a large force acting for a small time period) will do the batting team no good, while it can be a tremendous boost for the bowling team. On the other hand, steady unimaginative play by the batsman is good enough, while a bowler needs to necessarily show patches of spectacularity to have an impact.

Hence, batting is fighter and bowling is stud.

However, what the advent of one day cricket has done is to invert this. By limiting the number of overs, and creating conditions where a team need not be bowled out, it has turned things upside down. Of course, a stud performance by a bowler (say a hat-trick) can have a significant impact on the game, but inconsistent and wayward bowling is likely to cost the bowling team significantly more than it does in Test cricket.

Similarly, with the game getting shorter, an impulse by the batsman (say a quick 40 by Sehwag) has a much larger impact on the game than it does in Test cricket. And on the other hand, dour batting  – which is so useful in Tests – may actually be a liability in ODIs. Similarly the mantra for bowlers has become containment, and thus fighterness in bowlers has a greater impact – and so people now do respect bowlers who can bowl long spells without taking wickets, but just containing.

Remember that even now, to succeed in Test cricket, you need to have the correct characteristic – Sehwag’s batting might appear stud and risky, but he has the ability to play really long innings which is why he is a really good Test batsman. If he didn’t have the “longevity gene”, he would’ve still remained a one-day wonder. Yes – now teams do pick a fourth bowler to do the “holding role” – keeping one end tight while others attack. Still, the holding guy needs to have some ability to pick up wickets by himself.

Preliminary reading on studs and fighters theory:

Studs and Fighters

Extending the studs and fighters theory