Category: arbit

The Lingaraj Effect and Financial Regulation

Lingaraj was a driver who used to work for my father. He had a unique way of dealing with traffic jams on two-lane roads without a divider down the middle. He would instinctively swing the ambassador into the right lane – meant for traffic in the opposite direction (the jam ahead meant there was little traffic flow in that direction).

I remember both my father and I abusing him (Lingaraj) for this method which would only make the jam worse. However, he would persist. And we soon found that he wasn’t unique in his methods. It is the favoured method of most Bangalore drivers. Thus, whenever there is a minor jam somewhere, thousands of Lingarajs clog the “return lane” in all directions, and end up making it worse.

The funny thing about Lingaraj’s method was that it was “too big to fail”. Having switched to the right lane, we would progress much faster (till the site of the jam, of course) than our law-abiding brethren stuck in the left lane. There, someone who had taken responsibility of clearing the jam (not necessarily a cop) would realize that a necessary condition to clear the jam was to get our ambassador out of the right lane. And we would be given passage to shift to the left lane, and past the jam site, much ahead of those suckers who stuck to the law.

For drivers like Lingaraj, moving to the right lane in the wake of a jam is seen as “arbitrage”. And a necessary condition for it to be an arbitrage is that the offending vehicle is “too big to fail”, as I mentioned earlier. And given that in Bangalore, measures like traffic tickets sent by post aren’t that effective, this continues to be an arbitrage, and hence you still see so many drivers use this “method”.

While stuck in a traffic jam like that one last weekend (I was driving, and I consider myself socially responsible so stuck to the left lane), I realized how similar this was to the financial crisis of three years ago.

Traders noticed an “arbitrage” that didn’t really exist (namely, some AAA rated bonds traded at higher yields than other AAA rated bonds) and proceeded to trade on it. When they got into trouble the regulators realized that they had to be bailed out in order to clear the larger mess. The resemblance is uncanny.

So what should the regulators have done? Basically, drivers should’ve been prevented from getting to the right lane in the first place. Then there would have been no requirement to bail them out. In some places, this is done by installing road dividers, but in my experience I’ve seen that doesn’t help, too. People use whatever gaps are available in the divider to go to the right lane, and contribute to the jam.

The only option I can think of is some variation of postal tickets – having bailed out the drivers for going to the right lane, they need to be made to pay for it. Yeah, postal tickets (sending tickets by post for traffic violations) may not be effective, but that seems like the best we can do to regulate this problem. The upshot is that once we figure out how to solve this problem on the road, we can extend the solution to financial regulation, too!

Name mutilation

Like Bangalore supposedly became Bengaluru a few years back (when HDK was cheap minister), West Bengal is going to change its name to “Poschim Bongo” or some such thing. Now, unlike Bombay-Mumbai or Madras-Chennai, the thing with these name changes is that they are merely globalization of local names. Let me explain.

Bombay (bom bahia or good port in Portuguese) and Mumbai (of Mumba Devi) are fundamentally different. Madras (mad race? ) and Chennai (beautiful) are again fundamentally different. While I disagree with those name changes and still prefer to call those cities by their former names, I see that the change in those names at least has some merit. They wanted to get rid of their colonial British-given names (and i’m sure Tams wanted to prove they aren’t a mad race, though they might have achieved the opposite through this action) and chose local names in the local language.

When Bangalore’s name was supposedly changed to “Bengaluru” a few years back, Kannada newspapers (I used to subscribe to Vijaya Karnataka back then) had a tough time explaining the name change. Because Bangalore has forever been known as “Bengaluru” in Kannada. Even now, when I speak in Kannada I say “Bengaluru” but I say “Bangalore” when speaking in any other language. While it might have been a noble intention by HDK and UR Ananthamurthy and others behind the name change to get the non-Kannadigas to use the Kannada name, the effect has been completely counterproductive.

Till date, I’m yet to meet someone who is not conversant in Kannada to pronounce “BengaLuru” correctly. First of all, most people can’t say the “L” sound and instead pronounce it as “l” (in Kannada that can make a profound difference. for example “hELu” is “tell” while “hElu” is “shit” ). Next (this is the problem with most North Indians), people have trouble pronouncing the short ‘e’ sound. Finally, it’s hard for people to figure out that the first U in Bengaluru is to be pronounced long and the terminal u should be pronounced short. The combination of all these means horribly messed up pronunciation, which makes one wonder why they bothered to “change” the name at all.

West Bengal doesn’t seem to have learnt from this experience of Bangalore. They want to call themselves “Poschim Bongo” it seems. Not being a bong, I’m going to have major difficulty in pronouncing that name, and I might end up pronouncing it in a way that makes most bongs cringe. I really hope they see sense before they make this name change official and opt for a saner name, if they want to change their name at all that is.

