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 Sports (Pain and passion of gymnast Dipa Karmakar), Economics (Isn’t it time Finance stops hogging GDP measurement?), Internet (How much of the Internet is fake?), Lifestyle (Do you suffer from ‘buy-side personality disorder?), Technology (a podcast on the infamous Y2K) and Politics (Struggle for India’s soul) among others.

Here are the ten most interesting pieces that we read this week, ended January 04, 2019.

1) The pain and passion of Dipa Karmakar [Source: Livemint]
Whoever saw Dipa Karmakar perform ‘Produnova’ at the 2016 Rio Olympics in August, 2016 was surely stunned by her performance. Her latest book, Dipa Karmakar: The Small Wonder, co-authored by Nandi and sports journalists Digvijay Singh Deo and Vimal Mohan, throws light on her struggle and how she made it to the top. The book is a gripping account of her journey from the day she entered Agartala’s Vivekananda Byamagar, a fabled single-storey sporting club with an asbestos roof, 20 years ago to becoming the first Indian gymnast to qualify for the Olympics.

Karmakar came fourth at the 2016 Olympics, outperforming many of the world’s best gymnasts, but, everyone wanted to know how she felt about missing a medal. “It was a personal triumph but not the one India wanted,” she says. Headlines and introductions such as “Dipa Karmakar has just fallen short of a heroic performance” hurt every time she read or heard them. She only lost her cool when a journalist asked her why she didn’t do two Produnovas as it would have upped her score and ensured a medal. “I glared at him and asked him if he knew anything about gymnastics,” Karmakar says.

The book also talks about clueless Indians who don’t know where Tripura is located, and many of them have no knowledge of gymnastics as a sport. Karmakar also describes one recurring type of interaction in Delhi’s markets, where she was asked whether she is a wrestler or boxer. Aside from the anecdotes and the ringside view of Karmakar’s mind at the Olympics, the book is important because the story of Dipa Karmakar’s sporting success is the story of every Indian athlete who has made it in the international arena despite the odds. 

2) Isn’t it time Finance stops hogging GDP measurement? [Source: Institute for New Economic Thinking]
U.S. GDP accounting underestimates intangible capital, overstates financial capital, and is all but oblivious to the erosion of human and social capital. A serious growth slowdown is coming, says Peter Temin, the Elisha Gray II Professor Emeritus of Economics at the Massachusetts Institute of Technology (MIT). He warns that growth of financial activity and efforts of economists to fit finance into our measurement of national product and of economic growth fail to see that the United States is consuming its capital stock now and will suffer later. It’s like killing the family cow to have a steak dinner.

This disconnect, the article says, infects the calculation of economic growth in the US and other countries too. More and more of GDP is composed of services, which also have been called intangibles. It is hard to estimate the output of the financial sector, for example, so it is measured by its inputs. Modern growth theory started with two papers by Robert M. Solow in the late 1950s. The first showed it was possible to create a stable model of economic growth using a Keynesian model of investment and capital. The second showed that this model failed to explain most of American growth in the first half of the 20th century. This model was expanded by adding human capital, social capital, financial capital, etc. The first measured the effect of education on productivity. The second was to add social capital. The third addition was added by assuming that wealth equals physical capital, that is, financial capital is indistinguishable from physical assets.

The author, in a detailed paper on the topic, reviews the accounting methods used to compile investment data to understand how these other forms of capital behave in an economy that has changed markedly since the 1950s. He concludes that current accounting of growth in GDP fails to include the kind of investment that generates these other forms of capital. Temin’s thesis points to three implications. “First, short-run growth as currently calculated bears more relation to short-run Keynesian analysis than to what we know about long-run economic growth. Second, financial capital increases inequality more than it generates growth for the entire economy. Third, we are now allowing human and social capital to depreciate, auguring ill for future economic growth in the United States.”

3) “Surviving Y2K,” a podcast that mines the lessons of New Year’s Eve [Source: New Yorker]
In the Surviving Y2K podcast series, Dan Taberski, a director, writer and producer based in New York City, gives us stories from the most dramatic, and anticlimactic, New Year’s Eve of 1999, when all four digits turned over, portending the unknown—and, people thought, the so-called Y2K bug. The first episode (Millennium Approaches) is about the Y2K bug and how it started. Y2K bug is an existential computing flaw that was supposedly poised to threaten society when the clock hit midnight on December 31, 1999.

Many expected the bug to cause digital calamity; some expected a religious Second Coming or “Leftovers”-type situation; some felt their personal goings on—falling in and out of love, having a baby, coming out—become freighted with the drama of the moment. Taberski takes us back to the turn of the millennium to meet the people for whom it was anything but a joke — computer coders, conspiracy theorists, survivalists, and true believers — as they each face their own version of the apocalypse.

Taberski and producer Henry Molofsky do all right with the gumshoe stuff, spotlighting a few truly interesting characters that embody differing views on what actually happened: Some believed the bug was a scam and never existed, others believed this was an example of a crisis averted through collective action. In truth, Surviving Y2K isn’t just a story about the end of the world. It’s also a story about the end of many personal worlds.

