Whenever an undergraduate student asks me for advice about what to do after graduation, I always recommend two things. A gap year, if possible. And some work experience, especially if the next degree they plan to acquire is an MBA.
The gap year because I think our society needs to learn how to learn outside of college. That is a whole other blogpost, and I’ll get to it this Friday.
The work experience before embarking on an MBA? Because you need to learn what folks in HR do (and don’t do) before you learn about HR in an MBA course. Because you need to experience the agony of a performance appraisal before learning about management in an MBA course. Because you need to fight for budgets for your team before learning about finance. Because you need to know what a deliverable is in the real world before earning the right to moan about assignments in college. Doing an MBA without having worked is a little like learning how to ride a bicycle without ever having seen one, and without actually riding one while learning how to ride it. If that makes no sense to you, great. That’s what that metaphor was supposed to do.
And Gulzar Natarajan says much the same thing, with two crucial differences. He admonishes, rather than advises. And the folks he admonishes happen to have won the Nobel Prize in Economics, so the audience is ever so slightly different:
I think India is a good example of [a country] where they literally had not thought through their own plumbing. If you think of what happened to the urban migrants, India’s welfare system is actually completely designed on the assumption that people live in their stable families which live in one place for year after year. In your village, you’re entitled to apply for the public distribution, which is essentially nearly free food . . . and in rural areas there is the rural employment guarantee system. Both of those are designed for rural citizens who live in their own village. You’re not entitled to go to any village and say: ‘I want my employment guarantee.’ There might be as many as 50m of these low-income migrants who temporarily live in cities. They can’t connect to the welfare system. That’s why there were pictures in the first lockdown of people walking 1,000 kilometres . . . there was no way for them to survive. They just had to go home. That is pure plumbing failure.
That’s the Banerjee/Duflo quote, taken from Gulzar Natarajan’s blogpost, as is the link itself (I’m not rich enough to subscribe to the FT!).
This is his response:
This is pure rhetoric. It’s the classic hatchet job – form your hypothesis (a system where migrant workers can access food and other welfare benefits), set up a straw man (the public distribution system, PDS, or any welfare benefit), demonstrate how the straw man fails the hypothesis test (the example of covid induced migration), and blame the system (the government “did not think through their own plumbing” on its programs). Before passing such sweeping judgement on something like the PDS or NREGS, it’s useful to understand its original purpose and its trajectory of evolution. It’s also classic hindsight-based judgement.
As always, read the rest of the blogpost. Anything written by Gulzar Natarajan is self-recommending. And while you’re at it, read this post (and all of the posts that he links to!)
But the larger lesson you should take away from his blogpost – if you ask me – is this: designing something is very different from implementing it. If you want to be a good designer, you must have worked in implementation for a bit.
Whether it is MBA after having gained work experience or economists working on policy design – or anything else, for that matter, it is worth keeping this in mind: first the trenches, and then the command centre.
And lastly, while on the theme, here’s a book recommendation for you: Skin in the Game, by Nicholas Nassim Taleb.
Hammurabi’s Code is among the oldest translatable writings. It consists of 282 laws, most concerning punishment. Each law takes into account the perpetrator’s status. The code also includes the earliest known construction laws, designed to align the incentives of builder and occupant to ensure that builders created safe homes:
If a builder builds a house for a man and does not make its construction firm, and the house which he has built collapses and causes the death of the owner of the house, that builder shall be put to death.
If it causes the death of the son of the owner of the house, they shall put to death a son of that builder.
If it causes the death of a slave of the owner of the house, he shall give to the owner of the house a slave of equal value.
If it destroys property, he shall restore whatever it destroyed, and because he did not make the house which he builds firm and it collapsed, he shall rebuild the house which collapsed at his own expense.
If a builder builds a house for a man and does not make its construction meet the requirements and a wall falls in, that builder shall strengthen the wall at his own expense.
So from yesterday’s post, this is where you need to go to get the data about India’s agricultural exports. There may be more than one correct answer, of course, but the Excel file that I generated came from here. The DGCIS website also offered to give me the data, but after telling me that I would need to pay the princely amount of Rs. 169 for it. Why Rs. 169? They charge Rs. 1 for each row of data in MS Excel. Nope, I’m not making this up.
I can go on and on about the theme of working with data in India. Anybody who works with, or has worked with data published by the Indian government for the last twenty years can go on and on about this. We make it really difficult to access data easily in India, and that in the following ways:
It is not clear which site to access to get the data that you want
That data may not have been updated for a while
That data will probably only be available in PDF format (which is a whole separate level of hell)
The website may often be down (looking at you, dbie!)
To give you just one, already painfully familiar example: to download CPI data, should one go to the RBI website or the MOSPI website? If the MOSPI website (which is the correct answer), which MOSPI website? There have been two for a while now: this one, and this one.
