environment - socialist or capitalist?

i had a thought provoking conversation with a friend of mine who believes in basic socialistic principles like public education and public health. i would consider myself as somebody who has capitalistic principles (or lack thereof) in my system and try to address social issues (education, health, etc) applying those principles. i look at things like efficiency, maximization of resources and even sometimes try to apply free market theory to them. however, i am also quite conscious about issues related to the environment, overuse of natural resources, etc. at this point of time i wonder if our environment, given a choice, would want us to be capitalistic or socialistic. a good part of my head tells me it would ideally prefer a socialistic system as it would be good for its longetivity. but let me see if i can dig deeper.

from an economic point of view, socialism refers to ownership by the state of both production and distribution. and capitalism refers to the system where the system of production and distribution should be left for the market to determine.

environment is quite broad of a subject, so lets take natural resources. finite and abundant. given the present outlook of, say, oil (peak oil phenomenon, rising oil prices, etc), we might think that conserving oil would be the best way to prolong our use of it. socialistic principles would guide us to minimize our dependance on a finite commodity like that, and share what we got equally. this would keep the prices affordable but wouldn't cut down our absolute use of it nor motivate us to find alternatives to it. a capitalistic system is heavily dependent on oil and hence, there is absolute need to have it at all cost. the system's productivity is directly related to the price of oil and availability. there isn't an option to reduce its usage as it affects productivity directly, resulting in failed businesses. since the growth of the economy in a capitalistic system is heavily dependent on it, there is also the need to access more of it by digging deeper into earth. given the fact that its finite and is only going to get more expensive, there is a strong need to find alternatives to replace oil as a driver. which is what many corporates are doing - they are
betting on more eco-friendly cars powered by batteries and fuel cells.

maybe i am biased towards capitalistic principles and try to address all issues with that lens. or maybe am not as aware of socialistic principles to address the same. or am just ignorant of other ways to deal with issues like these. at this point though, i am not sure. but i do see a capitalistic society needs oil the most for sustaining it and hence more inclined to find alternatives to replace it.

market and human sentiments: getting a gift on time or a bit late?

one of the major theories in the market is the boom-bust cycle. the economy is doing well. stocks are rallying high. investors are making a lot of money. then the slowdown begins, with stocks taking a hit and investor confidence slowly and steadily eroding.thats usually when the central bank steps up its game to save investors - by either pumping in money into the market or cutting interest rates. this sustains confidence for a while, before the market again goes down. or sometimes, the slowdown is actually 'slowed down'. so what the central bank actually does is to 'sustain' the boom period for as long as it can before it goes out of its control.

now i would like to draw a parallel to our day-to-day lives. our birthday. a day when everybody around us makes us feel special. it includes the ultimate competition of people calling you at midnight to be the first to wish. and your close ones trying to make the entire day special and full of surprises (for the lucky few!!). then the day is over. u lived the best day of your life in a year and probably felt the most special. one, this day of yours appeals to everydbody - wife, kids, family, friends, colleagues, etc. unlike a mother's day or father's day. we could compare it to an absolute state of market boom. everybody is happy and in turn makes u feel happy and special. the next day you still feel a bit special, but not as much as the previous day! say some of your friends wished you a few days later (yeah! happens a lot i know), you feel a bit special that day. but nothing compares to the day of your birthday.

think about this scenario - your friends and family plan it in a way that they surprise you for a month after your birthday. like make it the 'birthday month of ravi' or something. it might dilute how special you might feel but still sustain some interest. even the constitutents (family, friends, etc) might not be as enthusiastic about your birthday. this is pretty much like the central bank cutting interest rates to sustain the economy or get it back to normal. it just wont help as long as people are not confident or enthusiastic about the economy. its in the mindset, not in the rate cuts, atleast not as much as many think! and its pretty normal for the market to act that way. afterall the market is guided by human emotions.

it opens a pandora box in my head...with a lot of questions.

why do we like surprises? what can we learn about relationships, from economic theory and market cycles? how do we encourage shopping behavior?

i will cover this the next time when am not blogging from work :-)

personally, i love my best gifts (the ones from the closest people) a bit late, thats if they choose to give me one :-)

female aggressiveness - less aggressive in 'making money by being overly aggressive'

http://www.micromotives.com/2007/10/getting-in-touch-with-your-feminine-side/

a very interesting case study considering a hedge fund is the absolute example of alpha male overconfidence. my takeaway from such a cognitive study is a bit different from the bloggers'. my short analysis on why i think the trading performance actually improved with the female harmones.

