Links for 22nd April, 2019

  1. “It all comes down to money, and in this case, MCAS was the way for both Boeing and its customers to keep the money flowing in the right direction. The necessity to insist that the 737 Max was no different in flying characteristics, no different in systems, from any other 737 was the key to the 737 Max’s fleet fungibility. That’s probably also the reason why the documentation about the MCAS system was kept on the down-low.Put in a change with too much visibility, particularly a change to the aircraft’s operating handbook or to pilot training, and someone—probably a pilot—would have piped up and said, “Hey. This doesn’t look like a 737 anymore.” And then the money would flow the wrong way.”
    ..
    ..
    The most readable account I have read about what went wrong with the 737 Max. I do not know if it is correct or not, in the sense that I do not have the ability to judge the technical “correctness” of the piece – but I did understand whatever was written. A sobering read about checks and balances gone wrong in many, many ways.
    ..
    ..
  2. “Hardly sounds plausible. But there it is: Donald Fagen and Walter Becker—two super-fans of the genres they creatively appropriated—made some incredible, snarling, cynical, viciously groovy easy listening music, and it has more than held up over the decades since they released their debut album Can’t Buy a Thrill in 1972. Despite decades of critical praise and hit after hit, they also remain a profoundly misunderstood band.”
    ..
    ..
    The article doesn’t actually deconstruct Steely Dan as much as they might have, but if you haven’t heard of the band, this is a good place to start to learn more about them, and then maybe listen to their music. But also a good way to learn about the benefits of non-conformity, and doing what you really like without worrying too much about the consequences – a powerful lesson!
    ..
    ..
  3. “The iPad was not in the basket. Ollie, it turns out, had got hold of it and gone to town on the passcode, trying one idea after another, with the fury and focus of Alan Turing trying to beat the Nazis. It’s not clear how many codes Ollie tried, but, by the time he gave up, the screen said “iPad is disabled, try again in 25,536,442 minutes.” That works out to about forty-eight years. I took a picture of it with my phone, wrote a tweet asking if anyone knew how to fix it, and went downstairs to dinner.”
    ..
    ..
    A short read from the New Yorker about, ostensibly, a toddler and an iPad, but also about empathy, technology, stuff going viral. Interesting because it is short, and we can all feel the pain.
    ..
    ..
  4. “News floods the investment landscape about something strange in the land of debt funds. It turns out that:a) Kotak Mutual Fund has an FMP maturing April 8, and they won’t be able to pay the full maturity amount. They will pay some now, and the remaining “later”.

    b) HDFC Mutual Fund also has an FMP maturing soon. They will postpone the maturity of the fund if you so choose, by one year. But if you don’t vote to postpone, you will get the maturity value but a lesser amount than the NAV tells you.

    Whoa, you think. How can I be paid lesser than NAV? Isn’t that the very concept of an NAV? Isn’t it supposed to reflect what I’m supposed to be paid when I exit?

    Of course it is. And that’s why the mutual funds have had to take it on the chin for pretending it is not. Or rather, for ensuring it is not. But before that, let’s understand what the drama is all about.”
    ..
    ..
    Deepak Shenoy warns us at the very outset that this is a long post, and he isn’t kidding. But that being said, it is a wonderful way of helping us understand what exactly went wrong with the FMP saga.
    ..
    ..

  5. “Anticipating this discomfiting development long ago, Parliament passed an amendment during the Emergency years in 1976, freezing all delimitation as per the 1971 census, up to the census of 2001. Also, even after the redrawing of constituency boundaries, the total number of MPs per state was kept frozen. In 2000, another amendment postponed the day of reckoning to 2026. Thus, only after 2026 will we consider changing the number of seats in Parliament. Till then, everything is frozen as per the 1971 census. Remember, in 1971, India’s population was 548 million, and by 2031, the first census after 2026, it may well be close to 1.4 billion. The great apprehension is that redrawing boundaries and distributing the existing 550 MPs might mean that the south will lose a lot of seats to the north. Even if more members are added to the Lok Sabha, that incremental gain will mostly go to the northern states.”
    ..
    ..
    This was written a year ago, but this is a problem that we should think more and more about in the years to come. Changing the shape of our Lok Sabha needs to happen by 2026. How is an extremely interesting question.

Links for 28th March, 2019

  1. “While nightlife and entertainment are certainly drivers of the night-time economy, they need not be the only ones. According to a report released by the London mayor’s office, 1.6 million people in London—constituting more than a third of the workforce—worked at night in 2017. Of these, 191,000 worked in health and 178,000 in professional services, with nightlife coming in third at 168,000. These were closely followed by transport, automotive, IT and education.In other words, the city’s nighttime economy is not merely bars and restaurants, but an extension of its day-time economic activities as well. It is estimated that the night component comprises 6-8% of the city’s economy and contributes £18-23 billion in gross value added to the British economy. The figures are approximations but significant enough for Mayor Sadiq Khan to champion the night-time economy and appoint a “Night Czar” to manage it.”
    In which Nitin Pai makes the argument for having more shops, establishments and services operate at night as well, in India. A useful read for students of urbanization, microeconomics and life in India.
  2. “I think that our economic system reflects our understanding of humankind, and that understanding has been developing, with especial rapidity lately. You have to understand people first before you can understand how to devise an economic system for them. And I think our understanding of people has been accelerating over the last century, or even half-century.”
    Robert Shiller chooses five books to help us understand capitalism better. I haven’t read all of them, and read one a very long time ago (Theory of Moral Sentiments) – but this has tempted me to go and read at least A.O. Hirschman’s book, if not all of them!
  3. “The problem with cricket in most cricket-playing countries, certainly in India, is that the cricket market is what economists call a monopsony. A monopsony is a market in which there is only one buyer for a particular class of goods and services. Until now, a young Indian cricketer who wanted to play at the highest level could only sell his services to the BCCI. If it treated him badly and did not give him his due rewards, he had no other options open to him.”
    I am happy to admit that I got the IPL gloriously wrong – I approached the IPL while wearing my cricketing purist hat, but I really should have approached it wearing my economist’s hat. Which is exactly what Amit Varma did, ten years ago. Monopsony, the power of markets, incentive mechanisms, it’s all here.
  4. “The 737 assembly line in Renton, Wash. is a marvel of lean manufacturing. The line inches forward little-by-little as assembly proceeds. Born from Toyota’s production methods, the process is one of continual improvement. It’s what made the 737 the lifeblood of Boeing in the first place and why this crisis, taken to its most extreme, could threaten the company’s very existence. But the assembly line also comes with a tool called an Andon cord. The cord empowers all employees to pull it and stop the line if something is amiss or requires investigation and needs fixing. The rest of the world has already pulled it.”
    A mostly understandable explanation of the possible reasons behind the crash – but when I say possible reasons, I do not mean the technical ones. Why compromises had to be made, and the impact of those compromises.
  5. “I’m happy for the descriptive part of economics to stay as it is. The prescriptive part, when we tell people what to do – that one should be much more broad. In fact, we should stop using just economics and take all kinds of ideas from psychology, sociology, anthropology, philosophy and economics, and test which ones work, which ones don’t work and under what conditions. There is no question that behaviour is the ultimate goal – to try to understand behaviour, and how to change or modify it. I hope we can create a discipline that is much more empirically based and data driven. Maybe we can call it “applied social sciences”. It will draw from all the social sciences equivalently as we approach problems in the real world, and try to find solutions for them.”
    Dan Ariely on five books that he’d recommend when it comes to understanding behavioral economics better. If you are interested in this topic, as I am, the interview is great reading – and the books too! I have not read Mindless Eating, and will begin it soon.