One thing they could try would be to knock that “west” off their name (I believe the Times of India has been campaigning for this). West Bengal was the primary reason that I got my directions and geography horribly wrong till I was some eight years old. I used to assume that “West Bengal” was at the western edge of India! Especially since Bangladesh is no more called “East Bengal”.

Given that they are mostly commie, one thing they could try is probably to go the East Germany or North Korea way, and name themselves “Democratic State of Bengal” or some such thing.

LJ

Today, maybe for the first time in over two or three years, I logged in to Livejournal. Nowadays, at my home, LJ is for the exclusive use of the wife, and I haven’t been there at all since moving my blog here. And the first thing I did was to look at my LJ Friends page.

There was a post about ubuntu by randomwalker, which I put well left to. And then there was a friends-only post by al_lude  (no use linking that here since you won’t be able to read it unless he’s friended you on LJ). And now I know the one thing I’ve been missing about LJ ever since I moved here. The friends-only post!

I realize that in the last couple of years or so, I’ve been writing less because all those posts that would’ve been written as “friends only” posts on LJ are now not written at all. I do intend to re-start writing that kind of stuff. I’m thinking of Google Plus as a medium for doing that. For that one reason I really hope G+ takes off and more people begin to use it, so that it becomes more meaningful.

The Trouble with Mental Illness

  • The “patient” has an incentive to overestimate the extent of his illness, since he can “get away” with certain things by claiming to be more sick than he is
  • People around the patient have an incentive to underestimate the extent of illness. They think the person is claiming illness only to extract sympathy and get away with things that would be otherwise not permissible
  • The second point here leads to internal conflict in the patient, as he can’t express himself fully (since others tend to underestimate). Feelings of self-doubt begin to creep in, and only make the problem worse
  • There are no laboratory tests in order to detect most kinds of “mental illness”. Diagnosis is “clinical” (eg. if 8 out of following 10 check boxes are ticked, patient suffers from XYZ). This leads to errors in diagnosis
  • The method of diagnosis also leads to a lot of people in believing that psychiatry is unscientific and some reduce it to quackery. So there is little the medical profession can do to help either the patient or people around him
  • That diagnosis is subjective means patients have incentive to claim they’re under-diagnosed and people around are incentivized to say they’re over-diagnosed
  • I don’t think the effect of a lot of medicines to cure mental illness have been studied very rigorously. There are various side effects (some cause you to sleep more, others cause you to sleep less, some cause impotence, others increase your mojo, and so on ), and these medicines are slow to act making it tough to figure out their efficacy.
  • There is a sort of stigma associated with admitting to mental illness. Even if one were to “come out” to people close to him/her, those people might dissuade the patient from “coming out” to a larger section of people
  • If you were to be brave and admit to mental illness, people are likely to regard you as a loser, and someone who gives up too soon. That’s the last thing you need! And again, the underestimate-overestimate bias kicks in.
  • Some recent studies, though, show a positive correlation between mental illness and leadership and being able to see the big picture. So there is some hope, at least.

I don’t know what to name this bias

So yet again I’m at that point in my life when I’m pondering about my career, pulling up my socks and asking myself uncomfortable questions. I’m asking myself what it is I really want to do, what it is that I really enjoy, what is the best way I can monetize my skills and the like. I’ve been pondering between radically different alternatives – from staying on in Wall Street to becoming a hippie; from becoming a professor to starting a company. I’ve been thoroughly confused and have been talking to a number of people about this.

The one common strand I extract from my conversations with all these people is that most people give you advice that is aligned with what they are doing. When I talk to the prof, he talks to me about becoming a prof, and about why I’m suited for it. When I talk to the corporate whore, he tries to convince me that there’s no way out from corporate whoredom and that I must simply embrace and accept it. When I ask the hippie, he thinks it’s no big deal if I keep switching jobs, and that I’m being dishonest with myself continuing to do something I don’t enjoy. And the entrepreneur tries his best to push me into becoming an entrepreneur.

Given my thoroughly confused state of mind, all this has been mostly adding to the confusion, but now that I’ve managed to extract this common strand, I been able to add the appropriate amount of spices to all the advice I’ve received, and making more sense of it. While I continue to figure out what’s the best course of action for me, I wonder what it is that makes people want other people to be like them.

I must mention that this is not a recent phenomenon. Back when I was in college, I remember talking to a senior who went into consulting, and he convinced me that I should do that, too. The banker talked about how banking is perfect for my skills. Till I was in 10th standard, I had no clue about the existence of IIT until a rocket scientist uncle told me about it, and about how going there would be the best thing I could do.

