Martin Scorsese and Roger Ebert Talking Movies

Most of you will have heard of Martin Scorsese (duh), but perhaps not everybody will have heard of Roger Ebert. If you’re looking to improve your writing, read his reviews.

His reviews are also a great way to pick what to watch on pretty much any night. Also watch his reviews with Gene Siskel.

But for today, enjoy this conversation between two people who knew just a little bit about movies

Food, by Krish Ashok

If you’re coming cross this thread for the first time, I envy you. Scroll up to the top, and drool your way through 🙂

Please read his book, Masala Lab, if you haven’t read it yet.

On Networking

It’s a question I get quite often: can you teach me about how to network better?

  1. I actually don’t network all that well. I suck at small talk, for starters. I’m never sure of what to do when I walk into a large gathering. My preferred thing to do at large parties is to seek out a person I’m comfortable with, and chat with that person for as long as possible. So if that is the kind of networking you have in mind, I’m not the guy to ask.
  2. But reaching out to folks to ask for help, I have a lot of experience in. I’ve been doing it for years, and will do it for life. Unashamedly, unabashedly. That I can speak about, since I have skin in the game.
  3. “Life is a non-zero sum game” is an axiom for me. So if somebody asks me for help, I will always try to help. I’d advise you to do the same. And that is a good way to start building out your network: help other folks when they ask you for it. Two advantages, one personal, one societal.
    1. Of course that person is likelier to help you when you reach out to them for help. You can, Vito Corleone style1, call in favors, even years down the line.
    2. But at the margin, that person is also likelier to pay it forward. That is, there is a non-zero chance that the person you helped will in turn help other folks who ask that person for help. If your ultimate aim is to build a society that is more willing to help each other to learn (as mine is), help others as much as possible. And you can call that networking, if you like. 🙂
  4. But that is the larger point about networking. I think most people have “how can I get others to help me?” in mind when they want to get better at networking. And sure, that’s very much a part of it.
  5. But it cuts both ways, no? I think it makes sense to first ask “How can I help others?”, before asking others for their help. Exports matter as much as imports!
  6. And a college student (my primary target audience on this blog) might well say, “But what can I help them with? They have so much more experience and knowledge than me!”
    1. True, for the most part. Not always, mind you, but I get the merits of that argument.
    2. But can you help somebody else? Can you help your juniors learn better? Can you help your neighbor’s schoolkids out with a project? Can you put out blogposts regularly that other folks may eventually read?
  7. If at least a part of your personal mission in life is to help other people, you will be that much more confident in asking others for help. Because you’re not asking for help only for yourself to get a job (for example), but through the help you’re receiving, others are benefitting too.
  8. The bottom-line is this: networking isn’t just about asking how to get others to help you. It is also about asking how you might help others. And doing the latter first makes it much easier to ask for the former.
  9. One final point: it is of course still entirely possible that the person you’ve asked for help will say no. They’re not doing it because they don’t like you, or your work. It is because they have commitments of their own, and honestly and really don’t have the time.
  10. Which is fine! There’s seven billion of us out there, you can always find someone else 🙂

Previous posts on EFE that have mentioned networking.

  1. don’t take that analogy too far, please![]

Should social media ban political parties?

I came to this interesting article via Mostly Economics:

In many countries, Facebook is one of the few alternatives to the government-aligned outlets that dominate national media ecosystems. That is why authorities have devoted so many resources to manipulating it, and why the company must take responsibility for stopping them.

Which led me to ask myself this question: what are the long term costs and benefits of having political parties on social media, and whether it makes sense to ban them from being on it?