For the record, I know you can get CPI data from the old MOSPI website. But the point I am trying to make here is this: surely we can get (and surely we deserve) better data portals? For a country with the kind of software talent that India possesses, surely this is not the best way to design a UI?
I’ve written about this before here on EFE, but every time I write a post about data in India, I get frustrated enough to write about it all over again.
Appoint an educational institute to be the nodal agency, and get them to work on a report about what needs to change, and why and how, for the DBIE website to become better than it is right now. That doesn’t mean (at all) a blind copy of FRED, awesome though FRED definitely is.
Is there anybody in India working on trying to figure out ways to get Indian data to be more easily accessible? On documenting what data sources are needed, and how to arrange for their capture, their storage, and to make it easy to retrieve it? And this across all three levels of government((state level data is a whole different problem. And data below that level of government is, well, let’s leave it be for the moment))? And not for private profit, but so that data is open to all?
If there is such a project, I would be most grateful if you could point me towards it. And if there isn’t one, why are those of us in Indian academia not working towards figuring out how to get this done? This is India, and this is 2021. Surely we can do a better job of making data more accessible to ourselves?
“Agri-exports touched $41.8 billion in FY 2020-21, registering a growth of 18 per cent over the previous year.” .. .. Here’s a fun((I use the term in a very, very loose sense)) exercise. Figure out where the authors got the data from? There’s a very good reason I ask this question. We don’t (yet) have something like FRED available in India. When you read an article such as the one we’re going through today, it is one thing to take a look at the statistics and think about them – and quite another to try and dig out the data yourself. It is a skill that most of us pick up out of necessity when we start work – you’d do well to start practicing right now. You’ve won if you can see this on your screen:
Source: An Excel file NOT from DGCIS
2. We need to grow exports, and we need to increase agricultural production. These are, even at an introductory level, obvious statements((ought to be, at any rate)). But as the article points out, we therefore need to dig deeper into the data to be able to answer this question in its entirety. Which products can we export more of? Why? At what cost? Think of it this way: in what ways can the Indian cricket team get better? That’s like asking which specific Indian players can get better, in a way. So if we say that the team will get better if Kohli bats better and Bumrah bats better, is that a correct answer or just lazy thinking? Because they’re already pretty good, no?((Yes, yes, I know. My point is to ask if we should be focusing on the star performers, generally speaking, or the relative laggards. And yes, I agree that both were not at peak performance in the WTC final)).
3. As the article points out, rice accounts for about 21% of the $41 billion. Note that the statistics split this out by basmati and non-basmati rice, we’re adding these up. After that it is marine products (14.46%), spices (9.66%), buffalo meat (7.69%) and sugar (6.77%). That is, the top five categories together account for about 60% of all our agricultural exports. (Get familiar with the power law, if you aren’t already)
4. The rest of the article focusses on rice and sugar, and points out that exporting these two crops is akin to exporting water – and it is not as if we have a lot of it to go around.
India is a water-stressed country with per capita water availability of 1,544 cubic metres in 2011, down from 5,178 cubic metres in 1951. This is likely to go down further to 1,140 cubic metres by 2050. It is well known that a kg of sugar has a virtual water intake of about 2,000 litres. In 2020-21, India exported 7.5 million tonnes of sugar, implying that at least 15 billion cubic metres of water was exported through sugar alone. Another water guzzler, rice, needs around 3,000 to 5,000 litres of water for irrigating a kg, depending upon topography. Taking an average of about 4,000 litres of water per kg of rice, and assuming that half of this gets recycled back to groundwater, exporting 17.7 million tonnes of rice means that India has virtually exported 35.4 billion cubic metres of water just through rice.
6. “Moreover, the export subsidy given by the government to clear excessive domestic stocks of sugar has led many other sugar-exporting countries like Australia, Brazil and Thailand to register a case against India at the WTO, which India may find difficult to defend.” .. .. As a student, here are the questions you should be asking (in my opinion). Where can I find details about this case? How do these things work? They have a whole course about it, and you really should sign up for it. If you even think about asking if you get a certificate for this course, you end up killing a little kitten. Yes, really.
7. “Farming practices such as alternate wetting drying (AWD), direct-seeded rice (DSR) and micro-irrigation will have to be taken up on a war footing.” .. .. What is AWD? What is DSR? What is micro-irrigation? Better questions: which countries do this extensively? To what effect? What stops India from doing this? What can be done about it? I haven’t hyperlinked to the last five questions, and that is deliberate. Try searching for the answers yourself, and tell us what you learnt! 🙂
8. “Closer evaluation of non-basmati exports exposes another interesting fact: These exports are actually sourced not only below-MSP but also below the average domestic mandi prices prevailing in the country after one adjusts for freight from mandi to port and loading charges at the port. How does that happen? One possibility is that a substantial part of supplies through the PDS and the PM Garib Kalyan Yojana are leaking out and swelling rice exports.” .. .. This really takes us into the weeds of agricultural economics, but here’s an article to get you started.
