December 2009 – 6 am pacific

A Better Year

This year has been a trying year for many of us. In the US and most of the West, unemployment is high and a gradual recovery is the best we can hope for. In the IT world, in India and elsewhere, things are much better at the end of the year but still a far cry from the hypergrowth that we’ve become used to.

For me personally, this has been a challenging year. I started out the year looking to switch gears and do something else after my four year stint at Gridstone. But a family health issue has become a priority that trumps everything else. This will require my wife’s and my full attention for a while. If there is one thing I hope the next year will bring is better health for my son.

In the meanwhile, I am working with startups and interesting companies, helping them to the extent I can. It keeps the juices flowing and hopefully I can add some value to their business.

This blog is now like an old friend to me. A constant companion, through good times and tough times. Always there for a couple of hours of enjoyable company. By extension, you, my readers are like old friends too. I feel like I know the regular commentors well even if I’ve never met you.

And the silent majority, the readers who read but never join the discussion, thank you for coming back again and again. Here’s a humble suggestion. If you do one thing in 2010, join the discussion. Not necessarily on this blog. On any blog. On issues and topics that matter to you. Be heard. And hear yourself. It will feel good. Like you are plugging in to this massive collective brain that is humanity online. Like exercising your vote. It can be empowering.

I hope all of you have a great 2010. Or just a better year, perhaps. Happiness is a choice. I hope you choose to be happy.

Cheers!

Investing, My Way

This year saw a sea change in the way I invest. Umm…let me take that back. This year I finally decided to put in place an investment methodology. Something that will hopefully form the basis for the way I invest long into the future. I put some thought into it and so in case it might be useful to others, here it is. Needless to say, this is what works for me. Your context may be completely different and what works for you might be completely different (do leave a comment if you think it adds to the discussion).

Evernote for Android

I recently moved to an Android phone. I also use Evernote extensively and so I was thrilled when they launched Evernote for Android.

Besides the fact that it makes it so much easier to access my notes when I am on the move, there is another unexpected benefit. When you take a photo using your phone, the process of getting it off the phone and on to your computer is an extra step that slows things down. Taking pictures using Evernote makes that pain go away. When you take a photo using Evernote, it is automatically synced to the Evernote cloud and from there to your computer.

Here’s the first photo I took using Evernote, “Wake Up Sid” style!

Indian Church in Fremont

Fremont has a very high percentage of immigrants among the city residents. Especially North Fremont, where I live has a sizable Indian crowd. Most, like us are immigrants. Because of which Indian food, groceries and Bollywood movies are all within a ten minute drive, which is nice. Recently an Indian Church has come up close to where I live. I have never seen one before.

The proportion of Indian Christians amongst immigrant Indians may be higher than in India but still should not be more than say 10%. And given that there will be plenty of options on churches to join in the US, I wonder what drives the need for an Indian church. Could it be that Syrian Catholics (or other Indian Christian communities) from India practice their faith differently enough to feel the need for a separate church? Or is it the need to share their common, distinctive culture which an American church does not fulfill?

Make Work Homework

A few years ago my son who is now in middle school got some vocabulary homework for English. It was a pretty long list of words. He was supposed to write the meaning of each word and then use it in a sentence. And then, get this, draw or download a picture from the internet that illustrates the word. The homework took thrice as long as it would have without the illustrations.

Now if you think about it, if the child has learnt to use the word in a sentence, there is little value in an illustration. Especially, since most of the words pertained to intangible things like “blatant”. If it were an art class I can still see some value in an exercise where students reflect and then draw a picture depicting “blatant”. But not for 50 such words and not for an English class.

There is a phrase for this kind of work. Its called “Make Work”. Basically teachers are giving homework just to make up the 3 hours or whatever of homework they need to give per day. Like many issues, there is economics behind Make Work Homework.

Public schools and most private schools in the US have a student-teacher ratio that has gotten higher and higher over time. Obviously, there are cost reasons for this. The primary driver of cost efficiencies in a school is the average number of students in a class.