  1. In these politically charged times, disclaimers might be a good way to start. This is not about Trump and Facebook, which is what the article I excerpted from is about. Nor is it about Twitter and the Indian government. It is about, more broadly speaking, the separation of societal discourse from discourse led by, shaped by and manipulated by, political parties. All political parties from all nations across all social media platforms.
  2. What is the aim of political parties on social media? Are they playing the non-zero game of asking what is best for their country (and preferably the world)? Or are they playing the zero-sum game of showing how the other side is wrong?
  3. Do they lead by example in terms of what societal discourse ought to be like? I know what my answer is to this question. If yours is yes, and you are willing to engage in a conversation, I would love to learn why my answer is wrong.
  4. My utopian societal discourse is one in which I take the help of others to learn what is best. And I hope to do this by improving my own knowledge and thinking, by conversing with others.
  5. Perhaps I’m too cynical when I say this, but this is not the aim of any political party on any social media platform. The aim of any political party on any social media platform is to prove “The Other” wrong. More, to insist that glory for your tribe/state/nation is all that matters. Still more, to insist that this glorious destination can only be reached via supporting “Us”, not “The Other”.
  6. Political parties play the zero sum game on social media. And we get sucked into playing that game ourselves.
  7. They’re not the root cause of the state of societal discourse, to be clear. But have they made the problem worse? Maybe I’m blinkered in my view, but I fail to see how this is not the case.
  8. The devil, as always, lies in the details. Are representatives of political parties to be allowed? If yes, are they free to make political statements? Who decides? This is not, I’m very aware, a very practical solution to the problem I’m highlighting. But I’ll make two final points.
  9. I’d much rather have this conversation than a debate on whether America should rein in Facebook, and whether India should ban Twitter, or any other match the following of your choice.
  10. If the two alternatives given to me are a country without social media of my choice, OR social media of my choice without political parties’ handles on it, I’m going with the latter.
  11. The truth lies somewhere in the middle. But maybe there’s merit in approaching the middle from this side of the spectrum rather than that one? (Yes, I know, third point. But this is my platform, and therefore my choice.)

Buckle Up For the Ride

This from the Livemint:

As of March 2012, retail loans amounted to about 18% of the total loans outstanding in Indian banks. By March 2021, this had increased to 29%. By comparison, the share of loans given to industrial entities of all sizes has dropped from 45% to 30%. Retail loans grew at a compounded annual rate of 15.5% in this period, against 4.5% for loans to industry. The rebalancing accelerated after 2015 as retail loans maintained their pace, while the growth rate in loans to industry fell below 2%, showed data from the Reserve Bank of India (RBI).

Not just since the pandemic, then, but for a while now, retail loans have been more dominant.

But as the article goes on to say:

During the covid-19 pandemic, only two of the four main borrower segments have managed to borrow more from banks than earlier, the data showed. The retail segment is one of them, the other being agriculture and allied activities. Loans given to the services sector and industry saw a decline during the pandemic.

And then this, yesterday, from Deepak Shenoy:

There’s things textbooks and definitions, and there is practical experience:

But the takeaway is this: if other financial institutions are reporting “better” numbers, what weightage should you give this tweet in your mental model of the financial sector? Should this tweet worry you more than those numbers reassure you, or should it be the other way around? Why? What is Bayes’ theorem?

Finally, it is one thing to speak about the increase in retail loans. What about the increase in NPA’s?

If you are a student reading this, these are the questions I recommend you should be asking yourselves:

  1. What have NPA’s been like in past crises?
  2. Why have NPA’s risen so sharply for auto loans in this firm’s case?
  3. What can you conclude about all NBFC’s from this one report? Should you take a look at other firms reports? If so, which ones? Why? Re: the tweet above, how much can you trust them? Why or why not?
  4. What else might firms do to make their numbers look better, besides putting in cheques on the 30th of June? What does Google tell you about this? What do professionals tell you about this?
  5. What conclusion can you reach about the finance sector in India from your answers to the first four questions?
  6. If you were a finance trader, how would you have acted on your conclusions? What trades would you have tried to engineer?
  7. Do you see signs of such trades in the market?
  8. If yes, should you be reassured or worried?
  9. If no, have you figured out a way to trade that others have not? In other words, how confident are you of your conclusions, relative to what the market is saying? Why?
  10. Do you have the gumption to put your money where your mouth is? Will you bet your own money on the basis of your conclusions?
  11. Which questions have I missed out on asking? What else should I be asking, and why?

Try answering these questions, however basic your answers may be. After answering them, reach out to a finance prof, or a person from the industry, and ask them to help you make the list of questions longer, and your answers better.

It’d be a pretty good way to learn finance, irrespective of whether or not you “formally” study it as a subject, in my opinion.

