Category: Philosophy & Worldview

  • 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

  • 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.

  • The Moment of Lift

    Melinda French Gates

    “When we invest in women and girls, we are investing in the people who invest in everyone else.” That’s indeed how we can change the world, and the best part is that despite the tremendous experience she has on the subject, Melinda French Gates neither makes the book prescriptive, nor makes it about herself. 

    The book is only about 270 pages, but it covers a whole lot of ground. From maternal and newborn health, to the importance of contraceptives and family planning, to education for girls, the unpaid work that women do, and gender inequity in the workplace, it is clear that nothing in this context is an isolated problem. And to solve them, the work has to be done at both the macro and micro level. While many of the anecdotes are heartbreaking, it is a testament to the narration that one closes the last page with hope. 
    There are two things that impressed me a lot. The first is an intellectual honesty with which she approaches each subject. Right from “American billionaires giving away money will mess everything up” – she provides the reasons for this towards the end of the book, and there is a tremendous objectivity at work here. The second is the understanding that there is much learning to do. Several times in the book, she admits that she writes from a position of privilege, and there are aspects that took her time to grasp. But she spends the time to listen and learn. That’s also why she lets others tell their stories. 

    These are women in Africa and Asia who have been directly affected, but have had the courage and will to create a solution. There is compelling data, but what’s more moving is the humanity of it. The school on a railway platform, the BandhanTod network, Avahan – simple things that one wouldn’t think is a problem, or access to necessities one takes for granted, is a struggle for many others. Leymah’s story about the Liberian Women’s initiative carried an important lesson about how successful social movements needed a combination- strong activism and the ability to take pain without passing it on. That second part underlines why women are best placed to heal the angst that the world experiences every day. 
    The only exception (to letting others tell their story) is when she believes that her own experiences can get people to think differently. I found her perspectives on marriage and empathy at the workplace extremely insightful. 

    In the book, Melinda, quotes Mary Maxwell Gates – “From those to whom much is given, much is expected”. From whatever I have read, Melinda French Gates is on it! It is not just the empathy she shows towards those who are less fortunate, but the active steps she has been taking to overcome the obstacles that hold women back. The book is a compelling read, and a great learning experience.