A teacher spends time on preparing for class, grading homework and other small activities. The time required for preparing for class does not vary by the number of students in class. It also goes down with experience. But grading homework varies directly with the number of students. And it can add up to quite a lot of work. If the teacher is hard pressed for time, she can’t reduce the amount of homework given to students. But she can give the kind of homework that takes less time to check. The example I cite above is exactly that kind of homework – with asymmetric workloads for student and teacher.

I believe this is the root cause of Make Work Homework. It takes a lot of time for the student to draw an illustration and very little to eyeball it while grading. This asymmetry works in favor of the teacher. She can give the prescribed amount of homework and still keep her grading workload low.

This is not to say that anything requiring an illustration is Make Work. Not at all. Sometimes it is absolutely necessary. Visual learning can be very powerful. And sometimes it can be justified with the argument that children learn in different ways and at different paces. What may seem like gratuitous drawing and coloring to one student may be essential reinforcement of what is being taught in class for another student.

But a lot of what passes as homework for our children, is the product of a teacher trying to reduce his workload.

Copenhagen – the Mother of all Negotiations

Who hasn’t been in a tough negotiation? If nothing else, negotiating with your kids can often be most difficult. But the negotiations at Copenhagen summit and next year on climate change are going to be the hairiest negotiations you can ever imagine.

An FT article [pay wall] shines some light on why the negotiations were so difficult. The biggest reason is of course that these are multi-lateral negotiations. And different groups have different interests. Developed countries want developing countries to make commitments on emission reductions while not over committing themselves. They also want transparency in developing country emission measurement.

Developing countries don’t want emission reductions to get in the way of development. They want developed countries to pay for clean technology.

There are a also a whole bunch of developing countries in Africa who are not significant emitters but will feel the brunt of climate change. They have nothing to give in the negotiations but a lot is at stake for them.

And then there are also a few heads of state like Chavez, Morales and Ahmadinejad, who simply use the stage to take potshots at the US and the West. But they still have to be invited to party.

Obviously, 170 independent actors can never achieve any consensus. So groups were formed. US, UK, Germany, France as representatives of the developed countries and China, India, Brazil and South Africa as representatives of the developing world. But this still wasn’t enough to get an agreement. The bulk of the world’s emission in the next 20 years is going to come out of the US and China. If only these two countries had sat down and thrashed it out, we would have had a deal.

The world is not going to be happy with their leaders if they don’t put their shoulders to the wheel and get a deal together soon in the new year.

Ideas from the New York Times

The NY Times Magazine’s latest issue is on “ideas”. The ideas are of mixed standards, probably because they were force fitted into an alphabetical list as much as possible (“hey, we don’t have any ideas for X Y Z. We can’t discriminate against the bottom three so can you go and find any old idea.”). But here are some that I thought were great. Go read the whole thing if you can.

Here goes (alphabetically, of course):

Drunken Ultimatums. Revenge trumps rationality. An experiment with drunks shows how.

Empty Beer Bottles Make Better Weapons. The fizz in the full ones causes them to break at lower impacts.

More English and More Non-English

Chetan Bhagat has a recent post on his blog which is a transcript of a speech that he gave at the British Council in Delhi. He defines two groups in India. One, which he calls E1, is proficient in English and gets all the good jobs. The other, E2, is familiar with the language but is not proficient. E2 is ten times the size of E1. He would like to see effort being made, by the likes of the British Council, to shift more people from E2 to E1.

It’s hard to argue against this point of view. Expanding E1 or for that matter E2 as well is good. Spoken English skills are what have enabled India to create the huge offshore services sector. English is also the common language that links India and is therefore the de facto language of big business. Better English skills – spoken, written or really at any level – enhances a person’s employability and opens higher paying job opportunities.

But is more and better English the only dimension there is to language in education? I see two problems with this.

Coevolution in Telemarketing

Coevolution in species (predator-prey, for example) is a commonly occurring phenomenon. The same thing, loosely, can apply to many other things like criminal behavior and how it coevolves with law enforcement techniques.