Of all the people who have given me career advice, perhaps the only person who didn’t clearly show this kind of bias was my father. He was an accountant, and he used to work as a regulator. And right from the beginning he made it clear to me that I should neither become an accountant nor should I work for the government.

And I’m trying to think of what kind of advice I dish out. Perhaps because I don’t have one clear “career axis”, I don’t really show this kind of a bias. Or maybe it’s hereditary.

Going to Chennai

There’s something about traveling to Chennai that depresses me. Usually I’m a big fan of traveling, at least I think I am. Usually, before any trip, when I’m getting ready to leave, I feel happy. There’s some kind of happy expectation that there’s going to be lots of fun to be had in the trip. Except, when I’m going to Chennai.

I’ll be leaving home in about an hour’s time to catch a bus to Chennai. We’ll be there for a day and a half, and I’ll be meeting lots of people and hopefully having a good time. There’s nothing inherently unpleasant or uncertain about this trip. Heck, we’re even going to get picked up at the bus stand by someone holding my name board – it doesn’t get better than that.

But still, I’m not at my most cheerful. There’s something that’s making me feel sad. That’s because I’m going to Chennai. Oh, and I should mention one thing. I feel this way only when I’m taking an overnight train or bus to go there. The times when I’ve caught the early morning Shatabdi to get there (of late, that’s my most preferred means of transportation to Chennai) I’ve felt quite happy and upbeat.

I think it’s the association with college. I think I’ve mentioned here that I don’t count my years at IIT as my happiest. I was an inherently troubled soul back in those days, and the only thing that I would look forward to back then was the monthly trip back home. And when that trip back home was over and it was time to go back, gloom would descend.

I remember it would be the same dinner my mother would make every time I’d to take the overnight train. There was this fixed time we’d leave home, and the same route we’d take to the station. And till about a year or so back, when I started taking that route quite frequently (for different purposes of course), traveling towards Majestic via Bull Temple Road and Goods Shed Road would remind me of those days when I’d be going back to Chennai.

A lot of things have changed. On most occasions my trips to Chennai nowadays are for happy purposes. Yet, when it’s late night and I’ve to leave for Chennai there’s a vague feeling. That lump in the throat. There’s a bottle of Thums Up that the wife has just placed on my table. Hopefully consuming it will clear the lump.

Jobs and courtship

Jobs, unlike romantic relationships, don’t come with a courtship period. You basically go for a bunch of interviews and at the end of it both parties (you and the employer) have to decide whether it is going to be a good fit. Neither party has complete information – you don’t know what a typical day at the job is like, and your employer doesn’t know much about your working style. And so both of you are taking a risk. And there is a significant probability that you are actually a misfit and the “relationship” can go bad.

For the company it doesn’t matter so much if the odd job goes bad. They’ll usually have their recruitment algorithm such that the probability of a misfit employee is so low it won’t affect their attrition numbers. From the point of view of the employees, though, it can get tough. Every misfit you go through has to be explained at the next interview. You have a lot of misfits, and you’re deemed to be an unfaithful guy (like being called a “much-married man”). And makes it so tough for you to get another job that you are more likely to stumble into one where you’re a misfit once again!

Unfortunately, it is not practical for companies to hire interns. I mean, it is a successful recruitment strategy at the college-students level but not too many people are willing to get into the uncertainty of a non-going-concern job in the middle of their careers. This risk-aversion means that a lot of people have no option but to soldier on despite being gross misfits.

And then there are those that keep “divorcing” in an attempt to fit in, until they are deemed unemployable.

PS: In this regard, recruitments are like arranged marriage. You make a decision based on a handful of interviews in simulated conditions without actually getting to know each other. And speaking of arranged marriage, I reprise this post of mine from six years ago.

Two kinds of immigration

There are fundamentally two kinds of immigration – local job-creators and local job-competitors. The former are primarily middle and upper middle class people, who create jobs locally in terms of employing people (directly) to provide services for them – like maids, cooks, drivers, laundrymen, etc. The latter are primarily working class people who migrate in order to provide local services. They work as maids, cooks, drivers, etc.

Already existing local service providers welcome the immigration of job-creators. That means they now have the opportunity to push up their asking prices, since there is now more competition for their services. There is little economic opposition to the immigration of job-creators. The opposition to them is usually cultural – witness the rants of middle class “native” Bangaloreans like me against “koramangala people”.

Job-competitors, on the other hand are not so welcome. While they usually don’t contribute too much to the “culture” of the city, they compete directly economically against already existing local service providers. There is a clear economic rationale for local service providers to oppose the entry of more such providers, and since the local service providers are usually numerous and politically active, it is easier to oppose the entry of such job-competitors.

