Dealing with loss of cash

Ever since Rs. 500 and Rs. 1000 notes ceased to be legal tender on Tuesday night, the internet has been full of “human stories” of people for whom tragedy has struck because they are not able to transact.

This is a valid concern – for there is a significant portion of the population without access to banking (numbers in a Mint piece I’ve sent but they’re yet to publish), and access to banking is necessary to do any transaction of reasonable size (there’s only so much you can pay with 100 buck notes).

One fallacy, though, is that people in rural areas, where access to banks and ATMs is lower compared to urban areas, are going to have it harder till the cash gets adequately replaced. While these places may be out of the way, what will help them tide it over is that everyone pretty much knows everyone else.

In Money: The Unauthorised Biography, Felix Martin argues that money is neither a store of value nor a medium of exchange. Instead, it is simply a method to keep track of debts, with the elegance being offered by the fact that money is “negotiable”. If I have a 100 rupee note, all it says is I’m owed 100 rupees. Who owes me those 100 rupees doesn’t matter. “I promise to pay the bearer the sum of one hundred rupees”, the front of the note declares. It just doesn’t matter who the “I” in question is.

In order to illustrate his theory of money, Martin gives the example of Ireland around 1970, when a six-month banking strike left the country’s financial system in tatters. Life didn’t come to a standstill, though, as people figured out ways of maintaining their credits and transferring them.

Initially, people wrote each other cheques. Despite the inherent credit risk, and the fact that they couldn’t be encashed in near future, people accepted them from people they knew. Then the cheques became negotiable, after “reputed community people” such as barmen started vouching for people’s creditworthiness. And so the economy moved along.

Debts were finally settled many months later when the banking system reopened, and people could cash in the cheques they held. A similar story played out in Argentina in the early 2000s when rampant inflation had rendered the currency useless – cities managed to invent their own currencies and life went on.

In a similar fashion, in small towns, and other communities where most people tend to know one another, people are unlikely to face that much trouble because of the cash crunch. Credit is already fairly common in such places, except that it will have to be extended for a longer period of time until the cash supply returns. It is similar in other remote unbanked areas, and perhaps even among tightly-knit communities of businessmen. Systems will spontaneously come up to extend and exchange credit, and life will go on.

The concern, however, is for the urban poor, since they tend to do a large number of transactions with people they don’t know well. In such situations, extension of credit is impossible, and people might find it hard.

An unauthorised biography of an unauthorised biography

I just finished reading a book which was like a Telugu movie – the beginning promised much, as did the reviews. About a third into the book, I was sending excerpts from its chapters to friends. Two thirds in, I was rather engrossed. And then it all fell apart, going into polemic territory in the last third.

I’m talking about Felix Martin’s Money: The unauthorised biography. When I found the book on the shelves of Blossom Book House two weekends back, I immediately reached for my phone and checked for reviews. Largely positive reviews by The Guardian and The Economist meant that I was compelled to buy it. And the first two thirds of the book was pretty excellent.

There is one very strong idea in the book – that we should look at money not as a commodity but as a system of maintaining credit. Martin gives the example of the Fei in a Pacific Island called Yap to illustrate this, and makes a rather compelling case for not treating money as a commodity.

And he does this by giving examples from ancient and medieval history – the book is peppered with nice examples from Mesopotamia and Greece and the Warring States of China. In between he returns to modern times and talks about how Argentina in the 2000s and Ireland in the 1960s reacted to closure of banks – all of it lending further credence to his theory of money being a means of credit rather than a commodity.

He talks about the pyramidal structure of credit in medieval Italy and the fairs of Lyons. Considerable footage is given to the formation of the Bank of England and John Locke’s recommendations on debasement of the currency (these parts were easier for me to appreciate, having read Neal Stephenson’s The Baroque Cycle) and John Law’s exploits in France.

And then, with the book nicely set up two thirds in, he turns it into a polemic against investment banks and what prompted the Great Financial Crisis of 2008. Again, some of the stuff is impressive, like Walter Bagehot’s recommendations following a credit crisis in the 1860s, and Keynes’s recommendations after the First World War. But the last sixty pages or so are close to unreadable, especially for someone who’s fairly closely followed the 2008 crisis.

