Sunday, March 04, 2012

Women on my mind


International Women's Day (March 8th) is here again this year and the regular question which arises as always is whether it is just tokenism only, or symbolism has some importance too. My personal take is that symbolism is very important because it not just makes us ask the difficult questions about how pathetic record we have on the women's issues, but also because it ritualizes something very important. And, looking at how religions work, one can say it confidently that rituals slowly form habits, like touching your head with the book if it falls or you just accidentally touched it with your feet. So, it is definitely a good thing if we get into the habit of asking ourselves some difficult questions on the women's issues. It is probably just a drop where a flood is required to "level the field", but it is well worth it.
Along with the question of symbolism, some other issues related to womankind also come to our mind. These include, why we discriminate women (or more generically, discriminate any marginalized group), idea of equality as an ideal, role of nature or nurture in it, moral dimensions of these issues, etc. I am neither a woman nor someone who has given considerable amount of thought, energy and time to understand women’s issues. So I am just putting up my thoughts on three important aspects of women’s issues in general i.e. equality, nature v/s nurture, evolution. This is not a thorough and informed analysis of these aspects too; it is just my personal and CURRENT opinion on these issues. And yes, sorry for the regular digressions - I am just not capable of staying focused on anything.
Equality: The issue of equality is important because it comes up first in any conversation on this topic. This happens because of the existence of exploitative discrimination of women which exists almost everywhere in the world and more so in the poor families and regions with the exception of Middle East.
To say that it is a human tendency to discriminate is not a wrong statement if we were still the competing with the neanderthals. But with the complex society and science we have developed, it feels wrong to say that we haven't yet become open-minded enough to not stereotype or recognize the wrongs done by our ancestors. It is the fear of unknown or different which is typically at the root of any type of discrimination, and though everyone (I hope so) knows that knowing the unknown or open-mindedness (or curiosity) towards new and different ideas, people and everything else is the way to overcome fear and hence (hopefully) remove discrimination or exploitation. Tragedy in this case is that almost all of males live with females in our homes but most know nothing about these issues, because our cultures never let us think that women’s issues are worth that much attention.
In general Gender Equality as an issue has at the least two sides to it, first of this is the equal opportunity side (exactly speaking, the lack of it). This is definitely a highly pervasive issue of our times and has been so historically too. It is a known fact that at best women get evaluated on their performance while men get evaluated on their potential. Add the societal constraints, nurturing and expectations, and a female's dream of achieving something would mostly remain a dream only. Even the women, who do become successful, are often manlier than the men around them. Britishers described Rani Laxmi Bai as the only man they fought in what they call as the 1857 mutiny. Similar things have been said about Indira Gandhi, Golda Meyer, Margaret Thatcher and many of top female icons of current time e.g. Mayavati, Indira Nooyi, etc. So it is always a men's game and in order to win it, women have to beat men at their own game just like any other winner would have done.
It is assumed that flexi hours, telecommuting and maternity-issues, can't go along with serious business. Never will we discuss the issue of properly valuing the taking care of family as a contribution, instead of treating it like a zero-wage thankless job.
Second aspect is the silly argument similar to one put across by the reservation opposing upper caste folks, is why women get reserved seats in Metro or in colleges, jobs and politics i.e. why can't women compete with men as equals if they want to be treated equally? While reserved seats in Metro or a ladies first announcement is just a courtesy, reservation in jobs or politics is a simple means (though not the best) to move in the direction of achieving a somewhat equitable distribution of the opportunities between the two genders given the history of exploitation we have. The real change will start from homes only, when women actually become equally important decision makers in their homes regardless of whether live in cities or villages, or whichever class/caste they belong too.
Obviously there is a moral dimension of all this also, but then the liberal morals and conservative morals are so different that in a country of faith like India, we better keep that topic for a much detailed discussion some other time. Broadly I would just say that the differences between the two sexes are real and can be complementary too, so respecting the differences and making the best out of them should be our guiding or moral principle.
Speaking of differences, there is one very important one which appeals to men’s real (animal) nature i.e. women’s sexuality, and many get accused of using it to their advantage. No doubt some women take advantage of their appearance or sexuality, but then same women are also vulnerable when someone starts using force or vilify them in their communities. Irony is, men can be nasty enough to use the system to their advantage or use their physical power to coerce women, or be praised for their ruthless execution of tasks to achieve their goals or even attracting women (a big goal for them). Use of their charm by women is definitely a much more passive and humane way to achieve their objectives. Therefore, I am all in for women using their smile to make their way. Vidya Balan in Dirty Picture or Cleopatra are good icons on this front, and why forget the Mataharis of the world.
Nature v/s nurture: Are men and women genetically wired to be so different the way they are or it is more epigenetic reasons or nurturing which builds all these differences? As I see things, it is certainly a combination of both nature and nurture. There is no doubt that males are physically stronger in terms of athletic things or fighting, but women also have some advantages which show in their longer average life-spans and their ability to endure and survive labor pains or their monthly issues. It is near impossible to defend if one claims that men are more compassionate. At the same time nurture, which has created so many constraints on women- often in terms of their own mindset too, that it could possibly be blamed for all the issues in this gender debate. As more and more women are entering the workforce, the nurture or to say culture forces them to balance their family responsibilities and careers but just spending more hours working both in office and at home.
Whether masculinity as we know it, is an acquired trait or inherited one is a debatable question when you find that only the likes of India Gandhi making it big in our Men's world. But rather than worrying about its origins, I would like to focus on systemic changes which decrease the importance of masculinity in progressing as a civilization. Changing the "Nurture" at a systemic level makes sense because that's all we can do, and we have enough evidence to say that nurture can overcome the barriers of nature.
