Finding symmetries in an unsymmetrical world ..

Posts Tagged ‘start something new

There’s an interesting post by Anil Bokil and it proposes some fundamental reforms to deal with the corruption that has so badly gripped the grassroots of India .

The Key highlights of the proposal  —

– abolish all taxes in the country except import and customs duties.

– remove all currency notes above Rs.50 denomination from the system by asking all holders of this currency to deposit it in the bank.

– make it mandatory for all transactions above Rs.2000 to be done through the banking channel, i.e. through cheques, or credit/debit cards.

–  Introduce a flat transaction tax of, say, 2% on every transaction in the banking system in the recipient’s hand.

Here’s my take on the ideas- with a critique on the proposed mechanism design.

The impact of the transaction costs on the money collected, will add up to taxes and revenues for the Government. However it carries a huge risk – dealt in the Chaos theory later in the post.

The point is – If the input functions to this black box- the new mechanism proposed is hazy, it will have severe gaps in terms of what it intends to achieve and how the revenues will be distributed .


The Story of India’s growth is not only the amount of the currency in print- it is the growth of the Virtual money generating instruments. It is the easy accessibility of loans – both high and low interest rates .This proposal also hits the backbone of any economy- the liquidity that is so very essential to the growth.
It is clear that such proposals will not only encourage hoarding of money -to save this “additional transaction charge” levied on them, but also there is a bigger challenge to address .

Firstly, it is not clear how the money will be “BANKED” – i.e collected in the first place. This is equivalent of collecting the statistics about the population and distribution demographics of  a country- which are very difficult to procure.

Moreover this data collected at the micro level which affects the Macro Economics obeys the chaos theory which states that a small change in a variable can make a huge difference in the data that is collected.

Popularly referred to as the butterfly effect. Small differences in initial conditions (such as those due to rounding errors in numerical computation) yield widely diverging outcomes for chaotic systems, rendering long-term prediction impossible in general.

This now brings us back to the question – how do we capture the black money that is both being hoarded and also being used to fund the other operations which are not captured in the legal structure?

One might argue that it will facilitate that the operations used to fund acts of terrorism , criminal operations , political campaigns and like will become more visible , but the question remains – the collating of the data- i.e how much do we have ?

Moreover money is not just hard currency or virtual currency – it is also the basic component that adds in the GDP of any country – the Goods and the services that facilitate this creation .

The proposal attempts to arrest Inflation – but what would happen as a side affect is –

a. It will also arrest the development – thus giving incentive to hoard money

b.It will encourage the investors – as the perceived value of “stalling currency” will encourage to park money in other comparatively safer havens – which promise greater magnitudes of growth.

We have already seen the investors parking money in Banks of other nationalities – like Switzerland and Singapore- coz of the appreciating value of money.

i.e the utility function is what any investor would look at , and attempt to maximize.

Utility function  for any investor –

Original sum = x Units

Appreciated value of x units after n years =

k units in the proposed Mechanism *

j units in the other alternatives

* Includes the transaction cost and the other overheads which includes money that goes in procuring the liquidity + effort and time lost

Now any investor will attempt to compare the maximum payoff between k and j . Simply put, it is not possible for ANY banking system to permit k >> j for the following reasons –

The banking system needs to scale in proportion to the NEW demand of the backbone that is intended now.

This also includes the other Backup infrastructures that are basic to the primary creation –

Internet access to every individual – lack of which creates both a  bottleneck in terms of the liquidity that it intends to provide.

Take an example of a city , or a suburb struggling with huge deficits of  electricity , and poor- or not-up to date internet                                           infrastructure – how do we then scale up these transactions ?

The lack of this basic infrastructure ensures that a lot of money and effort goes in procuring the money – which is both ironic .For one, time is money – this will only increase the trips to the bank – which will have more repercussions for the anathema.

—Collapse or unavailability of any of this channel will create huge pressure and impacts in terms of the .It is not clear how the banking systems will operate.

—Moreover, who monitors that the transactions above Rs 2000 are tracked and done through the banks – If I need to exchange money – I may still do it -as I still have the funds – I can withdraw them – correct?

It looks like we may as well move to barter – than progressing from and upward from what we have already built.

—This does not cater the emergency, life and death situations – immediate needs for travel and cash requirements.

—Stocking huge amounts of money in the banks will not help till the system scales up to distribute the funds that would go to fund the interest that it needs to distribute. This would require “Finding “what to fund- and an easy availability of loans .This gives extra incentives and red signals of what happened with the housing bubble – plethora of loans – in this case – to distribute the stocked otherwise money that would otherwise not appreciate.

Overall it needs much work, and must accommodate all the repercussions  .

To sum it up , the manufacturing, like all the other Asset backed sectors requires huge access of liquid cash . “Moving” money through the bank transactions looks good on its face, but it is flawed- because

For this to happen the banking sector needs a revival and a complete makeover , it needs to scale to meet the challenges of a complete globalization in its true sense .That will not happen unless we have invested enough in the infrastructure .