9. And finally, the authors’ proposed solutions:
“It is high time that policymakers revisit the entire gamut of rice and sugar systems from their MSP/FRP to their production in an environmentally sustainable manner. We must ensure that we produce more from every drop of water. Also, at least in the case of rice, procurement will have to be limited to the needs of PDS, and within PDS, it is high time to introduce the option of direct cash transfers. All these will go a long way to promote better diversification of our agri-systems and better use of our scarce water supplies and lesser GHG emissions. We could save on the unproductive use of financial resources locked up in burgeoning grains stocks with the FCI. These savings can be used for doubling investments in agri R&D to improve productivity on a sustainable basis and improve farming practices for minimising carbon emissions. An export-led strategy also needs to minimise logistics costs by investing in better infrastructure and logistics. Only then one can ensure sharing the returns of these investments with farmers to give them a better deal in terms of higher and more stable incomes.”
I’ve been writing posts like these for a while now. Here’s one about fiscal policy in India, here’s one about footwear in India, here’s one about a Marques Brownlee interview, and if you dig through the archives, you’ll find plenty more. The reason I bring this up is that I think there is genuine value to taking notes as you read anything, and publishing these notes online. Plus, as a student, there is genuine merit in asking a simple question repeatedly: where did the authors get the data from? Especially in India, the answers often aren’t simple, and the exercise is therefore worth your time.
Another reason I bring this up is that if you do this long enough, you end up making a very helpful mental map of whatever it is that you’re studying. And trust me, over time, learning compounds.
So I hope that this helped you learn a little bit more about agriculture in India, but I also hope that you learnt how simple, and powerful, it is to take notes regularly. Please do! 🙂
Interesting trivia – By the time India finishes her vaccination drive to finish approximately 1600 million doses of Covid vaccine in one year, 10-12 million people will be added to the pool of individuals over 18years. That is 20-24 million extra doses needed.
I received some fascinating feedback to my faculty internship post from last Friday, and some offers to get things kickstarted. To those of you who reached out about trying to get this off the ground, I’ll be in touch over the weekend. Thank you! 🙂
But this post is about responding to some of the suggestions, and to some thoughtful responses.
Given the short term internship, usually the intern is barely starching the surface of the work done in any organisation, adding a faculty member along with it becomes a difficult job for the employee in the company to manage.
I see the faculty member’s role as one that supplements the employee who will be the primary mentor, and I think (hope?) that the faculty member will need much less hand-holding and support. If there are to be daily debriefs (where the student intern is concerned), these could be handled by the faculty, for example. And relatively simple queries and doubts could be handled by the faculty member. But hey, that’s just my hope and hypothesis – the only way to check on what works is by actually conducting the experiment. Sneha could well be right!
It would be much better to split the course into two parts , one semester theory and next semester covering practical aspect of the theory by an industry professional. Industry experts are willing to teach, however at times, academic regulations and specific requirements in terms of teaching experience and publications etc restricts the industry entry. Also, some hand holding can the done by the prof who teaches the theoretical aspect if the industry expert isn’t well skilled to teach.
I prefer, when learning, to go from the specific to the general, so my personal preference would be to go from the practical semester to the theoretical part. But I don’t say this to disagree with Sneha, simply to state that the ordering can be switched around, if needed. But the larger points are spot on: introduce and emphasize practical applications of whatever is being taught, and for the love of god, do away with the bureaucratic hurdles when it comes to industry professionals being allowed to teach!
If at all, an internship as you suggest happens in reality, it will require a great deal of effort and initiative from the intern and faculty to derive real insights from the internship and can at times result in frustration or no concrete result as well.
Indeed. If such a thing is to work, there will have to be some cherry-picking involved. The best faculty from the most suitable institutes being matched with the most receptive managers from firms that have a culture that is open to experimentation is a prerequisite, and there will be hajjar teething issues. More, as Sneha points out, you’ll need to budget for things not working out every now and then.
But I still think the experiment is worth it, and for a very simple reason: we have far too little collaboration between academia and industry right now, and what little there is, is mostly signaling. Conclaves, panel discussions and guest lectures are great, but we need to go deeper.
Excellent idea. Why not uncouple it with students? May make everyone less nervous 😊
Me, personally, I would love to be part of such an internship with students around, because anything that maximizes serendipity is a good thing. But Siddharth has an excellent point: the option to choose should be available. At least where the professor is concerned.
Interesting concept but I see writing case studies between an industry and academic research or allowing an industry professional to join a research center will be much more useful rather than short term faculty internship. Faculty internship will be only useful if faculty is sponsored by the industry for a project rather than being paid by the college they are working for.
I would disagree, in the sense that I think what Mudit is suggesting can (and should) happen in any case. The faculty internship has a very specific objective: help professors understand what is going on n the corporate world. This is as much about the culture of work as it is about the work itself.
