United Voters of India: The Logic of Collective Action (Part 14)

GameStop

It all came together in recent weeks with the stock of GameStop – where a swarm of individual traders attacked the hedge funds who were shorting the stock. Irrespective of what happens in the long run, the early score, as The Economist put it, is “Retail punters 1, short sellers 0.”

Bullish retail traders were ginned up when the market makers who sold them their bets were forced to hedge against rising prices by buying shares. Short-sellers were also forced to buy shares after incurring losses worth several billion dollars. The wall-to-wall coverage of the stock has prompted yet more investors to pile in. GameStop was the single most traded stock in America on January 26th; volumes matched that in the five biggest tech giants combined (see chart). The share price more than doubled the next day. The masses are coming for other heavily shorted stocks too. Share prices for AMC, a chain of cinemas, and Nokia and Blackberry, which once made popular mobile phones, have also spiked.

Jumpy professional investors will now have to keep one eye on the mob.

From CNN.com:

This past week has been a banner one for Reddit’s island of misfit investors.

WallStreetBets exploded into the mainstream, moving from the front page of Reddit to the front page of the New York Times and nearly every other major news site. The subreddit’s short-squeeze of GameStop helped shoot up the price of the video game retailer’s stock a mind-boggling 1,700% from the beginning of January to Wednesday (before it fell again Thursday), captivating the minds and wallets of investors — both casual and institutional — and financial regulators.

But while millions are now discovering WallStreetBets for the first time, it has been building momentum throughout the pandemic. One can trace its epic rise to a perfect storm of favorable conditions: the exponential growth of the app Robinhood and its no-fee options trading, the extreme volatility Covid-19 brought to the markets, the stimulus checks mailed to millions of Americans, the lack of televised sports for much of the year, and the unwanted free time stuck at home the pandemic has forced on many people.

Describing itself as if “4chan found a Bloomberg terminal,” the forum’s giddy nihilism, inscrutable language and memes fueled a war on a perceived corrupted mainstream.

And it’s led WallStreetBets’ evolution into an unprecedented force of retail-investing financial radicalism, offering the allure of get-rich-quick gains to a rapidly expanding audience of millions.

Here is the stub from a Daily Mail article: “How minnows sank the Wall Street sharks: It’s the most astonishing financial story for years – the army of small investors who took sweet revenge on cynical hedge fund millionaires.”

Thinks 34

Anton Hoes on Invention: “Core to the model is the observation that innovation spreads from person to person. It is a mentality, that we pick up from others. Of my sample of inventors, active c.1550-1850, the vast majority of them had had some kind of contact with an inventor before inventing anything themselves…Everything else we worry about when promoting innovation, from funding to intellectual property rights, or from education to social acceptance, is in a sense downstream of it.”

Jim Collins’ Hedgehog Concept’s 3 questions: “What you can be the best in the world at? What drives your economic engine? What you are deeply passionate about.”

Desiderata by Max Ehrmann. “And whether or not it is clear to you, no doubt the universe is unfolding as it should. Therefore be at peace with God, whatever you conceive Him to be. And whatever your labors and aspirations, in the noisy confusion of life, keep peace in your soul. With all its sham, drudgery and broken dreams, it is still a beautiful world. Be cheerful. Strive to be happy.” (First pointed to me by Atanu Dey.)

 

 

United Voters of India: The Logic of Collective Action (Part 13)

Swarm Intelligence

As I was thinking about the coordinated actions of many, I remembered reading about swarms many years ago – the idea of distributed, collective intelligence. It was this 2001 article from Harvard Business Review that had interested me in swarms. An excerpt: “Consider termites. Individually, they have meager intelligence. And they work with no supervision. Yet collectively they build mounds that are engineering marvels, able to maintain ambient temperature and comfortable levels of oxygen and carbon dioxide even as the nest grows. Indeed, for social insects teamwork is largely self-organized, coordinated primarily through the interactions of individual colony members. Together they can solve difficult problems (like choosing the shortest route to a food source from myriad possible pathways) even though each interaction might be very simple (one ant merely following the trail left by another). The collective behavior that emerges from a group of social insects has been dubbed “swarm intelligence.””

In other words, ‘spontaneous order’ or ‘emergent order’.