This is not the first time that a book on history falls away when it gets to modern history. Another example of this is Yuval Noah Harari’s Sapiens, which again begins extremely strongly in its description of prehistory and ancient history, but somehow falls away when it comes to the modern world (ending with a rather unreadable chapter on immortality and the Methuselah project). There are more examples that I can’t currently recall of books that do a great job of ancient history but fall apart when they come to modern times.

Money would have been a significantly better book had it stopped at around the 220th page or so, following the recommendations of Walter Bagehot – but maybe with some final recommendations. Till then it’s a fantastic book, but then there seems to be a compulsion to provide recommendations, where it falls away (this is again a common bugbear, where books fall apart when they try to provide recommendations). I’d recommend you read it, but not beyond page 220 (totally ~280 pages).

Oh, and for a change I read the physical copy of the book (since I found a copy at Blossom Book House), so that copy is available to be lent out.

Ganesha, wine and vodka

I know the wife has been intending to blog about this for a while now, but in this big bad blogosphere, intent counts for nothing, and given that she hasn’t written so far, I should go ahead and write this blog post. The basic funda is that Ganesha idols in “traditional” Indian culture, wine in European culture and smirnoff plain vodka in “modren” (sic) Indian culture are all similar.

So two days back I got invited to a “bring your own liquor” party. Now, there were other attendees who mentioned they were bringing stuff that I knew I was interested in drinking, like Desmondji Agave and Amrut Two Indies Rum. From that perspective, I knew that I wouldn’t be drinking whatever I carried. Yet, not carrying anything would make me look like a cheap guy, and this is one circle where I want to preserve my reputation. So what did I do? I picked up a bottle of Smirnoff plain vodka, simply because it is the most “fungible” drink. I’ll explain later.

Similarly, when you go for a function in India and don’t know what to gift, and are “too traditional” to gift gift cards, and think it’s not appropriate to give cash, you give a Ganesha idol. So for example after our wedding we had tonnes of Ganesha idols at home (similarly after our housewarming last year). Why did people gift Ganeshas? Because it is the most “fungible”. Again I’ll expect later.

And the wife reliably informs me that in Spain, when you have to go for a party but don’t know what to take, you take a bottle of wine. I don’t know about the fungibility of wine, but the fact that it is universally drunk, can be shared widely and is seen as a classy symbol makes it a popular choice of gift. So what connects these three?

So what connects? Fungibility of course. Economists have long argued that the best gift is cash, for the recipient can utilise that cash to buy the item that gives her maximum utility. Any non-cash gift decreases utility from the maximum that can be achieved by giving cash. This is a different discussion and I’ll not touch upon that now.

When you are going to a party, you can’t take along cash, so since the top choice is not available you take the “second best” option. What is the “second best” option in this case? Something that is close to cash, or something whose general utility is so high that the recipient values it as much as she would value the equivalent amount of cash. Of course you don’t assume that the recipient will sell your gift for cash, so you gift something that is a “safe option”, that you think they will have the least chance of rejecting.

So why did I take vodka? It is a universally popular, colourless odourless tasteless liquid, and I estimated that there was a good probability that the demand for that is going to be high. So even if I don’t drink what I carried, I posited, someone else will, and that will help me deliver maximal utility to the party.

With wine in Spain, you know everyone drinks and appreciates it, and there is a chance that it might be opened at the party itself. Even if it isn’t, wine in a sealed bottle doesn’t “depreciate”, and the host can then pass on some of the unused bottles at a party  that she attends! And soon there will be the virtuous wine circle. So essentially wine doesn’t disappoint, and is put to good use.

And it is exactly the same story with Ganesha idols. Like wine, it has intrinsic value. Who doesn’t like idols of a cute elephant-headed God? Maybe people who already have too many such idols? But then Ganesha idols don’t depreciate either, so all you need to do is to keep it in a safe place and pull it out the next time you’re going to a function! And thus the virtuous circle of Ganeshas will continue!

As it happened, at the end of Tuesday’s party, the bottles of Desmondji and Amrut Two Indies were empty. The Smirnoff I took remained unopened, as did another similar bottle which was possibly brought by another safe player. But I’m not concerned. I’m sure the hosts will consume it in due course, and even if they don’t, it will come of good use when they go to a party next!