Does the corporate world have a different understanding of work hours, and work/life balance? Does a deliverable mean the same thing in academia as it does in industry? How does accountability work when it comes to projects, deliverables and working relationships? Should colleges have somebody working as a full time HR person? Are meetings the same, or is their pace, structure and cadence different? Why do corporates insist on using first names as opposed to honorifics?
Cuts both ways, of course! Industry professionals should also be able to imbibe the culture of an academic environment, and understand the opportunity costs of both approaches. But for these things to happen, soaking in the atmosphere and the daily rhythms of life in an office/college is really and truly important. And therefore the internship, rather than the collaboration.
My partner Alex Rampell says that competition between an incumbent and a software-driven startup is “a race, where the startup is trying to get distribution before the incumbent gets innovation”.
Please listen to that podcast episode about Dominos thinking of itself as a tech company that happens to deliver pizzas. From another episode from that same podcast, this gem of an appropriate example:
In February 2013, Ted Sarandos, Netflix’s chief content officer, told “GQ,” “the goal is to become HBO faster than HBO can become us.”
As time passes, I am increasingly skeptical that most incumbents can adapt. The culture shift is just too hard. Great software people tend to not want to work at an incumbent where the culture is not optimized to them, where they are not in charge. It is proving easier in many cases to just start a new company than try to retrofit an incumbent. I used to think time would ameliorate this, as the world adapts to software, but the pattern seems to be intensifying.
I hope he is wrong, for my sake, and for the sake of my alma mater, which is where I have chosen to work. But, um, I increasingly fear that he’s (surprise, surprise) right. Introducing technology has been hard in my workplace, but the fault lies with the culture of the workplace, not with the technology.
But as I pointed out in yesterday’s post, the regulatory capture and the cultural conformity of the higher education space in India means that most students (and their parents, or should it be the other way around) still prefer a “top” college.
A good test for how seriously an incumbent is taking software is the percent of the top 100 executives and managers with computer science degrees. For a typical tech startup, the answer might be 50-70%. For a typical incumbent, the answer may be more like 5-7%. This is a huge gap in software knowledge and skill, and you see it play out every day across many industries.
Incumbents in higher education in India – the percentage of folks with computer science degrees? Let’s move on.
First, COVID is the ultimate cover for restructuring — what my friend and former CFO Peter Currie used to call “shake and bake”. It’s an opportunity for every CEO to do all the things he/she may have wanted to do in the past to increase efficiency and effectiveness — from fundamental headcount resizing and reorganization, to changing geographic footprint, to exiting stale lines of business — but couldn’t because they would cause too much disruption. The disruption is happening anyway, so you might as well do everything you’ve always wanted to do now
75% minimum attendance, or else we reserve the right to say that you haven’t learnt enough to write the semester end examination. All classes in offline mode, only. Rote memorization tests in examination halls, with no textbooks/supplementary materials allowed. Laptops/tables/smartphones may not be used in class.
Here’s my question to those of us who work in higher education in India. Do we expect all these things to come back once the pandemic is behind us, or are we having thoughtful discussions about how the post-covid higher education field will look in India?
Today, because of the pandemic, we are at an extreme end of the spectrum which describes how learning is delivered. Everybody sits at home, and listens to a lecture being delivered (at least in Indian universities, mostly synchronously). When the pandemic ends, whenever that may be, do we swing back to the other end of the spectrum? Does everybody sit in a classroom once again, and listens to a lecture being delivered in person (and therefore synchronously)? Or does society begin to ask if we could retain some parts of virtual classrooms? Should the semester than be, say, 60% asynchronous, with the remainder being doubt solving sessions in classroom? Or some other ratio that may work itself out over time? Should the basic organizational unit of the educational institute still be a classroom? Does an educational institute still require the same number of in person professors, still delivering the same number of lectures? In other words, in the post-pandemic world… How long before online learning starts to show up in the learning statistics?
And finally, Marc Andreessen’s response to Noah’s question about what advice he (Marc) would have for a young 23 year old American:
Don’t follow your passion. Seriously. Don’t follow your passion. Your passion is likely more dumb and useless than anything else. Your passion should be your hobby, not your work. Do it in your spare time. Instead, at work, seek to contribute. Find the hottest, most vibrant part of the economy you can and figure out how you can contribute best and most. Make yourself of value to the people around you, to your customers and coworkers, and try to increase that value every day.
Every now and then (and I wish it was more often), I like reading something so much that I don’t just take notes, I put them down here rather than in Roam. It forces me take more careful, structured notes, and the act of writing it all down allows for more thoughts to bubble up – which is the whole point, no?
Noah Smith’s interview of Marc Andreessen definitely qualifies. It was interesting throughout, and I related with some of the points/concepts more than I would have wanted to((about which more below)).
Before we begin, a quick aside: most of my thoughts and reactions to the interview are because of what I do, and where I’m located. I am in charge of one course at my University, and am also in charge of placements. This University is located in India. So my excerpts, and my reaction to those excerpts are contingent on these two things.
