Links from Folks About the Corona Virus

Prashant Jain sends in this website: Covidlive.info

Rohit Srivastav sends along this PDF: The-Pensford-Newsletter-3.23.2020: I don’t agree with most of it, but it does provide an interesting point of view about the cost benefit analysis.

Also from Rohit, a podcast in which economists from Goldman Sachs try to get a grip on where the American economy is headed.

Harsh Doshi has a podcast up about living through the lockdown. The first episode is he interviewing Dr. Sanjay Baru.

Prof. Asawa shared a blog written by SA Aiyar in the TOI about how our stimulus needs to triple from its current level – at least.

 

Parag Sancheti shares a video about exponential functions

Parag Sancheti, a batchmate from GIPE shared a video after reading my last post about exponential functions:

I’ve been watching old videos by 3Blue1Brown, and had no clue that these were up! Thanks Parag.

Speaking of new videos on that channel, take a look at this one as well:

 

Pro tip, especially to the BSc students at GIPE (but honestly, the entire planet) – consider subscribing to this channel?

Understanding exponential functions in the times of the corona virus

Neil deGrasse Tyson spoke for the entire teaching community recently, when he said the following:

So if you were nodding off or were otherwise engaged when exponential functions were taught  in your class – or you just feel like a refresher – here’s some links to help you understand what exponential functions are, and why they matter so much where the corona virus is concerned:

First, from yours truly, in plain simple English: exponential functions essentially imply that y is going to change pretty darn quickly, even for very small changes in x.

“x” thoda si bhi change hone pe “y” legendray change kar jaayega

It means more than that, and there are exceptions, but if you are a non-math person, that line above is what you need to take away.

Here’s Wikipedia on the same topic, and here’s a short videoby Khan Academy:

(The link before the YouTube video will also have other, related videos and a practice set. Recommended)

If you want to play around with exponential graphs yourself, try Desmos:

Do you see the little “play” buttons next to a, b and c? Try clicking them and see what happens. “a” and “b” are crucial for social distancing. The lower those values, the slower the spread. Try it for yourself! (Note, this will work best on a desktop/laptop, rather than a phone)

So why does this matter in times of the corona virus?

On Monday, March 15, the US had about 4,000 confirmed cases. You might have said “Hey, that’s a tiny fraction of the country’s population. What’s all the fuss?” By Wednesday it had grown to around 8,000. So then you might think the total will grow by 4,000 every two days. That would be wrong; that’s linear thinking. It’s much worse than that.

That is from a Wired article, from which I will continue to quote below as well. So if four thousand becomes eight thousand, eight thousand becomes twelve thousand, and twelve thousand becomes sixteen thousand… not so bad, right?

Well…

With exponential growth, the number of new cases each day constantly increases—graph the total over time, and you’ll see that the line curves upward—and that can get you into big numbers real fast. What you need to look at is the percentage increase. In this case, it doubled (an increase of 100 percent) in two days. At that rate, it will grow from 8,000 on Wednesday to 16,000 on Friday, and 32,000 by Sunday.

Please read the rest of the article, and take your time doing so. This is important!

By the way, I’ve said this before on these pages, and I’ll say it again – don’t be confused when you look at a graph that shows a linear growth, but the chart says growth is exponential. First look at the axes!

For example, take a look at the picture below, taken from this post:

Please read the entire post, here is the link again.

Now, every article we’ve read so far has given us cause to worry, right?

Go back to the start of this article:

…exponential functions essentially imply that y is going to change pretty darn quickly, even for very small changes in x.

I used the word “changes” quite deliberately. You see, exponentials go up in a hurry, it is true – but they also come down in a hurry!

And since the number of new cases also depends on the number of infectious people (which declines as folks recover), that will also be exponential, but exponentially decreasing.

Bottom line; While the bad news grows rapidly, the good news will also evolve rapidly. So let’s just hope that by invoking sheltering-in-place and other strategies, we can reduce the infection rate and cause the inevitable bell-shape curve of the number that are sick to turn over sooner.

Think of the corona virus as us chugging up at the start of a roller-coaster ride. That’s kind of where we are right now. The good news is, when we start to “come down”, that’ll be pretty quick too.

But until then, one thing, and one thing only: social distancing!

A clarification about yesterday’s post

I wrote yesterday in a post about research put up by The Center For Disease Dynamics, Economics & Policy. This is the link to my post.

I got the PDF as a Whatsapp forward, and shared it only after running a Google search for more details. I hit upon the website mentioned above, within which I found the page on which the results of the PDF were shared, along with the PDF itself.