More from Wikipedia: “Swarm intelligence (SI) is the collective behaviour of decentralized, self-organized systems, natural or artificial. The concept is employed in work on artificial intelligence. The expression was introduced by Gerardo Beni and Jing Wang in 1989, in the context of cellular robotic systems. SI systems consist typically of a population of simple agents … interacting locally with one another and with their environment. The inspiration often comes from nature, especially biological systems. The agents follow very simple rules, and although there is no centralized control structure dictating how individual agents should behave, local, and to a certain degree random, interactions between such agents lead to the emergence of “intelligent” global behaviour, unknown to the individual agents.”

Another example that is instructive is John Conway’s Game of Life. The rules are simple. Order emerges but the outcome of the playing of the game is hard to predict. The outcome is not determined by any subset of the players of the game but from the interactions of all of the players.

The HBR article summarised the key attributes of swarms: “flexibility (the colony can adapt to a changing environment), robustness (even when one or more individuals fail, the group can still perform its tasks), and self-organization (activities are neither centrally controlled nor locally supervised).”

In politics, the recent examples of the Tea Party in the US and Occupy Wall Street movements come to mind – largely leaderless swarms of people coordinating action to achieve a specific purpose. Digital tools have amplified the power of individuals to come together. Hierarchies of WhatsApp and Signal groups, Twitter accounts, Facebook messages, online bulletin boards like Reddit can now supercharge message distribution and engagement to reduce latency between ideas and actions.

There is one important difference between the behaviour of termites and swarms, and on the other hand that of the farmers’ and Wall Street groups’ actions. The former don’t have a defined specific purpose or goal; the latter have a goal that clearly motivates them to act.

Thinks 33

Pratap Bhanu Mehta: “The scenes at the Red Fort may have been disturbing. But the real darkness on the horizon is not the protest, or the turn it might have taken. It is the turn Indian democracy is taking, almost as if it is on the road to perdition…The real desecration did not happen at the Red Fort. It happened when we created a country where jokes, acts of love, and democratic articulation are all deemed anti-national.”

Red Fort and Delhi — symbols and narratives of power down the ages: “It was the conquest by Ghurid Turks in the late 12th century that put Delhi on the map as a centre of power. As the capital of the Sultanate, Delhi gradually developed an aura of power — in the popular imagination, it came to be associated with a dominant power in the subcontinent. Babur, having defeated Ibrahim Lodi at Panipat in 1526, headed for Delhi, which he described as “the capital of all Hindustan”, even though the Lodis had ruled from Agra for the previous two decades.”

Frequently Asked Questions on Farmer protests: by Yogesh Upadhyaya

United Voters of India: The Logic of Collective Action (Part 12)

Postscript: Many as One

The past week has been a tumultuous one in India’s capital as protesting farmers upped the ante with their actions on Republic Day. Riding tractors, they drove into Delhi and clashed with the police at multiple places. The peace was broken and positions will undoubtedly harden on all sides going forward. Even as all this was happening, there was a different sort of organised and coordinated action taking place in the US financial markets. A large group of individual traders rode up prices of a few stocks (primarily GameStop) and roiled the world of some of the large hedge funds who had shorted these stocks. As individual farmers went up against the might of the state in India, digitally savvy retail traders took on the biggies of Wall Street. The common theme was of individuals organising themselves and coordinating their actions.

Social media platforms and messaging apps are the instruments the masses use to unite and act in ways that were impossible earlier. The collective becomes greater than the sum of the individuals.

The story of GameStop is especially interesting because it illustrates how digital technology has changed the game and levelled the playing field for the weaker players. Whatever be the eventual outcomes of the farmers’ protests and the GameStop matter, there is much to learn for us on how to make United Voters of India (UVI) a success.

I had written earlier: “Taking on existing political parties is non-trivial. Recreating the organisational system they have built over decades is not easy. If disruption needs to be done, digital is the only alternative. UVI needs to work like a new-generation startup that is taking on the heavyweight incumbents in politics… UVI should become a digital non-party platform targeting the blue ocean of non-aligned and non-voters (NANVs) with an agenda crafted around principles for prosperity and wealth creation to attract at least 1 out of every 10 Indians. This is how citizens can seed the political revolution India needs to engineer the economic transformation that creates a Nayi Disha for the next generation.“

If the two-thirds of India’s eligible voters that constitute the NANVs can organise themselves and act in unison, it will be possible to bring about political change in India – not just determine the winners and losers, but actually be the winners. The key change is to use coordinated action within the existing rules of the game to bring about the desired change. It is not a change in the rules but in the strategy that the players evolve that change the outcome of the game.