As per my limited understanding of nature, evolution and everything else, the phenomenon of Path-dependence is a very important one. Putting it in this context, just like we say that “Rome wasn't build in a day”, so will be the case of women finally getting their rightful place and power. We have such a long evolutionary and then our social history of exploiting women that we can't get rid of it a short time frame. Most probably this process will take a few generations before we as a civilization reach anywhere close to the utopia of gender equality in terms of opportunities and no exploitation. Good news is that these changes are under progress everywhere though at different paces. In rural areas we have many women empowerment programs trying to do some good though TVs might be more effective. Without these also, we had (rare) women resort to taking charge of the family when the husband has been incapacitated by hard-luck or bad habits. Urban females are definitely doing relatively better as their opinions do matter in their homes in varying degrees though not as much as would be their fair share for their contribution or consequences to them.
The changes required could be mandated through laws or social norms but the hard reality is that those ideas won't derive any legitimacy and hence acceptance among the majority unless it becomes an evolutionary inevitability for our society as a whole. We are now somewhat of a democratic society because of the commitment of our country Founding fathers towards the ideal of democracy. This indicates that today's lawmakers and reformers can certainly provide the guiding direction if we want a world where our daughters get their rightful place. But the difference between authors of our constitution and our lawmakers is that while the former had both luxury and courage to be bold on social issues, the later have both too much of populist pressures and a total lack of courage to be bold on social issues. This is assuming that lawmakers too believe in equality of opportunity for both the genders, which is not true of at least a significant number of them, if not majority. On most fronts e.g. technology, this translates into policies lagging behind the reality whereas ideally it should be otherwise if we want to really realize the future we want and not reach some alternate future by accident as it has been almost always throughout the history.
Evolutionary case: Having mentioned the word evolution above, it seems right that we discuss this aspect. As per my layman like understanding, males dominate because most of the struggles of survival in our evolutionary and social history favored physical strength a lot. At the same time factors contributing to stability were always underplayed because of the perception of equating physical strength and its derivatives as bold and praiseworthy. Childcare is definitely not valued as much as it should be and maybe that would be the case till the world population keeps on growing. Achieving economic growth from having more people does have some correlation with lack of women's empowerment because it forces us to price childcare responsibilities as low as possible. Same holds true of other intangibles women typically provide for too.
Anyway, the point I want make by bringing in evolution is that we as a society are becoming much more feminine at an accelerating pace. Everywhere we are seeing working systems of law and order, and democratic institutions come-up, and economy is being driven more and more by knowledge, not the control of resources. More knowledge means not just increasing complexity but also increasingly co-operative ventures and systems. All these things reduce the importance of physical strength and I am quite sure that if not earlier, by the end of this century we will have machines for doing everything which requires physical strength or anything mundane or repetitive. Medical sciences would have progressed to the level where use of artificial wombs would be the norm and 80 might as well be called as the middle age (this might be a a slight exaggeration but I guess you are getting my point). Nature of work in the future would be very different and humans will have only creative things to do only for their livelihoods. It means if a waiter can't charm and keep her/his customers engaged every time better than a machine, they wouldn't be needed. Entertainment (sports, restaurant and other experience based offerings included) and research would probably the only broad professions left for humans. This also means that the nature of work as we know from our industrial age experience will change drastically. Work would become much more sporadic in nature for a large fraction of the population. Rule of law would too become much more pervasive, in fact evidence is abundant that violence is reducing in all forms almost everywhere on the planet and rule of law is gaining more acceptance and legitimacy.
With so much more value given to the human life and creative abilities than to the material stuff we own, childcare and other family responsibilities will both get distributed well among genders and valued rightfully. Given the pace we are moving towards such a society where physical strength will become almost irrelevant, I don't see men as a group being able to adapt fast enough. At the same time, women both because of their inherited traits and exploitative nurturing effect of our cultures so far have adapted to, or are normally stereotyped as more compassionate, cooperating, disciplined and sincere towards work and able to manage complexities better or balance work, family and other interests much better than men. All these traits are a huge competitive and hence evolutionary advantage which men in general have not adapted as of yet. For the advocates of attributing females being subservient to nature or genes, this is more scary scenario for then it is for the nurture advocates as it means men would take centuries to adapt (even with the availability of medical/genetic engineering options for doing so) to the new environment. Add to this the charm of a women’s smile and men certainly don’t stand much chance.
To put it simply, in future women would be the dominant decision makers. If we accept the above mentioned future is as a realistic or a highly likely scenario then we will also have to accept that nations which make lives better and fairer for women would prosper and be competitive in the future we have envisaged. So it is in the real interest of nations of take care of their women if they want a good future and the nations which don’t realize or act soon will have to pay later.
I am not quite hopeful about India doing anywhere close to enough on this front even when we are so much behind the other big and important countries. But still there are some elements of hope e.g. women in Computer Science is not an uncommon sight in India, maybe because on one hand we like the fact that it is not manual labor while on the other hand our society doesn’t think that women are by nature not good at math and sciences. This translates into saying that creative thinking is not an exclusively male domain in our view. Probably this is something which would play to our advantage, but only if we are able welcome the rise of women in all other senses too. Spreading this message is important, because the case I want to make is that sooner we accept this better it would be for us as a nation, for it is an evolutionary inevitability or the destiny.

