Saturday, October 22, 2016

Book Review: Mein Kampf by Adolf Hitler

History has created a villain in Adolf Hitler, but he was a hero for the community he represented. After going through volumes of books on second world war and watching the movie ‘Schindler’s List’ several times (and some more movies on Holocaust too), I had stayed away from reading much about Hitler. So this book bought out of curiosity stayed in my book rack for years untouched. Now I believe History is perspectives of who wrote it, so I did put my hands on this autobiographical work of Adolf Hitler to get to know his perspectives and to understand the personality which made him a leader with an influence significant enough to cause a world war.

He was a student of Fine Arts. Along with painting, he spent considerable time in studying ‘German nationalist ideas’. From there you can find the traces of how his dis-likening towards the Jews gradually turned into hatred. He got transformed from a less talkative as a student into an effective orator who can hold on masses and impress them with his thinking and arguments. He was just a soldier in the First World War but became powerful enough to cause the Second World War.

Except in the first two chapters, there is not much info on his personal life and the rest of the book is about his ideas on Politics, German Nationalism and so on. So instead of an autobiography, this appeared to me like a textbook of Political Science. This book was published in 1925 much before significant political events happened. But this still serves an important purpose of deciphering how his thinking shaped him into what he became later. Many of his observations about history, psychology of masses, role of media, and importance of arms were so sharp which you don’t find them often in other political leaders of his time though they were deeply opinionated and skewed towards the welfare of German Society at the expense of other races. His knowledge and oratory skills were so good, he invoked pride in Germans in all his speeches and he was on the path to leading them as the book ends.

Hitler mentions in this book that the majority of population lacks ability to think and they believe whatever media or history books say is true, but there are few who have ability to critically analyze and they are outnumbered by the majority. Since the majority chooses their leader or Govt. the outcome may not be intelligent choice always. He also believed that degeneration of German society was due to the grip of Jews on that society as traders and he wanted to put an end to it. His similar arguments made him a natural leader of Germans and his rise in the political career began.

Those who write history ensure it favors them, so it is one sided. It is important to hear the other side of the story too. You like Hitler or not, it is important to hear his version of story. As I have already mentioned, this was written twenty years before the Second World War in which life of Hitler came to an end. This book do not have details of war or personal life of Hitler but is more about political ideology. If you like history or politics, this book is for you and Hitler will impress you like how he had impressed his people as an orator.

Friday, October 21, 2016

History, Religion and Analytics

For a person to be a good analyst, he needs to know his data well, the data created by history. Knowing the times the data was created helps to get the setting right. History repeats itself is an old saying. Those who do not know history take the same paths and make us believe in the saying. But there is scope for improvement for those who can analyse and take better decisions. Modern day Machine Learning programs do learn from history. With time they fine tune themselves. Since their capacity to read, memorize and synthesize data is higher than human beings they will evolve at a faster pace than human evolution. As long as we (humans) remain masters of master algorithm they would serve us well. But in essence the more granular data we get from history better are our chances to improve though we outsource the learning job to machines. Without proper study of history our understanding of empirical models will be flawed. It isn't just data analytical skills but the way we study history is critical for our success.

Stalin had said it is not the voters but those who count the votes matter. In the digital world, those who control the data have the highest power. In other words any influence on the creation of data has the power to change the direction or the trend. To influence or to control the change has been attempted in the ancient time too and it was by religions. If we look at our actions in daily lives, the way we talk, eat, dress or shop they are influenced by the culture and the social setting we live in. Religions tried to create a framework around this social setting to control the change in patterns. That framework did know that the society transforms and they associated a God to each transformation. They correlated the creation of new things with mythological God Brihma, sustainability with Vishnu and obsoleting the irrelevant as the works of Shiva. Brihma was aided by Saraswati, the Goddess of knowledge in creation of new things. Lakshmi, the Goddess of Wealth helped Vishnu to keep things going. Parvati, the evil destroyer Goddess helped Shiva to help the world move on with the transformation. All these mythological gods were creation of those who played as analysts during the times unknown to influence and control the system of evolution. Man has evolved from generation to generation, from stone-age to modern age. He used different materials and developed new tools with every passing generation to ease his work. Modern day analysts and data scientists have new tools at their disposal, like Artificial Intelligence, Machine Learning but they are attempting the same job what our ancestors did to understand the system of evolution in order to influence it. The new tools will help deepen our understanding and fare better than our forefathers. But that does not undermine the work done in the past as that was the precursor itself.

When I read articles on web about how Maths is more important than History, I do wonder if it is really so. When people argue that religions have lost the relevance, I ask myself have not they made the first attempt to create a theoretical framework for social evolution. When someone says the world is changing, I say to myself, it is just the tools.

Wednesday, October 12, 2016

Money: The zero sum game and the cycles of money distribution

Let us say, cash supply in a system in constant. Then if one person has to become richer, it will be at other people’s expense as it becomes a zero sum game. More money one person accumulates is the outflow from the rest.

But in the practical world, money supply increases every year. But inflation too catches up. Let us say money supply got increased from 100 units to 105. And also assume that inflation too went up by 5%. In such a scenario, 5 units of newly printed money helped to increase the monetary transactions but due to inflation, it’s buying power went down so there was no increase in value of money. In another words, 105 units of money has the same value of 100 units of money in the previous year. With this background, if one has to increase his or her wealth, still it would be at other’s expense. We can also say that whoever makes most of the newly created money will become richer. If one still has the same amount of money he had last year, he lost it to winner through inflation.

Now we need to explore how the money is earned. Broadly two classes are present. Majority of world’s population earns through labor, in the form of wages or salary. Other smaller segment put their capital to work. Profits or interest earned on that is their income or way to make money.

Now, it is time to introduce interest rates and wage growth rates. Every year new money is created. And if wage growth rate is more than interest rate, then the labor class gets more portion of that new money. If rates are higher than wage growth, then it is capitalists who will make more money than labor class. But that is not all, we cannot forget the impact of inflation, so we need to look at the real rates of growth.

Real Interest rate = Nominal Interest Rate – Inflation

Real Wage growth rate = Nominal wage growth rate - Inflation

These equations will decide if rich are becoming richer or the rich-poor gap is getting closed. Let us say interest rates are at 6% and inflation too is at 6% but wage growth rate is 7%, you know that capitalists could not increase their wealth in that year and the labor class made most of the newly created money. But it is not like that same all the time. Most of the times real interest rates are positive and will be higher than the real wage growth rates, that gives an advantage to capitalists. Their money works for them, throughout their lives. So you know how the system helps  rich to remain in top positions for decades unless they make some blunder mistakes losing out their wealth.

But the interesting point is, interest rates are common across market but the wage rates are not. There are many professionals (like in IT industry) whose pay checks showed higher growth than that of interest rates. They are able to reduce the gap with capitalists. Or they might become new capitalists if they learn the tricks of savings and investing. So we find many Merc’s and Audi’s on our roads and they do not belong to Tata or Birla families.

Coming to the common man, if his earning growth is better than inflation rate, he is getting ahead. If it is same, he is just catching up with the transformation. But those earning less are losing out to the winners of the race. If one wishes to get out of labor class, savings and re-investments are the keys. If one person earns a handsome salary but spends it all, he is no better than daily wage labor in the long run despite the high lifestyle he could afford in the earning years.

When you read an article of rich becoming richer, take a look at difference between interest rates and wage growth rates, you will know how the money got distributed for such an outcome. Though it is happening everyday in front of our eyes, we do not realize it and wonder what’s happening in this world. Well, nothing dramatic but very systematic.