The Science of economics

Without a doubt the flavor of the season is “economic slowdown”.

Sir Isaac Newton was an English mathematician, physicist, astronomer, theologian, and author who is widely recognised as one of the most influential scientists of all time, and a key figure in the scientific revolution. Unfortunately, he has not been credited with propounding economic theories. You may argue, as most persons of Science, he too was an economic illiterate. I would argue otherwise. He discovered the two major principles that drive an economy.

1.    The theory of “free fall”. Remember the story of Issac N’s encounter with the falling apple. Yes, economies generally go into a free fall when supports are withdrawn.

2.    The theory of “motion”. Allow me to recall

·       Law 1. An economy persists in its state of rest or uniform motion in a straight line unless it is compelled to change that state by forces impressed on it

·       Law 2. Force is equal to change in momentum per change in time. For constant mass, force equals mass time acceleration F = ma

·       Law 3. For every action, there is an equal and opposite reaction

The state of uniform motion an un-satiated perpetual desire to own and use consumer durables and non-durables, (remember “neighbour’s envy, owner’s pride” and “Uski sari meri sari se zyada safed kyun hai?”) that spurred consumption in the last two decades has been hit by external forces. To start with, private consumption has taken a beating as consumers suddenly prefer to hoard cash or keep it in the bank or invest in SIP instead of spending on consumer goods. In fact this “uniform motion of consumption has been hit in many ways –  One smart phone has replaced TV, lap top, notebooks, outings (swiggy hai na?) and so on. In Bangalore whenever I have to go to places outside my comfort zone (RSI, Golf course, et al) I find it much easier to call in a cab. No hazzles. For emergencies ek car to hain na? The pattern of consumption has changed as a result of such “disruptive” forces acting on it.

There is a change in momentum in the way people now spend money – or rather don’t spend money. One may argue that many don’t have money to spend. Yes. But that was how it always has been. There are many who have bought multiple houses while many can’t afford even one. Now, a realization of the futility of owning multiple houses has dawned on the discerning. One retirement home per family is becoming the norm. If anything, taken in the larger context, there is more money available to be spent but nothing to spend on. Though Newton’s F = ma says m is a constant, in this case m is not a constant making the equation a bit more complicated.

Added to this is the fact that most Public Sector Banks are saddled with high NPAs or Non Performing Assets that have resulted in them tightening lending and instead, seeking deposits and otherwise repairing their balance sheets by making provisions for Bad Loans. This phenomenon is a classic case of bad actions attracting bad reactions. Mallayas, Modis, Goels and Ambanis (Anil as of today) are standing examples. As an illustration take the case of the Coffee Moghul from Karnataka. Like many successful business persons, Siddharth had access to easy loans from banks. The loans vanished due Inept ways of handling such easily gotten money. All these NPAs saddled on the many Banks and NBFCs are a reaction to unbridled lending.

Roll out of GST, other structural reforms (corporate tax, labour laws and such), Global slow down and retreat of globalization accentuates the slow down.

Having said that, I must confess that economy is not a science which follows empirical laws or edicts. Every economist will have different views of what is and what will be. The only definitive aspect of an economy is what was. At times corrective actions have to be taken on a trial and error basis, especially in the present day when there are far too many disruptive forces (technology, geopolitics, climate change, deglobalization, terrorism et al) acting on economies of the world. The slowdown is also part of a longer-term structural shift wherein the Economy is changing from the high investment era to a low investment era as well as a transition from being cash-driven to a digitally enabled economy.

It looks as though that the combined effect of all these factors means that the Indian Economy is likely to remain in a free fall for some time to come. The only option is for everybody to ride out the storm.

This and that: Look beyond what we can see; beyond the methods

Ch II 46 form The Bhagwat Gita

Yavan artha udapane

   Sarvatha samplutodake

Tavan sarvesu vedesu

   Brahmanasya vijanatah

Translation

 As is the use of a pond in a place flooded with water everywhere, so is that of all the Vedas for the Brahmin who understands.

Explanation

“Just as one who gets water from the river does not attach importance to a well, so the wise do not attach any importance to ritual action” For those of illumined consciousness, ritual observances are of little value.

(From the work of Dr S Radhakrishnan)

 

So far as the essence of the Bhagwat Gita is concerned it is immaterial whether Krisna the teacher, is a historical individual or not.

Oh no! I am not about to embark on a treatise on any particular religion. I believe Bhagwat Gita is not a “Sacred” text and in a sense I suppose all “Sacred” texts are literally a collection of verses to propagate wisdom to humanity. All these texts preceded respective religions. Let me make it clear that I respect all texts and respect all those who revere any text and practice a religion. It is the prerogative and right of any individual. I uphold that right. Just so, I believe it is my prerogative and right to discuss and question “religion” and religious practices.