Let’s begin by looking at what happened in the US in its financial markets – it is a fascinating study because it is end-to-end digital. We will then consider what could be done in India to make the Indian Revolution a reality.

Thinks 32

Anticipating the Unintended: Radically Networked Societies (RNS) meet Capital Markets, knocking the experts off their pedestal, the crowd is right, it is personal. “The GameStop phenomenon is just the beginning. It is like the Arab Spring of 2011 engineered on Twitter. Today it seems like a moment when the little guys took on the big, brutish establishment and won. This victory, like that of the Arab Spring, will be pyrrhic. The genie that escaped from that movement has been hard to put back into the bottle. The markets will now have to contend with the genie. It is out.”

Aswath Damodaran on the Gamestop saga: Great read. “The story resonates because it has all of the elements of a David versus Goliath battle, and given the low esteem that many hold Wall Street in, it has led to sideline cheerleading.”

Amber Petrovich: Why we cannot and will not stop with GameStop. “I hope my fellow retail investors will make GameStop just the start — and use our newfound power to help companies and corporate leaders find a conscience. Eventually, they’ll start listening and understanding that putting their communities and their employees first can improve business and still benefit shareholders.”

United Voters of India: The Logic of Collective Action (Part 11)

Ghar Lao Lakshmi

The final question to address is: what can be foundational principles that can attract voters to UVI? Atanu Dey has written about “Pretty Good Principles” in his book, “Transforming India.” The key ideas are based on limited government, individual rights and the relationship between the individual and government. These are good starting points. I had also outlined a set of prosperity principles and starting solutions in the Nayi Disha manifesto. What is common to both (and to nations that have created wealth for their people) is the idea of economic freedom.

Here is a preamble I wrote recently – capturing the current state of affairs and the change that we need to work towards.

**

I am an Indian. I want to bring home Lakshmi.

I am a farmer. I want to bring home Lakshmi.

I am a trader. I want the freedom to buy and sell, so I can bring home Lakshmi

I am a student. I want free entry in education, so I can bring home Lakshmi.

I am unemployed. I want a job, so I can bring home Lakshmi.

I am a mother. I want Dhan Vapasi for my family, so we get Lakshmi at home.

I am a salaried worker. I want lower taxes, so I can bring home Lakshmi.

I am a manufacturer. I want freedom from licences and permits, so I can bring home Lakshmi.

I live in a village. I want to move to a city, so I can bring home Lakshmi.

I live in a city. I want good infrastructure, so I can bring home Lakshmi.

I am an entrepreneur. I want rule of law, so I can bring home Lakshmi.

I am an exporter. I want an end to import tariffs, so I can bring home Lakshmi.

I am an unborn Indian. I want to grow up in a home with Lakshmi.

**

I want a new India.

I want an India in which Lakshmi resides in every Indian home.

I will not be divided by my caste or religion. I am an Indian first.

I am tired of divide and rule. I am tired of being exploited. I am tired of British Raj 2.0.

I want a government of Indians who will let me bring Lakshmi home.

I will vote out those who have let me down.

I will vote out those who have not let me bring Lakshmi home.

I will vote and vote as one to bring Lakshmi home. For myself and every Indian.

If you and I unite, we can bring Lakshmi home for every Indian family.

We can bring Lakshmi home. Not in a generation, but with the next election.

If you and I unite, we can make India great.

We are United Voters of India.

Will you join me?

**

The time has come to move from Ram to Lakshmi. While Ram will reside in a temple faraway for most Indians, Lakshmi (wealth) needs to be brought into the homes of each and every Indian. Every political party has connived to deny Lakshmi entry into our homes. This is the central theme UVI must build on – Ghar Lao Lakshmi (Bring Home Lakshmi). This is the challenge and opportunity for India’s voters to, in Swami Vivekananda’s words, “arise, awake, and stop not till the goal is reached.”

