Ten interesting things we read this week

At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, ranging from zeitgeist to futuristic, and encapsulate them in our weekly ‘Ten Interesting Things’ product. Some of the most fascinating topics covered this week are: Investment (What millennials want from their personal finances), Technology (Oil is the new data; An epidemic of AI misinformation), Business (GM crops like Golden Rice will save the lives of hundreds of thousands of children), and India (Nine women scientists who are doing phenomenal work;     Why is India staring at a middle –income trap).

Here are the ten most interesting pieces that we read this week, ended December 20, 2019.

1) Christmas — a time for family rows over money [Source: Financial Times]
This piece talks about the importance of financial planning. After Golda Bechal died aged 88 in 2004, her five nieces and nephews were shocked to find out she had left her £10m fortune to a married couple who ran a Chinese restaurant in Essex. The nieces and nephews contested the will on the basis that Golda was not mentally capable of understanding what she was doing when she made it in 1994 and that they, not the Mans, were entitled to her substantial estate. Despite the High Court upholding the will and dismissing the challenge by the relatives, they appealed against the decision and settled out of court for a much smaller share of the estate.

Money — or to be more precise, what money represents — is a major cause of family disputes, conflict and relationship breakdowns. Coming together at Christmas can unfortunately provide the perfect conditions for a blistering family row over money. Financial planning is about building and preserving wealth. In his book Family Wealth: Keeping it in the Family, James Hughes argues that in addition to a family’s wealth or financial capital, there is human capital, intellectual capital, social capital and at the heart of them all, legacy capital, providing resilience for the family and their enterprise.

If your family can’t cultivate a culture of communication and trust around its common purpose, there’s a danger your children and grandchildren will only value what their money can buy. Families who manage the transition successfully have good financial and estate planning like everyone else, but they also have this third element, through which they prepare their heirs for the entire legacy they will receive.
 
2) Demographic dream is collapsing rapidly [Source: Livemint]
Everyone thought that India would take over China, in terms of growth. But, the Indian economy is in a tailspin. The author of this piece had attended a mutual fund event wherein there was a slide on India’s Demographic Dividend (IDD). The demographic dividend of a country is essentially a period of two-three decades when the birth rates go down and this leads to a situation wherein the workforce of the country is growing at a faster rate in comparison to its population. As these individuals enter the workforce, find work, earn money and spend it, the economy is expected to do well and grow at a faster pace than it has in the past. This slide indicated that India would grow fast, as fast as China, if not faster. But this dream is collapsing due to 1) rise of debt, and 2) gloomy investment scene.

What has been happening with consumption is broadly mirrored by the decline in savings in the economy. The net financial savings of households (their fixed deposits, insurance policies, mutual funds, small savings, etc., minus their financial liabilities) has been falling over the years. The question is why have people been spending a greater proportion of their income and borrowing to finance consumption. Also, income-tax data shows us that average salaries have gone up by a mere 4.5% per annum between assessment year 2012-13 and assessment year 2018-19 (income earned in 2017-18). Hence, once we adjust this for inflation, the income in real terms for the salaried class has barely grown. Growth in rural income has also slowed rapidly.

Investment is the key driver of growth and consumption. The logic is fairly straightforward. Investment creates jobs. Jobs provide income to people. People spend this money, and this boosts consumption and helps other people earn an income as well. These earners subsequently spend their money and provide a further fillip to consumption. So, the cycle works. In 2010-2011, investment projects worth ₹4.04 trillion had been dropped. In 2018-19, projects worth ₹20.74 trillion were dropped. During the first six months of 2019-20, projects worth ₹7.89 trillion have already been dropped. It is safe to say now that India’s demographic dividend is collapsing. So, what is the need of the hour? As economic history clearly suggests, no nation has gone from a developing one to a developed country without making gains on the exports front.   

