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Elementary Watson! Trump is Moral Arbitrage for Media.


Long time back my friend in finance explained me the concept of Arbitrage. Apparently there are computers dedicated to searching stock prices on many stock exchanges. And every now and then a computer finds that a particular stock XYZ is being sold on exchange 1 at 99$ and is being bought at exchange 2 at 100$. Then the computer buys in a chunk of that stock from exchange 1 and sells on exchange 2, making small but sure profit. The opportunity may not come that frequently and the sizes of profit can vary. But if such an opportunity is found, then it must be jumped on because profit is guaranteed.

Before I write anything further, I must declare that I do not like Trump as a person. I do not think he should have become president. I did not vote for Trump.

But his rise from a fringe candidate to main candidate to president continued to baffle me. Throughout the primaries and in election and even right now, I continued to get amazed about how much coverage he was getting and he is getting even right now. This is the post about my attempt to understand the obsession of the media, both professional media and social media, with Trump. My AHA moment was thinking about this as arbitrage.

I think Trump as no friends. He only has enemies of enemies. And the continued media coverage helped him make more enemies and thus in a very convoluted way, get more people on his side by ‘enemies of enemies’ rule.

Just the way financial institutions love ‘financial arbitrage’ the people and media loves ‘moral arbitrage’. Instead of tackling complex issues that do not have good and bad sides clearly marked, they prefer to focus on small, irrelevant issues that have good and bad very clearly defined. So they can take the “good” side and feel good about themselves. This way no one has to face the uncomfortable, inconvenient truths about themselves. No reflection is required. No change to be made within ourselves.

Let’s keep the common people and social media out here. Because portraying the current affairs accurately is not really their job. But what the professional media did is inexcusable. They went after cheap headlines with ‘moral arbitrage’ with far more vigor than after complex issues that really mattered. All they cared about was staying in the positive light. And Trump gave them the perfect opportunity.

If we have to make sure another Trump does not rise in future, someone has to break this frenzied search for moral arbitrage in media. We need media that takes moral risk, handles inconvenient truth and is less judgmental than informative.

Why We Fail To Understand Each Other?


conflict

On two corners of this world, I am watching two divides. India Pakistan divide in Southeast Asia and another Democrat Republican divide in USA. Of course the first divide has lot more sinister dimension of possibility of nuclear war. And that has historical context too. But more on that in next post.

The Democrat Republican divide is interesting because it’s happening even when there is no reason for this divide to be that strong. After all, both parties support capitalism, human rights and more or less agree on constitution.

What makes the public opinion about each other diverge? Why people completely fail to understand each other’s viewpoints.

And then one of my walks, I made a discovery. I am sure people have made this discovery before. But here it is in my words.

When thinking about someone else, people expect them to behave in a rational and ethical way. But when thinking about themselves, people make decisions based on emotions.

It reminds me of an psychological experiment described to me by a friend of mine. Forgive me for not providing a link, but it was just part of a conversation.

People were divided into two groups and asked to make a choice.

A. Select an airplane ticket at certain price for flying on the route where bad weather and heavy turbulence was expected.

B. Or select a ticket on the route for double the price where good weather was expected.

Everything else was supposed to be same about planes. There was no known technical difficulties and both airplanes were statistically supposed to have the same probability of safe journey.

One group had to pick this ticket for an unknown person. They mostly picked the cheap but turbulent route, because that was rational choice, scary but still statistically safe and cheap. The other group had to pick for their own, they mostly picked the calm route with double the price.

After this, both groups were shown a movie narrating horrible turbulence experience. Then they were asked to make a choice again.

Again if they had to pick the ticket for other person, they picked the scary but cheap route with almost the same probability.

But here is the real kick. When they had to pick for themselves, they picked the safe but costly route even in significantly higher numbers. That means they were more inclined to avoid the fearful experience for themselves after watching the movie. But still they thought it’s OK for the other person to face the fear, as long as it was in their rational interest.

It’s not that people hated the unknown passenger. They  underestimated the importance of emotions to the other person.

When thinking about others, people underestimate the erosion to the quality of life by negative emotions like fear  and enhancement to the quality of life by positive emotions like self esteem boost.

