Kolkata's Kommunist Korruption

I always land at Kolkata, where I generally make one trip each year, with tepid expectation. I am keen to observe the progress made by this city, which was until recently quite untouched by the economic revolution sweeping the rest of India. My first brush with organized corruption started at the pre-paid taxi counter (run by some union of the leftist government). My home is about 7 kms (4 miles) from the airport and hiring a pre-paid cab takes Rs. 105. The gentleman at the counter asked for my destination and called for someone to get me there. He instructed me, in English, to pay the person Rs. 130 when I get there. No receipt was given and no entry was made of the hire. On questioning I was told that no cab driver wants to take a short fare so I will have to wait (perpetually) if I don't avail of this "scheme". I had little option but to take what was on offer. During the journey I could have been waylaid, mugged or murdered and there would have been no evidence that I ever boarded a cab at the Dum Dum airport.

I'll wait for yet another year for things to change. For the better.

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Cricket 2.0

Thankfully they did not decide that players will have to don shorts and muscle Ts to play the World Twenty20 cup. The desire to do something different should have been overwhelming and it must have taken character to not do what Packer had done with cricket clothing. However, in the age of instant gratification, this form of the game had to be different from any versions of its predecessors. And different it is. Cut short by less than half of half of the number of overs bowled in a test match day, this is the cricket equivalent of the wham-bang-thank-you-ma'am phenomena. As Robert Redford so poetically said in the movie "Spy Game" - "twice the sex with half the foreplay". 20-20 cricket resides in the twilight zone that intersects frivolity, entertainment, power and true cricket.

Every form of the game merits its own strategy. The opening batsmen dig in and see off a new red ball in test matches while the same opening batsmen take the skin off the white ball in the opening overs of a fifty over match. There are different approaches to different situations and the art of playing the game almost resembles an implementation of Sun Zu's principles of warfare. Then there is osmosis - both straight and reverse - where principles from one form get to the other. It is not merely coincidental that more test matches end decisively ever sine the fifty over format got popular. The propensity to take risks in an otherwise staid form of the game originated from the ODI format and has made the five day format more exciting. The 2005 Ashes series in England was one of the most exciting series in recent times and the heroes of the series were electrifying cricketers from the one day format. Twenty20 will usher in more changes as more situation specific strategies evolve.

Frivolous it may be as it may be an entertainment show more than serious cricket, but it cannot be dismissed. The shortest version of the cricket game (yet, that is) is here to stay and will influence other forms of the game much quicker than people can think. Get to your couch, grab your soda and chips and enjoy the game - after all the result is just three hours away.

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Shelf Life of Leadership

Turning left as one exits the Harare International airport, the visitor is faced with what the locals call "Independence Gate". It is a gateway built to celebrate Zimbabwe's independence from the British rule in 1980. Twenty seven years is not a long time in a country's history but for Zimbabwe it has been enough to shape its destiny. And the picture looks fairly grim. The country is ruled by the same person who brought them freedom but President Mugabe has metamophosized from being a hero to the most hated person in Zimbabwe today.

India, on the contrary has been now free for sixty years. More for the better than for worse - many would think. Pakistan, our neighbor, was given independence twenty four hours before India and the country has hurtled from one crisis to another and even today is only a step away from being a anarchy. We Indians must thank visionaries like Pandit Nehru and Sardar Patel who gave the country a solid foundation at birth. It requires an iron will and vision to build anything, leave alone a nation and our early executives had oodles of both. But perhaps so did Robert Mugabe.

Here is my theory on this. All leaders come with a shelf life and any tenure beyond the sell-by date has dangerous ramifications. We in India came perilously close to it when China invaded us in 1962. It was Nehru's naivety that he couldn't anticipate the threat and foolishness later on to not realize the severity of the invasion. Nehru passed away soon after, leaving the reins of the nation to the younger generation but only after he ensured the solid bedrock of sustainable growth - political, social and economic. Jinnah died too - but my guess is he died too soon, and in the shadow of the partition it was easy for the armed forces to play the role in Pakistan that the army continues to even on this day.
Perhaps Zimbabwe would have continued to be the beautiful country that it was had President Mugabe not lived well past eighty.