3) The African farmers are taking on big chocolate companies [Source: Financial Times]
Chocolates are everyone’s favourite, but there’s a lot that goes into making chocolates and its products that we get in the market today. But, where does the raw material comes from? It’s mostly West Africa. Today, between them, Ghana and Ivory Coast produce nearly two-thirds of the global supply of cocoa, the main ingredient in a chocolate industry worth more than $100bn a year in sales. While the chocolate companies like Hershey’s, Mars, and Nestle make billions selling chocolates, the cocoa farmers hardly get anything for their produce.

After years of talk, African governments have decided to act to improve their leverage in the chocolate industry. In July, Ghana and Ivory Coast unilaterally announced a fixed premium of $400 a tonne over the benchmark futures price from October 2020. “If you look at Opec, they are only controlling about 30 to 40 per cent of the global oil supply and they control prices,” says Mahamudu Bawumia, Ghana’s vice-president, referring to the oil cartel. “If they have Opec, we can have Copec.” But will this be sufficient? Or will this plan work? Some, including Barry Callebaut, a Switzerland-based chocolate maker that is the world’s biggest cocoa buyer, have cautiously welcomed the $400 premium.

Barry Callebaut has even launched a “Forever Chocolate” initiative, which aims to hit four audited targets by 2025: lift 500,000 farmers out of poverty, reduce child labour to zero, become carbon- and forest-positive, and have fully sustainable ingredients. But there are others who disagree. Michiel Hendriksz, a former cocoa executive at commodities trader Archer Daniels Midland, says the attempt by Ghana and Ivory Coast to impose the $400 premium will fail. The premium, known as the “living income differential” or LID, is intended to increase farm-gate prices to levels high enough that farmers can send their children to school, eat healthily and pay medical bills.

4) Why children find weird television so mesmerizing? [Source: BBC]
You learn from every mode of communication – be it TV, print, mobile, etc. And when it comes to children, you can easily find out what they love and what they don’t. Shows that you watch on television, your children won’t like. Also, they shows or cartoons that love watching, you will find them boring. Young children’s minds process information differently from adults’ – what’s weird for us is often highly engaging for them. A better understanding of these differences could help create healthier, more engaging television programmes, boosting children’s understanding of the world as well as keeping them entertained.

Moon and Me, it turns out, is a product of research, informed by a collaboration between the co-creator of the hit show Teletubbies – Andrew Davenport – and Dylan Yamada-Rice, a researcher specialising in children’s education and storytelling, to study how children interact with toy houses. “When people objected to Teletubbies, they used to say: ‘Look, Teletubbies understand babies, and babies understand Teletubbies. If you’re watching Teletubbies without a child, you are only getting one half of the conversation.’"

“If you approach children through their own culture, rather than imposing your culture on them, they are much more motivated and more interested,” says Davenport. Also, here’s the general rule: before the age of two, kids won’t get much out of TV – unless an adult is sitting with them, helping them to understand it. From age two or three until they are five, children can follow simple plots, but not complex moral lessons, such as a bully getting his or her come-uppance at the end. “All television content is teaching something. The question is what is it teaching?” Joan Ganz Cooney, the co-creator of Sesame Street, used to say. A lot of content still portrays unhelpful stereotypes about, say, what girls and boys can do, or features violence. It is the parent’s job to guide their children.  

5) Time to make some money: the business career of Rudy Giuliani [Source: Financial Times]
Time Magazine’s “Man of the Year” for 2001 seemed destined for the White House. But Mr. Giuliani had a weak point: his bank account was constrained by a career in public service and a costly divorce. It was time to make some money. Mr. Giuliani did so with zest. He opened a consultancy, Giuliani Partners, that attempted to spin cash from his reputation as the ultimate crisis manager and turnround expert — the executive who not only stabilised New York City after the attacks but had also previously managed to tame its crime and clean up its streets. They had some big clients including Delta Air Lines and Aon, among others.

