Glob: Library

A Manifesto for Reform

In 2007, Ramachandra Guha wrote India After Gandhi, history of the world's largest democracy. In 750 pages, he summarized Indian history which, in Guha's words, "is so rich and complex and yet so imperfectly documented and understood". While Guha's work gave this world the most comprehensive account of India's social and political history ever written, it left a gap in my mind about the economic and policy context that has shaped our country in the same timeline. As an entrepreneur, this gap was cause for much trouble until it was filled quite unexpectedly and pleasantly by Nandan Nilekani's Imagining India. It came as no surprise later, that "the book really began on a wintry evening in Coonoor... in December 2006. Ramachandra Guha, Rohini and I (Nandan Nilekani) were having coffee". Nilekani acknowledges Guha as one of his mentors on this book. In the appendix, the book publishes a timeline of key events starting with the East India Company overthrowing the Newab of Bengal in 1757 through both money and military, to the swapping of the Left with UP's Samajwadi Party by UPA in the wake of the Indo-US nuclear deal in 2008. Nilekani's focus on detail and Indian history sets this book apart from any biography, autobiography or big picture book written by an Indian entrepreneur or bureaucrat painting a big, hairy, audacious vision of tomorrow's India.

Economics demystified (for the developed world only)

Harford is a mecro-economist, a bridge between macro and micro economics. Harford explains macro-economic phenomena such as retail pricing, stock market behavior, taxation, health-care, environment, and licensing air-waves; by one-by-one getting inside the heads of each stake-holder on that poker table and dissecting their behavior in accordance with the first principles of economics: scarcity and choice. However, the insights only go as far as the developed world does. In the last 3 chapters where Harford tries to similarly explain the woes of the poor and developing worlds with examples of Cameroon, Belgium and China; his views quickly appear shallow and cliche, lacking the same wisdom as the rest of the book. 70% of the book is therefore a 5-star, and the rest is a 2-star.

With the Undercover Economist, Tim Harford de-mystifies the wiggling jelly of economics (where you cannot kill farm-destroying birds without suffering population explosion of farm-destroying insects and so on). What sound like conundrums are actually logical explanations of common-sense causal chains. For example, he explains that "more rational the behavior of stock market investors, the more erratic the behavior of the stock market becomes." I try to summarize: rational investors would buy shares today if it was obvious that they would go up tomorrow, but then everyone would buy today driving the price high enough so that it cannot go higher tomorrow. Rationality would obviously and consistently second-guess rationality, implying rationality cannot lead to predictable behaviour. The only thing left then is unpredictable news, which is a random event. This means that shares would behave like random walks. But if this was absolutely true, it would be a paradox, since rational investors would not invest in shares and only invest in predictable alternatives. The balancing point then lies somewhere in between. Harford then goes on to draw parallels with supermarket queues and how everyone tries to predict the fastest one, and a game of poker with players analyzing the outcome based on fundamentals yet betting based on their understanding of what the other players are thinking.

Discovery of India (independence onward)

If Nehru were to pick his choice of a historian to chronicle Indian history starting where he left off with his Discovery of India letters to Indira from 1942-46; he would probably have lived a decade longer in his excitement after finding Ramachandra Guha. Never before has a historian (or any human being for that matter) undergone the momentous task of uncovering and articulating the history of the world's largest democracy the way Guha has with India After Gandhi. Leave opinion, judgment, agenda, and agency aside; it is little doubt that Guha is the most aware Indian alive.

I had the good fortune of spending hours listening to Ram in person earlier this year, and was amazed at the wisdom-per-second spewing out from head-to-mouth impromptu. It is one thing to collect, select and organize information in chronological order; and it is another to hold that infinity in the back of your mind and retrieve, synthesize and present it on demand. It reflects passion, experience, genius, and wisdom. The series of talks were a follow-on to his controversial article in The Outlook about seven reasons why India will not be a Superpower, and why that is a meaningless goal to aspire towards.

Fooled by Probabilities

The ideas in this book have created more controversy than they deserve, and it might have something to do with the title of the book. Given the number of people who equate "random" with "equiprobable", "Fooled by Probabilities" would have been a more appropriate title for the book, though not as provocative as "Fooled by Randomness". There is a finite chance that there is a black cat in every dark room, but when you switch the light on, there is no black cat in the room. Both are correct statements - mathematically and practically. This book must be read in the same light.

It seems to me that the transition from an average to good investor (probabilistically speaking) happens as soon as you internalize the concept of expected values and invest by it. My favorite story from the book is where Taleb is asked which way the market is expected to go next week, and he says slightly up with a high probability (70%). Then someone intervened that Taleb had just made a big bet on the S&P going down next week, and he said that indeed he did. The one lesson this book teaches is that the two statements are not inconsistent with each other. 70% chance of a +1% change and 30% chance of a -10% change sums upto -2.3, a strongly negative expected value. Good investors always shadow the expected value (trend and magnitude), although market sentiments are always driven by either the expected trend of upward or downward movement, or expected magnitude of upward and downward movement.