But when it comes to them, they overestimate those exact things things. They want to avoid negative emotions and go for positive emotions, even if it means making a choice that seems not rational.

Two primal emotions  – desire to increase self esteem and desire to reduce fear play a huge role. If you leave room for these two emotions, you would understand the response much better.

Take an example. Think of a recent incident when white cop shot black person.

When white person is thinking about the incident of black person being shot by white cop, their first thought is whether the black person followed cop’s instructions? If yes and still shooting happened, then white people are willing to investigate further. If not, then the case closed. The black person should have followed the instructions.

When black  person thinks about the same incident, their first thought is whether the police followed the procedure. No matter the victim followed the instructions or not, the black person would conclude that if the victim did not pose danger to the officer, the shooting was not justified. The situation when cop arrests you is stressful to both ends and may be the victim was too stressed or confused ?

The white people are more likely to identify with police and allow them some emotional slack, like fear and anxiety. The black person is more likely to identify with the victim and allow them emotional slack, like fear and anxiety.

Who is right? I am afraid both are.

(I am generalizing too much. I know. There are plenty of white people that see black angle and vice versa.)

Next time if you don’t understand the choice made by other person, think of two things. Self esteem and fear. Or rather Self-Love and Fear. If the person has to not only make a rational choice, but also make sure it helps them to do self-love and reduce fear, what choice would they make? And you will surely have a lightbulb moment.

 

 

 

Of Tesla and Tax Breaks!!


Came across a WSJ article by Holman Jenkins who is not happy that Tesla customers are getting tax rebates. We see articles like this pop up every now and then. I am not an expert, but can’t help thinking “Seriously?”

I don’t know if this is deliberate ignorance or lack of knowledge. The truth is the whole oil supply chain is extremely costly and extremely delicate affair. American taxpayers pay through their nose to keep this supply chain intact and running. It’ just we have never seen a world where oil is not necessary and we are desensitized to all the costs we are paying.

To put it in numbers. The Model S has federal tax rebate of 7500 $ which expires when 200,000 Teslas are sold. After that the rebate goes down to half of that for a few months and then 25% of that and then vanishes entirely in one year.

7500 x 200,000 = 1.5 Billion USD tax break value till phase out begins. Say Tesla sold a hell lot more vehicles during the phase out period and was able to get another 1.5Billion USD incentives to its customers. So that’s total 3 Billion USD for a company in its lifetime.

3 Billion USD. Certainly a good chunk of money. But that’s it. The loan that was given to Tesla was paid back with interest, years ahead of schedule, with prepayment penalty.

And remember, this money does not go to Tesla. It’s just what taxpayers keep.

To put it in perspective, consider the cost of  G W Bush Tax breaks. ‘1.4 Trillion (with a T) reduction in revenue’ is the most conservative estimates. Higher side estimates go as high as 3.3 Trillion dollars.

That sounds too much guesswork and maths? Need some concrete numbers? How about the bailouts? The the first installment to just one company AIG received was 164 billion USD under multi trillion dollar TARP program.

Coming back to industry specific “favors” by the government. Here are the three favors given by taxpayers solely to the oil and gas industry.

  1. Seen that deserted gas station around the corner? Such deserted gas stations are scattered all around the towns and cities in USA? Those gas stations are deserted because the underground tanks developed leaks and contaminated the areas around. If someone were to buy it and make it operational, they need to spend money cleaning the underground first. No businessman wants to take that risk because that cleaning could explode in millions of dollars. What happens to such gas stations in long run? Eventually they get cleaned with taxpayer’s money. Every year USA taxpayers incur hundreds of millions of dollars in clean up such gas stations. Here is an article that states the costs to just one state, New York state run into approximately 200 million USD per year.
  2. Remember the Strategic Petroleum Reserves? These are petroleum stockpiles permanently maintained perpetually as a safety measure against any major oil supply disruption? The amount of oil at the moment in SPR is close to 700 mil barrels. At present value of approx 50 USD per barrel, that’s 35 billion USD perpetually stuck underground. If we had electric cars, we could free some or all of that money for better use.
  3. Have you heard about the USA Military base in Tanzania? No? It’s because there isn’t one. But there is one in Kuwait, and Saudi Arabia, and Qatar. Tanzania does not have oil. Kuwait and Saudi Arabia have. There is a huge cost of operations of these bases, whose sole purpose is to keep oil flowing smoothly. It’s hard to get a good idea of those expenses because everything is secret. But the figure is definitely going to be in Billions of USD.

