Self interest

It is funny, how self interest works. Let's say I am sitting at a dining table with five others. I love the potato wafers. Lest I lose out to others I give myself a generous helping of the wafers. I notice immediately that all the others are helping themselves to more wafers and soon there are no wafers left. I allow myself a smug smile for recognising the need to dip in first and hence get most of the wafers. However when we all get up from the table I notice that a couple of people have wasted the wafers that they picked up so greedily. I ask them if they didn't like it. They say they did, but had served themselves too many. It suddenly dawns on me that it was my action that triggered the rush for wafers. Others were serving themselves more, just in case I came up for a refill. I realise that if I weren't so self serving there might have been more wafers on the table, for me to help myself to! My self interest has worked against me.

I am extremely excited by this discovery. Not from a moralistic point of view, but from sheer logic I can see that self interest doesn't work; can't work. If I bargain so hard with the vegetable vendor and beat him down daily it is only a question of time before he shuts down. The next one will do the same if I am the same. Ultimately I'll have to go to a shop a little further away. So I lose since. And if that shop stays around for a long time you can be sure I am not winning the bargain battles all the time! This is true even when it comes to company. If I am such a pain that I won't listen to anyone because I am so full of myself it is just a matter of time before people hang out the 'engaged' sign the moment they see me. I learned this one the hard way!

There is a certain elegance with which you can prove that self interest works against one's self interest using elementary Maths; the maxima and minima we learnt in school. Whenever you try to maximise something, maxima and minima has taught us, you must do so within some constraints. Which is why you have a 'y' on the left side of the equation ( the 'dependent' variable you're trying to maximise) and several 'independent variables' such as x1,x2, and x3 , on the right side of the equation. You always maximize 'y' subject to the constraints imposed by x1,x2,x3 on y. You try to get as much of the wafers, subject to there being enough for others. When you do such a maximising of your benefits subject to others also maximising their benefits, you may not get as much as you could have got without any constraints. But everyone is happy. Why is that important? In the wafer example, I maximised without any consideration for others, so I won didn't I? Well, yes on that occasion. But chances are that I won't be called again for a party. Or worse still, the host may decide to serve me rather than leave the wafer bowl on the table! Such humiliation. So maximising your happiness given that others need to also maximise their happiness is the only logical way for you to be happy consistently in the long term. QED.

What makes this discovery very exciting for a theoretician like me is that economics fails to recognise this elementary truth. It only recognises greed or self interest. It fails to see that self interest is best served by 'enlightened' self interest. So it is that companies try to maximise share holders' wealth without any consideration for the other stake holders like employees and customers. You want to show profits this quarter, fire a 1000 employees, goes economic logic. If you want to make big profits, burden unsuspecting individuals with huge loans that they can never repay. When this usurious attitude of the small time money lender became the favoured home loan business strategy of big banks, we got into big trouble. Sacked employees don't spend. So consumption has plummeted. Burdened home loan takers don't pay. So there's a credit crisis. If only economic theory accepted the elementary principle that you can maximise only subject to others maximising their benefits, you wouldn't have this melt down. So the only way forward from this mess, to put it in fancy management jargon, is 'smart greed'. Share holders will have to learn that it is in their best interest not to hire and fire people at will. That a loss in a couple of quarters is much smarter than a melt down. That a few cannot indulge themselves with extraordinary perks and bonuses for firing people. In fact companies must give CEO's bonuses for not firing people in a quarter and still earning profits. Salesmen and loan officers should have their bonuses reduced when customers default on payment. That is 'smart greed'. The present day management mantra that a CEO's job is to maximise share holders' wealth belongs in the dustbin. 'Smart greed' demands that you must maximise share holders' wealth subject to employee contentment and consumer delight. Maybe we should add 'environmental harmony' to those constraints. Isn't that self interest too!

Will 2009 be good for IPL?

