Lately I have been observing a lot of cognitive dissonance. Okay, rather a strange way to start a post, let me rephrase: “people hear only what they want to hear”. Now it’s better.
Not really an universal truth, but true of those who don’t have an ordered mind. We all tend to interpret the bits of information that conflict with our view of the reality as “clutter” and those who fit with “truth”. Because otherwise we would be wrong somehow, and we would have to rethink, and that would entail consuming a lot of energy (up to 25% of your energy consumption assuming you, reader, are human), and our brain wants to preserve energy, right? Then our brain has a lot of interest in not changing what it already perceives as truth.
And specially for those in charge. How can they accept that they make mistakes? How can they see that they are not as good as they believe themselves to be? How can they understand in an environment which will adulate them no matter what that they are imperfect? They don’t. It’s always easier to blame the others, essentially the weaker ones.
Evidence-based management needs to come to the forefront. Take benchmarking as an example. We try to do something that has worked for another company. But do we think about the full span of assumptions that we’re doing? Was the thing that we’re copying the cause for the other company’s success? How does that value chain work exactly? Will it work in our case and why?
Even if we start compiling evidence, which only a few managers do, we may end having too much. And which evidence does really apply to our case? How are we sure we are seeing the causality links in the right way? Are we maybe focusing on the least relevant issue and ignoring the one that’s really paramount?
A doctor could never diagnose a patient without proper examination only based on previous experiences. Yet many managers do that every day. Does that make sense?
Even when you’re in a hurry and have the pressure to act quickly, encourage enquiry and observation. It is the right moment to do it, even when it feels quite the opposite.
The average Joe in Spain is now living worse off than in boom times. Anyone can tell you that. While some, many, citizens, scape the crisis altogether. Apart from the platitude as obvioulsy societies live better in Boom times than in Recession times, anyone can warn you of growing inequalities, and he will be right.
The same feeling you may have if you look at the landscape in Mumbai, India. As skycrapers grow in number and height and slums grow and invade previously green spaces, you may have the feeling of growing inequality, and you may be right.
Same feeling you may have in China, when you compare Shangai with some backward province. They would have the biggest slum on Earth if people had the chance to build it. But since they don’t, you cannot see it. But as cities expand, inequality is growing. Signs of danger in forthcoming times.
But if you think of great times, regardless of your point of view, you can think of the Mughal Empire, the Roman Empire, or even of Chairman Mao’s China, and think that the good times are behind.
But don’t make a mistake. In those glorious times, 99% of the population were at the limit of starving. Marie Antoinette may have lived as a Queen, but she ended beheaded for a reason, a reason that she could not understand when she suggested to give cookies to the mob if they were hungry. Any bad harvest could kill a sizeable chunk of the population, and if there was hunger and disease at the same time, half of the population dying was a possible scenario.
Since the industrial revolution in the Nederlands, UK, and some European locations, the things have changed. As it has been spreading all over the world, inequality is less than ever. And if some folks live worse off, is specially because they compare themselves to their richer cousins.
No one starves in Spain. Many people have made bad investment decisions and they will pay a price for it. Some will not be able to afford the holidays in Mexico this year so they will decide to stay at home. Some people I know have had to cut on Saturday restaurants. And some have real trouble to get to the end of the month, yes, but not hungry.
Many people in India and China are still starving. Many more are hungry. Obviously, too many, I may add. But less than ever. Mao’s China was probably the poorest in centuries, but Deng Xiaoping opened the capitalist way that is slowly (yes, if you think of all of China, not of the booming part only) reversing the trend. The same happens in India (and sooner it would happened if the current government was as brave as some that preceded them, instead of wasting India’s time).
Of course, if you look locally, there are some losers and some winners, but humanity wins. And if you look at the greatest foes of this 2012, you will here about debt affecting many people, but you will here a lot about public debt. Don’t blame that one on the capitalist system, blame it on bad governments.
The world overall is more equal in opportunities. More than ever. Capitalism, with its flaws, has started a globalisation trend that is only benefiting humans.
Nixon is known to many people for only a few things we did. But only economists remember that he was the one to definitively unpeg the dollar to the gold. That happened only 40 years ago, in 1971. I wasn’t born yet, but it’s not a long time in the long history of money.