Mr. Giuliani, famed for taking on the New York mafia, is himself now under investigation, according to several reports, with federal prosecutors from the Southern District of New York — the office he once led — scrutinising his past business dealings. Mr. Giuliani has denied any wrongdoing. Also, there were many cases against the company. Giuliani Partners attracted negative headlines for a $2m contract it signed to advise a start-up, Applied DNA Sciences, which was developing anti-counterfeiting technology. Its main backer had previously pleaded guilty to wire fraud. The company had no revenue at the time but its over-the-counter shares took off on the news of its association with Mr. Giuliani.

For the Giulianis, the presidential campaign was supposed to be a crowning moment. Instead, they crashed. After finishing a desultory third in the Florida primary, the state on which he had pinned his hopes, Mr. Giuliani ended up dropping out of the Republican contest in January 2008. Addressing his supporters, a wistful Mr. Giuliani spoke of his heritage as the grandson of immigrants, and called for a more inclusive Republican party: “We have to reach out to all Americans — that’s the way to break through the red state-blue state divide.”

6) The artistry of free speech in South Asia: Politics is inescapable but it isn’t the end-all of art [Source: scroll.in] 
The author of this piece says that she has taken her freedom as an Indian, as a citizen of India, for granted. This assumption of a baseline of inalienable liberty has been tempered for sure, with the knowledge of the many ways in which her freedom is both enabled and constrained by her gender, religion, caste, class and so on. Working for so many years on Ambedkar has inevitably qualified her ideas of fundamental freedom, equality and justice forever, given the hierarchical and unequal nature of India’s caste society.

As she became a professional scholar of South Asian history, she realised more and more how recent, fragile and contingent an artefact freedom is in all of our cultures on the subcontinent. She says that we need a much deeper enquiry into freedom, both political and existential. A more fundamental exploration of the purposes and engines of art in our time. And more than anything, a reconfiguration of language such that we may speak of what is unspeakable.

She says that incidents pertaining to free speech have forced her to think again what it is that we do when we write, when we sing, when we paint, when we take a photograph or make a film. What do we do for ourselves and what do we do for the society in which we live.

7) Crabs are richer than humans! [Source: journals.elsevier.com]
Can an animal be rich? Not probably, but  a new study published in the journal Physica A, has compared the distribution of human wealth and the wealth of hermit crabs and found surprising similarities. “The close similarity between wealth distributions in humans and hermit crabs suggests that the fundamental forces shaping inequality in both species are similar and that we could carry out experiments on the crabs to help us identify those forces” explains Ivan Chase, of Stony Brook University in New York, USA.

“For our data analysis, we compared the statistical distribution of the weights of shells occupied by the crabs with the common form of wealth distributions in human societies,” Chase says. “We found that the two distributions were remarkably similar in form.” The team found the amount of inequality in the crabs resembled the level in small-scale human societies like hunter-gatherers and ancient farming communities in the Middle East. However, the crabs had less wealth inequality than that found today in nations like the United States and Japan.

“Our work suggests that investigations using hermit crabs might give us some insight into the basic factors that generate inequality in material resources across species,” Chase says. “Knowledge gained in this way could help us to understand and mediate human inequality.” Chase decided to study the crabs because “these crabs are active and, curious, and although it’s not very scientific to say so, I think they’re cute,” he says. On top of this, they help to simplify things. “Researchers rarely investigate the simpler social systems in animals as a way to begin understanding the more complex ones in humans,” notes Chase. “I believe that looking at these simple social systems can help us discover basic principles of social organisation.”
 
8) How to tell the difference between persuasion and manipulation [Source: Aeon]
We are constantly subject to attempts at manipulation. Here are just a few examples. There is ‘gaslighting’, which involves encouraging someone to doubt her own judgment and to rely on the manipulator’s advice instead. Guilt trips make someone feel excessively guilty about failing to do what the manipulator wants her to do. Charm offensives and peer pressure induce someone to care so much about the manipulator’s approval that she will do as the manipulator wishes. Advertising manipulates when it encourages the audience to form untrue beliefs, as when we are told to believe that fried chicken is a health food, or faulty associations, as when Marlboro cigarettes are tied to the rugged vigour of the Marlboro Man. Phishing and other scams manipulate their victims through a combination of deception and playing on emotions such as greed, fear or sympathy.