Having got that out of the way, this verse from the Gita is profound in its meaning. It simply states that you are better served by knowing why something is done, usually through ‘religious’ proscriptions and rites, than physically doing something just because

a)   You have been told to do it

b)   It is what is always done by forefathers

c)   It is ordained in my religious texts

d)   Everybody does it

e)   If I don’t do it, I will go to hell or whatever

f)    …. any or all other reasons you can find…

It also says once you know the reason for doing something, you don’t have to mandatorily do it because you already know why it is done; you know the result of your proposed actions in advance. The key is knowledge, realization; thereafter it is just you and your mind; you can achieve that which you intended to achieve through physical activity by just concentrating your mind towards it and consider it done without any physical or material interchange.

The essence of all sacred texts addresses the inner self. Methods have been worked around it over generations by vested interests – for material gains or subjugation; Just take away the methods; you will realise that all religions are the same – the language, stories, heaven & hell (where are they located? Well….) may differ…do they matter here and now?

I do not therefore believe religion is a real source of conflict anymore in this world including terrorism; the methods built around the essence of religions are the primary reasons for dissonance and conflicts around the world.

The evolution of mankind has left in its wake a series of conflicts. The present-day humans (Homo Sapiens) have surely evolved over several millennia. It is also a fact that GOD in whichever form we know today, if at all, existed millions of years before the introduction of any texts or modern religions. Also, it is recorded that we the Homo Sapiens, were not the only sapiens who inhabited this Earth. There were other human species such as Homo Erectus, Homo Neanderthals etc.., who were annihilated by Homo Sapiens to gain ascendancy. From inter species (!) conflicts, human-animal conflicts, to inter racial conflicts to inter faith conflicts to various other conflicts we have seen it all over the past tens of thousands of years.

Is the human race any better from these conflicts?

Yes. In a way all these conflicts are now passé. There are effectively only two issues now, over which conflicts persist. Economy and culture. Every other reason attributed to the strife around the world is only a façade. Whereas economic considerations have been the main causes of these conflicts these past decades, the dissonance in culture is fast catching up as another reason – now what is culture Is another moot question. My definition of culture is just the way a section of the people dress, eat, dance and it’s behavior in general within the family, closed society and society at large. When a section of people immigrates in numbers to a place where the aforesaid behavior is different and the immigrants fail to adapt to the adopted culture, a conflict situation is created. We are going to see more of this in the decades ahead.

If we want the world to be a better place than it is, we have to look beyond what we can see!!! Beyond the methods.

The wealth of Patala

The wealth of Patala

The society and the world are always evolving; the evolution in one direction cannot be for eternity. We are travelling towards destruction as we progress into the future. Let me explain. I see the Indian mythology as a mixture of science and concepts. Take the cae of Devas and Asurs. Both are supernatural beings and portrayed as brothers – progeny of Prajapati. Initially Devas and Asuras were both good. In the fight for wealth and good things some became Devas and some Asuras. The Devas are said to reside in heaven while the abode of the Asuras is below the feet  - Patala. In post Vedic literature the Devas, now considered benevolent, represent good and Asuras, now considered malevolent, are bad. In the feud Devas always win and usurp all the wealth available and generally have a good time. It is natural that all feuds result in some wastage and destruction.

It is true that mythology and imagination, are generated from reality.

Asuras are said to reside in Patala, meaning below the feet. Patala  is said to have seven layers (Atala, Vitala, Sutala, Talatala, Mahatala, Rasatala and Patala All food, precious metals, precious stones, water (rains are created from water drawn from Earth), energy (gas et al) are all to be found in Patala. The Devas fight the Auras for this wealth, take away whatever they can and just enjoy.

Déjà vu?

Some of us Sapiens are unscrupulously fighting the mythological Asuras and usurping all the subterranean wealth in the name of progress. The modern Devas are enjoying the spoils. The fighting capabilities of the Asuras ae waning as it becomes more and more easy for the Devas to access the wealth in the Patala. The abode of the Asuras is crumpling. As also is the world of the Devas!!!

How much more wealth remains to be accessed? Your guess is as good as mine.

Tail piece

There were extended discussions (more like arguments) on politics and religion in the whatsapp groups (and many other social platforms ) these past days. A few days back one participant hit the nail on the head by attributing the differences to different perceptions…. perceptions are a combination of knowledge and sentiments. Sentiments are transient, fickle and most times do not follow any logic. Accumulation of knowledge is a deliberate and continuous action. Where knowledge is shallow, sentiments override thoughts and actions.

There are two books I would recommend (available with Amazon) which can enrich our knowledge about evolution of mankind in general (Sapiens by Yuval Noah Harari) and the Indian polity in particular (Political Violence in Ancient India by Upinder Singh). These books, I believe, will give us a better perspective of the evolution of mankind and the inalienable religions in society and the development of politics.