If GDP confuses you, here’s some much-needed clarity

Although it wasn’t created to measure progress, a country’s gross domestic product (GDP) quickly became the single measure that defined progress. Economist Diane Coyle has written a nice essay in Aeon magazine that explains GDP and its limitations, while putting it in historical context. Here are some highlights:

  • GDP is the sum in a given time period of everything produced in the economy with a monetary value, which should add up to the same figure as the incomes earned by every person and company, and the same as the total spent by everyone. In practice, these separate sides of the accounts are rarely equal because of the difficulty of getting all that data.
  • GDP was first developed in 1934, and it soon became the main tool for measuring a country’s economy.
  • Most people complain about GDP because it doesn’t measure non-monetary costs, which include environmental damage and social welfare. That is why a national disaster (or war) spurs faster GDP growth, but the loss of life and assets will not be included.
  • GDP is meant to measure market activities and, by definition, housework is not in the market; but there’s no market price for government activities either, and they are included.
  • While changes made to it later introduced hedonistic factors to include innovation, the list of products are severely limited.
  • Initially GDP didn’t count financial trading, but now it does. This leads to situations where, for instance, the biggest contribution from the financial sector to the UK economy occurred in the final quarter of 2008, which is when the financial crisis started.
  • GDP served as a decent measure when economic activity and social welfare went hand in hand, but now the gap between the two is widening.

In the end Coyle suggests that GDP is a flawed but useful number. That is why it must not be scrapped or changed. Instead newer measures for uncounted things need to be given more importance such as OECD’s Better Life Index.

If you are cursing Arvind Kejriwal for throwing away a golden opportunity, you are wrong

The Aam Aadmi Party has done the impossible. One month ago, the Facebook class of India loved them for showing what Indian politics really needs. Now they hate them for doing things that we won’t expect even corrupt politicians to do.

To understand this schizophrenia that the AAP has created among the educated middle class of India, we need to look at our own expectations. The success of Kejriwal in the Delhi elections, we thought, was the result of our disgust of the current political class. We hate those politicians who go after vote banks only so that they can fill up their own pockets with bribes. We wanted someone who could clean the muck and put worthy leaders in charge. Like Obama, he was the beacon of hope in a mess that had been decaying for decades.

As soon as he took up his place as Delhi’s chief minister, we expected Kejriwal to behave like a model chief minister—honest, sober and efficient. We wanted him to get things done. But unlike Obama who crushed the American dream after being re-elected, Kejriwal’s party members seem to be on track to crush our dreams within months of being in the government.

The law minister Somnath Bharti was accused of taking law into his own hands. The resident poet Kumar Vishwas was caught on camera making racial comments. And the leader Kejriwal was blamed to act un-statesmanlike when he resorted to protesting against his state’s police—something no chief minister had ever done before .

And yet, we must realise that Kejriwal is smart to know that pandering to our desires is impossible in the few months he has before national elections. He is partly right to blame the media for creating a hate campaign, for whom he has been a bonus. With Kejriwal, the media has one more top politician to poke beyond Rahul Gandhi and Narendra Modi.

Kejriwal’s best strategy for the national elections is going to be the same strategy he had going into Delhi elections—try to get enough seats so that AAP can be a trouble-making opposition. And for achieving that goal, it would be best to stick to the principles that won him Delhi. Something that even the Congress and the BJP have admitted to learn lessons from. The principles were to provide the people an alternative to the current crop of filthy politicians.

Of course, national elections are going to be a whole different game. Delhi’s population is all urban, but India remains largely rural.

In the Delhi elections, AAP got 30% of the votes, slightly behind BJP’s 33% and slightly ahead Congress’s 25%. He won not because of the few votes from the Facebook class, but mostly because of the votes from the poor—the rickshaw drivers, the slum-dwellers and lower middle class (which can afford mobile phones but has no use for the internet).

He succeeded because he acted as he had done for many years before—like a revolutionary. While it would be foolish think that he does not enjoy the power of being a chief minister, I would like to believe him when he says that he does not want that power if he has to compromise on his ideals. The Congress can pull remove their unconditional support and he won’t be chief minister anymore.

At this point I should disclose that I do not support Kejriwal’s economic policies, at least the ones he has shown so far. But I’m willing to experiment with having a clean politician who improves the functioning of the government and exposes its predecessor’s wrongdoings, even if the immediate effect on people’s lives will not be beneficial.

Rise of the muffler man

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I like Vir Sanghvi’s clarity of thoughts. That is why when he said, “Kejriwal has become no more than a media-blaming, vote-bank politician”, I entertained his well-laid arguments seriously. Sadly, the conclusion drawn is only partly right.