And we have not talked about cleanup costs of oil spills, or healthcare costs due to pollution, or human costs of wars launched for oils.

I am a taxpayer and I would much rather have my money diverted to a company that might bring a positive disruption than anything else.

 

The Unproven Global Warming


 

I had an interesting argument with someone a few days back about global warming. The said person was of the opinion that global warming is all myth, perpetuated by special interest groups.

This post if basically a snapshot of my reply.

It surprises me when someone argues about proof of global warming. We cannot have airtight proof that global warming will destroy us. Because then we will be dead.

We have only one atmosphere to live with. And yes, global warming is a theory so far. With pretty good support from lots of data and simulations, but still a theory. Yes, that’s true.

But considering the danger it poses to humanity if true, up to what point you are willing to push your luck? You can wait till the theory is proven beyond doubt. But by that time the damage to earth’s atmosphere will be so catastrophic that the winner and loser in the argument will not live too long to reminisce in victory or come to terms with the loss.

With given scientific research, where do you put the probability of global warming to be true? 100% , 70%, 30%, 10%?

And now on a separate note, where do you put the probability of you having another car accident in next month? I am sure less than 10%, Where do you put probability of your country getting attacked by another big army? I am sure less than 10%. But yet we buy car insurance. And we support a hundreds of billions of dollars of expenditure on new fighter planes and boats.

Considering the catastrophe global warming can cause, and considering that most of the scientific community is in agreement of it’s seriousness, shouldn’t we be a little more concerned?

On this the individual pointed me out to a news clipping that said “there is not appreciable variation in earth average temperature over a last couple decades.”

Yes, there has not been appreciable variation. But the extreme temperatures are being more extreme. From livability of this planet point of view, average temperature does not tell the whole story. If your head is in a furnace at 140 degree f and your feet are in a freezer at 0 deg f, then average temperature of your body is 70 deg f. But that hardly means you are comfortable.

Growing up in India, I have personally witnessed tremendous expansion of cities and I believe that is happening all over the world. From the dawn of industrial age, which is barely 200 years, humans have managed to wipe out half the forests on this earth. And this has got to give in somewhere.

In India and I believe in most other countries, the push to counter global warming comes from conservative part of society. Because conservatives are more responsive to threat perception. But surprisingly it’s opposite in USA. In USA, the conservative part of society seems to be more opposed to the idea of action against global warming.

Why? The feeling you have while defending your country is “It’s my country and it’s the only country I have. I must protect this”. Why does this feeling not scale to the planet. It’s our planet and it’s the only planet I have at least so far. Why people are more responsive to the threat to their religion or country but not to their planet?

When you think of leaving your kids some wealth, do not forget to leave them clean environment. Otherwise  the piece of property and the fat bank account are of no use when there is no air to breathe.

 

Immigrant’s Guilt – When Love Masks as Hate


“Can you believe that story in newspaper? Every time I read something like that, I don’t want to go back to India.”

I cannot tell you how many times I have heard this remark. In coffee shops, at water coolers, on online forums and so on. The news in question changes. The ultimate conclusion remains the same. “I don’t want to go back to India.”

I always felt there is more to these words than what seems on face. Then one day I read about immigrant’s guilt. The sense of guilt and shame an immigrant person feels. I have always felt that. But I always thought they were my personal feelings. I never thought they are so broadly shared. It makes sense in retrospect that this feeling is so common.

This reminds me of an cognitive dissonance experiment I read a while back. Some researchers made a group of people do a boring job for a while. Then the group who did this job, were told to lie to other group and tell them that the job was exciting. The first group was paid to lie. Different people were paid different amounts.