Hajjar Awesome!

The phrasing of the title is because of English August, a book I read long ago, and still remember very fondly. And it’s sort of a pat on the back for myself because I completed a thousand posts on EFE. Well, strictly speaking this is post number 1003, but let’s round it off to an even thousand today.

My friends and colleagues, past and present, will be happy to confirm that there are few folks lazier than me, and I’ll happily admit to it myself. Which is all the more reason to celebrate this, because to keep this going for a thousand posts over five years is an achievement of sorts for me.

We started this blog on a whim sometime in June 2016, my wife and I, without having a very clear idea about what was to come of it. I started off, as I almost always do, with a large amount of enthusiasm, and as with everything else I do, said enthusiasm petered out soon enough. But since June 2018, I’ve been fairly regular, averaging about a post a day.

There have been periods of radio silence last year, and the reason is that I went through extended bouts of “but what is the point?”. Not jus the point of writing on the blog, but doing anything at all. It was that kind of a year, and I will not beat myself up over feeling that way, and about breaking my streak. Excreta, as the poet says, happens.

And there have been periods of radio silence this year too, but the second wave was devastating for all of us. We have all suffered losses, immediate family or extended. But for all of our sakes, let’s not dwell on that anymore. We’ve all had enough of it.

What have I learnt from writing these thousand posts?