This is from their “About” page:

CDDEP was founded with the objective of using research to support better decision-making in health policy. CDDEP researchers employ a range of expertise—including economics, epidemiology, disease modeling, risk analysis, and statistics—to conduct actionable, policy-oriented research on malaria, antibiotic resistance, disease control priorities, environmental health, alcohol and tobacco, and other global health issues.

CDDEP projects are global in scope, spanning Africa, Asia, and North America and include scientific studies and policy engagement. The CDDEP team is experienced in addressing country-specific and regional issues, as well as the local and global aspects of global challenges, such as antibiotic resistance and pandemic influenza. CDDEP research is notable for innovative approaches to design and analysis, which are shared widely through publications, presentations and web-based programs.

CDDEP has offices in Washington, D.C. and New Delhi, India and relies on a distinguished team of scientists, public health experts, and economists around the world.

The report seems to have been published on the 24th of March, 2020. But the reason I wanted to write this post is because of the following tweet:

This is the reply from Johns Hopkins:

The report that I shared with you was tweeted out by them on the 24th of March, 2020, at 11.45 pm:

CDDEP hasn’t retracted, so far, their report, nor have they responded publicly to Johns Hopkins saying that they haven’t had anything to do with this publication.

I will update this page with clarifications as and when they emerge, from either Johns Hopkins or from CDDEP.

My apologies for causing any confusion, if any, with my post from yesterday and my thanks to Prashant Jain for a brief conversation about this issue.

 

 

Looking for Silver Linings

Prakshal Jain from the Gokhale Institute writes in:

Hello Sir
Hope you are doing well

Current fiscal and Monetary measures (not stimulus as Parchure Sir mentioned) that are undertaken by Government to infuse money and ensure consumption of essential goods in the hand of public to fight the lockdown situation is actually a blessing.
Our economy needed these reforms since a very long period of time and government has been ignoring it, so can this injection result in some sort of economic upliftment?
Secondly, can more measures like these to the various sectors can help us fight economic slowdown?

I’m treating this as an extremely Rawlsian take. Read more about Rawls here, and his most famous book here.

Rawls’s positive distributive thesis is equality-based reciprocity. All social goods are to be distributed equally, unless an unequal distribution would be to everyone’s advantage. The guiding idea is that since citizens are fundamentally equal, reasoning about justice should begin from a presumption that cooperatively-produced goods should be equally divided. Justice then requires that any inequalities must benefit all citizens, and particularly must benefit those who will have the least. Equality sets the baseline; from there any inequalities must improve everyone’s situation, and especially the situation of the worst-off. These strong requirements of equality and reciprocal advantage are hallmarks of Rawls’s theory of justice.

I understand Prakshal as asking if the corona virus has made our government (and indeed, governments the world over) more Rawlsian in its outlook, and if that is, on balance, a good thing.

Three things come to mind:

  • First: It is a given that the poor will be the most badly hit in these times. See here for a list of recommendations (each of which is worthy of greater debate and potential implementation), follow this Twitter handle to get a sense of how bad things are (or are going to get). Any government would have no choice but to help out the poorest sections of society: it is a moral imperative. From that perspective, yes, the government is more Rawlsian right now than as of a week ago, and that is a great, great thing.
  • Second: The crucial part is the phrase “on balance”. The government is more Rawlsian right now because of the corona virus lockdown, and it is all but certain that the lockdown will do more harm than the government will do good where the economic well-being of the poorest of the poor is concerned.
    Let me be clear: this is not me accusing the government of not doing enough. This is me saying that the problem is far too big for anybody to handle. So even if you were a person who thought we should be more Rawlsian, this is surely far too high a price to pay.
  • Third: And this relates to Prakshal’s final question (will more such initiatives help?), absolutely yes. Governments, NGO’s, civil society – everybody can and must chip in to help out.

Prakshal, if this doesn’t answer your question, please let me know. Thank you for writing in!

Vipul Gupta’s Recommendations

I’ll preface Vipul Gupta’s list with a request I made earlier as well: help students out with your recommendations!

Vipul Gupta recently graduated from the Gokhale Institute, and what follows is his list:

My suggestions on the books an economics students should read

1. Factfulness
2. Fooled by Randomness
3. Naked Statistics
4. Doughnut Economics
5. The physics of Wall street
6. Poor Economics
7. Fault lines
8. Black Swan

Some textbooks I would want to go through again

1. Econometrics by Wooldridge
2. Time Series by Walter Enders
3. Probability and Statistics by Degroot
4. Microeconomics by Varian
5. Futures, forwards and options by Hull

I know my list is a bit biased towards statistics that’s because it is my favorite subject

… that’s a worthy bias to have, Vipul. Thank you so much for sharing this!