What was funny was, those who were paid least were most likely to lie very forcefully and convincingly. Those who were paid more were less forceful in lying. Isn’t it ironic? If you are paid more to lie, shouldn’t you feel more incentivised to lie emphatically? No. If you are paid enough, your mind has a rational justification for lying and lying feels less conflicted. If you are not even paid properly, your feeling while lying are very conflicted and you are more likely to make yourself believe your lie to minimize the conflict and thus result in more forceful lying.

The same principle is applicable here. If you are immigrating from a war torn country, you are at peace with your own decision of immigrating. But if you are coming from a reasonably stable country, you feel more conflicted about immigrating and you are more likely to highlight the negative aspects of your home country and reinforce them in your mind, so as to justify your own immigration to yourself, so as to cope with your conflict.

But there is something unfair about these comments. We should face up to the feelings of guilt and conflict upfront and work on them constructively. We should not hide behind the coping mechanisms. We should admit that the more negative we feel, it’s because stronger the conflict. The conflict is strong because we have a strong bond with our motherland. So in a very ironic way, the more critical our comments are about our motherland, the more love we have felt. It’s love masking as hate.

Colonialism – A Societal Abuse


A bit departure today. Into history and politics.

Often times I post on online forums and debates. One recent such debate was about colonialism. The poster was most likely from Britain or one of the other colonizing countries, and was making a point that India and all other colonized nations should not be complaining really because they got a lot out of colonialism. He stopped just short of saying that the colonized countries should in fact be thankful to their colonial masters.

Lots of Indians voiced their disagreement, some in strong words and the argument degenerated. However I had a feeling the real problem was not quite captured. Thus this post.

History is just vast sea of facts. Based on these facts we make our judgments. Why we focus on a particular set of facts and what judgment we derive from them depends on our emotional undercurrents. And sadly, rarely people dig deeper than the superficial facts and judgments.

I have strong negative feelings about British colonization. You know why? Every nation, every society has this ongoing love affair with their past, their history. It is from this love affair that they derive their sense of identity, their pride, their self esteem. It is a form of self worship. Everyone has an altar deep in their mind, and there is an idol of self. There is nothing wrong in self worship as long as you are not sacrificing others at that altar.

The grim reminders everywhere of colonization throw a wrench in this self worship, this love affair with the past. People struggle to feel good about themselves. This struggle for self esteem is very subtle and hard to spot, but very pervasive and thus far more damaging in long term. It creeps into your decision making, it creeps into your relationships, it creeps into your sense of identity. It contributes a lot to create a dysfunctional society.

It’s a trauma. It’s as if part of me wants to forget that trauma because it’s painful. But part of me wants to keep that trauma alive as a reminder, as an insurance that I will be able to avoid such trauma in future. And the conflict tires me out.

In short, I don’t like colonization because it makes me difficult to love myself. And ironically it is difficult for a British person to accept colonization as bad because it makes it difficult for them to love themselves.

For the most part the first world, and especially Anglo Saxon demographics, has been unaware of how a massive societal trauma feels. Some segments of this world, like women experiencing rape or soldiers experiencing PTSD have been exposed to this trauma. But others are blissfully unaware and vastly underestimate the impact such trauma has on your life.

No, 9/11 was still not a national long term trauma. It was painful tragedy, but not long term trauma. Because USA was able to bring people to justice and bring some closure. When you bring closure, you can maintain your self-respect and a sense of control over your surrounding. It hurts a lot more when you are violated but have to live with the trauma and see the perpetrators walk free. We are all aware of dangers in this world. But we live with a certain plausible deniability of “that may not happen to me.” When you suffer trauma, but can’t bring closure, that comfort of plausible deniability is taken away.

Most of the first world nations have this blind spot for trauma. And that sadly reflects in their politics and foreign policy.

Consider the Iraq war. How did it play in Iraqi minds? History reads “America and Britain invaded Iraq and Iraq lost.” No matter what, that reminder of loss and the crisis of self esteem inflicted is going to contribute to the dysfunction of Iraqi society far more than the arrival of democracy is going to fix it. When an American or British person looks and salutes at their flag, do you see the warm glow of pride in their eyes? The Iraqi invasion just made sure that Iraqis won’t feel that glow for the next 100 years.