~

ek

Mathematics is the language of Nature .  Patterns emerge, when you look hard enough .

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The pretext before I take up from here : 

 I was reading this amazing post on kindling your curiosity; sure it must have kindled mine, because a day later I found myself writing this.


At the heart of it, Sam lays the proposition “. If we are going to be people who fully develop and maximise our potential, it will be in large part because of our curiosity” , which is quite true, because in the contemporary world IDEAS drive processes .


And here’s the street for you .. 


I was standing in my backyard ,and relishing my evening tea after office ,when I a kid who was running on the ground ,trying to compete, with what it seemed to me , his sibling.

 And while he was running, he fell off. But he did something that most of us adults do not do when we grow up. He KICKED the ground.


 That must have sure kindled my curiosity and the creative genes , enough to mention it here in my post !


 What is it that we unlearn so soon as we grow up, simple, it is fighting back .

 

 When was it last that you stopped by and instead of saying that “it ain’t fair”, fought back instead ? And if you do not remember when it was , you are in serious trouble, and Do something about it !

 

As kids we are curious, have an inherent desire to explore , and reach out to what surrounds us, but as grow up we start taking things for granted .

 


As Seth mentions, when you pass by a cow ,adult that you are, you never say, ohh that’s a cow, but if you pass by a purple cow, you saw ..Waooo did you notice that !

The message is simple , are you being a purple cow, are you worth remarking ?


In the new era of twitter, other such micro blogging phenomenon and seemless social media what is the value to you give to those you interact with . Are you just consuming their time ? (and mind you time is by far the most precious commodity)


So today so something that kindles your creativite quotient, that not only make you say Waoo I did that , but makes you so good enough that people remark about the person you are .

 

This is not to say be good at everything, but be good at one thing ,and that speak out for you .


Before I leave you to yourself,here’s a treat for you !




It is a pretty old one, but substantiates it well !

 


~

 ek

 “All who have accomplished great things have had great aim,have fixed their gaze on a goal that was high , one which sometimes seemed impossible.”

 

 

When you were born, like a seed you were vulnerable, but you survived, the parch heat, humidity, the exposure and rough weather.From a seed you grew on to acquire ROOTS, and moved on to stems,branches,twigs,leaves,and finally flowers and fruit .


And you grew up to be a tree, the leaves of which were conditioned by education, and the people around, by persistence, self discipline, industry, willingness to accept as life came along.

 

Each day of conditioning made you strong, and audacious. Each of these days you stood for HOPE, trading time for who you can be, you invested in educating yourself, and each of these days you fought with yourself not to settle for less.

 

But then the autumn came along, and you backed out, shedding leaves, surrendering to what is external and **beyond you**

 

Alas, but the story of human race is a story of innumerable human being who sell themselves short each day, for each day in their hearts and mind the self doubt plugs and eats up into who they can or could be, if only they persisted.

 

The point now is, how NAKED are you, if you are growing your leaves trust the nature to get back the spring to you. If you are in spring already, trust to see the autumn soon, aware that anything persistent and permanent is change.

NAMEPLATES are boring !

 

You don’t want to be living all your life with the nameplate, that’s not what defines you,you are your definition, yours alone,and if the tree you are building stands for giving, you define others around you,andonly  then in true sense have you existed and made a difference.

 

Today pledge to give something, anything your time, your attention, your vision, or as little as a thought .You will then see the other naked trees around you building on, and blooming in a message that reverberates around the universe “Giving and building on..”

 

~

ek

Do what you want to do ..And go where you’re going to
Think for yourself ..  ‘Cause I won’t be there with you.

 George Harrison 

Seth writes that to do something all you need is some MOOD , far from ordinary claims of not having enough information, that’s out there for you, waiting for you, all you need is the perseverance and persistence to put it.

I know of a friend who always gives me enough ideas to juggle with , so many of them at times that at times I find myself warning him if he doesn’t do anything about it, I might as well steal them.


Ahh! Stealing someone else’s ideas. Of course the ideas that spread win, and who likes to conceive an idea, work on it, and then say’ oh I am not prepared yet, not enough’.




Buzo’s turn me off. I am 24, full of energy, and here with an open mind, to explore not what surrounds me, but what is within me. Call them what you should the NoNo’s ,buzo’s , they find remarkably innovative ways of turning down a prospective idea, and why things will never succeed, and why you are never prepared enough.

Well, the fact is that, you will never be prepared enough.

Watch Guy talking about Buzo’s here and why one should avoid them.



Obstacles are the things that you see when you take your eyes off the goal.

Don’t do that !

My two cents this year:

Do not listen to people who turn you off.

Follow your heart, fail better, smarter, faster.

~

ek

We cannot change the cards we are dealt, just how we play the hand.

 


Hey there, would be nice to have you around !

That’s me

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