The extraordinary prices at which the players have been 'bought' this year suggests that at least the owners think that the Indian Premier League is going to do well. $ 1.55 million each for Pietersen and Flintoff is certainly not the kind of investment that the faint hearted can make. One of them, Flintoff, has been bought by Chennai Super Kings owned by Mr.N.Srinivasan, Hony. Treasurer, BCCI and MD of India Cements. He surely must know a thing or two about the pulse of the game and the market. Yet I venture to say that this year's IPL is unlikely to be a success. There are 3 good reasons why.

First is the state of the job market. There is so much threat of people losing jobs or in the very least facing salary cuts, that it is hard to imagine that they'll pay the exorbitant thousands that the league tickets cost. Can you see a guy with a school going kid, higher mortgage payments and prospect of lower salaries for self and wife, wearing a fool's cap and cheering his team with his kid
after paying Rs.10,000 for a 3 hour tamasha? I can't, unless the fool's cap really fits!

Secondly, the state of the economy certainly doesn't auger well for corporates splurging money on TV advertising at fancy rates. Last year was different. Just the money in the league, players being paid crores, was enough for everyone to get excited. If everyone is excited then advertising money is well spent on the event. Today the big spend itself may put off people caught in a downtrend. So advertisers may well find it smart to stay away. Why throwaway millions when the market hasn't picked up, when fans are unlikely to turn up and in fact you could get associated with negative sentiments?

The third reason is not so obvious. I believe that the success of Indian cricket in Tests and one dayers will reduce interest in 20-20 cricket. How can you cheer a Flintoff bowling to Shewag when just a few months ago Shewag played a dream innings against England and won us a Test at the very same Chepauk? How can you cheer any South African batsman against Zaheer or Ishant when these are the very guys who'll have to help India beat South Africa and take us to the top of the table? I am sure of what I'll be doing. I'll sit in front of a TV with a group of friends and cheer every Indian's effort, no matter which team he belongs to. May the most entertaining team win!

To the larger question as to how 20-20 has affected Indian cricket, I submit the following: The fast bowlers have improved since they have learnt the value of line, length and discipline in order to not get hit all over the ground. Restrictive bowling also gets them the wickets. The spinners have lost out for the same reason. They are scared of buying wickets now. What is a spinner if he can't flight the ball and taunt a batsman? They bowl much flatter now and try not to give runs, taking wickets be dammed! It is difficult to gauge the effect of 20-20 on batting. Batsmen have certainly learnt to innovate. Strokes like inside out drives, reverse sweeps and fine leg drives (not the traditional leg glance) rule the roost in 20-20 cricket. Batsmen are certainly playing more strokes, are always looking for runs and are generally much more positive and aggressive. However, all these characteristics are totally detrimental to test cricket. Batsmen are certainly losing the art of occupying the crease. They don't have the patience to build an innings. They don't realise that Draw is a result option in Test cricket and don't know much about drawing a match. Barrington and Bolus, who played out virtually an entire day to cover for half the English team being in the sick bay, could teach them a thing or two! In the area of fielding however 20-20 has been an unqualified success. It has taken fielding to a different level and made it a deciding factor in the result of a game. It is only a question of time before the Jonty Rhodes of cricket are referred to as all-rounders, competent in batting and fielding!

An alternative to the Third Front

Our media has done us a disservice. The fourth estate is charged with the responsibility of being a watch dog for our democracy and is hence provided with virtually unlimited press freedom. While they have been very zealous in protecting their freedom they seem to have shown less concern for the health of our democracy. How else can you explain their total lack of concern for the lack of democracy in most of our political parties? While dynastic politics has become more the norm than the aberration, our media is interested in presenting leaders as the czar or czarina of the party thereby encouraging dynasties rather than democracy. They then pontificate endlessly on TV on why we should vote!

Are we being given the right options for democratic expression? Take the present national scenario. The two main parties are the Congress and the BJP. If I am a democratic, centrist person, shades of which most of us are, where is my option? Either I must go with the right wing but democratic BJP or I must choose the centrist but dynastic Congress. Talk of Hobson's choice! Clearly there is space for a third option, which is why we periodically have the Third Front - a loose knit, highly malleable group that is more an affront than a front. We deserve better.

