Category: Non fiction

  • The Psychology of Money

    Morgan Housel

    My job is at the intersection of marketing and personal finance, and that’s the reason why I appreciate this book even more. It is a difficult subject to communicate, but a job that needs to be done. What makes The Psychology of Money really good is that it views money not (only) through the technical lens, or the “get rich” advice, but explores the emotional aspects of personal finance, and then articulates in a way that is relatable. I might be a little biased because I subscribe to the author’s worldview, and apart from index fund investing, have exactly the same approach. But I think everyone should read this book, because, as the author quotes (Voltaire), “History never repeats itself; man always does.”

    I will try not to paraphrase the lessons because they need to be read in the author’s narrative style for them to (hopefully) sink in. He begins with calling out the fact that personal finance is well, personal, and while there are definitely rules in finance and investing might, one’s behaviour is based on one’s experiences and emotions. And some of it is very generation specific. For instance, the idea that one is entitled to a dignified retirement life took root only in the 1980s! 

    He then moves on to risk, and the role of luck, followed by the importance of knowing what you really want, and then, some excellent illustrations of the “magic pill” – compounding – at work. The next couple of chapters make some key points that are often ignored- the difference between getting wealthy and staying wealthy, and the importance of “tail events”.

    The definition of “freedom” is something I could completely relate to. I’d flip the original maxim for a quick understanding – “money is time”. The more agency over time I have, the happier I am. The next two chapters about wealth are extremely insightful – no one is as impressed as your possessions as you are, and spending money on showing others that you have money is the fastest way to lose it! Wealth is income not spent, and it increases optionality. And while, one cannot control externalities, what is possible is an efficiency in savings. “One of the most powerful ways to increase your savings isn’t to raise your income. It’s to raise your humility.” 

    The following chapters get deeper into the how emotions play a large role in financial decision making, how it is better to be reasonable than trying to be coldly rational, and also, how important it is to leave room for error. I really loved the Benjamin Graham quote – “the purpose of margin of safety is to render the forecast unnecessary.” This is also important because our own desires and notions of happiness change with time. There are also some nuanced perspectives on optimism, and my views about it have changed now! 🙂

    Another extremely important lesson is not taking financial cues from others without really understanding what game they are playing – what are they optimising for, and why. e.g. day traders vs long-term investors, at a transactional level. The author uses the final chapter to show what he is aiming for, and therefore the rationale behind his own investments. 
    As I mentioned earlier, the author’s goals resonate with me – “..you only do the work you like with people you like at the times you want for as long as you want.” But at the risk of repeating myself, I think this book will help you frame your relationship with money, irrespective of where you are in your thinking and understanding of personal finance. So I insist you read it! Now!

    P.S. The postscript is an excellent read on how the US economy and its people got to where they are, both in terms of macro economic events and trends, and expectations. It’s superbly insightful in terms of understanding consumer psyche. Wonder if someone has done this for India.

    The Psychology of Money by Morgan Housel

  • Political Order and Political Decay

    Francis Fukuyama

    The first volume – The Origins of Political Order – went straight into my favourites, and so does this one. While the former was about the components of a stable state, and how political institutions developed differently in various parts of the world, this book begins at the dawn of the Industrial Revolution and shows how state, law and democracy developed to their current state, by (also) considering three additional dimensions of socioeconomic development – social mobilisation, idea legitimacy, and economic development. The industrial revolution and the economic growth that followed caused a movement to urban areas, where new social groups were formed based on fluid identities. This mobilisation serves as a foundation for changing political institutions with new ideas. The book also throws light on the various reasons for the decay of institutions, and offers directional thoughts on fixing them. 

    The author frames the development of the stable state by asking how a country can “get to Denmark”, which is the benchmark for an ideal state. While there is some specific focus on the US, also warranted by its early and unique path to democracy, the depth of analysis that has gone into many countries, across Asia, Latin America, Africa, Europe, is just astounding! History, economics, policy, geography, (with critique and usage of content from another favourite book – Guns, Germs & Steel), culture and many other facets, all going into understanding the state of politics in a particular country. There are many routes to modern government, including the necessities that war creates (“unfortunately”, Latin America never had its share, and Europe had plenty of it – both have class stratification, national identity, and geography to thank) and peaceful political reform. And once there, the principle of effective government is meritocracy, the principle of democracy is popular participation, effective states operate through law, but law can be an obstacle to appropriate levels of administrative discretion – how is balance achieved? The material is phenomenally complicated, and bringing it to this level of accessibility is something the author should be credited for. 

    The first part of the book focuses on parts of the world that experienced liberal democracies first – Europe and the US. It also analyses why Germany has an uncorrupt administration while Italy and Greece are plagued by corruption. In the former, how is state strength related to organised crime? How does cynicism and social distrust get culturally embedded? How were Britain and the US able to reform themselves from patronage-led public sectors? And why was Britain able to get there faster than the US? An active middle class accelerated Britain while US got a unified business community and middle class professionals only in the late nineteenth century. At a broad level, we learn early that the sequencing of events matters greatly. Countries where democracy preceded state-building (US) have had higher problems in achieving high-quality governance than those who inherited modern states (Germany, through some excellent civil service reform and an educational system) from absolutists. And that democratic societies without a strong national identity have trouble unifying the population with a common narrative. 