In the 1960s, for example, Shiv Sena started out by targeting South Indian middle class people. However, that campaign didn’t last long, since the “masses” (mostly local service providers) realized that it was economically counterintuitive for them to target middle class people. Hence, gradually over time, the rhetoric changed and the targets are now immigrant job-competitors. So you have Shiv Sena guys beating up Bihari taxi drivers, etc. And since this targeting of immigrant job-competitors is economically advantageous to the “masses”, it is likely to be more sustainable than the targeting of immigrant middle class people.

End of month blues

One of the problems with running your blog on your own website is that you need to manage bandwidth. Basically it seems like my blog has been run over by bots and so by the 25th of every month the bandwidth for the month is over, and the blog goes down for the rest of the month. I’ve been trying to do a lot of things to prevent this – blocking suspicious looking IPs, installing bad behaviour, and such like, but still I don’t know why it gets locked out.

My biggest problem with this end of month lockout is the volume of ideas that go down the drain during this time, rather than getting published on the blog. I wish I could try and remember all those blogging ideas and do one mega blog post at least with a summary of all of them, so that I could write about them at some point of time in the future, but it seems like I can’t remember anything now.

In other news, I’ve been getting really stressed out of late, and my mental bandwidth has been at an all time low. I’ve felt that I’ve been going downhill since my trip to New York a few months back, but of late it’s gotten really bad, and I’m just not able to do anything. That’s yet another reason why blogging frequency has dipped in the last couple of weeks or so.

Doing a deep dive into my own past, I think I’ve figured out why this has been happening. Rather, I have a hypothesis about why I’ve been stressing myself out too much at work which has led to this situation. Basically it’s down to studs and fighters.

I traditionally have what I call as a “stud” working style. I work in bursts, at reasonably low intensity. I look at the problem as a series of steps, and for each step, I internalize the problem, and then try to de-focus. And while thinking about something else, or reading something, or writing something else, I end up having a solution to the problem, and then I take a little break and move on to the next step. This is essentially how I’ve worked over the last few years and I think I’ve (to myself at least) done a good job using this method.

There’s yet another method that I’ve frequently used in the past, one that I call the Ganesha method. It’s basically used for tasks I want to get  done with ASAP. I work at it at a very high intensity, shutting myself off from everything else in the world. I work at it continuously without a break, and then take a long break once the solution is done. I’ve used it in the past for things like competitive exams where I think I’ve done rather well.

So the mistake I did a while back (maybe a year or so back) was to try and use this latter method over longer periods of time, for longer problems. The thing with this method is that it’s suited for short problems, which can be finished off in a burst with a little bit of stretching myself. But when applied to significantly larger problems, I’ve found that it’s been stressing me out way too much. By trying to be steady and focused over a long period of time, which is how a fighter traditionally works, I think I’ve mentally destroyed myself.

Moral of the story is that whatever happens you need to be yourself, and do things in your own style. Don’t try to change yourself in order to please others. It is simply not sustainable.

Vishnu and Shiva temples

This post may add to Aadisht’s contention of Shaivism being superior to Vaishnavism. Earlier this month I’d gone with family to this place called Avani, some 100 km east of Bangalore. The main centre of attraction there was this 10th century Shiva temple that had been built by the Gangas.

As we got off the car, I was pleased to see the signage of the Archaeological Society of India. I’m in general not a big fan of temples. I find them to be overwhelmed with “devotees”, and way too noisy, and more importantly for some reason I’m not allowed to use my camera inside temples. So I was pleased that this being an ASI temple there won’t be any worship in there and so I can take pictures peacefully.

As we entered, though, I saw a number of priestly figures standing around the entrance, and one of them shouted “no photo in temple, no photo in temple” (i was in bermudas and a t-shirt, and wearing a backpack and camera bag so looked foreign types). I just nodded and went on. And then another priest accompanied us, and performed the pooja to the idol.

The temple at Avani is that of Ramalingeshwara, a version of Shiva. Now, the studness with Shiva temples is that the idol is extremely simple. It’s just a penis. And it’s not hard to make, and more importantly it’s hard to break, since it’s monolithic, and usually without any portions that can easily break off. Contrast this with Vishnu temples, where the idols are of actual human figures, with arms and legs and ears and noses and fingers – all made of relatively thin pieces of stone, which makes it easier to break.

So think of yourself as an invader who for some reason wants to defile a temple by destroying its idols. The very nature of idols in a Vishnu temple makes your job simple. All you need is to give one strong hit which will break off a nose or a toe or a finger – not much damage, but enough to defile the temple and render it useless for the purpose of worship. But get to a Shiva temple, and you see one large penis-shaped stone in there, and you realize it’s not worth your patience to try break it down. So you just loot the vaults and go your way.

And hence, due to the nature of the idols in these temples, Shiva temples are more resilient to invasion and natural disaster compared to Vishnu temples. Aadisht, you can be happy.