The Illusion of Incomprehension

Amartya Sen's ideas and opinions in this book are eminently agreeable. However, this book comes across as either a hard-selling rebuttal to the nay-sayers to Sen's theories about identity, or repetitive professing to a reader who doesn't get it.

If I eat a peanut every time Sen criticizes Samuel Huntington and the Civilization theory, I will weigh a thousand pounds. With this book and the repeated attempts to nullify Civilization theory, Sen makes it much more important than it will or should be.

Amartya Sen continues to educate and continues to make smart and rational arguments that question conventional conservative wisdom. If this is your first Amartya Sen book, you will definitely get the party line in the signature format. However, if you are looking for more insights than what you have already received from the author, this book may not be the right one to spend time on.

Short Tale of the Long Tail

Wired magazine packs some of the best technology writers and new economy experts in the world, and with this book Chris Andersen asserts his position as the leader of the pack. This book has the right mix of the essential ingredients of a good business book: enough rigor for business theory but not so much as to make it dry; enough anecdotes to bring the point home but not so much as to make it repetitive; enough opinions and wit to make the reader question but not so much as to make it biased and shallow.

Like all mainstream business books, this one does not resist the temptation to encapsulate all business and socio-cultural phenomena around one simple theory. However, Anderson maintains the humility to admit discovery than claim invention. Expect this concept to become as widespread and oft-quoted (if not more) in understanding the digital consumer economy, than Geoffrey Moore's Chasm was/is in understanding the evolution of hi-tech products.

Travelogedy

Like all good travelogs, this one is romantic and personal. It is more than just the story, yet less than the biography, of Chris McCandless. Jon Krakauer establishes his credentials as a biographer of a misunderstood recluse, and passionately defends the confused genius of a youth obsessed with answering (or even knowing the answers to) the larger questions of life. The intensity and depth of the youngster who called himself Alexander Supertramp is special. He could well have and should have lived through the summer of 1992 in Alaska.

The simplicity of the goal to "live off the land for a while" makes it easy to pass judgments on, for newbies, rookies, regulars, experts, or veterans alike. That's exactly what makes this story and this book an interesting read. It would be silly to typecast him into any one bucket, whether one might appreciate his unique ideologies or not. Although the book does a great job of hero-worship with substance, it sometimes misses coherence and dabbles more into the he-said-she-said than is required. It will be interesting to see how Jon Krakauer and Sean Penn handle it in the movie scheduled for release later this year.

First-principles Investing

Food for thought for investors, served as a delicious four-course meal with 30 bite-sized portions. The portions are a la carte and may be consumed in no particular order. The chef cherry-picks from a diverse set of sources and creates a recipe of highly palatable wisdom for all to mull over.

I am no professional investor and my first reaction to the book was that Mauboussin is stating the obvious. The financial wisdom is not being found in as "unconventional places" as the title may suggest: of course, you would look at behavioral psychology, gambling and coin-tosses for learning investment concepts. However, when it comes to investing, don't we all have our stories to tell about the gap between rationality and action at the point-of-decision. In a world where finance theories attempt at creating formulae to replace human responsibility in decision-making, Mauboussin goes back to the basics and provides a tool-kit that empowers humans to make better decisions.

And thus he spake...

My favorite part of the book is the last third. By that time Hitchens has made his arguments about how Religion Poisons Everything and is now rebutting the best intellectual arguments against his thesis. What would become of human decency, morality and ethics without religion? How do you address the inherent human need to believe in something and take comfort in a higher power? What are the god-less alternatives and aren't those institutions as bad or worse? Doesn't religion provide stability to society by pacifying individuals in times of darkness and uncertainty? It is hard to sum things up and provide sound bytes about something as complex as religion, but my take-away from this book is that any religion (by design) has the ingredients of becoming totalitarian, when successful; and totalitarianism of any kind leads to ultimate power corruption.

Hitchens makes his arguments and rebuts the best counter-arguments with passion and panache. If you are amongst the majority of people in the world - believers - his irreverent sense of humor may lead you to immediately brush him off as a partisan hack; while the unbelievers will get a kick out of each of the thousands of punchlines that Hitchens artfully mumbles. However, if you belong to the third category - an intellectual who chooses to look beyond a bi-polar view of the world when it comes to religion - I would urge patience with Hitchens' indulgence as a genius linguist (when you have it, it is hard not to flaunt it!) and you will find this book extremely rewarding and will not go un-satiated. If you are seriously debating the merits and demerits of religion as an institution in the society we live in, you have glanced at the perfect place, no matter what your affiliations.

Michael Porter of Innovation

Just as Michael Porter is the authority on Strategy, Clayton Christensen has become the authority on Innovation. He has not only created a great business theory, he has created an institution that defines our modern understanding of disruptive innovation. The foundations of his business theory are unimpeachable and the illustrations of the theory across industries are appealing to professionals inside and outside the industry alike.

In this book, Christensen's students expand on the theory first proposed in The Innovator's Dilemma to create a framework that can predict whether an innovation might be disruptive (read. has potential to transform an entire industry or create a new one). The impact of understanding and applying this theory is large.