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Bubble 2.0

Every silver lining has dark clouds around it. This makes for famous last words from a glass-half-empty kind of a person like me, but truth was never farther away from this maxim when stock markets reach bubble proportions. I was witness to the dot com bust in 2000 and to quote from a film a I saw recently - it would be funny if it were not sad. People were pouring money into every venture that had anything to do with the two most powerful vowels in those days - "e" and "i" (for electronic and information respectively). Sometimes things assumed hilarious proportions like one day when the CRISIL (a credit rating agency in India, later acquired by S&P) stock started piercing stratosphere just because the company released a new version of its website. The Chairman of a company I worked for proudly pointed our collective attention to Amazon.com, a company he revered. Why? Because it had no revenue yet commanded such huge market cap,you stupid imbecile. Commonsense economics had clearly left the building.

Turn the clock to what is happening now. The buzzword is anything two point zero. Web 2.0, Datawarehousing 2.0, BI 2.0 - you name it. Blame it all on the cheap money that made bankers and investors throw moolah at ideas that look great on Powerpoint. So you have social networking that is white hot these days. Neural networks and patented algorithms that allow me to connect to the doorman of a building that housed me in Boston for a week in 1996 (the owner of a two point oh venture now lives in the same building so you can connect to him through the doorman, you stupid nineteen eightyfive idiot). Sheer amazing stuff - six degrees of separation. I have 48 contacts in Linkedin (another social networking site for professionals), my friends have 203 at least, everyone recommends everyone and as a family it is much happier than my own. But how do these people make money, I wonder. The day Linkedin asks me to pay for the membership I will walk out - albeit with misty eyes - from this cauldron of social clustering. That perhaps brings us to flogging the most flogged path of revenue generation - online, targeted advertisements. But in a downturn, when everyone is busy running for cover who will stop to advertise lingerie on Linkedin just because your fourth degree separation happens to be that bombshell from college days?

Watch out for the end is nigh. In the words of Warren Buffet - only when the tide goes down will we find out who all were swimming naked. I will run for a swimsuit straightaway.

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Bengali Blues

I have this rather untested theory about stock market crashes. Every time you spot Bengalis becoming active and investing in the stock market, you are pretty much near the peaks. I actually witnessed this to some extent during the Harshad Mehta induced 1993 crash when it was common for a Bengali in a crammed Calcutta mini bus beam happily - "ACC book kore dilam dada" (just booked some ACC stocks. Curiously they used the word "booked" instead of buy - a hangover from the license raj where one had to get into a queue even to get cooking gas).
So are the Bengalis buying stocks now? I am not entirely sure since I have moved away from Calcutta. However, I have started gathering observations around another hypothesis of mine. Watch out for the "Sir, personal loan sir" guy outside my office building. If he is there frequently enough just short the stocks with high PE ratios. It is sad that I don't run a hedge fund - else, I could have pioneered the "Human behavior relative value" strategy. Watch this space to see how my strategy does!

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Equality Anyone?

A couple of months ago Thomson Corporation made a bid for – and was accepted by – Reuters for a whopping $17 billion and change. My employers, Thomson Financial, a market group within Thomson Corporation will become Reuters once the deal is approved by the regulators. Thus it was not quite without reason that I started reading Tom Glocer’s blog. For the uninitiated, Mr. Glocer is the current CEO of Reuters and Chief-in-the-wings for the Thomson-Reuters combine. Mr. Glocer’s blog is a pioneer idea in transparency of thought and action – I don’t know of many CEOs who run public blogs. He writes well too (has to, right? Isn’t he the boss of a zillion and a half super journos at the most respected member of Fleet Street?). Now with all that corner-office-pleasing stuff out of the way, I want to turn attention to his recent post on China and its careful balancing act of socialism and market economy.

