#23 - From Firecrackers To Gambling - A Possible Transition ?
The greatness of Don Bradman, How China controlled coronavirus, five things business should do in present crisis, and Buffett's key ideas to shareholders (1986)
Hello,
Greetings from the Curious Cat.
We wish all our readers in India a very Happy Diwali.
If you are reading this in India, there is a high chance you would be celebrating Diwali with various traditions and rituals minus the firecrackers. In the days to come after Diwali, newspapers historically are filled reports on the deterioration of air quality establishing a causal linkage to firecrackers. It is true that pollution is the most important health issue that deteriorates lifespan in urban cities. Is it time to do away with the firecrackers and usher in a noiseless Diwali ? In a broader sense, should older rituals become more sensitive to the modern needs and modify themselves accordingly?
Diwali celebrations have always been strongly associated with the bursting of colourful firecrackers in living memories of all individuals. Noise is a form of celebration and in India, noise means people are having a good time. The same can be seen in the decibel levels of Indian weddings, shopping malls and reality television shows. As the pollution problem, particularly in North India, reaches catastrophic proportions, firecrackers have become a nuisance. The ban on firecrackers by the Government has caused heartburn for a section of the population who associate celebrating the festival with firecrackers. Perhaps, it is a time for finding a more sustainable celebratory ritual which can be adopted from North India - the teen patti.
Gambling distills the decision making experience and gives instantaneous highs and lows with very few decisions to be made in less time with quick feedback. Bollywood movies have shown gambling as a vice with the villains usually shown in gambling dens intoxicated with alcohol and surrounded by molls. This has transmitted an incorrect perception about gambling which has restricted its mass acceptance. Bollywood movies have also not shown the realities of the Bachchan Diwali parties where celebrities have mentioned that they indulge in harmless gambling. Many people have secretly enjoyed gambling with their money in poker parlours, evening kitty parties, casinos, or even the stock markets, which open for a short duration on Diwali day. For some incomprehensible reason, gambling is considered auspicious during Diwali when we worship the Goddess of Wealth, and this cultural licence is utilized with a vengeance as friends and families sit down together and gamble.
Change is important in culture and rituals. The idea that change can be forced through coercion and stringent regulation is a dangerous illusion. Muscular actions feel gratifying at a symbolic level but they are not adequate to bring about sustainable change which is gradual. Sometimes, it might be better to work with tradition, and to find a way of expressing its intent differently, rather than fight it. Maybe by promoting teen patti and other forms of celebratory activities, it can prove to be a distraction from the polluting firecrackers. A strong response during the IPL for gaming apps like Dream11 are positive signs. Maybe a Diwali jackpot or a festive week with multiple winning opportunities by these new-age gaming applications can reduce the heartburn caused by the firecracker ban.
It is very difficult to remove the link between firecrackers and Diwali celebrations, one can only attempt at finding a celebratory equivalent substitute through means of trial and error. Eventually, what stays for a long time gains acceptance and becomes part of the new culture which many forthcoming generations will associate with Diwali.
In today’s edition, -
Demystifying Greatness - What made Don Bradman better than the rest?
Five Things Businesses Should Do In Present Crisis
How China Controlled the Coronavirus
Key Ideas from Buffett’s letter to shareholders - 1986
Happy Reading.
What Made Don Bradman Better Than The Rest
Read the article here (Read Time ~ 7 mins)
In this piece, Ian Chappell, a former Australian captain and one of the finest minds to have commented on the game, explains what made Bradman special.
Chappell says that he found the answer whilst watching previously unseen footage of a test match played 80 years ago: “I was watching a programme on the history of Australian cricket produced by Jack Egan and it featured never-before-seen footage of the 1938 Ashes Test at Trent Bridge.” Aussie batsman Stan McCabe scored a remarkable 232 off 277 balls. Inspite of this Australia was forced to follow-on. Chappell says that that is when Bradman, the Aussie captain at the point, showed what made him so special: “At that point Egan featured shots of Bradman’s match-saving second-innings century, accompanied by the animated comment: “Look at that footwork.”