Much before then, since Bretton Woods, the dollar became the facto the centre of all currencies. That was 67 years ago, again not so long in the history of money. Let’s say that the present order of things is not ancient or anything like that. There were many other currencies before, not just one, and they have been changing through the ages.
But this post is not about which one will be the next currency. It’s about the possibility that everyone avoids thinking about. What if the current monetary order is living its last days?
We didn’t know how much sovereign debt a country could stand. Now we know: some figure close to 100%. And many countries are in that range. The US being one of them. Governments have two quick options: either borrowing more money, or printing it. Austerity measures, if they are not to be counterproductive as they can destructively contract the economy, take a lot of time. (And I’m not sure that politicians or creditors are the right ones to design, choose and enact those measures.)
And debt is good! It’s one of the lubricants of progress. Let’s not demonise it ever. But there’s some quantity of debt which is too much. Now we know how much is that. And the rich countries seem to be beyond that line, namely the US, the one that everyone takes for granted that its default is unthinkable.
Maybe that’s why they don’t think about it. But not thinking about something is not a guarantee that it will not happen. Maybe it even makes it more likely as nobody is actually working to prevent it till it explodes on your face.
So, will the US default? Well, they don’t need to. As many other governments they can just keep printing more and more money. The default becomes unnecessary as inflation will do its bidding and do a covert default. Your investments can’t withstand the storm when they are based on a currency which is losing its value. They apparently can, yes, but only apparently.
And that’s because the system was based on a promise: that the authorities were not going to print too much money. But again, an easy way to get dollars (or euros) is to print them. But then what happens to a fiat currency like the dollar? (One that has been unlinked from the gold value for 40 years now.)
It’s easy to hold to the promise of not printing more dollars when investors are there to lend you the money but, what after they are long gone? Are the politicians going to keep their promise of not printing more money? Do they actually have an option?
Many people will not know who Anna is. Yet, without knowing him, everybody can sympathise with his cause: the crusade against corruption. Anna was on a fast to death with the only objective to get a less corrupt India, starting by officials, politicians and judges. And he wanted to see it written in a Parliamentary bill before he died. Finally it seems he will see it, and live as well.
Corruption means that a sizeable part of the resources of one country go to a few deep pockets taxing the future of the same country. Because the price to pay for corruption is much higher than the resources it drains. Losing the faith in the system means that less people will be entrepreneurs and more of them will fail. Means that many people will think of sending their wealth abroad just to protect it. The externalities of corruption are always very complicated to measure, but by all means they have a huge impact on a nation’s future.
Anna has made this country’s politicians to humble and start passing a bill against corruption. Bills are that, bills. Still they mean little if they are not properly implemented. When the viceroys of the Spanish empire got some law from the king that they didn’t like, they said “acatese pero no se cumpla” which means accept the order, and then do not implement. Another clever minister of the Spanish empire, Romanones, said “que otros hagan la ley, que yo haré el reglamento”: let others do the law, and I’ll write the rules for its implementation. Anna got an unanimous vote from those who first chose to ignore him, many of them too close to the corruption sin. Finally they decided to support him, but how will they implement, legislate, behave once this tide has gone away.
I wanted to use the Spanish reference to highlight that this is not only an Indian problem. But again, everyone must do its part. Anna did. But corruption on a massive scale cannot exist unless lots of people participate in it. Even more, it is necessary for a silent majority to tolerate it. Anna has, for once, resonated with this majority in order to make the complaint heard. The complain that is usually only whispered at work, or shared with friends in closed circles, now has been voiced aloud but, will it still be tolerated?
We all have to do something. Just as Anna did. But it’s not fasting. It’s about talking aloud. It’s about not profiting from corruption. It’s about whistleblowing. It’s about doing the right thing.
It’s amazing how we tend to forget. Not so long ago some people were still being blamed, bankers mostly, the beheaded god Alan Greenspan, some professional confidence man (aka con) Bernie Madoff, and a few more, but except for the latter that has even seen the disgrace in its own family, the former have gone back to their oversized bonuses and Mr. Greenspan is enjoying a deserved retirement, maybe with less conferences than what he had hoped for.