    The second part deals with parts of the world that had been colonised – Latin America, Asia, Africa, and the Middle East. When the imperial powers left, many of these nations were neither fully Westernised nor able to retain their traditional political organisation. However, there are success stories like Costa Rica, which according to many frameworks should have become a banana republic. There are also disasters, like Argentina, which, blessed with climate and resources, should have become a model country. The reasons are complex, and Sub-Saharan Africa vs East Asia is a great example of different development paths. In both areas, as well as Latin America and the Middle East, states that had strong institutions were able to reestablish them, while those that didn’t struggled. Interesting to note that African ethnic groups are largely a modern phenomenon, created or at least consolidated in postcolonial times! The specifics of the Japanese system and how their military-led nationalism has evolved until the present day is also fascinating. The problem that East Asia now faces is making the state accountable. The nuanced difference between rule by law (state using law for its ends) and rule of law (law binding on the state) is superbly explained. In the Middle East, the threat is that popular mobilisations risks being hijacked by religion. 

    Part 3 focuses on democratic accountability and goes back in time to the period after the French and American revolutions to see how democracy spread. The timing in various countries vary depending on the changing relative positions of social classes – middle class, working class, elites, and peasants. The rise and growth of middle class was a great catalyst to democracy. While doing this, it raises a question extremely important for the current times – with increasing globalisation and technological advances, the middle class is getting hollowed out. What happens to democracy then? 

    The final section of the book is on political decay, and there is a heavy focus on the US, which has now gotten tied up in the very checks and balances it had set up to protect democracy. In the author’s words, “there is too much law and too much “democracy” relative to the American state capacity”. It has now become a vetocracy, with economically powerful special interest groups and the judicial arm having hijacked the system and preventing reforms. No modern book can avoid China, and this is further proof. The author sees the Chinese model as the biggest nondemocratic challenge to the idea of liberalised democracies. How will the Chinese middle class behaves in the next few decades? Even as it grows, will it be content to live under a “benevolent” one-party dictatorship? 

    I think I will re-read both volumes, they are such treasure troves of information. If you like books that explain the system of the world, this is a set you most definitely should pick up. 

  • Logicomix

    Apostolos Doxiadis, Christos H. Papadimitriou, Alecos Papadatos (Illustrator), Annie Di Donna (Colorist)

    I have to confess I gamed this a little. This is my 300th review on goodreads, so I wanted it to be a special. So I chose a unique book – a graphic novel whose title also includes “an epic search for truth”. And thankfully, it was a fantastic experience. 

    While the story is based on the life of Bertrand Russell, it is presented through the different perspectives of its makers too. In a sense, we get to see the debates they had and how they progressed on the storytelling. Self-referential is a multi-meta when we’re talking of logic, and paradoxes! Russell is a mathematician but mathematics is also his language to engage with philosophy and thus “the truth”. Indeed, it is difficult to draw clear lines between the two deep subjects, and it only gets deeper when you add logic into the mix. The journey is as spiritual as it is scientific. And many believe it is solvable. To quote Hilbert, “In Mathematics, there is no Ignorabimus (Latin for “we shall not know”). As Russell continues to work on his Herculean task of establishing a logical foundation for all mathematics, he crosses paths with some of the foremost thinkers of the era, and probably of all time. Kurt Gödel, Ludwig Wittgenstein, Alfred North Whitehead, Henri Poincaré and so on. (the creators note that some instances have been created for narrative purposes)

    The story is rendered in flashback mode, as Russell is asked to lend his voice to those who oppose US involvement in WW2. I found it a perfect setting as he practically narrates his life thus far, and in the end, his response to the protesters pretty much summed up what he learned from his life and his quest. Though the novel is primarily about Russell’s pursuit, it also gives the reader a view of his life in the real world – his lonely childhood, his many marriages, his friendships, his relationship with his student Wittgenstein, his passion to bring a sense of order, the connection between madness and logic, and his stance on the two world wars. All of this makes it a deeply layered book with some wonderful thoughts. “The tragic loneliness of every human being. The finiteness and profound futility of life”

    But I think the reason why I loved this book was also because it resonated a lot with my perspectives, my affection for logic, and the lessons I have learned when I have tried to bend reality to fit it. (“Sure, Frege, Russell, Whitehead were excellent map-makers, but maybe eventually they confused their reality with maps” “All the facts of science are not enough to understand the world’s meaning“) This also leads to a lot of over analysis. (As Russel writes, “Like me, he was constantly analysing everything, a habit deadening to the emotions“). And something about the genesis of it all – “Maybe what brings them to logic is a fear of ambiguity and emotion“. But of many moments, I think my favourite is when Wittgenstein survives a near-death experience and understands that”The meaning of world does not reside in the world“.