“I am,” I said to no one in particular. It was Bradman like I’d never seen him before, apart from footage of the Bodyline series. Where he normally carved up attacks with the confidence of an international facing schoolboy bowlers, suddenly here was a mortal batsman, shuffling sideways in the crease and defending as though his life depended on survival. It struck me that Bradman was batting with the pressure of the scoreboard and the weight of saving a match that he desperately didn’t want to lose. It was Bradman feeling all the pressures that other batsmen endure every time they walk to the crease. In that innings Bradman accumulated 144 not out off 379 balls for an uncharacteristically slow scoring rate of 37.99. He saved the match…”
Chappell says that that 1938 innings showed that in normal circumstances Bradman could do what few others can – play with an uncluttered mind: “This innings showed that Bradman mostly – apart from his chastening Bodyline experience – was able to bat in a match with the serenity of a man involved in a casual net session. I’ve seen plenty of players flay net bowling when they weren’t concerned with fear of dismissal, losing the match, or being harassed by a demanding crowd. However, it was a different case out in the middle when they encountered all those outside pressures. On most occasions his immense mental strength allowed him to cocoon himself from the outside pressures that bedevil other batsmen…
In addition to his immense mental strength, there’s no doubt Bradman also had a ruthless streak that drove him to crush opponents. It was this burning desire to outscore everyone else that probably caused a lot of old-timers to anoint the elegantly fluent Victor Trumper a better batsman than Bradman. Those comments annoyed Bradman and even caused him to present a pretty convincing statistical case to validate his superiority.
Finally, I had what I deemed to be a satisfactory answer to the beguiling question: “Why was Bradman so much better than any other batsman?” It was his superior mental strength rather than any special physical attributes.”
Five Things Businesses Can Do In Present Crisis
Read the article here (Read Time ~ 11 mins)
Anna Warrington and Hansika Singh of Forum for the Future write about five things that businesses can do to help better systems today.
Address the plight of migrant and informal workers: Informal workers form nearly 90% of India’s 500 million workforce, yet they are excluded from many legal or contractual protections that form a crucial safety net in times of crisis.
Safeguard, and even uplift, regulatory norms, and standards: In recent years, labour and environmental laws and regulations have become unfortunate casualties in the race for economic progress. These have been further eroded this year.
(Re)build trust in your workforce: Before lockdown, working remotely from home was simply not part of the working culture in India, with the exception of some tech companies. The lockdown, having necessitated online working for much of the country’s office-bound staff, has changed that.
Invest in improving the environment: The clear skies over Mumbai and Delhi during lockdown were a telling reminder of how much human activity—and business activity above all—influences the environment we live in. Unfortunately, we can already see that familiar haze creeping back.
Use your organisational voice to push for transformative action: Every business has the potential to move beyond its organisational boundaries to play a more proactive role in advocating change, both in governmental policy and with other organisations in their value chains
How China Controlled the Coronavirus
Read the article here ( Read Time ~ 38 mins)
Peter Hessler writes an enaging ground view on China’s attempts to curb the coronavirus. The author seems to suggest that the Chinese success in controlling the virus can be attributed to what China does best – systematic execution at a massive scale. Organisational structures (such as the neighbourhood committees of the Party), sheer rigour and hardwork of its people and effective public communication seem to form the key success factors. The author writes -
The strict Chinese shutdown, in combination with border closings and contact tracing, had eliminated the spread of the virus in most communities. February 20th, the day of my lockdown trip to campus, turned out to be the last day that the Chengdu authorities reported a symptomatic case from community spread. The city has a population of about sixteen million, but since late February there have been only seventy-one symptomatic cases, all of them imported. Virtually every case has involved a Chinese citizen who arrived on an international flight and proceeded directly from the airport to treatment and quarantine. Chengdu’s success was typical in China. In one of my surveys, I asked students if they personally knew anybody who had been infected. None of them did. While officials seemed to have faith in the economic resourcefulness of citizens, the approach to public health was completely different. Very little was left to individual choice or responsibility. The lockdown had been strictly enforced, and any infected person was immediately removed from his or her household and isolated in a government clinic. By early April, all travelers who entered from abroad, regardless of nationality, had to undergo a strictly monitored two-week quarantine in a state-approved facility.