We’ll follow the usual format: excerpts, and then my thoughts.
Consider the three primary markers of the American Dream, or more generally middle class success — housing, education, and health care. You have written at length on how all three of these success markers seem further and further out of reach for many regular people. I think — and you would agree? — that these three deficits are not only causing problems for how people live and how the economy functions, but are fouling our politics quite dramatically.
Education, in India at any rate, can either scale, or it can maintain quality. It has never been able to do both. How to increase scale without losing quality, and how to maintain affordable quality without gaining scale – both of these are really, really difficult questions to answer. The impossible trilemma of higher education in India, as it were. The BSc programme at the Gokhale Institute is (in my opinion, and it is of course a biased one) affordable quality. Far from perfect, I’ll be the first one to admit, and could always be a whole lot better, but I genuinely do think we’re doing good work. But scaling is impossible. And we all know of educational institutes that have managed to scale really well, but don’t do so well when it comes to quality.
And when I say quality, it is very much a “you know it when you see it” definition I am going with. Not NAAC reports or percentage of students placed.
Housing, education, and health care are each ferociously complex, but what they have in common is skyrocketing prices in a world where technology is driving down prices of most other products and services.
The Archimedes reference is obvious, but that’s not the reason I want to focus so much on just this one sentence. How exactly is software a lever on the entire world? Marc gives the examples of Lyft and Airbnb in the interview, but they’re the outcomes for having deployed software. The inner mechanism (I think) is that software goes a very long way towards reducing transaction costs, search costs and therefore overall friction in economic transactions.
The guy driving the rickshaw, and waiting for a customer at a traffic intersection isn’t aware of the person two blocks away who is outside their apartment building, waiting for a ride. Search costs. These are minimized because of the app.
The whole “bhaiya, xyz jaana hai” – “Itna duur, itna late, double bhada” – “kya bhaiya, itna thodi lagta hai” song and dance is avoided (although not always in a way that is fair to the rickshaw driver). Transaction costs. These are minimized because of the app.
And so more transactions take place than they would have if Uber/Lyft/Ola had not been around. And the same is true for Zomato, or Swiggy, or Airbnb or… you get the picture. This (I think) is the lever at play. More gets done because software is involved.
There are legitimate worries about whether the system is always fair, always perfect – and the short answer is always “no”. A better question to ask is if the world is better for these services being around – and the short answer (I think) is “yes”. The best question to ask is how these services could be made better – and Andreessen has suggestions later on in the interview about this.
Software is alchemy that turns bytes into actions by and on atoms.
A lovely way to think about what software does, when used well.
Everywhere software touches the real world, the real world gets better, and less expensive, and more efficient, and more adaptable, and better for people. And this is especially true for the real world domains that have been least touched by software until now — such as housing, education, and health care.
The Baumol effect has some potentially disturbing implications:
When we recognize that all prices are relative prices the following simple yet deep facts follow: If productivity increases in some industries more than others then, ceteris paribus, some prices must increase. Over time, all real prices cannot fall.
As a society it appears that with greater wealth we have wanted to consume more of the goods like education and health care that have relatively slow productivity growth. Thus, preferences have magnified the Baumol effect.
But I think what Marc Andreessen is (in effect) saying is this: sure, even accounting for the Baumol effect, are there ways to reduce search and transaction costs in education, healthcare and housing? And if yes, can we drive down prices in these sectors while maintaining (or even increasing!) quality? That’s the power and potential of software.
And yes, each one of us will react with differing levels of skepticism to the proposition. That’s fine, and I’d say desirable. But the idea is worth thinking about, no? (And if you say no, it’s not, I’d love to hear why you think so.)
It’s more the importance of communication as the foundation of everything that people do, and how we open up new ways for people to communicate, collaborate, and coordinate. Like software, communication technology is something that people tend to pooh-pooh, or even scorn — but, when you compare what any one of us can do alone, to what we can do when we are part of a group or a community or a company or a nation, there’s no question that communication forms the backbone of virtually all progress in the world. And so improving our ability to communicate is fundamental.
Remember the “If you’re the smartest person in the room, you’re in the wrong room” quote((Was it really by Confucius? I don’t think so.))? The potential advantage of Clubhouse, Spaces (or whatever it will be called on all the apps that copy the concept) is that it solves for the geographic constraint when it comes to your menu of rooms to choose from. That’s what makes Twitter so great too – you never have to worry about being the smartest person on Twitter (and I mean that in the nicest way possible!).
It is a great time to be young and angry about the quality of the education system, because the internet can solve some of your problems better than was ever possible in the past.