Informative articles about the Corona Virus

Prof. Anurag Asawa at GIPE shared this link, which is worth reading in full. There is a PDF at the end, which can be freely downloaded, with more information.

What did we find?

  1. Community transmission of COVID-19 in India most likely started in early March.

  2. National containment is no longer an option in India. However, state or local (temporary) containment and mitigation is the best option.

  3. At baseline (without interventions), between 300 and 400 million Indians are likely to be infected by July. Most of these cases will be mild. At the peak (somewhere between April and May 2020), 100 million individuals will be infected. Of these, approximately 10 million will be severe and about 2-4 million will require hospitalization. This is the most critical period.

  4. Generalized social distancing can, in theory, reduce this peak load by as much as 75%, although this may be difficult to enforce in India.

  5. Our model is sensitive to hospital outbreaks of COVID-19 induced by admission of infected patients into hospitals. There is a need for large, temporary hospitals to handle this patient load over the next three-month period. Secondary, hospital-based transmission fuels the epidemic.

Mihir Bapat, a CA based in Bombay, sent this link, which is worth reading in full. Yes, 92 pages, but still, worth reading in full.

My thanks to both!

 

The Chinese Government and the Corona Virus

There’s people, there’s the government that represents said people, and there’s a concept called “nation”.

They’re three separate things.

If you disagree, I submit that people have existed before nations have, and (most) nations have existed for longer than individual governments have. And the reason I bring this up is because I put up a video some while ago, arguing against tribalism, and therefore arguing that blaming the Chinese for the virus didn’t make sense.

Here’s the video:

And I stand by said video: it makes no sense to blame a country, or its people for a virus.

But a government? That’s a separate story, for as I said at the start of this essay, a government is not its people, and vice versa:

Some of the bravest men and women have been the Chinese doctors and nurses on the frontlines of this virus, who were bravely raising alarm, often at the cost of their lives, and suppressed by the most totalitarian and evil great power in the planet.

And the Chinese government can say what it likes, it bungled this up. Fact.

A study published in March indicated that if Chinese authorities had acted three weeks earlier than they did, the number of coronavirus cases could have been reduced by 95% and its geographic spread limited.

As with any quantitative model, treat the number with a pinch of salt, but fewer people would have died had the Chinese government acted faster, and communicated better.

We now know that the opposite happened: local authorities in China suppressed information about the outbreak, even destroying proof of the virus sometime in December. Official censors scrubbed social media posts from medical professionals warning of a new “SARS-like” disease. And as late as mid-January, Chinese authorities denied evidence of any community transmission, allowing the lunar new year celebrations to proceed despite having known about it for at least a month.

Not only is the Chinese government obviously aware of this fact, it is trying – surprise, surprise – to not only hush things up, but warning other countries of ‘adverse’ impacts if the line is not toed, stat.

Once the virus made its inevitable outward march, claiming lives beyond China’s borders, the CPC mounted a major public relations exercise that exploited common human decencies to evade accountability. Criticism of the Chinese government was equated with racist prejudice against ordinary Chinese people. The result: rather than confront China, precious energies were exerted to avoid the trap set by China. In February, the Mayor of Florence launched a campaign encouraging Italians to “hug a Chinese”, describing it as a “fight of solidarity and unity against virus”. The People’s Daily, a mouthpiece of the CPC, applauded young Italians advertising their virtuousness on the Internet with photos of themselves hugging Chinese tourists without mentioning a word about the mortal perils of human contact.

China didn’t owe an apology or an explanation to the world: the world owed China proof of its anti-racism.

China has legal problems on its hands, once the worst of the crisis is behind us:

While China’s intentional conduct is wrongful, is it unlawful? If so, do other states have a legal remedy? Under Article 1 of the International Law Commission’s 2001 Responsibility of States for Internationally Wrongful Acts, states are responsible for their internationally wrongful acts. This commission’s restatement of the law of state responsibility was developed with the input of states to reflect a fundamental principle of international customary law, which binds all nations. “Wrongful acts” are those that are “attributable to the state” and that “constitute a breach of an international obligation” (Article 2). Conduct is attributable to the state when it is an act of state through the executive, legislative, or judicial functions of the central government (Article 4). While China’s failures began at the local level, they quickly spread throughout China’s government, all the way up to Xi Jinping, the general secretary of the Chinese Communist Party. He is now being pilloried by Chinese netizens for his failures of action and inaction. The most prominent critic, Chinese tycoon Ren Zhiqiang, lambasted Xi for his mishandling of the coronavirus, calling him a “power hungry clown.” Ren soon disappeared.