Push and Pull Teaching

I’m writing this in the context of the Right to Education Act coming into force this year. The reason I use a musical example upfront is that music is the only thing I’ve tried to learn formally in recent times. While I use the example to illustrate the problem with the traditional Indian learning system, I refer to more basic and general education in this post. 

So about a month back I decided I need to add to my education in Carnatic and Western Classical Music and decided to learn Hindustani Classical. I decided it was time to learn a new instrument (so far I’d been trained only in playing the violin) and after some facebook queries, found a teacher who lived close by. After a lecture in how he teaches to take forward a “parampara” and not for money, and that he expects extreme devotion from students, and that he likes to begin classes for a new student only on a Monday, classes began in right earnest.

Classes soon hit a roadblock, though. As the more perceptive of you here might be aware, I have (I don’t want to use the word “suffer”) ADHD (Attention Deficit and Hyperactivity Disorder), thanks to which my attention span is grossly lower than that of the normal human being. Weeks together of simply going up and down the (Bilawal) scale soon got to me and I lost interest in practicing. Soon I realized I had started to look for excuses to bunk classes. I decided to cut my losses and decided to discontinue class.

Before I discontinued class, however, I  thought long and hard about telling my teacher about my ADHD, and that his methods of teaching weren’t working out for me. I wanted to tell him about the Suzuki method which my Western Classical teacher had adopted a year ago, which kept me interested in the music without relaxation of rigour. The Suzuki Method had worked fantastically well for me. Each class I would learn a new (simple) song – for example, I started my Western Classical learning by learning to play Twinkle Twinkle Little Star.

There are times when I think that I should have given my sitar teacher a fairer chance and explained to him about the Suzuki method and adopt something like it for the Sitar. However, from my knowledge of him based on my intereaction with him for a month or so, it didn’t seem like it would work, and I ended up (regretfully) quitting without giving him a chance to push the education on me.

The thing with traditional Indian learning is that it is fundamentally “pull”. The onus is on the student to convince the teacher to take him on as a student, and then to extract knowledge and wisdom from the teacher. In the traditional Indian context, it is absolutely okay for the guru to be aloof and disinterested, for it is not his duty to teach – it is the student’s duty to extract knowledge from the teacher. In fact my friend and colleague Nitin Pai informs me that according to the Upanishads, it is the duty of the teacher to reject a student the first three times he “applies”, and accept a student only after he has sucked up considerably.

While there might have been good reasons for such teaching practices back in the Vedic and Puranic ages (for example, the caste system forbid considerable sections of the population from learning the scriptures), these practices are wholly unsuited for the modern age where the focus is on increasing the reach of education and and ensuring that more people have access to education.

With the onus being on universal education and on getting every child to learn, we need to get rid of the “Acharya Devo Bhava” (teacher is god) paradigm and instead shift to a framework  of professional teachers where it is the teacher’s duty to reach out to the student. We need to get to a paradigm where the students can demand that the teacher reach out to them and teach them, and where students don’t need to suck up to the teacher.

The “acharya devo bhava” concept might have served us well in the pre-writing age and ensured that our most important scriptures were transmitted down to an era where they could be written down. This paradigm, however, is not scalable, and definitely not suited to a situation where the objective is to provide education to everybody.

Flawed though it may be, the Right to Education Act is a good step by the Union Government to ensure greater learning among kids and to maximize our chances of making good of the demographic dividend. The measure, however, will be dead on arrival unless the mindset of teaching and learning is changed.

Sponsorship Cannibalism

Back in 2004 Shamanth, Bofi, Anshumani and I started the IIT Madras Open Quiz. In some ways it was a response to critics of IITM quizzing, who blamed our quizzes for being too long, too esoteric, too disorganized and the likes. It was also an effort to take IITM quizzing to a wider audience, for till then most quizzes that IITM hosted were limited to college participants only. An open quiz hosted by the institute, and organized professionally would go a long way in boosting the institute’s reputation in quizzing, we reasoned.

Shamanth had a way with the institute authorities and it wasn’t very difficult to convince them regarding the concept. We hit a roadblock, however, when we realized that organizing a “professionally organized” quiz was a big deal, and would cost a lot of money, which means we had to raise sponsorship. And this is where our troubles started.

