Rajesh Jain

Bibek Debroy and Aditya Sinha on India’s Urban Local Bodies: “There is a need for urban local bodies across the country to find an alternative mechanism for financing development and reduce their dependence on transfers. Only then, the strong Wicksellian Connection will empower residents to question their city governments to carry out necessary developmental works.”

NYT: “In September, scientists at the University of Hong Kong published the most complete census of ants ever assembled. The numbers are so big as to seem made up. The study estimated that there are at least 20 quadrillion — that is, 20,000,000,000,000,000 — ants on Earth…What has always beguiled me about ants is how their similarities to humanity — they live in societies, they’ve all got jobs, they endure arduous daily commutes to work — are offset by incomprehensible alienness. So much of ant life makes no sense to us: There’s the abject selflessness, the subsuming of the individual to the collective. There’s the absence of any leadership or coordination, their lives dictated by instinct and algorithm, out of which emerges collective intelligence. There’s the way they navigate and communicate through chemical signals, creating road signs from pheromones and never getting stuck in traffic jams…Ants were here before us, and they are likely to long outlast us. They run the place. We’re just visiting.”

Ninan: “The Indian economy is manifestly an out-performer just now…So why is it that, for many observers, optimism about the present does not extend much beyond the visible horizon? It boils down to familiar issues, the most important being a structural unemployment problem which is hard to tackle, and which carries within it the roots of social unrest. Allied with this is the poor state of education and health care, and the nutrition deficits that show up in extensive stunting and wasting among children — tomorrow’s workforce. It needs no elucidation that, with such drag factors operating, a country cannot expect to maintain or improve its speed of ascent. There is also a third set of issues, linked to the limited range of systemic safeguards that exist to block pilot error.”

Peter Boettke: “I am an optimist because of the creativity of individuals and the power of the market; I am a pessimist because of the moral intuitions hard-wired into humans through our evolutionary past in small-group settings and the tyranny of government controls in the affairs of men. The logical outcomes of both are fundamentally opposed: complete and unregulated trade with all or isolation and war against all. Human history, I contend, can be seen as the long drama of these two forces battling it out to determine which norms of interaction will be dominant. Put another way, we can follow the Smithian propensity to truck, barter, and exchange, or we can follow the Hobbesian propensity to rape, pillage, and plunder. Optimism comes from Smithian propensities winning out over Hobbesian ones, whereas pessimism comes from the Hobbesian propensities sweeping aside the Smithian ones.” [via CafeHayek]

John McDonnell: “In 2022, large language models (LLMs) finally got good. Specifically, Google and OpenAI have led the way in creating foundation models that respond to instructions more usefully. For OpenAI, this came in the form of Instruct-GPT (OpenAI blogpost), while for Google this was reflected in their FLAN training method (Wei et al. 2022, arxiv). Flan’s which beat the Hypermind forecast for MMLU performance two years early. But the best is yet to come. The really exciting applications will be action-driven, where the model acts like an agent choosing actions. And although academics can argue all day about the true definition of AGI, an action-driven LLM is going to look a lot like AGI.”

FT: “Three of the top 10 highest-grossing mobile games ever launched in 2012. Candy Crush Saga, Clash of Clans and Puzzle & Dragons have each generated billions of dollars in revenues, before counting spin-off titles or licensing deals. They came out when smartphone screen sizes were getting larger, giving developers more real estate to play with. Games makers were beginning to master the business model of free-to-play games that charge for extra lives, power-ups or personalised outfits. Today mobile has gone from being a sideshow in the gaming market to its biggest source of revenue. Turning games into “live services”, with a constant stream of new levels or limited-time events, can sustain a popular mobile game for just as long as a console title, if not longer. Candy Crush Saga has been the most enduring global hit of that 2012 cohort. It has had three billion downloads and it still attracts more than 200 million players a month.”

Nathan Baschez: “I’ve seen a lot of technology waves in my time: cloud, social, mobile, wearables, crypto, and now AI. Every time, the same story plays out: there is a long gestation period, followed by a breakthrough story that kicks off a hype cycle. Lots of silly decisions get made, and most of the hoped-for value never materializes. But then the dust settles, the tourists leave, and a smaller group of people keep building; before you know it the technology gets woven into our lives in a boring-yet-useful way.”

NYT: “There are well over 100 currencies, from the Angolan kwanza and the Bhutan ngultrum to the Uzbekistan sum and the Vanuatu vatu. Is that the right number for the global economy? Not really. A multiplicity of unpredictably fluctuating currencies discourages trade and investment by injecting uncertainty into business decisions. Charles Kindleberger thought there should be one world currency, and he had a candidate: the U.S. dollar. He argued that there would be more trade, cross-border investment and prosperity if all nations either adopted dollars (as, say, Ecuador has) or tied their currencies to the dollar at a fixed exchange rate, which has almost the same effect…Perhaps surprisingly, though, the world today is closer to Kindleberger’s vision than he or his intellectual opponents could have imagined. Although the United States’ share of global domestic product has shrunk since the aftermath of World War II, the dollar continues to play a dominant role in financial flows.”