4) Rovaniemi: The town that sold Christmas [Source: Financial Times]
Everyone has dreamt of meeting Santa Claus in their childhood days, but this place in Finland is the place to visit if you wish to relish those fond memories. The author of this piece, Toby Skinner, went to Rovaniemi to understand why Santa landed here in the first place. Last year, close to 580,000 visitors flew into Rovaniemi (pop. 62,667), almost double the number in 2010. Much of that growth has been driven by Asian visitors, especially from China. More than a million annual visitors are expected in Rovaniemi by 2022.

Sanna Kärkkäinen the managing director of Visit Rovaniemi says that the starting point for Santa tourism in Rovaniemi came in 1950, when Eleanor Roosevelt decided to visit this logging and mining town that was being rebuilt with the help of Finnish architect Alvar Aalto. Wanting to create a winter wonderland for the former first lady, the town hastily built a cosy log cabin on the line of the Arctic Circle, east of town, in what would become the Santa Claus Village. “There was nothing there before that,” says Kärkkäinen. “Rovaniemi wasn’t a tourist destination, and no one travelled to meet Santa.”

Even though St. Nicholas, the third-century saint that inspired Santa Claus, lived in Turkey, an illustration in Harper’s Weekly magazine in 1866 is credited with establishing Santa’s home as the North Pole. Rovaniemi also receives a flood of letters from around the world (apparently any addressed to “Santa Claus, Lapland” will arrive here, though most people find the full address via Google). A board shows where most of this year’s 500,000-plus letters have come from: China is in first place, then Poland, followed by Italy, the UK and Japan. If you wish to see the Santa and his elves, you know where to go!

5) Do you suffer from 'buy-side personality disorder'? [Source: efinancial careers]
This piece throws light on an occupational hazard, 'Buy-Side Personality Disorder' or BSPD. As a syndrome, BSPD has a fairly obvious set of root causes – overwork, stress and salespeople. To work in the modern asset management industry is to spend long days in the thankless task of trying to outperform ever-more efficient markets. In the process, it becomes incumbent upon practitioners to give up on any real prospect of a social life outside of work. People in the Finance industry have always tended to rely upon the office for socialization. 

Today’s high-achieving buy-side professional ends up being someone who has surprisingly little social contact with anyone except sell-side brokers. There’s nothing wrong, but they are sell-side brokers. They’re selling something, the buy-sider is their customer, and this simple fact shapes every conversation between the two parties.

The author of this piece asks a set of 10 questions to try and understand whether a person, working on the buy-side, is a sufferer or not. And if you answered “yes” to more than three of these questions, it’s quite likely that you are suffering from some form of BSPD. If you answered yes to seven or more, it’s extremely likely that your sell-side contacts (the ones that are really polite to your face) have a WhatsApp group dedicated to discussing your behaviour. Many people suffer from BSPD and never find out, until the day that their employer has a round of downsizing and they need to “reach out” to their former sell-side contacts on LinkedIn.

6) How much of the Internet is fake? Turns out, a lot of it, actually [Source: nymag.com]
In today’s digital world it’s difficult to distinguish between what’s true and what’s not (fake). In late November, the Justice Department unsealed indictments against eight people accused of fleecing advertisers of $36 million in two of the largest digital ad-fraud operations ever uncovered. Digital advertisers tend to want two things: people to look at their ads and “premium” websites — i.e., established and legitimate publications — on which to host them. The question that arises is…How much of the internet is fake?

Studies generally suggest that, year after year, less than 60% of web traffic is human; some years, according to some researchers, a healthy majority of it is bot. For a period of time in 2013, the Times reported this year, a full half of YouTube traffic was “bots masquerading as people,” a portion so high that employees feared an inflection point after which YouTube’s systems for detecting fraudulent traffic would begin to regard bot traffic as real and human traffic as fake.

So what all is fake in this digital world? 1) The metrics are fake; 2) The people are fake; 3) The businesses are fake; 4) The content is fake (everybody knows); 5) Our politics are fake; and 6) We ourselves are fake! Have you ever came across…Can you retype this distorted word? Can you transcribe this house number? Can you select the images that contain a motorcycle? We can have a debate on what’s real and what’s not.

7) How metal thieves pulled off a 100-ton heist [Source: Bloomberg]
Cobalt has lately become highly valuable because it prevents the lithium-ion batteries found in mobile phones and electric cars from overheating and bursting into flames. Cobalt’s value surged more than 300% from 2016 to its 2018 high, reaching a record of almost $100,000 a ton. And that’s why many thieves are keeping an eye on the metal. And in Rotterdam, drums of cobalt—112 tons of it, worth about $10 million—went missing.