Thinks 31

Dan Shipper on stress and peak performance: “Stress isn’t good or bad. It’s a tool. In small doses it’s good, but too much of a good thing becomes a bad thing pretty quickly. When your stress response is working properly it makes you run faster, your memory gets better, you’re able to focus better. But when your stress response is over-activated, or chronically activated—you get ulcers and heart disease. It’s bad!”

Morgan Housel on Writing: “You have five seconds to get people’s attention. Books, blogs, emails, reports, it doesn’t matter – if you don’t sell them in five seconds you’ve exhausted most of their patience.”

James Buchanan: “Politicians and bureaucrats are no different from the rest of us. They will maximize their incentives just like everybody else.”

United Voters of India: The Logic of Collective Action (Part 10)

Making It Happen

Political parties are election machines. Even as they indulge in theatrics inside and outside of the legislative bodies, they have a grassroots cadre (voluntary and paid) which comes to life during election time. A good and successful party separates politics and elections. Win every seat is the mantra. To make that happen, they need to focus on two tracks: keep the core enthused and create the ‘hawa’ to swing the non-aligned voters. The base needs to be glued to the floaters to create a sticky selectorate.

Taking on existing political parties is non-trivial. Recreating the organisational system they have built over decades is not easy. If disruption needs to be done, digital is the only alternative. UVI needs to work like a new-generation startup that is taking on the heavyweight incumbents in politics. This mindset can offer ideas on how to make UVI a success.

Firstly, UVI is not competing for the committed voters of existing political parties. That is the red ocean and what all the political parties do with their high decibel and divisive campaigns. UVI needs to focus on the blue ocean – the largely uncontested market of the non-aligned and non-voters, who constitute two-thirds of all eligible voters.

Secondly, UVI cannot replicate the offline presence of the incumbent political parties. It has to go all-digital. Most of India now has a mobile phone, and there is a smartphone with at least one family member. Just like Amazon and its ilk have built all-digital platforms to penetrate the competitive world of retail, UVI needs to build a digital platform to reach out to the blue ocean of NANVs.

Thirdly, UVI must not succumb to the temptation of creating a new political party. Parties have their own distinct dynamics – a few at the top of a political party seek to control the election symbol and everyone else. (In fact, a good election reform would be to get rid of the arcane election symbol – that was needed in the India of two generations ago when illiteracy was very high. It is time to now start putting the names of political parties or the candidate affiliation next to their names on the EVM. A further election reform needed is to replace the EVM itself (as I have written earlier.) UVI’s focus must be to support candidates and parties who get reforms done – or vote against those who don’t. Do it in a couple of elections, and all parties will get the message.

Fourthly, UVI must have a unifying agenda. This must be around the principles of prosperity – a list of 8-10 ideas that work to attract those frustrated about the lack of choice in what the current set of political parties have to offer. This is the white space UVI must target – India has never had a united voting bloc for principles.

To summarise: UVI should become a digital non-party platform targeting the blue ocean of NANVs with an agenda crafted around principles for prosperity and wealth creation to attract at least 1 out of every 10 Indians. This is how citizens can seed the political revolution India needs to engineer the economic transformation that creates a Nayi Disha for the next generation.

Tomorrow: Part 11

Thinks 30

Kunal Shah (Cred) on Indian startups: “Unfortunately, they’re just being stupid about it. They’re trying to go for 100 million customers when they don’t have the money to afford the basics. India has approximately $2,000 per capita income. If you remove the top 25 million families, that would drop to less than $800 per capita, which is 50,000 rupees a year [683 dollars]. What do you think people can buy with that? So why is no one building for the 25 million? Everybody is building for the 100 million who have no money.”

Conlangs: A term denoting a language whose vocabulary, grammar and phonology have been consciously devised rather than developing organically.  The father of conlangs is indisputably J.R.R. Tolkien, a prominent linguist who drew from Finnish, Welsh and Ancient Greek to craft 15 languages for The Lord of the Rings, including Elvish, Dwarvish and the Black Speech of Sauron. From here, all other conlangs flowed: the Na’vi language in Avatar, Parseltongue in Harry Potter, Dothraki and High Valyrian in Game of Thrones.

The Invitation by By Oriah Mountain Dreame. “I want to know / if you can be alone / with yourself / and if you truly like / the company you keep / in the empty moments.”