    Even if you’re not into graphic novels (I am not), this one is a must read.

    P.S. If you have read similar books, do share.

    Logicomix : An Epic Search for Truth

  • Weapons of Math Destruction

    Cathy O’Neil

    Humans have had biases for the longest while. But they have come a long way from from the simplistic ones that helped the species band together and survive, or even the the heuristics we have applied and continue to use at an individual level. As search engines and social networks move from tools to utilities, we have now begun to see the dark side of “software is eating the world” – when biases and discrimination are being codified into systems, resulting in blind discrimination that widens inequality by preventing people from climbing out of poverty, unemployment, homelessness and all the things that we as society should be ashamed of. 

    The author, thanks to her education and experience, is well placed to write on the subject. She calls the mathematical models or algorithms WMDs – Weapons of Math Destruction. They have three common characteristics – scale, opacity and damage. To elaborate, they typically use data sets to create scoring systems that evaluates people in various ways. Most of these systems are proprietary. The scale at which these systems operate is really large, and therefore the damage they cause is also equally massive. Most of the people affected don’t even realise they’re being discriminated against and sent on a downward spiral. And most importantly, there is no feedback loop to make the system better. 

    The author frames it very well through examples across life stages – how teachers and students are evaluated in schools and universities, how employees – potential and existing – are screened, how online ads for predatory services like payday loans are targeted, how insurance premiums are decided, how law and order systems end up “creating” criminals simply based on location data, and perpetrates injustice, how scheduling software destroys any sense of work-life balance. These are not dry, statistical examples, but backed by stories of actual humans devastated by an unfeeling algorithm, with nearly no chance to work their way out of it.

    In the future, what really stops us reaching “Minority Report” scenarios? Arresting people because they could be potential criminals, screening applicants based on health issues they could have in the future, and so on. And since everything is based on users sharing data, it seems certain that privacy will come at a price. In the past, when greed and business “progress” began to have harmful effects on society, the government stepped in and put laws in place to safeguard us. But now governments themselves use these systems! We still have a chance to work our way out of this and bring back dignity. For instance, the European model, in which data collection must be approved by the user and is opt-in, and the reuse of data is prohibited. 

    But will we? In our efforts to remove biases, we have ended up creating systemic monstrosities that lack empathy, and only focus on efficiencies. Those who learn to game the system profit. Winners keep winning, losers keep losing, as fairness is forgotten because entire business models are built on them. As the author rightly points out, “The technology already exists. It’s only the will we’re lacking.” And that, really, is the problem, because “Algorithms are opinions embedded in code”. An important book for the times we live in, and the future.

  • How Fascism Works

    Jason F. Stanley

    In “The Origins of Political Order“, Francis Fukuyama talks about three institutions that have to be in stable balance for democracy to take root and thrive – the state, the rule of law, and accountable government. When that doesn’t happen is when we get contemporary Russia or China. But in various countries, there has been a sharp spike in fascist organisations, either overt or covert, and a polarisation in political discourse. Nations such as Myanmar, India, Poland, Hungary and even the United States may not be called fascist at this point, but are increasingly vulnerable. 

    In “How Fascism Works”, Jason Stanley looks at the structures that are common to Fascist movements – the ten tactics that are the pillars on which the narrative of “us vs them” is created and reinforced. A mythic past that breaks down common history and is rewritten to support the Fascist vision for the present and future. Propaganda that twists democratic ideals to serve their purpose. Anti-intellectualism that attacks universities and academia in general who might challenge their ideas. These three work in tandem to create an “unreality”, followed by the onslaught of conspiracy theories and fake news.

    Group differences are then highlighted, and scientific support for hierarchy is formed. As divisions multiply, victimhood among the dominant population is stoked the moment any minority moves towards progress. As gender equity advances, patriarchy gets threatened, increasing sexual anxiety, which is used to fuel conflict even further. Law and order is then cast as a tool for the majority “us” to be used against “them”. The narrative of us is most applied in the rural heartland, where “our” pure values and traditions still survive. And finally, unions and any social organisation that tries to build unity among diverse citizens is dismantled. So is public welfare since “they” are exploiting “our” generosity. 

    The nation replaces the state, creating a group identity, and using a sense of collective victimhood to call for the defence of that shared identity – ethnicity, religion, skin colour etc. Pluralism and tolerance are targeted in order to isolate “them”. The nation then artificially creates the conditions that would legitimise ethnic cleansing or genocide. 

    If you live in India, as I do, you are bound to recognise a lot of these – the pure Hindu past, love jihad, the sacred cow and lynching of Muslims, attacks on universities, imprisonment and/or killing of writers and activists, the biased use of law and order, and so on. The plight of the Rohingyas in Myanmar is a nearby example too. So is the United States under Trump. 
    There is a systematic normalisation that would make any charge of Fascism seem like an overreaction. This too is part of the process. The way to combat this is by first understanding the tactics, see them for what they are, and share the perspectives widely. That’s why this book is an important read for everyone.