FT: “A decade ago, one man bands had gone out of fashion. Then along came Putin, Xi Jinping, Zuckerberg and Musk…Today’s two dominant organisational forms are practically the same: the one-man autocratic state and the one-man autocratic company. Both have the same vulnerability: the idiosyncrasy of an overpraised loner.”

Economist: “Why do the self-interested stewards of American capitalism—Wall Street, venture capitalists, investors, the business press—so often fall victim to too-good-to-be-true corporate narratives? Read “Power Failure”, Mr Cohan’s 800-page extravaganza on the firm founded in 1892 as the General Electric Company, and it is instantly clear how important brilliant people are to business success—and how their brilliance can become a dangerous vulnerability. GE had not only the inventor, Thomas Edison, to thank for its start in life; Charles Coffin, a visionary businessman, set it on the path to lasting greatness. Welch, who took over as CEO in 1981, stood on a similar pedestal. The author describes in beautifully reported detail Welch’s mastery of the chemistry behind GE’s products, such as plastics, as well as his abilities as a leader to cajole, charm, party with and, yes, annihilate staff. From the point of view of profits, it worked. Under him GE achieved quarter after quarter of earnings growth and a market value that grew from $12bn in 1981 to $400bn when he stepped down in 2001. But such success inevitably over-seduces investors. No one, apart from short-sellers, has an interest in peering through the hype. Under Welch, GE’s mythology—and no doubt M&A fees —meant that Wall Street mostly turned a blind eye to the growing role GE Capital, an unregulated bank, played in enabling the firm to meet its “stretch” profit targets. Under Jeff Immelt, his successor (whose appointment caused Welch such bitter regret), its size became an Achilles heel.”

strategy+business: “Although every company is different, and there is no set formula for determining the appropriate design for your organization, we have identified 10 guiding principles that apply to every company. These have been developed through years of research and practice at PwC and Strategy&, using changes in organization design to improve performance in more than 400 companies across industries and geographies. These fundamental principles point the way for leaders whose strategies require a different kind of organization than the one they have today.” One of them: “Declare amnesty for the past. Organization design should start with corporate self-reflection: What is your sense of purpose? How will you make a difference for your clients, employees, and investors? What will set you apart from others, now and in the future? What differentiating capabilities will allow you to deliver your value proposition over the next two to five years? For many business leaders, answering those questions means going beyond your comfort zone. You have to set a bold direction, marshal the organization toward that goal, and prioritize everything you do accordingly. Sustaining a forward-looking view is crucial.”

strategy+business on the need to question your successes as much as your failures: “Successes can feel like moments for celebration, rather than furrowed-brow scrutiny. But it is precisely those moments of interrogation that can lead to insights and longer-term competitive advantages. Today’s shorter economic cycles create more momentum, both good and bad, and you want to be riding a wave rather than trying to paddle against it.”

The Economist’s ten trends to watch in 2023. “Today’s world is much more unstable, convulsed by the vicissitudes of great-power rivalry, the aftershocks of the pandemic, economic upheaval, extreme weather, and rapid social and technological change. Unpredictability is the new normal. There is no getting away from it.”

Economist: “With a median age of 28 and a growing working-age population, India now has a chance to reap its own demographic dividend. Its economy recently displaced Britain’s as the world’s fifth-biggest and will rank third by 2029, predicts State Bank of India. But India’s prosperity depends on the productivity of its youthful people, which is not as high as in China. Fewer than half of adult Indians are in the workforce, compared with two-thirds in China. Chinese aged 25 and older have on average 1.5 years more schooling than Indians of the same age.”

Samuel Gregg: “Contemporary market liberalism has many individuals engaged in the important work of policy development and advocacy. Yet it desperately needs more people like the historian Amity Shlaes or the philosopher James R. Otteson. Such individuals combine their academic specialties with deep appreciation of market economics. But the market liberal cause also needs more of an even rarer commodity: economists with the breadth and depth of knowledge that gives them the capacity to mix it up with historians and philosophers peddling left-populist or economic nationalist narratives—and to do so on their opponents’ intellectual turf. Such individuals additionally require the capacity to address often very different audiences: experts and non-experts; the secular and the religious; the business leader tempted by the ESG agenda and pushed by woke management consultants to turn her company into something akin to an NGO; or the homemaker who’s considering voting for the latest politician promising economic nirvana through state intervention.”

Economist: “Indonesia is poised for a boom—politics permitting…[It] has much to recommend it to foreign investors. It is young: 26% of the population is under 15, in stark contrast to ageing East Asia. It has also maintained a careful diplomatic neutrality for decades, making it a plausible destination for both Chinese and Western investment—one area in which its otherwise frustrating international anonymity provides an advantage. It is the world’s fourth-largest country by population, with 276m people, and so a gigantic market. And although it is only the world’s seventh-largest economy after accounting for the cost of living, and 16th at market exchange rates, it is steadily climbing up the rankings.”

