Killing death

The man lies sprawled out. Blood flows from his head, down the neck, turning his white shirt crimson. A few little rivulets are drying on his left arm that is stretched towards me, as he lies on the road divider. On the other side, a white car blocks traffic at an angle, beyond it is a motorcycle, mirroring its owner’s plight. A few men stand around the fallen man, studying him. A man with a worried expression, answering questions, clearly defensive. The traffic slows down before me. I honk hard, before reaching the scene. It’s 40 degrees outside but I turn cold when I see the fallen man.

Opinion in The Indian Express, June 30, 2006

State religion? No

Why do countries have a state religion? The answer perhaps lies with Adam Smith who, keeping market dynamics in mind, argued that having a state religion is to accord a monopoly position to a favoured religion, using the two omnipotent weapons that states use to enforce any policy: creating entry barriers and delivering subsidies. The result, he concluded, was that the quality of service and religious participation fall. Two centuries later, as Robert J. Barro and Rachel M. McCleary of Harvard observe in their paper, ‘Which Countries Have State Religions?’, of the “188 independent countries in 2000, 72 had no state religion in the years 2000, 1970, and 1900; 58 had a state religion at all three dates; and 58 had some kind of transition”. As we all know, economists have a nasty habit of breaking down things into a rational-incentive paradigm — people are rational and driven by incentives. Apply that to the study of religion and you’re studying morality from a factual prism, something like an ideal being clouded by facts. In the case of state religion, what’s more interesting is the issue of choice. According to the Harvard duo, this decision is based on a “political calculus that involves interactions between the Government and the religion sector”. The incentives: for the religion, monopoly power; for the state, control over the religious sector. There’s product differentiation too. As they note communist countries and dictatorships avoid state religion to weaken the power of organised groups that would compete with the state, but in theocracies like Iran, the maintenance of an official state religion becomes part of the government’s plan for controlling society.

Opinion in The Indian Express, June 30, 2006

In giving, Buffet completed the circle of capitalism

After much reflection, the Sage of Omaha has finally passed through the looking glass. And as in creating it, Warren Buffet’s philosophy of giving his wealth remains the same: seeking long term growth of value. His disdain for diversification and all high-cost intermediaries the idea brings with it, his focus on decades rather than quarters in terms of returns, his long term seeking of a charity that will do the “most good” rather than “some good” are direct reflections from his 30-year mirror of investing — more bang for the buck, in this case a ‘social’ bang.

Opinion in The Indian Express, June 29, 2006

Beyond redemption

The war of and over religions has spilled into cyberspace. The Internet hosts some 2.8 billion pages of “god”, 487 million pages of “religion”. You get evangelists, you browse through individual seekers, you meet religious organisations. With so many sites, you might think that finally man is expressing his inmost Truth, sharing his intimate Journey as he evolves to godhood.

Opinion in The Indian Express, June 19, 2006

Clause & effect

Not quite a clause for concern yet, but if property prices fall far enough, trouble lies ahead. Buried deep in the bowels of any home loan agreement is a sub-head that goes, ‘events of default’, within which is tucked away a clause that in English means, if the value of the house for which a loan has been taken falls below the loaned amount, the bank, unilaterally, can demand that the borrower make good the difference, or else be declared a defaulter.

Opinion in The Indian Express, June 19, 2006

Market meltdown shows Mutual Funds run with the bulls, get mauled by the bears

NEW DELHI, JUNE 11 : Take all diversified equity mutual fund schemes. Find out how they fared over various time periods. Crunch the numbers. Put them against the market benchmark, the BSE Sensex. What do you get? A rather uninspiring look at fund managers, experts who we pay about 2.5 per cent of our investment to outperform markets.
Take a look:
• During the past month, when the Sensex crashed by 25.4 per cent, the average fall in 158 diversified equity funds was 28.9 per cent—an underperformance of 3.4 percentage points. Only one out of 10 funds managed to beat the Sensex in this period.
• In the past two weeks, when the Sensex fell by 12.8 per cent, the funds on an average, fell by 16.6 per cent, an underperformance of 3.8 percentage points, with just 16 of 161 funds being able to beat the Sensex. In other words, just 9.9 per cent of funds were able to deliver returns better than the Sensex.
• A study of 161 diversified mutual funds over the past week, two weeks, one month, three months, six months, 12 months and 36 months shows that on an average the funds have been lagging the Sensex in all but the 36-month period.

Story in The Indian Express, June 12, 2006

Four pages of fear

Make no mistake: the moral plank on which Form 2F — the tax form that will replace the current variant — stands is not insubstantial. Despite tax reforms and technology, citizens of all kinds, even the salaried, continue to evade taxes. But going beyond the moral argument, Form 2F, notified on June 1, 2006, is a tool that allows the tax administration to look at salaried perks and expenses from the other side of FBT (fringe benefit tax), introduced last year. Form 2F, therefore, is like a mirror in which tax officials standing behind FBT statements released by companies are able to pin-point employees who show expenses like entertainment, official travel and suchlike and use those reimbursements to run their households.

Opinion in The Indian Express, June 05, 2006

Call off the wild

What else is the financial services industry if not wild? It’s growing at a wild pace. Its first family of product manufacturers and top distributors have been given wild returns through eight-digit salaries and sinful commissions — and nobody’s grudging them that. The returns on equity over the past three years have been wild and insurance companies and mutual funds have benefited immensely as have intermediaries selling their products.

Opinion in The Indian Express, June 02, 2006