Tuesday, February 21, 2012

Interesting Readings: 22-2-2012


Let's start light: Interesting Bookcase designs :)


New Ideas in Online Retail of Apparels - technology & customization


Article on rise in power of money in american elections, especially after the Citizen's United verdict of Supreme court #PAC or political action committees


Efforts to make a really free and democratic internet. Also, shows how internet's current (business) structure of doing things through ISPs has made it easy to control


Al Gore's manifesto for sustainable capitalism


Good and detailed analysis of Obama as President


Good article for some ideas on the right balance between incremental and disruptive innovation


Clayton Christensen on how new financial tools destroy innovation


Impact of famous blogs on papers published in economics. Super star effect


Umair Haque on what should we do in life. Though written in reference to Davos WEF. 10 things


Interesting ideas on how to redefine education in developing countries

Paul Romer's speech - IMF. On economic crisis


Umair Haque's valentine's day post on love - generically on relationships - slightly philosophical


Facebook's ranking algorithms - Edgerank and Graphrank described


Great piece on explosion in human population and a sick (though maybe true) argument on how income inequality is just another struggle for survival in the evolutionary sense


Seriously Rapid Source Review- tool to find live-reporting or eye witness sources on Twitter


US Foreign Policy, Iran, methods to increase utility of prediction excercises


Tibetan self-immolations & extreme Chinese security in Aba


Note on the Reality of Tax-progressivity in USA


Ideas and quality of debate in US of 1912 on income inequality as an evil and against democracy


Bashing FED and hailing Ayn Rand atlas shrugged style


We humans have two parallel sets of moral-beliefs to help us make the decisions


Interesting finding: Specialized skills force people to vote for welfare state as they have already made a risky investment in acquiring such skills - folks with generic skills go against welfare state. School and education systems provide and shape such input into labor-force and political-economy


How people become experts in anything - deliberate practice


How experts/winners can sustain superior performance

Mathematical equations which describe most of physics


In future both education and work would become more and more informal, and look like a coffee-shop


Risks and injustice because memories are fuzzy. Also, how new memories can even be created


On drugs that could enhance or boost memory


Learning disability/dyslexia means a person can't focus for long but there is trade-off and it may mean such people can detect abnormalities in confusing patterns faster


How Chinese property ownership concept got started in 1978 in a small village, and then China forever


Speech by Christina Romer of Berkeley on financial crisis


Great post for data-visualizations freaks


Why privatization of public goods may not be a good idea


Charts shown to US Senate on income inequality in USA


Ideas for good business practices in retail sector


Open Government Initiative by White House to put most data in public domain


Interesting infographic comparing Africa's size to most of the important countries