  1. As David Perell pointed out on Twitter recently (as have others), if you take care of the quantity, the quality will take care of itself. Some of my posts have been atrociously bad, some have been about me trying to find my voice, and a lot have been of fairly middling quality, at best. But there are some that I am genuinely proud of, and remember very fondly indeed.
    My learning has been to show up (almost) everyday, without fail. It doesn’t matter if people read what I have written or not, comment or not, share or not. The writing is its own reward. I may have said this before on these pages, but if you’re a student reading this, please: write. Or make videos, or Instagram posts (or stories, or whatever one calls it), or tweet, or make a podcast. But put your work out there, and that regularly. Trust me, it does wonders for you.
  2. I haven’t bothered with measuring anything. I don’t add identifiers to outbound links, I haven’t installed Google Analytics, I don’t do affiliate links, and I don’t advertise anywhere. I try to respond to whatever comments folks put up, whether here on the blog, or on LinkedIn and Twitter. If you have written a comment and I have not responded, my apologies! I have also automated the sharing of these posts on Facebook, but I (quite literally) haven’t logged in to Facebook in years.
    My learning has been that quantifying stuff is strictly optional. I write everyday (well, almost), and even that is not a measure or a requirement. It’s a choice. Who is reading this, is the readership going up over time, which social media site drives the most traffic to my website – I don’t know any of this. And it doesn’t really matter. I just write.
  3. Writing these thousand posts has made me painfully aware of how little I know. Nassim Taleb has made famous the concept of the anti-library, and in that sense, writing on this blog is a daily reminder of how much remains to be read, learnt and written about.
    My learning is that writing is a humbling experience, and that becomes truer the more you do it. And that’s a good thing! Think of it this way, you don’t write to show how much you know. You write to understand how much there remains to be learnt.
  4. I don’t schedule my posts too much in advance. The most I’ve ever managed is a couple of weeks or so, and that because I was due to go on vacation. Otherwise (and this includes today) it is a case of get up, arm yourself with coffee, and think about what to write. That has its disadvantages, because an unmarinated blogpost doesn’t acquire the depth of flavour it could have otherwise. But it also has its advantages, because I am the kind of person who works best when panicking a little bit about upcoming deadlines.
    My learning is that habit formation is a real thing, not just management speak. If you do something for long enough, it becomes a habit, but better – it becomes a habit you’re unwilling to break. And you end up finding the time one way or the other to keep at it. And that, in and of itself, is worth it.
  5. The more I write, the more I remember stuff I’ve written. This is not a statistically valid observation, and I haven’t analyzed it, but I do think that I increasingly link to posts I’ve written earlier. I don’t say this to show how much I’ve written in the past, but to explain that I’m able to “connect the dots” better. I now understand better how what I’m writing about today can be thought of as an aspect of something I’ve written about earlier (or vice versa). My understanding of the world, such as it is, is definitely better than it was earlier. That’s a healthy profit right there!
    My learning has been that writing is a way of teaching myself to think, to see the larger picture, and to make connections between topics that I would not have otherwise. And for that reason, I highly recommend it. It is not for me to say if I have become a better writer. That is for others to judge. But I can think better for having written these posts, that I feel (mostly) certain about.
  6. I wanted to celebrate the thousand posts by coming up with a book based on on what I would have called some of my best work here. I even spoke about this with some of my friends and students, all of whom were very kind with their encouragement. But on reflection, the “could’ve been a blogpost instead” argument was much too strong to go up against. A book ought to be a book, not a vanity project.
    But spinoffs is a good idea, I think. And for that I would like your help. What can I do more of? Less of? Add a weekly podcast that reflects in greater detail on what I’ve written that week? I’ll happily admit to not having the faintest idea about where I’ll find the time, but that’s one possibility. A day of the week dedicated to book reviews? God knows it’ll force me to read more books, and get better at writing about them. What else? Please send in your suggestions, and I really do mean that.
  7. I don’t have any desire to turn this into a newsletter (Substack, or Revue, or anything else). One, because I’m lazy. I can’t bear to think about the nightmare of moving over into another system and all of what that entails. Plus, WordPress, which is where this is hosted, is just fine by me. Except for the new block editor style they have. I loathe it, and it is far too buggy for my liking. But I’ve gotten used to it now, and I’ve quite literally adopted the way I write to its idiosyncrasies, so why invest in changing now? (You want examples? Those little “..” signs that you see throughout this post are there because I don’t know how to introduce spacing between points otherwise. Pah.)
  8. I cannot tell you about the number of people I have gotten a chance to meet and work with as a direct consequence of this blog. Students, professors, folks from the corporate world, people who work in think tanks, research organizations, and more besides. I often tell students that putting your work out there is a great way to build out your network, and I don’t say that without basis. It quite really is true. That ought not to be the reason to write, but it is a positive externality spillover, and a very welcome one. I’ve built my community as a consequence of writing this blog, and I am very thankful for it.
  9. There are opportunity costs, of course. Those never go away.
    1. Maybe I could have written more academic papers? I don’t necessarily want to, and I’ll explain why in a blogpost one day, but I certainly could have.
    2. Maybe I could have read more books? This one hurts, because I really could have, and I really would have wanted to. But I think the takeaway is becoming better at time management. In other words, do both, but sacrifice something else in my day. Meetings. I would love to “sacrifice” meetings.
    3. Made more podcasts? Learnt a new skill? Made more videos? Traveled more? Again, I think the answer lies in learning how to get better at becoming more productive.
    4. So a promise to myself (and I’m old enough, and perhaps cynical enough, to already come to terms with the fact that I’ll probably end up breaking it): read more books, create more podcasts, make more videos, and attend less meetings.
  10. Thank you for reading! I hope to do this for years to come, and I’m grateful that you have chosen to read whatever it is that I put out on these pages. If you have any feedback or suggestions for me, I would love to hear it. Again, thank you very, very, much 🙂

Can Undergraduates Be Taught To Think Like Economists?

The title of today’s blogpost has been copied, word for word, from a blogpost I had linked to earlier (the fifth link in this post).

It’s been about two and a half years since I read that post. I would still like to believe that Deirdre McCloskey was wrong, and that you can too teach undergraduates to think like economists. But well, perhaps the truth lies somewhere in the middle.

A common goal for principles of economics courses is to teach students to “think like economists.” I’ve always been a little skeptical of that high-sounding goal. It seems like a lot to accomplish in a semester or two.

Both Tim Taylor and Deirdre McCloskey (whose essay I excerpt from below) aren’t saying that you can’t teach economics to undergraduates. You most certainly can, and you don’t need to run a fancy-pants model to ascertain this. What they are saying, however, is that it is one thing to teach them the principles of economics. It is quite another to teach them to apply these principles in their lives, at all times.