The first bunch of people we approached to help with sponsorship were the Saarang (IITM Fest) sponsorship coordinators, who had so successfully raised tens of lakhs for the just-concluded Saarang. Raising the one lakh or so that we needed would be child’s play for them, we reasoned. However, it was not to be. While the coordinators themselves were quite polite and promised to help, we noticed that there was no effort in that direction. Later it transpired that the cultural secretaries and the core group (let’s call them the Cultural Committee for the purpose of this post)  had forbidden them from helping us out. Raising sponsorship for an additional event would cannibalize Saarang sponsorship, we were told.

When we needed volunteers to run the show, again we found that the Saarang “GA Coordinators” (GA = General Arrangements; these guys were brilliant at procuring and arranging for just about anything) had been forbidden from working with us. The Cultural Committee wanted to send out a strong signal that they did not encourage the institute holding any external “cultural” events that were outside of its domain. It was after much hostel-level bullying that we got one “GA guy” to do the arrangements for the quiz. As for the sponsorship, we tapped some institute budget, and the dean helped us out by tapping his contacts at TCS (for the next few years it was called the TCS IITM Open Quiz).

One reason the quiz flourished was that in the following couple of years, the organizers of the quiz had close links with the cultural committee – one of the quizmasters of the second and third editions of the quiz himself being a member of the said committee. This helped the quiz to get a “lucrative” date (October 2nd – national holidays are big days for quizzing in Chennai), and despite being organized by students, it became a much sought after event in South Indian quizzing circles. Trouble started again, however, after the link between the quizmasters and the cultural committee were broken.

The Cultural Committee once again started viewing this quiz as a threat to Saarang, and did their best to scuttle it. The quiz was moved around the calendar – thus losing its much-coveted October 2nd spot, and soon discontinued altogether. Despite significant protests from the external quizzing community and alumni, there was no sign of the quiz re-starting. Finally when the cultural committee accepted, it was under the condition that the quiz be a part of Saarang itself. After significant struggle, finally a bunch of enterprising volunteers organized the quiz this year after a long hiatus. It is not known how much support they received from the cultural people.

The point I’m trying to make is that when you have one lucrative product (in this case Saarang), it is in your interest to kill all products which could potentially be a competitor to this product, which explains the behaviour of the IITM Cultural Committee towards the Open Quiz. And it is the same point that explains why Test cricket in India is languishing, with bad scheduling (Tests against the West Indies started on Mondays), bad grounds, expensive tickets and the likes. The Board of Control for Cricket in India (BCCI) now has one marquee “product”, the Indian Premier League (IPL). The IPL is the biggest cash cow for the BCCI, and the board puts most of its efforts in generating sponsorship for that event. And as a side effect, it does its best to ensure that most of the premium sponsorship comes to the IPL, and thus the stepmotherly treatment of other “properties” including domestic cricket.

Last evening, I was wondering what it would take for the BCCI to make a big deal of the Ranji trophy, with national team members present, good television coverage and the kind of glamour we associate with the IPL. And then I realized this was wishful thinking, for the BCCI would never want to dilute the IPL brand. Have you heard of a tournament called the Syed Mushtaq Ali Trophy? It is the domestic inter-state T20 competition. A potential moneyspinner, you would think, if all national team members are available. But do you know that last year the final stages of this competition coincided with the World Cup? I’m not joking here.

I’m sure you can think of several other similar examples (Bennett Coleman and Company’s purchase and subsequent discontinuation of “Vijay Times” also comes to mind). And the one thing it implies is that it’s bad news for niches. For they will begin to be seen as competition for the “popular” brand which is probably owned by the same owners, and they will be discouraged.


Metro Notes

One of the advantages of being jobless is that though you’re poor in terms of money, you’re rich in time. So you have all the time you want to do things that give you random kicks, such as riding the new Bangalore metro on the second day of operation. The reason I chose to go today was that I had to anyway go to the MG Road area on some work, but also that the second day is a good time to see things early, while not getting caught in a mad rush.  My decision to go today was reinforced by a report in today’s paper that while there was much clamouring to get on to the first train yesterday, the second train was half-empty.