Which is why I propose a new third option. A national party that comprises several regional parties. Let's call it the Federal Democratic Congress. The basic idea will be as follows:

• The Federal Democratic Congress will not contest state elections, only the central election.
• Only regional parties with a democratic, non-dynastic succession process can become constituent parties of FDC.
• All office bearers of FDC will be elected by card carrying members of the constituent parties. This will ensure that all constituent parties maintain a verifiable base of party members. This in turn will help inner party democracy in the regional parties.
• The FDC will not have any direct party members lest it becomes a national party that could compete with its regional constituents. It will only be a party of regional parties.
• The regional parties of course can contest both central and state general elections.

Now let's see how such a party would fare.

Several powerful regional parties who are today stuck for alignment options will immediately see value in this new party. The AIADMK led by Jayalalithaa, Telugu Desam Party led by Chandrababu Naidu, Mayawathi's Bahujan Samaj Pary will all be interested. Other leaders like Sharad Pawar, Nitish Kumar, Naveen Patnaik, Mamata Banerjee should be interested as well. These are powerful leaders with a strong mass base from Tamilnadu, Andhra Pradesh, Uttar Pradesh, Maharashtra, Bihar, Orrissa and West Bengal. This means that parties from every region of India - North, South, East and West - could straight away be constituents of this new federal party. A leader like Bhairon Singh Shekhawat, who is trying desperately to create space for himself in the BJP and one who's credited by the media to have friends across all parties, could set up such a party. He could strengthen his case for leading such a party if he could rope in Dr.Abdul Kalam, under whom he was Vice President, to get to be the convener of FDC. Imagine the stature and the consequent media coverage that such a party would have.

Why should regional leaders prefer the FDC over the loose Third Front? Firstly, it'll be an association of equals. No single party will form the core around which the front is built. Secondly, the FDC clearly rules out entry of any dynastic party since in the core it is democratic. So all the parties know who can't become constituents of FDC. There will hence be no threat of party X replacing party Y since in most states mass leaders oppose dynastic politicians. So this won't be a loose conglomerate which will keep changing as and when parties win or lose. That augers well for long term political success. Also, since each one of these leaders is self-made, they know that others are pulling their weight too and are not free loaders in elections. Thirdly, leadership tussle within the FDC will not be after winning general elections. It will be during the elections for office bearers. Hence the chances of the arrangement breaking apart once in power are lower. Constituents will also think twice before breaking away since FDC will offer them some stature even in state elections. Fourthly, unlike the third front it won't be seen as a forum for those out-of-power since the binding reason is powerful regional parties that are not dynastic. Finally, since there is no national party as the 'core', there is no threat of challenge in the home base for any constituent party from any other party in FDC. In other words state leaders can work for this federal party without having to constantly look over their shoulders.

How will we benefit? We get a strong centrist party which, because of its democratic credentials, will always be inclusive. Communal and casteist tendencies will be moderated since several parties with varying ideologies will be the constituents. The party will never suffer for want of leaders. Indeed several ministries could be headed by ex-CM's with tremendous management capabilities. Ideology will be strongly tempered with practicality since these are leaders who never forget their need to win elections. Most importantly we get a chance to bring democratic and centrist tendencies back into the national mainstream parties. The Federal Democratic Congress can do for us what the Fourth Estate has failed to.

Our future PM

The world has just witnessed an extraordinary election that has given America its first non-white President. What makes it truly remarkable is the selection process. From primaries to the final election the process takes almost 2 years. Every registered Democrat and Republican gets a chance to inspect, evaluate and choose a candidate through a fiercely competitive election process held across 50 states. The chosen candidates then get scrutinised by the media, are analysed threadbare, debate against each other on national TV, are evaluated for their commitment and past voting records and finally voted. No wonder the American President enjoys such prestige across the globe.

In contrast our incumbent Prime Minister Dr.Manmohan Singh completes 5 years in office as the first PM not to be elected to the Lok Sabha. The PM of the world's largest democracy was nominated to the Rajya Sabha and chosen by the Congress party to be our PM. No matter how good a PM he has been, how well regarded a man he is, doesn't it feel strange that he never even contested a Lok Sabha election during his 5 year term? What kind of people's rule is this?