But that also depends on an internationally coordinated response, and that isn’t likely, given current evidence:

In this effort, the third event mentioned above, i.e., Donald Trump’s chaotic management of the spread of the disease in the US, is an asset for Beijing. The US President’s early responses were bumbling, flippant and motivated by narrow domestic political considerations. Trump went from being completely dismissive to eventually declaring a Europe travel ban, a national emergency and a potentially collaborative approach with G7 countries. It’s still early days, but if the US leadership continues to stumble in its efforts to contain the spread of the disease domestically and mismanages ties with international partners, it will work to Beijing’s advantage. In such a scenario, expect the Communist Party to further double down on the effectiveness of its governance system to contain unrest at home and reshape global norms

Demanding clear(er) communication ought to be requirement number one from any government here on in, beginning with the Chinese government. But I wouldn’t hold my breath.

Krishna Subramanian’s List of Things to Read and Learn

Krishna Subramanian, Ajinkya Jadhav’s batchmate in SCMHRD, was kind enough to message me separately on LinkedIn, and send across his list of things students might benefit by reading, along with some tips and tricks that he found to be useful.

If you have finished college and are reading this, a request: please help out students who are currently in college, and are wondering how to add to their learning. I and other faculty members can help out with syllabi and all that, but you are folks with skin in the game. What helped you in your career, what helped you learn better, what did you wish you had done when you were in college?

I’m reachable on LinkedIn and on email. Please send along your recommendations, and I’ll share them here. Thank you!

On to Krishna Subramanian’s list – thanks a ton for sending these in, kind sir 🙂

 

My own top 5 books which all MBA Streams should read
1) Basic Economics by Thomas Sowel
2) Atlas Shrugged by Ayn Rand
3) Intelligent Investor by Benjamin Graham
4) Goal by Etiyahu Go
5) Life and work priciples by Ray Dalio.
6) Linchpin by Seth Godin (Bonus)

Books for Finance professionals, Other than above:
1) Manorama Yearbook
– If you are working in India, it would surprise you how little you know about India. Keeping this handy and going through once in a while is a massive boon.
2) Security Analysis By Graham & Dodd
3) Damodaran on Valuation
4) R programming for dummies. (most underrated skill any finance professional can have)
5) Warren Buffett and the interpretation of financial statements by Mary Buffett and David clark.

This should help.

I would recommend the following technology trends
to keep an eye on:
1) Blockchain ( Blockchain Revolution by Don and Alex Tapscott is a good read )
2) Artifical Intelligence ( course by Andew Ng on Coursera and Prediction machines by Agrawal gans and goldfarb)
3) Augmented Reality (best is youtube videos, because you really need to understand visually why this will change business)

Ajinkya captured the blogs and podcasts perfectly, so I figured I would add a list of don’t dos?

1) Do not read any book only once.
2) Accounting is a mechanical process but Finance is not. Do not be close minded on how things must be done. (once you come into the world, even accounting is not mechanical)
3) Do not forget your basics. NPV, IRR, Time value of Money, P&L, Balance sheet, Cash flow statements.. these things should be absolutely solid. Its remarkable how many people still fumble with these.
4) Do not ignore Taxes./hidden charges. We always do things ” tax exclusive” but remember, taxes/ hidden charges are a massive key to anything. Eg: Read about active and passive Mutual Funds.
5) Do not call Ashish as Sir. (This is correct, and important – Ashish)

Lastly I think Ajinkya captured it best, you are the average of the 5 people you hang out with. Even if you read none of the above, bring out ruthless choice in your company.

Thank you for all the learnings,
Krishna Subramanian

 

In Conversation with Professor Parchure: Macro in the times of corona

Speed was key, and Prof. Parchure found talking on the phone (an actual, honest to god conversation over the phone, imagine!) the easiest.

It took me the better part of a day to figure out how to upload it on YouTube. Shows how old I am getting, no doubt.

Still, here you go. Talking with Parchure Sir is always enlightening, as is listening to him – as you are about to find out.

We’ll be doing a follow-up sometime soon, no doubt, so send in your questions, and I’ll try and include them in that conversation.