Bower thinks that we can teach economics to undergraduates. I disagree. I have concluded reluctantly, after ruminating on it for a long me, that we can’t. We can teach about economics, which is a good thing. The undergraduate program in English literature teaches about literature, not how to do it. No one complains, or should. The undergraduate program in art history teaches about painting, not how to do it. I claim the case of economics is similar. Majoring in economics can teach about economics, but not how to do it…. (Emphasis added)

It is one thing to teach opportunity costs. And most students we’ve taught will tell you the definition. The “good” students will tell you three different definitions, from three different textbooks, and maybe cite a couple of academic papers that ruminate about what the definition means. Well, great. Do these students apply the concept of opportunity costs in their daily lives? Do they ask themselves if this (whatever this may be) is the best use of their time, and what are they giving up in order to do this?

Does winning matter more than learning? Does winning matter more than doing? If you end up defeating somebody else – a person, a team, a tribe, a party or a nation – what do you gain? And to go back to the previous paragraph, was it but a Pyrrhic victory?

Consider this hypothetical:

Let’s say there’s two teams in some corporate environment somewhere. And for whatever reason, these teams don’t get along well together. Both sides believe that they’re in the right, and the other side is in the wrong, and we’ve reached Mark Twain territory.

Are they going to go to their manager(s) and ask them to resolve this issue? Sure, it may seem like a good idea initially. But said managers, I can assure you, have things to do. Deliverables to, well, deliver. Teams to manage. Projects to initiate. Other people to manage. And so the manager(s) might listen to both teams long list of complaints once, perhaps twice.

But eventually the price mechanism will come to the party. The more the two teams spend time on this, rather than on work, the more expensive the situation becomes for the enterprise. Because a commodity that is limited (time) is being spent on non-productive work (productive, in this case, can be thought of as remunerative).

Since the whole point of the firm’s existence is to maximize revenue, this will not be tolerated for too long. The manager(s) will eventually say one of the following:

  1. Figure it out yourselves, but get the work done, for that’s what matters. Or else.
  2. Let’s reallocate, forcibly, both teams on to other projects. This will usually be accompanied with a mental note to themselves that truly important projects in the future should not be given to these team members. For obvious reasons.
  3. Or let’s shut down the project, because the point of a firm is to do the work that earns one the money. Start something new, with a new set of people.
  4. Now, since the team members are old enough to know that eventually pts 1 to 3 will occur, they usually swallow their differences and get the work done. Sure, bitching about the other team will happen in bars and pubs in the evening, and sure the other team won’t be called home for dinner anytime soon. But in the workplace, professionalism will win out, due to the price mechanism. In more explicit terms, they will get the work done because they know that otherwise they will be fired.

The reason all of this will happen is because these team members will have families, responsibilities, loans to pay off. The money they will lose out on by losing their jobs is far too important, and the threat of losing out on their income forces them to behave professionally.

The opportunity cost argument comes into play. Playing politics may be good for your ego, but it ain’t good for your wallet. But that lesson comes with age, it doesn’t come from attending principles of economics classes.

A nineteen-year old has intimations of immortality, comes directly from a socialized economy (called a family), and has no feel on his pulse for those tragedies of adult life that economists call scarcity and choice. You can teach a nineteen-year old all the math he can grasp, all the history he can read, all the Latin he can stand. But you cannot teach him a philosophical subject. For that he has to be, say twenty-five, or better, forty-five. …

Adults don’t necessarily grasp the argument that the opportunity cost of politics is work. But they understand the rules of the game called life. They do understand that the opportunity cost of politics is an increase in the probability of losing their wages. And so they still practice politics, but more covertly. Not, in other words, an ideal situation if the system is trying to optimize work, but hey, better than overt politics.

How to get students to understand that the opportunity cost of politics is learning? That the opportunity cost of politics is not getting fun projects done? That the opportunity cost of resolving arguments, or adjudicating who said what to whom and when is not being able to start other fun learning based projects? There’s no price mechanism at play, there’s illusions of immortality (they don’t get that time is limited), they don’t have the responsibility of putting food on the table (they come from a socialized economy called a family), and they haven’t experienced the tragedies of adult life.

To them, winning a political argument against the other side is the best use of their time.