"hedge funds are dominated by the aggressive male types. in such an environment, there is a constant void that gets bigger when u climb high up the ladder (from a junior trader to the showman). this void is the lack of women in the business that they can interact with or sort of share a different perspective. its the same case with ppl who put their money in hedge funds and people who do business with them...so its an almost-male dominated environment. now, when a man acts less aggressive and a bit more compassionate with his clients (like the junior trader Tong) or investors, there is automatic trust that builds around him and his portfolio, resulting in better trading performance."

we can kind of extrapolate this theory in dealing with aggressive markets where conventional wisdom says, the more aggressive you are the better your outcomes. it could be that cutting down on the aggressiveness and showing a more feminine side (=compassion) would actually result in the audience appreciating your stuff. am not saying women are 'soft' when i used the word compassion...its more like less aggressive in making money by being overly aggressive!!

Private sector jobs - religion and caste based discrimination

The story that led to the analysis
http://www.tehelka.com/story_main36.asp?filename=cr241107not_quite.asp

I think we need reservation based on caste in India. Until the time when my maid's son and my neighbor's son would goto the same school, have access to the same information and have the same lifestyle without being intimidated, I would support reservation. I know reservation could be a two-edged sword (in some cases) and not the only thing that will make education/jobs equitable, but it definitely is the best way to get there. And if done efficiently with strong underlying research, it can change things around. I think it is being done for the most part with strong fundamental research, with a bit of politicization that is unavoidable.

Just consider the number of people who have access to quality education from 40 years ago, look at the schools which are diverse (still low considering economic backgrounds), diversity in jobs, etc and you would get a fair idea how we have 'progressed'.

I recommend this article and go on to support the casue of reservation in the private sector too.
http://www.india-seminar.com/2005/549/549%20sukhadeo%20thorat.htm
The author is Chairman of the University Grants Commission.

And about employers who choose people from a higher caste, you have to look at people up there who make those decisions in the private sector. They are part of the high caste mob who are as mindless as the rogue politician. Just that they wear a suit!! This study provides statistical merit to such an argument. At the end of the day, the responsibility of the government is make growth 'inclusive' given we still have gross bias, without our houses and our larger society. Let me reiterate the point that given the same opportunities under similar circumstances, caste or religion dont play a big part. However, that level platform has not been reached yet!!

I am from the so-called 'higher caste' but fortunately studied in a school in a small town with people from diverse backgrounds, and not in a school that picks only the brightest kids and spits out the brightest 10 years later!!

Medical tourism - Does private hospitals affect public health care in India?

http://hbswk.hbs.edu/item/5814.html

Q: How does growth in private hospitals affect public health care in India?

A: There is an assumption in the view often expressed in the media in India and Europe, for instance, that when private hospitals in India provide care to heart patients from England, the hospitals are somehow taking care away from poor people in India. The assumption seems to be that if medical tourism was banned, the doctors in question who were catering to wealthy patients would suddenly, as a practical matter, move to a village. It takes a different set of individuals, a different set of infrastructure circumstances to create that scenario. We need good scholarship to verify the idea that there is a potential substitution between caring for sick people from England and providing medication for malaria in an Indian village. I'm not aware of such analysis yet.

My guess is that the bulk of India's problem is primary health, and has nothing to do with tertiary care. And the primary health problem is not going to be addressed by a private hospital for the most part anyway. These are almost different industries. If someone analyzes the landscape and discovers that there is substitution between care, then there is a real public policy issue that needs to be debated.
---------

Some options for india:
1. govt step up primary health care
2. make PHC more lucrative for fresh doctors
3. mandate private hospitals that benefit from medical tourism to open up free clinics in rural places or provide quality free healthcare for the urban poor
4. an entirely different angle - make rural india attractive and economically more viable (by creating jobs and enabling reverse migration) so tier-2 hospitals would look at villages/towns for 'business' growth, considering urban area is crowded and more competitive for them

As a good friend of mine, a doctor and a primary health care consultant, put it
"I do not think this is a substitution phenomenon but a general failure of primary care worldwide." Bull's eye.