Perhaps manipulation is wrong because it harms the person being manipulated. But manipulation is not always harmful. Suppose that Amy just left an abusive-yet-faithful partner, but in a moment of weakness she is tempted to go back to him. Now imagine that Amy’s friends employ the same techniques that Iago used on Othello. They manipulate Amy into (falsely) believing – and being outraged – that her ex-partner was not only abusive, but unfaithful as well. If this manipulation prevents Amy from reconciling, she might be better off than she would have been had her friends not manipulated her. It appears, then, that whether an influence is manipulative depends on how it is being used.

It is endemic to the human condition that we influence each other in all sorts of ways besides pure rational persuasion. Sometimes, these influences improve the other person’s decision-making situation by leading her to believe, doubt, feel or pay attention to the right things; sometimes, they degrade decision-making by leading her to believe, doubt, feel or pay attention to the wrong things. But manipulation involves deliberately using such influences to hamper a person’s ability to make the right decision – that is the essential immorality of manipulation. This way of thinking about manipulation tells us something about how to recognise it. What matters in identifying manipulation is not what kind of influence is being used, but whether the influence is being used to put the other person into a better or a worse position to make a decision.

9) How do we rescue human rights from rhetoric? [Source: EPW engage]
Human rights can be seen as a discourse of public persuasion that brings forth sociopolitical recognition, and normative formulations of the subject as a rights-bearer. In the modern world, states have had to fight to preserve the interests of an interdependent, international “civil society that transcends states” (but is imperative to a well-functioning global order), against non-state actors that pose a threat to it. The state is conceived as an entity that both guarantees and is the subject of human rights.  But underlying this tenet is the belief that the state is a behemoth that, if unchecked, can prey upon and diminish human freedoms. The conventional international human rights law perspective, thus, envisages the state as the “classic savage.”

Numerous examples of how the human rights discourse is used reflects a broader sense of “ethical rights,” rather than strictly legal rights. Amartya Sen argues that in case the government of a state is accused of human rights violations, and it cannot adequately defend itself by claiming the absence of any legal protection for those rights in its political establishment, it can be held accountable to fulfil anyway the respective human rights, even when rules for their preservation are not strictly established in law.

The human rights project is primarily, if not essentially, a political endeavour, and in order for it to triumph, it must be “moored in the cultures of all peoples”. A great tool for politics is rhetoric, and the analysis of rhetoric can supply a great deal of information about the characteristics and limitations of the cause it serves. The human rights model must desert the metaphors of the savage, the victim and the saviour to make way for a genuine global discourse on rights. In the final analysis, human rights theory must be rooted in internationalism, and be responsive to diverse cultures to be better equipped to deal with the inequities of the international order.

10) People turning 65 will not retire quietly into the background [Source: The Economist]
The year 2020 will mark the beginning of the decade of the yold, or the “young old”, as the Japanese call people aged between 65 and 75. One might therefore expect peak retirement for baby-boomers in the coming years—except that they are not retiring. By continuing to work, and staying socially engaged, the boomers, in their new guise as the young old, will change the world, as they have done several times before at different stages of their lives.

There will be 134m 65- to 74-year-olds in rich countries in 2020 (11% of the population), up from 99m (8%) in 2000. That is the fastest rate of growth of any large age group. Health worsens with age, but the yold are resisting the decline better than most: of the 3.7 years of increased life expectancy in rich countries between 2000 and 2015, says the World Health Organisation, 3.2 years were enjoyed in good health. The yold are busier, too. In 2016 just over a fifth of people aged 65-69 were in work in rich countries, a figure that is rising fast.

In short, the yold are not just any group of old people. They are challenging the traditional expectations of the retired as people who wear slippers and look after the grandchildren. That will disrupt consumer, service and financial markets. The rise of the yold will be a boon to themselves, to economies and to societies. Government policies will have to change, too. The retirement age in many rich countries is still below the age to which many people want to work.