Principles of economics, if taught well, and if learnt well, should in theory help you understand that the opportunity cost of politics is work. Philosophy should in theory teach you that good work is better than bad politics.

I’ll say this much: I was convinced that Deirdre McCloskey was wrong when she said that you couldn’t have undergraduates do economics, even if we taught them economics.


I hope.

The Riemann Hypothesis

Learn To See, and You’ll See That You Can Learn So Much!

Read the entire (short) thread, and the article at the end. And as Mihir says, kudos to the students!

Arbitrage and Writing

Here are excerpts from two newsletters that you should consider signing up for if you are a student of economics:

In late June, the Reserve Bank of India (RBI), India’s central bank and the banker to the banks, released the household financial debt figures based on select financial indicators. Household financial debt is basically loans that you and I have taken from the formal financial system of the banks (both commercial and cooperative) and the non-banking finance companies (NBFCs).
Of course, there are other ways to borrow as well. One can borrow against gold as a collateral from a local jeweller or simply borrow from a local money lender or borrow money from friends and family, which is why, the RBI calls it household financial debt based on select indicators.
It needs to be kept in mind here that borrowing from the informal sources is perhaps easier but at the same time more expensive, given that the risk for those lending money is higher.
So, what does the RBI data tell us? In absolute terms, the total household financial debt based on select indicators has gone up from Rs 55.38 lakh crore to Rs 73.13 lakh crore, between June 2018 and December 2020.

That is from Vivek Kaul’s (relatively) new newsletter, Easynomics. It is written in Vivek’s trademark style: easy to read, gloriously simple sentences (which is hard to do!), and sprinkled with just enough additional information to keep you engaged as you read through his main points. In short, really, really well done.

Here’s an excerpt from the second newsletter:

Despite this, it is unreasonable to expect that the government will reduce tax on these two fuels. Why? Sample this: excise duties on petrol and diesel accounted for a whopping 28 per cent of the central government’s tax revenue last year. Which government would let such a bounty slip by, especially when the country’s economic recovery is fragile? Think about it.
And, unlike income tax and goods and services tax, which entail a collection cost, oil marketing companies just have to do a simple RTGS transaction to pay the fuel tax they collect from us to the government! The government then uses the money for a range of welfare schemes.

You and I may have our own personal opinions about which of these are better to read, but that’s not the point of this blogpost. The point of this blogpost is to point out that both writers have created simple, easy to understand posts about aspects of the Indian economy that matter to the common Indian citizen.

And they have done this by taking data from government websites. This data, as I have discussed here before, is not always easy to acquire. But those of us who have done the hard work of understanding how it is captured, where it is stored, when it is released, and how to go about making it analyzable1, have an advantage over those of us who remain blissfully unaware of all this.

But those of us who are blissfully unaware wouldn’t mind reading about the implications of this data, only if somebody were to take the time and effort to acquire that data and write simple, useful takeaways about it.

In finance, this is called arbitrage:

In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices at which the unit is traded. When used by academics, an arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state; in simple terms, it is the possibility of a risk-free profit after transaction costs. For example, an arbitrage opportunity is present when there is the possibility to instantaneously buy something for a low price and sell it for a higher price. (Emphasis added)

If you are an economics student, and you know where all this data hides, and you know enough about how this data impacts the daily lives of citizens, and you want to get better at communication, there is riskless profit to be made. Get the data, analyze it, write about it, and give it away for free.

You learn the art and skill of of acquiring this data, you learn the art and skill of analyzing it, you learn the art and skill of writing about it (and you only get better over time, so don’t worry if the first few pieces aren’t “great”). You get to publish stuff that you can put on your CV – in fact, as I am fond of saying, it has the power to quite literally become your CV. Folks get to read what you’ve written, and they therefore understand our field and its implications in their lives a little bit better.

Nobody loses out, and we all win!

And when that great and glorious day arrives, and governments in India acknowledge that the way they make data available to its citizens is crappy, you have the ability to write a series of posts about exactly how the government could do a better job in this regard.

Learn how to work with data if you are a student of economics in India, and then write about it.

It’s a great form of arbitrage.

  1. what an utterly horrible word![]