Epidemiologists told me that temperature checks, though useful, represent a crude tool, and they generally believe that social distancing is more effective than mask use. One epidemiologist in Shanghai told me that people should wear face coverings, but he noted that there are no data on the level of effectiveness as public policy, because mask use could also affect behavior. And, while Chinese officials required citizens to wear masks from the beginning of the lockdown, they didn’t actually depend much on them. China never allowed residents to move freely in a community with significant viral spread, hoping that masks, social distancing, and good judgment would reduce infections. Instead, the strategy was to enforce a lockdown until the virus was eliminated. The elementary school never bothered with more effective but disruptive policies—reducing class size, remodelling facilities, instituting outdoor learning—because the virus was not spreading in Chengdu. And, while the government hadn’t trusted people to set the terms of their own behavior during lockdown, it did depend heavily on their willingness to work hard for various organizations that fought the pandemic.
Contact tracing at scale and detail: At a party a week earlier, Liu had had a long conversation with a d.j., who, it was later learned, had been infected by someone from Hubei. Liu was thirty-five, single, and highly energetic. The details of his post-contact movements are listed on a public WeChat account maintained by the city government. In China, such case histories are often available, as resources for local residents. Liu’s case history notes that, during the first three days after he is unknowingly infected, he visits a bar, a store, two pharmacies, three gas stations, and six restaurants. Liu’s tastes are eclectic, ranging from a pancake restaurant to a frog-and-fish-head restaurant. He picks up a friend named Huang, and he visits his elderly parents. He goes to work. He gets a fever. Post-fever, Liu hops over to a few more pharmacies, and then he keeps going: he picks up a friend named Li; he visits his parents again; he goes to another party. On the WeChat account, Liu is the Liupold Bloom of northeastern Sichuan, with every step of his urban odyssey recorded in terrifying detail. When is this guy going to stop? Such meticulous case histories were prepared by contact tracers who worked under the direction of the Chinese Center for Disease Control. There are about three thousand C.D.C. branches in China, each branch containing roughly a hundred to a hundred and fifty staff members. Despite these numbers, the Chinese C.D.C. has traditionally been underfunded, like Chinese public health in general. Approximately ten thousand contact tracers worked in Wuhan, where more than eighty per cent of China’s deaths occurred. Epidemiologists told me that the tracers were divided into teams of between five and seven, with each group directed by an individual who had formal training in public health. Other team members might have no health background, but they came out of the same detail-oriented national educational system that had produced my students, and they often had local knowledge. Many tracers worked for neighborhood committees or other government organizations, including the police. As the virus spread, tracing teams were established across the country, and the C.D.C. recruited others who had technical expertise.
Surprising restraint on flouting data privacy: By then, many overseas students and others were coming home. It would have been useful to know exactly where they had been, so Jiang wrote a proposal requesting that Tencent, the company that owns WeChat, provide the I.P. log-in information for returnees. “They rejected me because of the data privacy,” he said. He was told that Tencent was adamantly opposed to its data’s being used in this fashion. “They said, ‘This is a violation of data protection. We can’t do that,’ ” Jiang explained. “It was surprising to me.” It surprised me, too—given the heavy-handed tactics of many lockdown policies, I had assumed that the government used any tools available. But there seemed to have been some resistance from prominent tech companies. Tencent and Alibaba helped the government develop “health code” apps that assist in monitoring and controlling the virus’s spread among citizens, but these tools are much less sophisticated than programs used in South Korea and Singapore. In Europe, virus-alert apps based on software developed by Google and Apple have been downloaded by millions of users, and the apps rely on Bluetooth signals to detect close contact with infected individuals. In some parts of China, the health-code apps register a change in a user’s location largely through a manual data transfer: if the user checks in with his I.D. at an airport, for example, or if his license plate is recorded at a toll booth. An epidemiologist in Shanghai told me that one Chinese city with a flourishing tech industry had commissioned the development of a much better tool that combines G.P.S. data and artificial intelligence to alert anyone who comes into the proximity of an infected person. “But that system was never implemented, even in that city,” the epidemiologist, who asked not to be identified, said. “It could not get approval from somewhere in the government system because of data privacy.” Jiang Xilin told me that, when the proposals to use automated data collection were rejected, the other C.D.C. researchers grumbled. But then they buckled down and continued to do the hard legwork of phone calls and face-to-face interviews. The C.D.C. policy is that, whenever a new case appears, contact tracers are called immediately, even in the middle of the night. They are given eight hours to complete the tracing.”