An interesting place where you see coevolution at work is in telemarketing. If you think about it, they are the predator and you are the prey. Their objective is to get you to pick up the phone and then not put it down. Your objective is to not pick up the phone.

Before Caller ID, you were losing the battle. You had to pick up the phone. You didn’t know who was calling.

After Caller ID, it was better, but not if you were prepared to ignore every call except the numbers that you recognized. Also, the telemarketers adapted and started blocking Caller ID. But then you started avoiding calls with no Caller ID. And then they switched back to numbers but no names or innocuous names. And so on.

Then came the National Do Not Call Registry in the US. That tilted the balance decisively in your favour. It still left the non-profits who are exempted from the DNC stipulations. You were still having to walk up to the phone when the local charity called and you didn’t want to donate this year. But then you got that new phone which can read out the name on the Caller ID. And that was that. End of the telemarketing nuisance.

Not quite. Last year I started getting robo calls on my mobile phone from a company selling extended warranties for cars. I pick up most calls to my cellphone, even if I don’t recognize the number. It was very irritating. I actually lodged a complaint with the FTC about these guys. Apparently many others did too. Thankfully its been turned off. The people behind it must have figured that whatever they were doing was worth flirting with FTC for. Or maybe they don’t even live in the US. Who knows.

I still get a moderate number of telemarketing calls. If you are of Indian origin, like me, you may still be getting calls from India. With telecom costs between India and the US dropping sharply in recent years, the call activity is going up as well. We regularly get calls from DirectTV and Airtel. The latter in fact has been calling from a Delhi cell phone to my cell phone (where did they get my mobile number?).

The companies that call from India use Caller IDs in different ways. Some of them send out a US number which I think is a losing strategy (one of them sends out a toll free number). Some of them block Caller ID, which, I believe is a better strategy. With almost no calls from telemarketers in the US, you are probably losing your old aversion of picking up a call with no Caller ID. Or maybe, I have a special situation. A friend of ours we regularly talk to had blocked her Caller ID at one time.

This is known to occur even in predator-prey coevolution where a defence that the prey had developed in response to a certain predatory tactic is lost through the millenia. When the predator evolves the same trait again, the prey has no defence against it.

Callers from India seem to have the ability to put just any old number in the Caller ID. Like say “2222”. Or use an Indian number. I will pick up any call with an Indian number on it. Which is why I get snagged often.

But it doesn’t end at Caller ID and getting you to pick up the phone. Since the dialing out is typically done by a dialer which connects an agent only after you pick up the phone, there is a lag before someone starts speaking at the other end. Most people will realize it’s a telemarketing agency and put the phone down. This must cost a lot in agent time at the other end.

Which probably explains, in a crazy way, the latest Caller ID tactic. Yesterday someone called us. The Caller ID name said “Telemarketer”. We didn’t pick up the phone. But if someone does, you can be sure they want to talk. And it could be the beginning of an honest, trusting relationship.

The Numbers Behind the Numbers

This week’s big news was that the US economy lost the fewest jobs in a month since the beginning of the recession. There were reams and reams of news and opinion on the matter. Quotes from the White House, Republicans, Democrats, Wall Street and Economists. But I got stuck on the third paragraph of the first news item that I read on the matter on NYT

In the best report since the recession began two years ago, only 11,000 jobs disappeared last month, the government said on Friday, and the unemployment rate actually dipped, to 10 percent, from 10.2 percent the previous month.

What’s the math that allows the unemployment to go down when 11,000 jobs were lost? Did the denominator suddenly go up? Did all the returning Indians suddenly decide to go back to the US like Shiva Ayyadurai?

The answer seems to be

Not only did the rate of job losses drop to 11,000 but losses in the previous two months were revised down by 159,000.

which is not really offered as an explanation but as an aside by FT. But the numbers look like they should be able to explain the drop in unemployment. Does anybody have the official explanation?

Economics by its nature is complex. Good reporting should make it more accessible. Not leaving obvious questions unanswered would be a start.