It’s so striking that in our primarily textual technological world, people are instantly enthusiastic about the opportunity to participate in oral culture online — there is something timeless about talking in groups, whether it’s around a campfire 5,000 years ago or on an app today
At the Gokhale Institute, we were lucky enough to listen to a talk by Visvak where he spoke about some of the positive aspects of Clubhouse during the recent elections in Tamil Nadu. The ability to listen to, and possibly chat with, people with skin in the game who are actually Doing The Work, is truly remarkable. And again, what we have isn’t perfect, and it could be better, and there will be problems. The question to ask is if the world is better with Clubhouse (and it’s imitations) or without? And the better question to ask is how to improve upon it. But when I have the opportunity to listen to Krish Ashok talk about food on Twitter Spaces, and I see people just straight up ask Krish Ashok to host a Spaces about chai – well, what a time to be alive. No? (And if you say no, it’s not, I’d love to hear why you think so.)
Substack is causing enormous amounts of new quality writing to come into existence that would never have existed otherwise — raising the level of idea formation and discourse in a world that badly needs it. So much of legacy media, due to the technological limitations of distribution technologies like newspapers and television, makes you stupid. Substack is the profit engine for the stuff that makes you smart.
I don’t exactly disagree with Marc Andreessen over here; but I have a lot of questions. I’ll list them here:
Substack is a substitute for blogs or newsletters, but with the additional ability to charge payments from subscribers for some (or all) of your posts. Is that a good definition of what Substack is?
Not all Substack writers will initially get enough paying subscribers. In fact, I think it is safe to say that most will never get (enough) paying subscribers. If the first sentence in the excerpt above is to be agreed with, what other incentive is at play for “enormous amounts of new quality writing” to come through? This is not intended as sarcasm or implied criticism – I really would like to know.
Especially in India, I completely agree that legacy media makes you stupid. It is the middle part of that sentence that I am not so sure about: I do not think it is just the technological limitations of distribution technologies that is at play. It’s a much broader question, but what other factors would you think are at play, and how does Substack help mitigate those other problems?
Is bundling inevitable on Substack? Shouldn’t it be? How will this play out? Will Revue stand a better chance as a bundle because it can be combined with so many other offerings?
This isn’t a complete list of questions, and I am not sure of the answers. But this is the part of the interview that I understood the least, for sure.
A longish excerpt in a longish post, but a very important one:
M.A.: My “software eats the world” thesis plays out in business in three stages: 1. A product is transformed from non-software to (entirely or mainly) software. Music compact discs become MP3’s and then streams. An alarm clock goes from a physical device on your bedside table to an app on your phone. A car goes from bent metal and glass, to software wrapped in bent metal and glass. 2. The producers of these products are transformed from manufacturing or media or financial services companies to (entirely or mainly) software companies. Their core capability becomes creating and running software. This is, of course, a very different discipline and culture from what they used to do. 3. As software redefines the product, and assuming a competitive market not protected by a monopoly position or regulatory capture, the nature of competition in the industry changes until the best software wins, which means the best software company wins. The best software company may be an incumbent or a startup, whoever makes the best software.
So this is the part of the Domino’s story that struck me more than anything, when he simply declared for all to hear, we no longer think of ourselves as a pizza company. We think of ourselves as a technology company. I said, excuse me? Well, turns out, they’re headquartered in Ann Arbor, Michigan. They’ve got 800 people working in headquarters. Fully 400 of those, half of their headquarters employees, are engaged in software analytics and big data. They really– once they finally got the product right, they really are, from this point going forward, as much a technology company as they are a food company. And many of the initiatives have to do with making it as easy, as convenient, as kind of natural and impulsive almost to order Domino’s, much more so than any other pizza company.
But, but, but – and this is where the “what I do and where I’m from part” really comes into play – has higher education in India successfully (or even partially) gone through Marc Andreessen’s three stage transformation?
Short answer, no.
Long answer: because “assuming a competitive market not protected by a monopoly position or regulatory capture” doesn’t apply in the case of higher education in India (yet). See this, this, this, and this from earlier on in EFE.
But especially see this! College, as I’ve written in this post, is a bundle. It sells you the learning (Coursera), the signaling (LinkedIn) and the peer network (Starbucks):
If you want to go up against college as a business, you need to sell the same thing that college is selling. And the college sells you a bundle. A business that seeks to do better than college must do better on all three counts, not just on learning. All of the online learning businesses – Coursera is just one very good example – aren’t able to fill all of the three vertices just yet. And that’s why education hasn’t been truly shaken down by the internet just yet: Because college today is more about signaling than it is about learning, and because when you pay money to a college, you are getting a bundle.
And partially by regulatory capture (UGC approved degree, yay!) and partly by cultural conformity (Sharmaji ka beta went to IIT. Whaddya mean, you will learn from YouTube. Kuch bhi!) we still celebrate getting into a “top” college.
Since “top” colleges know this, there is no incentive for them to change. And since ed-tech firms in India also know this, they design excellent software that is designed simply to get students into these colleges((that is a sweeping generalization, yes. I’m more than happy to be corrected on this. Please tell me more about ed-tech firms that are about learning for its own sake, not about entrance examinations)).