Joseph Nye on Women's role in Future - building up from Steven Pinker's book The Better Angels of Our Nature


Article on how conservatives are genetically different from liberals


To find new and interesting books to read


Technology progress has been superexponential in last 2 centuries


Economist's article on how scientists are trying to understand why the universe is expanding

Wednesday, February 08, 2012

Fair Profit Company: Making Case for a New Type of Entity for Social Enterprises



Increasingly a lot of dissent has been rising towards Capitalism that the system doesn’t contribute enough to the welfare of society at large. The reason behind this is that businesses are viewed (most often rightly) as the primary cause for social, environmental, and economic problems which different societies are facing. To put it simply, businesses and businessmen are now being widely perceived to be prospering at the expense of society at large.

The fiduciary duty of companies to maximize shareholder value only at the expense of everything else (otherwise they could be held legally liable) and the short term outlook followed by the companies are cited as the underlying causes for this loss of legitimacy for the Capitalism as a system. At the same time, governments and civil society organizations also try to solve the problems faced by the society at the expense of business. The trade-off between economic efficiency and welfare of the society at large has been taken as given, and guides the interventions by the government and civil society actors.

Here is a simplified take on what happens:
· Capitalism was the outcome of an attempt to create a system for efficient allocation of capital in the projects/ideas with highest possible returns.

· This lead to race among the investors to increase their returns on capital, which in turn demanded faster returns too. This quest for ever increasing and faster return got institutionalized with the advent of stock markets and VC funds.

· The narrow focus of investors in the return on their capital alone, meant that they and the businesses they had invested in started ignoring the broader influences which determine their success in long-term.

· This resulted in negative externalities for the environment and society, costs of which they were not supposed to pay and hence with economic growth the costs of these externalities have started weighing more day-by-day due to accumulation effects.

· One of the core strength of Capitalism is competition for promoting innovations to keep an economy vibrant. But the excessively myopic pursuit of returns on capital started meaning that companies needed to maintain their competitive advantage

· This in turn leads to big companies trying to make sure that competition dies out by using their money and other advantages to deter the entry of new players in the industry, which means decrease in innovation.

It is established that private ownership and efficient allocation of capital by markets i.e. Capitalism as we know today, is probably the most powerful, flexible, and robust system for growing society’s prosperity. At the same time, we know that the economy is just an aspect/part (probably the most vital one) of the society and the purpose of every society/ civilization is the welfare of its citizens. So economy and its constituents i.e. businesses should also serve that greater cause. But as interests of Capitalism are increasingly getting pitted against the broader interests of our society, Capitalism has to evolve to meet all the objectives of the society. Fortunately, this evolution of the role business in society has been happening albeit slowly over time, but the big push has come from increasingly growing number of social enterprises.

Rise of Social Enterprises
Social enterprises or socially responsible businesses try to solve this problem of negative externalities by internalizing the costs associated with them. This mean, shareholder value maximization is a part of the broader agenda for such enterprises. Their agenda could be to reduce environmental footprint, increase the welfare of the local communities, empowerment or focus on marginalized sections of the society, and in general a longer term outlook for the business ecosystem as a whole in the industry and locality they are working in. This means long term welfare and interests of all stakeholders in the business like consumers, employees, community, suppliers or other stake holders from the value chain has to be kept in mind while making decisions, and not just the interests of investors/shareholders.

Rise of social enterprises will go down as the characteristic transformation of our times in the economic history to be written in future. Governments and other influential bodies supporting this transition in the business is conducted would be hailed as the pioneers. The reckless pursuit of shareholder value maximization in turn got translated into making of GDP and the growth rates as the only criteria for measuring development of societies and countries. Other dimensions of development of society just got ignored, which has given rise to or increased the extent of many of our societal problems. Therefore the renewal or evolution of capitalism as a more inclusive system, would serve as a systemic intervention of bottom-up nature to solve the problems we have in our world today by promoting a nurturing environment for the innovations for this purpose.

Problems
Various structures and models are being tried by social entrepreneurs for achieving a balanced growth along with the welfare of public or fulfillment of other social goals like livelihoods security, health, education, empowerment of marginalized, etc. Some of these efforts have been highly successful but on the whole social enterprise ecosystem is not in the shape it should be to make it possible for new social enterprises/innovations to get into in the market and scale-up fast enough. While there are many dimensions of this ecosystem that require attention and support from the government, we would focus here on three very specific and heavily inter-related aspects.