The supposedly showpiece MG Road station is not yet complete. You still can’t get to the station from the Plaza theater side, which is the “logical” side to get in if you’ve come to MG Road for shopping or generally hanging out, or even if your office is there. You need to cross over to the parade ground side at the Cauvery signal and then make your way through some narrow barricades before you get to the entrance. You get frisked at the entrance (this might end up being a bottleneck) after which you get to buy tickets. There was a queue of about 10 people when I got there.

There is still scope for the ticket staff to become more efficient, and for people to learn to carry exact change (especially given that you have tickets for Rs. 12, Rs. 14, etc). However, I would imagine that in the long term, most people would end up using a travel card, so the pressure on the counters may actually decrease. One disappointing thing was that they didn’t sell return tickets. I would have to stand in queue again at Indiranagar.

You have escalators only for going up, and you have to take the stairs when you exit the station. I don’t know if this is a method to cut costs or lead-time, but it would be a letdown if you had to take the stairs down each time, especially since the stairs were a major bottleneck in exiting the station when I disembarked from MG Road on the return journey. Another bottleneck while exiting at MG Road was the turnstiles. On your way in, the ticket booths are the bottlenecks so the turnstiles are free. Not so on the way out. However, I don’t see much scope for putting more turnstiles there so I don’t know how the metro will cope with increased demand.

The train is quite small (3 bogies long) but I’m told it’ll be increased to 6 soon. Maybe the train wasn’t as full as expected but I found the temperature in the train too cold on the way to Indiranagar (it was ok on the return journey when the train was full).  The indiranagar station was incredibly convenient and not crowded at all. Entry, exit, ticket purchase and turnstiles were all extremely smooth, and the view from the station platform is stunning, especially towards the ulsoor side. Speaking of views from trains, the metro has now given scope for a new set of hoardings for the city. These hoardings can be put up at the “metro level” along the metro line. I’d be surprised if no businessman were to take this opportunity.

The train itself doesn’t move too fast, especially since there are so many curves on the route. On the straight MG Road stretch, however, the train moves well at a faster rate. The announcements on the train still need some work. The grammar of the Kannada announcements is atrocious, and the funniest bit is when they try and explain “mind the gap” in Kannada and Hindi. The hindi announcements also carry a very strong Kannadiga accent.

There are some other measures that the metro corporation has taken in order to get people acquainted with the metro. There is usually an officer standing at the turnstiles who tells you how you should swipe (on entry) or deposit (on exit) your token. Then, there are security guards at the platform itself who make sure passengers are standing back when the trains arrive, and that they are not blocking the doors when it’s closing.

The journey from MG Road to Indiranagar was extremely quick and painless. I believe that the metro has already demonstrated its ability in making the city smaller, and I can now only hope that the full stretch of the metro (including the underground stretch at Majestic) gets completed fast. I can’t wait for the day when I take a short walk to the Jayanagar metro station and do two quick journeys to reach MG Road or Indirangar easily, safely and painlessly.

Agoda + TripAdvisor

Ok here’s a startup idea. Basically a combination of Agoda and Tripadvisor (basically a front-end combining those two backends). I’m looking to book a hotel for a forthcoming holiday. So what I’ve been doing is to search through agoda for hotels available for those days and within my price range, and one by one searching for them on tripadvisor to see their ratings and comments and all that.

Now, the deal is this: Agoda is an excellent and reliable booking engine. However, it’s tripadvisor that has the reviews that I’d trust but it neither does bookings nor has details of availability or lowest price available. Hence I’ve to keep the two windows open which is quite frustrating and time-consuming.

For someone who’s experienced in developing web apps this is quite simple I think (since I have no experience or interest in this I’m just giving the idea away). A front end that queries agoda for available hotels and tripadvisor for ratings of these hotels and then presents both together in a nice frontend. The actual booking can be done through agoda itself (to where there can be a link).

As for revenue, I’m sure hotels will advertise on this site. Problem, though is to get the tripadvisor reviews in a way that can be extracted to this third-party website without actually going to tripadvisor. But why would tripadvisor allow this since the reviews are their intellectual property and the basis on which they make their money? But well worth a try, I think!