Scale of testing: In June, after Beijing had reported no locally transmitted cases for fifty-six days, there was a sudden outbreak at a wholesale produce market called Xinfadi. The epidemiologist in Shanghai told me that the place was well managed: masks were required, and anybody who entered had to show his health code and have his temperature taken. Even so, more than three hundred people were infected, and all the warning systems had failed to catch it in the early stages. The first alert came when a man in his fifties felt sick and went to a hospital to request a test. It was another example of old science: effective public communication. The man not only recognized his symptoms but traveled to the hospital by bicycle, as officially recommended, in order to avoid infecting others on public transport. Afterward, the government locked down parts of Beijing, and, within a month, nearly twelve million residents were given swab tests. The city had the capacity to test four hundred thousand people per day.
Comparison with the American approach: As the spring wore on, conversations often included a standard conclusion: the pandemic showed that Chinese value life over freedom, whereas Americans take the opposite approach. I disliked such simplifications, which failed to consider the initial Chinese coverup of the virus, or the government’s policies in Xinjiang and Hong Kong, or the fact that any number of democracies were handling the crisis much better than the Americans. (Also, the U.S. doesn’t have state-owned tobacco firms that engage in mask ’n’ Marlboro promotions.) I tried to convey the idea that the current American failure doesn’t narrowly reflect national character or values but, rather, a collapse of system: a crisis of leadership and institutional structures.
Despite the political indoctrination involved in Chinese schooling, the system teaches people to respect science. Hard work is another core value, and somehow society has become more prosperous without losing its edge. Nearly a quarter century ago, I taught young people who were driven by the desire to escape poverty; these days, my middle-class students seem to work at least as hard, because of the extreme competitiveness of their environment. Such qualities are perfect for fighting the pandemic, at least when channeled effectively by government structures. In comparison, the American response often appears passive—even enlightened citizens seem to believe that obeying lockdown orders and wearing masks in public is enough. But any attempt to control the virus requires active, organized effort, and there needs to be strong institutional direction.”
Key Ideas from Buffett’s letter to shareholders - 1986
While we summarize the key ideas in the letter, we encourage the readers to read the entire letter to capture the context in which the thoughts were expressed by Warren Buffett.
On greed and fear in the markets: When conditions are right that is, when companies with good economics and good management sell well below intrinsic business value - stocks sometimes provide grand-slam home runs. But we currently find no equities that come close to meeting our tests. This statement in no way translates into a stock market prediction: we have no idea - and never have had - whether the market is going to go up, down, or sideways in the near- or intermediate term future. What we do know, however, is that occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
On reduction of corporate taxes: Our conclusion is that in some cases the benefits of lower corporate taxes fall exclusively, or almost exclusively, upon the corporation and its shareholders, and that in other cases the benefits are entirely, or almost entirely, passed through to the customer. What determines the outcome is the strength of the corporation’s business franchise and whether the profitability of that franchise is regulated. For example, when the franchise is strong and after-tax profits are regulated in a relatively precise manner, as is the case with electric utilities, changes in corporate tax rates are largely reflected in prices, not in profits. When taxes are cut, prices will usually be reduced in short order. When taxes are increased, prices will rise, though often not as promptly.
What We Are Reading
We decided to publish few links to interesting articles that we have found across the Internet. We hope you find them interesting.
Why Billionaires Have More Sons [BBC]
The Joys Of Being A Stoic [Nautilius]
The Mental Obstacles of Investing [Novel Investor]
Why Athletes Choke Under Pressure [The Guardian]
What Cyberwar Will Look Like [Scholar Stage]
How To Seriously Read A Scientific Paper [Science Mag]
Moats and Network Effects in Financial Services [Medium]
Th Analog City and the Digital City [New Atlantic]
Apple’s Shifting Differentiation [Stratechery]
The Myth Of Influence [Livemint]
Afterthought
“If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But, if each of us hires people who are bigger than we are, we shall become a company of giants.”
-David Ogilvy
And that is a wrap for the week. Wishing our readers in India a very happy and prosperous Diwali. We hope you enjoyed reading this edition. If you found this newsletter useful and worth your time, do share it with your friends.
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Take care, stay safe and have a nice weekend. We shall see you next Saturday