Month: May 2016

Guru–the most important free market movie ever made?

Guru, a 2007 movie from India starring Abhishek Bachchan and Aishwarya Rai and directed by Mani Ratnam, is one of the most pro-free market movies ever made and perhaps the best.

Guru follows Gurukant “Guru” Desai from his small village in India to Turkey where in a series of evocative scenes he shows a natural affinity for the rhythms of markets. Determined to work for himself, Guru returns to India and tries to enter the cotton market but he needs a license and the license system is monopolized by a rich clique with close ties to the government. Guru has no entry into this clique, which Guruposterdiffers in class and caste from his village roots, but his cause is taken up by a liberal newspaper editor, Manik Dasgupta, a veteran of the independence movement, who shames the government into opening up the license system. Guru and Manik become close and Guru becomes godfather to Manik’s daughter who has epilepsy.

The movie’s portrayal of entrepreneurship and the problems that Guru must surmount–financial, familial, and political–is unusually smart and sympathetic.

As Guru rises to the top the movie becomes more complex. Guru bribes politicians and skirts rules and regulations. His previous benefactor, the newspaper editor, turns against him. Derek Elley at Variety says Guru “forgets his ethics on the way to the top.” That’s a common but incorrect reading. What is going on is more subtle. Ratnam is telling us that Guru’s virtues are incompatible with a corrupt system and a choice must be made. Consider that on his way to the top, Guru has promised to always honor, love and respect his elder patron and even as they are at odds, he never wavers in this promise. Nor does he waver in his love for Manik’s epileptic daughter, even as she marries the reporter who has led the charges against Guru. Rather than having been corrupted, Guru demonstrates an iron-willed commitment to virtue. Riches and success did not corrupt Guru’s personal virtue nor has his public virtue been corrupted. In contrast to the earlier corruption of the ruling clique we never see Guru preventing others from competing with him. He bribes only in order to build.

The movie is powerful not because it opposes virtue and corruption but because it opposes two ideas of virtue. Is it virtuous to follow the law when the law itself is corrupt? Other artists have explored this question when the lawbreaker opposes social injustice, ala Gandhi and Martin Luther King, but what about when the lawbreaker opposes economic injustice? The question the movie asks is a classic question from Ayn Rand, how can an honest (business)-man live in a corrupt world? The theme becomes clear in the climax, a trial in which Guru, ala Howard Roark, puts society on trial.

The director, Mani Ratnam, has great ambitions. In telling the story of India’s liberation, not from colonialism but from socialism, he aims to elevate a new type of hero for post-socialist India, a business guru. In the trial, Ratnam is also arguing that a house divided against itself, a house half slave and half free, cannot long remain standing. Either India must push forward with a new vision for itself based on business, free and open markets and liberal views (on gender, the disabled, religion and other issues) or it will indeed fall back into internal strife and corruption.

I love the theme of Guru but the movie wouldn’t work without a great performance from Abhishek Bachchan. The beautiful Aishwarya Rai, a Miss World champion, gives a very good performance (she married Bachchan as the movie premiered) as do a host of other actors.

I find it encouraging for India that the movie was a hit and has a 90% rating on RT. You can buy the movie at Amazon or watch it on Youtube.

Addendum: Guru is loosely based on the life of Dhirubhai Ambani who from humble beginnings built Reliance Industries into one of the largest and most profitable firms in the world.

The heroes of Jaron Lanier

There are many, but they include:

  • J.M. Keynes,  he was the first person to think about how to really manage an information system.
  • E.M. Forster for The Machine Stops, written in 1907, which foresees our error with a very critical eye.
  • Alan Turing, who stayed a kind person even as he was tortured to death.
  • Mary Shelley who was a keen observer of people and how they can confuse themselves with technology.

And of course my friend Ted Nelson. He invented the digital media link and was perhaps the most formative figure in the development of online culture. He proposed that instead of copying digital media, we should keep one copy of each cultural expression on a digital network and pay the author of that expression an affordable amount whenever it is accessed. In this way, anyone could earn a living from their creative work.

Here is another interesting bit about the internet:

One thing that bugs me is the way context is lost. You start discovering new music or new culture in very particular ways. Algorithms become your guide. If an algorithm calculates that you may like a piece of music, it will recommend it to you. That makes the algorithm the master of context for humanity. It tends to remove culture from its context, and context is everything. The structure of the Net itself has become the context instead of real people or the real world. That’s a really big deal.

Here is the full piece, an interview with Catherine Jewell at WIPO, I would say that Lanier is or should be rising in relative status.  For the pointer I thank Samir Varma.