1. Our current laws don’t provide for an alternative to pursue the society’s interests as a whole through sustainable models or mission driven businesses. Company law doesn’t provide for scope to pursue a second or third bottom-line beyond profits, though some entrepreneurs have tinkered with existing structure of a company to suit the needs of socially responsible business. Many new social enterprises get torn between their social commitment for which the business was started and their fiduciary duty.

2. Philanthropic donations, government programs and aid-money have tried to address the challenges of human development with a mixed record so far, and social enterprises are also a similar attempt which many believe to be having a great potential. For investors and anyone else to be assured that social returns expected on their investment are being reaped, a standardized system of measuring the social impact is not in place. So far people use proxies for the impact which can’t exactly be compared across different projects/ideas because of the differences in the methodology used and things measured. Profits or financial returns on capital are easy to measure and compare. A well developed social enterprise ecosystem would also require an equally good societal impact measurement system to compare different types of impact. Impact measurement methods used by development projects could definitely be of help here. Existence of a reliable standardized impact measurement system would also enable us to differentiate between false propaganda/claims by some corporations v/s the real impact.

3. Lack of reliable impact measurement keeps socially responsible investors suspicious and low on confidence to make investment decisions. This causes a slow investment rate which combined with lack of liquidity of such investments becomes a huge constraint for the social enterprises.

Solutions
In order to solve the problems mentioned in above sections, many jurisdictions have been adopting different methods. Based on the ideas implemented internationally to tackle these problems, we recommend following strategies:

New legal structure: Allowing for new type of entities (let’s say Fair Profit Company or FPC) to be registered in which shareholder primacy gets diluted in favor of public welfare in general, with increased transparency and accountability is definitely going to encourage and support mission driven entrepreneurs. Such a legal structure would allow for shareholder value maximization after ensuring that the social mission of such a FPC doesn’t get compromised.

Here is a representative (and tentative) list of features of such a legal structure:
1. FPCs would give first priority to the explicit commitments to community welfare objectives mentioned in their charter or Memorandum of Association.
2. Cost of negative externalities created due to the business will get accounted into the financial statements of FPC to tackle these externalities by internalizing them.
3. Minimum fraction of ownership to be given to different stakeholders would get mandated e.g. 10% to blue-collar employees, 10% to the suppliers, 10-14% to the communities where FPC markets its offerings and 15% to the communities where the FPC is located.
4. Good corporate governance practices would be enforced with high penalty clauses
5. Explicit commitment to pursue long-term outlook has to be made in the charter and executives would be given flexibility and decision making power to achieve the goals set by shareholders
6. Commitment that fixed fraction of the profit (upto 25% max) will always get distributed as dividends, unless ruled otherwise in the General Body Meeting in that fiscal year
7. These corporations can take in grants with tax benefits to the donors, just as non-profits are allowed to accept grants
8. Foreign investments could easily be made without any restrictions and need of approvals, both in the form equity or debt i.e. easy FDI and ECB allowed through Direct route
9. Extra reporting requirements would be there to both ensure transparency and accountability, and to monitor progress on the social mission of the FPC

10. All tax liabilities for FPCs would be calculated just as it is done for the other companies registered under the Companies Act of India, 1956
11. Cost of measuring social impact can be reduced from the tax liability of an FPC within the permissible limits
12. Heavy penalty for fraudsters not fulfilling the community welfare objectives of FPC or compromising its social mission
13. To increase labor availability for FPCs, deduction in the income tax liability for the employees of FPCs could be provided
14. No license required or significantly eased requirements for getting license to provide goods and services which are highly regulated, including the provision of public goods i.e. power, water, education, health, security, mining, communication, public infrastructure, etc

Impact measurement standards: Setting up a government recognized Standard for impact measurement calculations in the Indian context is a must to be able accept the reports submitted by the FPCs for the purpose of monitoring progress on the social mission of FPCs.

FPC Impact Rating system based on both the absolute impact metrics, peer-rating by other FPCs, NGOs and the community, and/or standardized social audits should be given recognition by the government. Such a rating system would enable everyone to compare the performance of FPCs with each other.

FPC Stock Exchanges: To provide liquidity to the shareholders and FPCs an opportunity to raise capital from public, government should facilitate setting up of new stock exchanges where only FPCs of all sizes can be listed. Spot exchanges or share trading sessions for the trading of shares amongst the community members, employees, suppliers etc. should be organized regularly in the location where FPCs are located. FPC Impact Rating system would serve the purpose of providing the information required by such buyers and sellers for getting into the trade.