And so we in the education sector in India continue to wait for the revolution.
Phew! That’s enough for today. I’ll be back tomorrow with Part II of my reflections on this interview.
Yesterday’s post was about taxation (or the lack of it) in the United States of America. Today’s post is about the composition of tax revenues in India (along with some questions to which I would love some answers).
In FY21, despite a stringent lockdown and a raging COVID-19 first wave, the gross tax revenue collected by the Centre increased over FY20. However, the increase was made possible by a sharp rise in contributions from union excise duties. This compensated for the sharp drop in the share of corporate tax collection. The shift in tax burden from the corporates to the masses has come at a time when the pandemic has led to many job losses and reduced income levels thereby pushing more people into poverty.
I tend to take chart design a little seriously, so before we proceed, a laundry list of ways in which I wish this chart was better:
Source! What is the source of your data? As we will see later on in this blogpost, that really matters
Dump the y-axes (or at least one of them) and label the series instead. I’d prefer to do this for both series
This is especially important because you’ve got “base” numbers on the LHS y-axis and percentage change on the right, and visually, it is very non-intuitive. Especially because the RHS y-axis has zero at a different level when compared to the LHS.
A horizontal line next to 0% on the RHS would help provide clarity.
Any charting ninjas out there, please let me know where I’m wrong, and what you would do instead 🙂
Gross tax revenue for 2020-21 (Revised Estimates) is Rs. 1900280. That’s… close enough, I suppose, to 20.24 lakh crores? Not really, if you ask me, but we’ll make do. By the way, to be clear, none of this is intended as a “hah, gotcha!” exercise. If there is a better data source that I should be using, please do let me know.
The excerpt above notes that gross tax revenue went up in FY 21 compared to FY 20. That’s not what this table shows, and I would love to learn more about which data source was used by The Hindu’s data team. That being said, their larger point is valid, and worth thinking about: in a year in which India’s GDP contracted, by around 7% or so, tax collections have been remarkably resilient. Going by the dataset I am using, they haven’t actually increased, but it is a close run thing, and that is remarkable.
[Professor Sabyasachi Kar was kind enough to point out a rather elementary error on my part: what matters is nominal GDP growth rate, not the real GDP growth rate. And nominal GDP contracted by around 3%, not 7% – that does explain a lot about the change in gross tax revenue we are seeing in this blogpost. Thank you, Professor 🙂 ]
Which means, of course, that we should be taking a look at which specific line items are responsible for this increase. And even a cursory glance at the table tells us that the impressive performance is almost single-handedly due to excise taxes. They’ve gone up from a base of Rs. 240615 crores in 2019-2020 to Rs. 361000 crores in 2020-21. That’s some growth!
If you are a student of the Indian economy, you might want to read this article, an excerpt from which is below:
The interesting thing is that the excise duty earned from the petroleum sector has jumped from Rs 99,068 crore in 2014-15 to Rs 2.23 lakh crore in 2019-20. The government has become addicted to easy revenue from taxing petrol and diesel. This year its earnings will be even higher than in 2019-20.
As a student, never take numbers you read in an article as given. Not, to be clear, because you don’t trust the author, but because you should always go to the source of the data. Here’s one potential answer:
I personally want to learn more about 5.02, 5.03, 5.05, 5.07.10 and the “total” row. That’d be a great masterclass, if you ask me
The bottomline: it is a great time to be a student of the Indian economy. All of what your textbooks tell you, both in terms of theory and in terms of data, is being stress-tested in ways that really test your knowledge of the Indian economy – so long as you look hard enough, and don’t stop asking the right questions.
I write this blog for folks who are looking to learn more about economics. And if you are in this group, you can’t help but have noticed that there’s been a bit of a brouhaha over taxes, both in the United States of America and in India.
ProPublica has obtained a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years. The data provides an unprecedented look inside the financial lives of America’s titans, including Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg. It shows not just their income and taxes, but also their investments, stock trades, gambling winnings and even the results of audits. Taken together, it demolishes the cornerstone myth of the American tax system: that everyone pays their fair share and the richest Americans pay the most. The IRS records show that the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year.
What exactly is income tax? And what is its history?
Well, the first question is simple to answer (to begin with): it is a tax on your income. Ah, but that then begs the (pardon the puny pun) million dollar question: what is income?
But a question remained: What would count as income and what wouldn’t? In 1916, a woman named Myrtle Macomber received a dividend for her Standard Oil of California shares. She owed taxes, thanks to the new law. The dividend had not come in cash, however. It came in the form of an additional share for every two shares she already held. She paid the taxes and then brought a court challenge: Yes, she’d gotten a bit richer, but she hadn’t received any money. Therefore, she argued, she’d received no “income.” Four years later, the Supreme Court agreed. In Eisner v. Macomber, the high court ruled that income derived only from proceeds. A person needed to sell an asset — stock, bond or building — and reap some money before it could be taxed.