The building in which the cobalt was kept was run by Vollers Group GmbH, a logistics specialist based in Germany. But, who owned the cobalt? Most of the cobalt was of Anthony Milewski, founder and chief executive officer of Cobalt 27 Capital Corp., a kind of metal hedge fund that offers investors an indirect way to bet on a battery-powered future. The vast majority of the company’s material was locked away in Rotterdam, including about 76 tons at the Vollers’ facility.

Known as Cobalt Jesus in the industry, Milewski has pulled off at least one cobalt miracle. In November, his company’s insurers paid out for the missing 76 tons—at the top market price for July, even though cobalt had dropped almost 20% since then. The victims made a small profit from the crime. “At the end of the day,” Milewski said, “the system worked as it’s supposed to.”

8) Former Barclays boss Bob Diamond on being fired and the future of finance [Source: Financial Times]
The author of this piece, Robert Armstrong, sat with former chief executive of Barclays, Bob Diamond, to listen to his side of story (why he was ousted) and his other ventures. The one-time head of Barclays’ investment banking division and then chief executive rose to and fell from the pinnacle of British and indeed global banking. In the process he became, for the British press and politicians, the face of “casino” capitalism. From the then prime minister Gordon Brown to the Khashoggi affair, they discuss everything. 

Talking about his take on a recent book about Barclays, The Bank That Lived A Little, by the former investment banker, Philip Augar, which described the brutal firing, Diamond says he liked the book, but that it gets some things wrong. He declines to specify what. The intervening years have not changed his view of what happened. He says that individuals acted reprehensibly at Barclays, but “our fines were lowest in the industry; it was an industry issue; I would argue that other [banks] were more involved”. 

But, after getting fired from Barclays in 2012, he didn’t stop there. Diamond quickly grew bored of retirement. The following year he founded two ventures — Atlas Merchant Capital, which invests in financial services companies in the US and Europe, and Atlas Mara, which does the same across sub-Saharan Africa. When asked for his advice to other bank bosses in the regulators’ cross hairs, such as Wells Fargo’s Tim Sloan, he says anyone asking that advice from him should get his head examined.

9) The struggle for India’s soul [Source: Economist]
As the world’s most populous democracy heads to the polls, this piece talks about the probable outcomes of the elections. The elections will in part be a referendum on Prime Minister Narendra Modi, who in 2014 brought his Bharatiya Janata Party (BJP) India’s first single-party parliamentary majority in three decades. That landslide suggested broad endorsement for its pro-business and Hindu-nationalist agenda, as well as support for Mr. Modi’s carefully tended mix of patriarchal mien, folksy talk and energetic boosterism. But after five years, Mr. Modi’s magic seems to have faded.  

Farmers, lower-caste Hindus and religious minorities all have fallen out of love with the BJP. Mr. Modi’s tenure has seen an ugly surge in violence directed against India’s less privileged, often by groups or individuals associated with the Hindu-nationalist right. The poor have also been hit by rising global oil prices, a weaker Indian rupee and falling farmgate prices.

In order for the Congress to win the elections, the likely strategy would be to patch together a rainbow of anti-BJP forces, largely composed of the regional and identity-based parties whose growing importance has been a salient development in recent years. If Congress can hold together such a coalition, and that is a very big if, then Mr. Modi’s days might be numbered. No matter whoever rules, India will remain too wildly diverse for any one trend to dominate. 

10) How the artificial-intelligence program AlphaZero mastered its games [Source: New Yorker]
A group of researchers from Google’s artificial-intelligence subsidiary, DeepMind, recently published a paper in the journal Science that described an A.I. for playing games. While their system is general-purpose enough to work for many two-person games, the researchers had adapted it specifically for Go, chess, and shogi (“Japanese chess”); it was given no knowledge beyond the rules of each game. At first it made random moves. Then it started learning through self-play. Over the course of nine hours, the chess version of the program played forty-four million games against itself on a massive cluster of specialized Google hardware. After two hours, it began performing better than human players; after four, it was beating the best chess engine in the world.

The program, called AlphaZero, descends from AlphaGo, an A.I. that became known for defeating Lee Sedol, the world’s best Go player, in March of 2016. AlphaZero, by contrast, has only two parts: a neural network and an algorithm called Monte Carlo Tree Search. In a nod to the gaming mecca, mathematicians refer to approaches that involve some randomness as “Monte Carlo methods.” The idea behind M.C.T.S., as it’s often known, is that a game like chess is really a tree of possibilities. This is where the neural network comes in. AlphaZero’s neural network receives, as input, the layout of the board for the last few moves of the game. As output, it estimates how likely the current player is to win and predicts which of the currently available moves are likely to work best.

To learn, AlphaZero needs to play millions more games than a human does— but, when it’s done, it plays like a genius. It relies on churning faster than a person ever could through a deep search tree, then uses a neural network to process what it finds into something that resembles intuition. Surely the program teaches us something new about intelligence. But its success also underscores just how much the world’s best human players can see by means of a very different process—one based on reading, talking, and feeling, in addition to playing.