We’ll end up believing that the crisis is more a natural catastrophe, like those earthquakes in Japan, than a punishment. Isn’t it always easier not to blame yourself? God, with infinite power and without any need for an explanation, has just decided to punish you. And that’s all. Why think? Why blame? Why even change?
A system that privatises gains and socialises losses can’t be good. And that’s what we are seeing all over the world. All citizens end up sharing the burden. The “too big to fail” has been finally accepted by the whole humanity, the final enshrinement of the “moral hazard”.
Maybe we have finally reached our destination. We are capitalists when it’s time to reap benefits, but socialists with losses. Be aware, that only applies to big corporations. Finally, the richer 5% has some way to outgrow us all, to keep concentrating more and more power in their hands and make sure that when they fail they won’t have to answer for it.
I read today in the news that this year General Electric, in spite of a huge profit figure (true, it could have been better but it’s still huge) is only paying 7.4% of their profit in taxes. Congratulations to their accounting department, finding every possible trick, every crack in the fiscal legislation, every opportunity not to pay… But, at the end of the day, do you feel like they are making the same effort as citizens are? How much do you personally pay?
And another example, this time from Spain, from the likely next president in another year, a sentence in a conference in Germany: “If Spain is having a bad time it’s not the Spaniard’s fault”. Whose fault is it then? The hidden external enemy? God’s?
Beware, things that do not work can’t last for long…
Decisions. Whether to leave or stay. Leave from where? From India or to India? I’m not even sure of the right declension for the verb leaving.
And in the following days I do have to make a decision. Sorry for spitting it all out here, after so many blog-silent weeks. I’m in the midst of accepting an assignment here for at least three years. And the decision was already taken, yes, but as the conditions keep changing the decision needs to be remade now and again. It is said that we join companies and we leave bosses, this case could be right the opposite.
But enough about that, whatever you write can be used against you someday. Today Berkshire Hathaway has its figurehead Warren Buffet visiting India with a humbling attitude. He says he will talk to the Prime Minister, Manmohan Singh, about whatever Manmohan Sing wants to talk about. He also says he’s late to be in India and that from now one he will make a big investment per year in this country. He also says, and that’s why I called him figurehead, that the guy that makes the most money for Berkshire Hathaway is not him, but an Indian as well, in charge of the insurance business. Obviously the Indian press have quickly jumped to call him the heir.
Such a great entrance! Humility around an iron fist. Ladies and gentlemen, there is no business as show business. This is what I call the new American soft power. Humble but right to the Prime Minister in a country where business still relies on personal contact! They know how to do it. Actually, if I could, I’d join their ranks right now.
My road is humbler indeed. Not to be leading a huge investment company with resources aplenty but to develop business in India. A tough job. Another learning experience and, hey, in the end it’s all about learning. But also means leaving behind other personal development experiences and obviously a very important part of my life.
What is it that I want to be? Where do I want to be in five years time? I need to figure out as soon as possible as only then I will be able to make the right decision.
When you do not longer wonder by hearing the expression of “doing the needful”, when you realise that there are other ways of thinking, and by being different they are not better or worse (an easy temptation that leads to failure) but just different, when you see the order in the chaos and walking in a Mumbai slum doesn’t make you cringe anymore, when you are being told that you may have Norwegian accent (yes, me), when you use the words yaar and walla as basic words, when you learn to walk under the rain (and I mean really walk under the Monsoon with a smile), when you repeat the verbs twice and ask no at the end of the sentence, when you get used to see very simple people smiling, when they do not longer chase you for money, when you realise that being in a crowd is a different way of being alive, that’s when you start loving this country.
Because India can and should be loved. There’s a layer of dirt, a crust of inefficiency, true, but there’s more than that, much more. There’s this will to move ahead, this aim to be, this sturdy yet huge democracy, this terrible mother mistreating her children yet, somehow, still loving them.
India changes you. And does so from within. Makes you better. New connections in your brain. Not linear ones, true, but since when humanity has traveled a linear path? Never. India is as organic as a human body, as imperfect as any of us. Yet it thrives as any of us can thrive. It’s a unique opportunity of developing a diverse society without resourcing to authoritarianism. A path that many others we’ve left behind may follow.
Once you’ve been here, really here, I mean, you’re never the same. A part of you never leaves India, and a part of India comes with you.