Simone Stolzoff: “A map might give you directions from A to B, but a compass will help you find true north wherever you are. Often when we seek out career advice, we look for maps: follow the morning routine of this highly successful person. Reverse-engineer your way to the C-Suite, one LinkedIn cyberstalk at a time. Even the metaphors we use with regard to careers—ladders, stepping stones, paths—assume a linearity that is rarely consistent with lived experience. Our career maps may be distorted by other people’s preferences and our own outdated ideas of what we thought we wanted…Instead of planning a route from the get-go, we benefit from first taking a step back to determine what matters, irrespective of any particular job or direction.”

Michael Munger: “The price mechanism, if it is allowed to operate in situations of scarcity, allows other consumers to “bid” against the person who is thinking of hoarding. If prices are allowed to rise and carry out their proper function, then the current purchaser is really buying from potential future purchasers…[We need to] recognize that other consumers, not the seller, are responsible for the prices charged. Attempts to “manage” or “plan” prices do nothing to address the real problem of scarcity, and often make scarcity worse. Price controls are a restriction on the ability of other consumers to have their needs met, and that’s just wrong.”

Marian Tipy: “Every new human being comes to the world not only with an empty stomach, but also a pair of hands, and, more importantly, a brain capable of intelligent thought and new knowledge creation. In the process of economic development, human beings cause environmental damage, but the new wealth and knowledge that we create also allow us to become better stewards of the planet. That is why all environmental ranking tables are dominated by developed nations. Doomsayers concerned about population growth are right to note that the world is constituted of a finite number of atoms – be they of copper or of zinc. But the finitude of atoms (i.e., resources) is largely irrelevant to human well‐​being. What matters is our ability to create new knowledge that combines and recombines those atoms in ever more valuable ways.”

McKinsey speaks to the authors of “Deliberate Calm”: “Jacqui Brassey: Deliberate calm is a set of skills that helps leaders make the best decisions in the moment, even when it’s tough. Aaron De Smet: We’re constantly faced with new levels of uncertainty, volatility. Change is now the norm. I grew up in a world where the way we think about how to handle a crisis is outdated. This book helps leaders understand how to change their relationship with change, how to change their relationship with uncertainty, and not to shy away from it. But it also provides a better tool kit for dealing with uncertainty on an ongoing basis.”

Andy Kessler: “Profits are a measure of the societal wealth created by corporations, and that the price paid for products and services is the minimum amount of value created. If that weren’t true, we could all grow our own food or assemble our own iPhones. But we can’t. Jobs are very much like profits. All jobs, from the machine-learning coder to the oil-rig worker to the Safeway bagger, increase societal wealth. Why? Because we don’t have to do those jobs ourselves. Think of pay as personal profits. Every (legal) job adds value, and if you slack off or don’t deploy your human capital and live up to your potential, you’re stealing societal wealth from the rest of us. That’s selfish.”

Shashi Shekhar: “Our politics has grown dependent on accusations and counter-allegations. This also taints the positive works of the rulers…Why can’t our politicians dare to run for office solely on the basis of their welfare work and contributions? The electorate, not politicians, will have to provide an answer to this question. In some ways, the electorate has supported the misconduct of the politician. The moment has come to remind our politicians that we will vote based on their work and principles, not on hatred or spectacle.”

Thomas Homer-Dixon and Johan Rockström: Today’s mess is better understood as a global polycrisis, a term the historian Adam Tooze at Columbia has recently popularized. The term implies that humanity is dealing with a complex knot of seemingly distinct but actually deeply entangled crises. Precisely because these crises are so entangled, they’re causing worldwide damage much greater than the sum of their individual harms…We tend to see bits and pieces of a causal loop, but not the whole thing. For that reason, we urgently need to identify and monitor these feedbacks and ferret out those still unrecognized to establish whether they are synchronizing the world’s systemic risks. Businesses do similar kinds of risk analysis by diagraming causal loops in the dynamic systems affecting them. In this case, the system is the planet itself. It goes back to the ecologist Barry Commoner’s first rule of ecology — everything is connected to everything else — but with a crucial amendment: some kinds of connections matter a lot more than others.”

Phil Gramms, Robert Ekelund, and John Early: “Knowing that some people had extraordinary amounts of both ability and ambition, the Founders set about to build a government where the talented and ambitious could not seize control and use the power of government to endanger the freedom and property of others. They equally feared both the man on the white horse and the enflamed masses who, by either force or the ballot box, might seize the power of government and use it to destroy the rule of law.” [via CafeHayek]

Ben Thompson: “In the end, the best way of knowing is starting by consciously not-knowing. Narratives are tempting but too often they are wrong, a diversion, or based on theory without any tether to reality. Narratives that are right, on the other hand, follow from products, which means that if you want to control the narrative in the long run, you have to build the product first, whether that be a software product, a publication, or a company.”