Yes Kejriwal blames the media, but he is no vote-bank politician. Sanghvi’s analysis fails because he is being short-sighted. He claims that giving free water and cutting electricity prices in Delhi will get Kejriwal votes at the national level.

Kejriwal got into politics to play the long game. He recognises that what few votes he can get at the national level will come from exposing the tainted politicians, offering a good alternative and listening to the vast majority of people. He is moving the debate away from pitting personalities against each other to talking about values and ideas.

Like in Delhi, there is no way that AAP can form a majority government at the national level this year. It would be lucky if it even played a small part in forming the government. Instead, the AAP is aiming for the election of 2019. In five years, the party will have matured and the country will have grown tired of Modi. That would be the time when AAP will be a serious alternative—something Indians have been wanting for decades.

Image credit: Kumar Vishwas (not original source)

My worst days as a kid gave me the most valuable productivity hack

Radiolab, one of my favourite things on the internet, ran an episode on morality a few years ago. The main question they asked was whether our sense of morality is something we are born with or something we learn. If it is the latter, then how? The one-hour story is worth your time, but there is one aspect of the three-part story that I want to discuss.

In the first part, they observed chimps to find that even among our primate cousins there exists a rudimentary system of morality. Their example comes from how these chimps share the food that is given to a group. Some neuroscientists and philosophers argue that each one of us has this rudimentary level of morality that we have inherited through millions of years of evolution—this is the “inner chimp” hypothesis as one scientist puts it.

In humans this inner chimp starts acting when we are two or three years old. And then we refine it as we go through the experience of life. Most of this refinement, not surprisingly, happens when we are kids, as we see in the second part in the episode, which involved an example from the school life of Amy O’Leary, now a New York Times reporter.

In grade four, one of Amy’s teacher got the kids to play a game that would help them learn some history. The game was called Homestead and it was something like Monopoly where each student received certain resources and had to play by simple rules to win. The main rule of the game was: “Do what you think is right.”

Amy cheated. She looted some of her classmates who wanted to be part of an in-group and even flooded the market with fake money. The teacher who ran the game realised what was happening and called a meeting of those who were involved. He asked Amy, who had become a leader by now, “What are you going to do?”

When she said “nothing”, the teacher used it as one of those “teachable” moments and showed his disappointment in her without directly intervening in the game. That look on her teacher’s face has stuck with Amy for all her life.

Just as she finished telling the story, I was flooded with memories of the many guilty moments that have left such moral lessons in my life.

These moments are painful. Most of them involve a scene at the end where my mum is tired of reprimanding me, or my dad is about to get angry, which happened on rare occasions and terrified the hell out of me. Some are absolutely clear, as if the expressions on people’s faces were recorded on a photographic plate in my head. Others are vague, with the characteristic fog that blurs the details leaving only a strong sense of shame.

This I’m sure has happened to many of us. I asked a few of my friends and all seemed to share anecdotes of times they remember when they did something wrong, but only realised that it in hindsight. A painful lesson was learnt and they carried it for all their life.

One such lesson that I have etched into me has helped me tremendously. It involves mischief and feedback.

Beat me to it

As a naughty child I may have done wrong things, but mostly I did annoying things. Of course, in my head, I was only having fun and that was no crime. But people around me seemed to have low tolerance, and I was told off too many times. I hated it. Mostly because I wasn’t given a proper reason for why my actions were annoying. Of course, if I didn’t know why what I did was wrong, I wasn’t going to learn to do the right thing.

That is why the annual school open day was the worst day of the year. It gave the teachers an opportunity to complain to my parents and get the guilt off their chest. They did this in a polite manner, which I always thought was wrong. Wouldn’t it have been better to talk to me in a polite manner in the first place?

All that admonishment left scars. It might have taught me something about morality, but more importantly it gave me a really useful hack.

In hindsight, I realise that I didn’t understand the reason for stopping me because my natural empathy levels were low. I had that realisation partly because even as an adult I sometimes struggle with it. And to counter my lack of empathy, I developed a system of wanting a constant stream of feedback. I want to know as often and as early as possible if I’m going wrong somewhere.

But I also needed to develop a thick skin. When you are open to feedback, some would be constructive and much hurtful. This is the reason, as the thinker Seth Godin puts it, adults don’t seek feedback as often as they should.

When you can get this system to work, however, it’s absolutely fantastic. It is the best productivity hack I know for becoming better at something quickly: ride the cycle of practice and feedback. It has been a painful but useful lesson.

Image credit: Zen