Mr. Glocer takes cognizance of the dilemma that governments face with public welfare, especially in income distribution and equality. The conundrum here is whether to rob Paul to pay Paula or trying bringing Paul and Paula to an equal social and economic standing. Straying clear of taking a stance, he quips towards the end of the post that he’ll stick to running companies. It is not that corporate management is free of this predicament. General compensation and executive remuneration has been a sensitive matter, leading to much discussion and even more controversies in any implementation. The question is whether employees are happy with their absolute wage increases or do they also keep a close watch on the chasm between different layers in the organization. It is not so much a problem if that gulf remains more or less constant. Adverse reactions are not uncommon is that gap expands. This is one reason why compensations are so secretive in most workplaces and why a lot of time around water-coolers is spent on salary speculation. Recently, the Indian Prime Minister, himself a humble economist, touched a raw nerve asking corporate India CEOs to cut down on conspicuous consumptions lest they stoke fires of social unrest. The media pounded on Dr. Singh for making this “blasphemous” appeal and not a single CEO stepped up to support the Prime Minister. The matter is one of high contention in the highest echelons of corporate existence. And – strangely - in the lowest echelons of corporate existence too.

There are some CEOs who have grown their business with higher social responsibility while ensuring wider income distribution. Mr. Narayana Murthy of Infosys gets top of mind recall – it is said the ladies who clean the Infosys campus are Rupee millionaires from grants of Infosys stock. Social equality is a matter that touches all aspects of life and retribution to an imbalance happens eventually albeit they take time to reach a tipping point. A one Nicolae Ceausescu will doubtlessly agree with this. So the question in front of corporate executives is whether to shroud compensations hoping the information distribution inefficiency will help curtailing unrest. This is akin to what the Chinese government is doing by clamping the spread of the greatest weapon of democracy – the public internet. Of course the other way out is for eminent leaders of the corporate world like Mr. Glocer to take a bold step in transparency and boldly go where no man has gone before.

Reality Check In

I always have had poor experience while checking into any Lufthansa flight from the US. The girls (wo)manning the counter mostly have no clue to anything beyond lip-gloss and nail polish and turn to each other for advice on a matter as simple as printing a boarding pass. I always wondered why this has to be so complex. Is it just that their systems are archaic and the interface is in Cantonese or is it something more genuine? I cannot help a feeling of amazement (and pride) when I contrast that with some experiences I had recently in a trip to Mumbai.

I walk into the Bangalore terminal (the only other airport worse than Bangalore is the one at Patna) and a bloke from Jet Airways asks me to check in at the kiosk. “You’ll get an additional 250 miles for free, sir” was his carrot. He punched in my ticket details (India is labor surplus so there is a guy who does all this for you at the kiosk) and hallelujah, comes out my boarding pass. I just walk to a counter and add my bag and I am all set.

On my way back I was in a rather longish queue to check in. Up comes a person from Jet Airways and asks for my ticket. He has a handheld in which he ticks in my ticket details with a stylus and shows me the seats available. After the “I’ll take 10C please, thank you” he prints out the boarding pass from his handheld. I am pointed to a counter with much less crowd where I add my bag and I am done. This was an awesome experience and I just couldn’t help think of Lufthansa and feel proud of what we have achieved since private airlines came into play just eleven years back.

If anyone has qualms about privatization of airports (my communist brethren perhaps) they should just go to the Mumbai airport. It still is work-in-progress but whatever that has come up is mind blowing. I had always wondered why announcements in the terminal are so clear unlike the typical railway station like sound quality. I discovered that all acoustics in the terminal is done by Bose. I watched some cricket in a forty six inch LCD panel that had DTH service, heard my flight called and was headed home.

PS: The stewardess announced in-flight that “Captain Saurav is in command” while I read the newspapers screaming out “Rahul Dravid retained as skipper”. Life’s twists!