Was it worth it? I don’t know. I am too small person with too limited resources to decide whether Saddam Hussein was keeping WMDs or not. But I would have liked to see this considered. I would have liked at least one from the trove of political pundits on either side to acknowledge this.

And this is not just a problem with any one nation or any single person. We all underestimate, or completely forget, the need of other person to feel good about themselves. It’s like we have no awareness of ever not feeling that need, so it has become background veil of our thoughts not registering in our consciousness. And we have have no sensation of other person feeling that need, so we discount it while dealing with them.

If we paid attention to this, we would realize that we not only need good things to happen to us, but we need them to happen in such a way that they make us feel good about ourselves.

That realization of abstract, unsurfaced, emotions of other person is compassion. Compassion is not giving a dollar to the beggar. But compassion is realizing that the beggar is as entitled to self-esteem as the queen of England.

And next time when you will get multiple calls in your head, that call of pride or call of virtuousness or call of compassion, I hope you answer the call of compassion. Because that is the golden virtue.

Arm Them With Knowledge, Not Guns!!


Something about the headline “USA government decides to provide arms to XXXX” disturbs me. There has been a series of civilian uprising in the Middle East and several parts of the world. And the most frequent mode of response seems to be arms and ammunition or military action. While there might be a strong case of short term surgical military intervention for a precise objective, military intervention for a prolonged and directionless civil war is almost always counterproductive.

Syria is in the news lately. Let’s say you found a Syrian rebel and just before you hand him a gun, you asked “What does the future Syria look like? Will it be secular? Will there be equal rights for women? ”, what do you think his answer will be?

There is a common theme in most recent uprisings worldwide. The protesters succeed in threatening the existing regime, yet they don’t get enough traction to derail it. They begin with a bang, but lose in mid-game or end-game. They know what they don’t want. But once they are done away with that, they don’t really know what they want and how to get there.

So what seems like a promising change in course of affairs of a nation fizzles along the way. The direction is lost and despondence sets in. It goes either to stalemate and years of dragged civil war, or defeat of rebels. At some point society returns back to where it was, or rather a few years behind where it was, before the war. Occasionally the rebels succeed, but then they turn out to be worse than the people they replaced.

That’s the key difference between most of “springs” and rebellions worldwide and American Revolutionary war. The revolutionary war did not really begin on the battlefield. It began in the town hall. It did not begin with firing of guns. It began with signing the declaration of independence. The leaders of the war had a very clear constructive vision of how the country was going to look like after they won the war. That helped them garner widespread support of masses . Masses were genuinely convinced that winning the war was in their interest.

The distinguishing feature in these failed civil unrests is the lack of vision going forward. The core of any civil unrest needs to be a constructive vision of better future and a strong leader of a group of leaders committed to that vision. As long as the vision is there, common people will go to war again and again, with whatever arms they have. As long as it is not there, no amount of external infusion of arms will convince common people to fight.

The importance of such a positive vision is critical to any civil unrest. Frustration and anger are not enough, because a constructive, sustainable, long term change cannot ride on the back of negative emotions alone.

I have no doubt in my mind that many people behind the decision to arm Syrian rebels have genuine intention to do something good. And that Assad has committed many crimes against his own people. And that rebels are committed to their cause and their grievances are genuine. Yet I have many doubts about how this whole thing of providing arms assistance is going to pan out.

So what do we do? Do nothing and let innocent civilians die?

If I were the president of USA, I would use all the might to orchestrate a truce between Asad and the rebels. Temporarily remove imminent threat to Assad so he would stop using extreme measures. Perhaps arrange some UN headed oversight of the Syrian administration to make sure that there is no retaliation. Let life get back to normal to some extent. Let students return to schools, workers return to factories.

And then I would spend all the money I had set aside for Syria in political education of Syrian people. In empowering the grassroot leaders that can drive the change organically. In bringing out Jeffersons, Lincolns, Martin Luther Kings of the Syrian society.

And one day they will have a Syrian dream. It may take a decade or two, but for sure they will have a dream. And once they do, there will be no turning back. Remember, what won the civil rights battle for Martin Luther King was not his anger, but his dream.