As the article I have excerpted this from goes on to say, folks were warning us even back then that this was not going to end well (it is nowhere close to ending, and it is not going well). But this talks to us about the difficulty of defining income, about which more in a bit. Here’s a brief snippet about how the idea of income taxes originated:
The universal taxes of ancient times, like the one that brought Mary and Joseph to Bethlehem just before the birth of Jesus, were invariably head taxes, with one fixed sum to be paid by everybody, rather than income taxes. Before about 1800, only two important attempts were made to establish income taxes—one in Florence during the fifteenth century, and the other in France during the eighteenth. Generally speaking, both represented efforts by grasping rulers to mulct their subjects. According to the foremost historian of the income tax, the late Edwin R. A. Seligman, the Florentine effort withered away as a result of corrupt and inefficient administration. The eighteenth-century French tax, in the words of the same authority, “soon became honeycombed with abuses” and degenerated into “a completely unequal and thoroughly arbitrary imposition upon the less well-to-do classes,” and, as such, it undoubtedly played its part in whipping up the murderous fervor that went into the French Revolution.
Brooks, John. Business Adventures: Twelve Classic Tales from the World of Wall Street (p. 93). Hodder & Stoughton. Kindle Edition.
That… is not reassuring.
The chapter on income tax from this excellent, excellent book makes for great reading. As it turns out, it was the (surprise, surprise) Civil War that finally provided the impetus for the imposition of an income tax across the length and breadth of the nation((do read the entire chapter, though. The snippet about the experiment in Rhode Island is fascinating.)) And the imposition was celebrated! Well, at least by some:
“I am taxed on my income! This is perfectly gorgeous! I never felt so important in my life before,” Mark Twain wrote in the Virginia City, Nevada, Territorial Enterprise after he had paid his first income-tax bill, for the year 1864—$36.82, including a penalty of $3.12 for being late. Although few other taxpayers were so enthusiastic, the law remained in force until 1872. It was, however, subjected to a succession of rate reductions and amendments, one of them being the elimination, in 1865, of its progressive rates, on the arresting ground that collecting 10 per cent on high incomes and lower rates on lower incomes constituted undue discrimination against wealth.
Brooks, John. Business Adventures: Twelve Classic Tales from the World of Wall Street (p. 96). Hodder & Stoughton. Kindle Edition.
Back, as it were, to the future. Anand Giridharadas wrote an article in the New York Times about the ProPublica report:
Mr. Buffett is almost the perfectly made billionaire for this moment in which, at last, many Americans are beginning to question not only corruptions of the system but the matter of whether billionaires should exist at all. He doesn’t do the things the worst of them do. He isn’t in it for what they’re in it for. He clearly must care about money, but he also kind of doesn’t care about money. Even in his generosity, he has avoided the imperial lording over that others cannot resist. And this is what makes him so troubling, because through him we are tempted into believing that a system can be defended that allows a man to accumulate more than $100 billion while people are sleeping, in hock to him, in his mobile homes, shortening their lives with the beverages he’s invested in, scampering around the warehouses whose nonunion status has redounded to his money pile. It can’t. And who keeps us from seeing that simple, stark truth more effectively, more perniciously, than the Good Billionaire?
The second card in my three card trick is a response to this essay, from V Ananta Nageswaran((note that I am excerpting the outline of the argument, please visit the blog to read it in full)):
So, notwithstanding Anand Giridhardas, we can still think about the manner in which incomes and capital gains & dividends are taxed. I see three issues, at my level. There needs to be a discussion on unrealised capital gains and dividends. Dividends are avoided and companies buy stocks back to avoid dividend tax. What if the tax policies take away that choice? Second, even if we accept that only realised capital gains are to be taxed, why are they taxed at much lower rates than tax on wages? Third, even if we accept this logic (which, in addition to the above arguments, is also a reflection of who made those laws, their incomes and wealth status, etc., over time and across the world) of the primacy of capital, for the sake of argument and hence accept the conclusion that capital gains will be treated differently from regular labour income, then the question is one of defining short-term and long-term. Why should short-term be just one year? In economics, anyone’s definition of short-term is not one year but a business cycle, i.e., minimum three years. Extending the definition of ‘short-term’ to 36 months from 12 months will earn more revenues.
That is, the author is saying that that are indeed problems with capital being taxed the way it is, but (as he points out elsewhere in the blog) the way forward is evolution, not revolution.
The truth, as always, lies somewhere in the middle – and that, of course, is the point of the excerpt above too. On the spectrum of Current System Bad:::Current System Good, reasonable people can and should argue about the “sweet spot”.
And if you are a student of economics (and especially public finances), where do you go to learn more before trying to figure out where you should be on this spectrum?
And for a theoretical understanding – always a good idea for an issue as complex and important as this one – Chapters 20 and 21 from Stiglitz’ Economics of the Public Sector.
EconForEverybody 