The Malthusian cultural world has arrived

For music, at least:

The simultaneous advent of streaming music and the vinyl renaissance has led to some very interesting recording industry statistics over the past few months. Last month, the RIAA reported that vinyl revenues outpaced sales from streaming services, despite actual streams vastly outnumbering physical vinyl sold. Now, Nielsen has released data revealing that, for the first time ever, old music (the “catalog,” defined as music more than 18 months old) outsold new releases in 2015.

It’s important to note that Nielsen’s numbers here don’t include streaming numbers, but that in itself is telling of current trends: an easy-to-draw hypothesis from these stats is that new music exists primarily in the streaming realm, rather than in album downloads or physical copies. And as 2016 has progressed and seen such things as Kanye’s The Life of Pablo shenanigans, exclusive streaming rights, like Rihanna and Beyoncé with Tidal and Drake with Apple Music, and the fact that the Beatles dominated Spotify in their first 100 days on the service, streaming music’s hold on the future seems to be growing tighter.

And note this:

Pink Floyd’s Dark Side of the Moon was the third-best-selling vinyl record of 2015.

I suspect you are not surprised to hear that Prince is dominating the Billboard 200 right now.

The pointer is from Ted Gioia.

Numeracy Improves Financial Outcomes and Can Be Taught

Two papers suggest numeracy improves financial outcomes and can be taught.

Numeracy and Wealth: We examined the relationship between numeracy and wealth using a cross-sectional and a longitudinal study. For a sample of approximately 1000 Dutch adults, we found a statistically significant correlation between numeracy and wealth, even after controlling for differences in education, risk preferences, beliefs about future income, financial knowledge, need for cognition or seeking financial advice. Conditional on socio-demographic characteristics, our estimates suggest that on average a one-point increase in the numeracy score (11-point scale) of the respondent is associated with 5 percent more personal wealth.

High School Curriculum and Financial Outcomes: Financial literacy and cognitive capabilities are convincingly linked to the quality of financial decision-making. Yet, there is little evidence that education intended to improve financial decision-making is successful. Using plausibly exogenous variation in exposure to state-mandated personal finance and mathematics high school courses, affecting millions of students, this paper answers the question “Can high school graduation requirements impact financial outcomes?” The answer is yes, although not via traditional personal finance courses, which we find have no effect on financial outcomes. Instead, we find additional mathematics training leads to greater financial market participation, investment income, and better credit management, including fewer foreclosures.

What is the most expensive object on earth?

True or false? A new nuclear power station in the south-west of the UK will be the most expensive object on Earth. That’s the claim about the proposed plant at Hinkley Point in Somerset – but has anything else ever cost so much to build?

“Hinkley is set to be the most expensive object on Earth… best guesses say Hinkley could pass £24bn ($35bn),” said the environmental charity Greenpeace last month as it launched a petition against the project.

…Even if you stick with the expense of construction alone, though, the price is still high – the main contractor, EDF, puts it at £18bn ($26bn).

Here is the story, via Tim Harford.  Being good Austrians, let’s put cost of production aside and focus on potential market value.  Might there be an object which would auction for at least this much, if it were put on the market?  If so, which one?  The Mona Lisa?  A pyramid?  How about St. Peters?  Worth more or less than a nuclear power plant?  The Grand Mosque in Mecca?  The Great Wall of China?

Going back to cost of production, the article also mentions:

But these are all exceeded by the $54bn (£37bn) Gorgon liquefied natural gas plant built by Chevron in Australia.

And (not on earth):

The International Space Station. Price tag: 100bn euros (£77.6bn, or $110bn).

The history of GPS

The United States Air Force never really wanted GPS.  The 621B program, the precursor to GPS, was underfunded.  After it evolved into the GPS program in the early 1970s, the Air Force largely neglected it, to the point of disowning it and defunding it.  A few times, it tried to kill its own creation, and GPS was kept alive by the Pentagon’s largesse…

One reason the Air Force was slow to embrace GPS is the space-based projects were never seen as a priority.  “The Air Force is not a big user of space,” says Scott Page..”The Air Force gets to build for space, but the Marine Corps, Army, and Navy are much more reliant on actual space services than the  Air Force itself is.  The budget for space is in the Air Force, but in terms of the number of customers and users, they’re all in the other services.

Another source said “…the Air Force is pilots who fly planes.”

That is from Greg Milner’s new and interesting book Pinpoint: How GPS is Changing Technology, Culture, and Our Minds.

Milner also relates how the park rangers in Death Valley National Park have the term “death by GPS.”  It refers to park users who follow their GPS and then die:

It describes what happens when GPS fails you, not by being wrong, exactly, but often by being too right.  It does such a good job of computing the most direct route from Point A to Point B that it takes you down roads which barely exist, or were used at one time and abandoned, or are not suitable for your car, or which require all kinds of local knowledge that would make you aware that making that turn is bad news.