It is not as if this country lacks leaders with proven electoral support. Nor is it that such leaders have been unimpressive performers while in office. 3 names readily crop to mind and I suggest that all three could be future Prime Ministers. My 3 candidates are Jayalalitha, Narendra Modi and Omar Abdullah. What makes these people such good candidates? Firstly they have all won elections on their own steam. They have led their parties to electoral victories in their respective states. Jayalalitha and Modi have ruled for full terms and have hence provided a good basis for evaluation. Both don't owe their positions to being part of any family.

Jayalalitha had to re-create her party from scratch after MGR's death since the party was split. She had to establish her hold over the party with the election commission, reclaim AIADMK's electoral symbol, hold the party together for a full 5 years and then contest and win her first election. All in spite of the fact that she was a woman in the male dominated Dravidian politics and had to put up with severe barbs for being a popular film heroine. While in office she has proven herself as a very able administrator with a clear vision, tremendous leadership qualities and a no-nonsense approach to law and order. Jayalalitha also has a great grasp of national issues and has had her party functioning as part of the central ministry.

Narendra Modi features in this list not just because of the vote of confidence he has received recently from the top industrialists of this nation, but for his mass appeal and fantastic administrative capabilities. Despite being continuously condemned by the national media for 6 full years as a fascist of Hitlerean proportions, Modi has two resounding electoral victories in Gujarat. On both occasions he carried the party entirely on his shoulders. In both the elections he faced the opposition, the media, enquiry commissions, court trials and dire pre-poll predictions single handed and won tremendous victories. If nothing else Modi is a fighter. He enjoys an impeccable reputation as being corruption-free, is an acknowledged top quality administrator who has brought much wealth to Gujarat and is man of the masses. While his acceptance for all of society is questionable, that is precisely what he'll have to prove to become PM. But for sure his track record is there for all to see and evaluate. Both Jayalalithaa and Modi have as CM's run a state independently and handled all issues except defence and foreign affairs. What better training for primeministership then being a CM?

Omar Abdullah is the odd man here. Firstly you can't say he is not a product of dynastic politics. Secondly he is yet to prove his mettle as a CM. So why is he one of my choices? Despite coming to politics as an Abdullah, Omar has not 'inherited' his position. Prior to this election for a full 5 years he has been in the opposition. He has also been the lone Kashmiri voice that unequivocally placed Kashmir's future with India. In a state torn apart by separatists, ruled by local politicians who were just barely non-separatists and opposed by Jammu politicians who always wore their Indianess on their sleeves, Omar's has been the balanced voice of the Indian Kashmiri. When almost everyone had written him off in this election for this very reason, he has come back as the man of the masses. This in itself is an extraordinary achievement given the state's history and politics. So he is CM today in his own right though his entry a decade ago was as an Abdullah. Secondly, even though he is yet to prove himself as a CM, he has a track record as a central minister and is getting a close to on-the-job training for being a PM. Also being a Kashmiri politician who is well accepted in the rest of India is a great plus. What better certificate can we have for Indian democracy and secularism than a Kashmiri Muslim as PM? What better way to slap Pakistan for its two nation theory and all the Islamist terrorists for their harangue against Hindu India?

All this of course seems like there is no place in my list for Rahul Gandhi. He is the very essence of dynastic politics and has no track record of either winning elections for his party or proven administrative capability. However one wishes that Rahul like Omar will get up there on his own mettle. He can yet do it. All he has to do is walk away from the family's home ground UP, and enter a southern state like Tamilnadu. Indira Gandhi built her reputation as a national leader on the basis of her victories from Andhra and Karnataka. Rahul can do it from Tamilnadu. If he is brave enough he can contest the state elections first, bring Congress back and cut his teeth as the CM of Tamilnadu. Think about it. The people of Tamilnadu will lap him up, not least because they'll want to remove the blot on the state that his father was killed here. He can sweep the polls because of the novelty he'll offer after decades of Dravidian rule. The Congress party will be fully charged and all India will accept him as a leader. God, won't that be great?