‘In every one of us there are two ruling and directing principles, whose guidance we follow, wherever they may lead; the one being an innate desire of pleasure; the other, an acquired judgment which aspires after excellence.’
~ Socrates, in Plato’s Phaedrus
First question of course is to ask if I am qualified to write about this issue. Let me tell you how I started and let you decide if you want to read beyond that account.
I have been an entrepreneur, formally (in the sense of owning my own business) since 1994. I started business however while I was still in a regular full-time job (in 1983), with the full knowledge and blessing of my employer and paid for it by working on my business during my vacation and unpaid leave.
I worked at learning and building a management consulting business for 12 years. I invested every available paisa (cent) on books and train fares (3rd class – a bare wooden plank for a seat) and every available day of vacation leave, interning with one trainer or another. I did not take a single day off in 12 years. Then in 1994 I started my own company (Yawar Baig & Associates www.yawarbaig.com ) in Bangalore with all of Rs. 3000 ($ 60) in my pocket and a dream in my heart, of becoming an internationally recognized leadership trainer with a global business. That in my view is typical of being an entrepreneur – to dream of things that never were and ask, “Why not?” This is 2013, 13 years after my first international assignment. Today I have a business with clients on three continents.
It is this innate aspiration for excellence that I believe is at the root of all successful entrepreneurial activity. It is the desire to differentiate. To be different in a positive way. To stand out from the crowd; not to blend in with it. To express your identity in a unique way such that it is recognized and honored. That is the meaning of ‘Branding’. Without that you are a grain of rice in a sack. Excellence is to take responsibility not only for your own well-being but that of others. To lead others on the road which will not only help you to make your dream come true but to weave the dreams of others into the fabric so intrinsically that when they look out on the achievement of your vision, they will also see their own visions becoming reality. To leave behind a legacy by which you are remembered with affection and your passing regretted. Entrepreneurship is to always act with this consciousness about the long-term effects of our actions. To be willing to give an account, because we know that we will be held accountable.
Entrepreneurship is all about spirit. It is recognizing that you did not come into this world either randomly by accident or by your own choice. Your parents did not choose for you to be born. I believe that we were sent and we were sent with a purpose. When we discover that purpose we enter a state of grace. A fish out of water is the most clumsy, awkward creature in the world. It can’t move, it flops desperately, it gasps for breath. But the same fish when you put it back into the lake disappears like a flash – the epitome of grace, speed and beauty. When we are in our appointed task we are like a fish in the water. The world conspires to help us to succeed. But first we must recognize our purpose and then we need to consciously accept it. That is the scary part. But that is the threshold that must be crossed to demonstrate that we are in and not out. Without crossing the threshold of owning responsibility for our own lives, we can’t expect anything to happen.
We are never compelled to make one choice or another. But the doors that open, the vista that unfolds before our eyes and the road that beckons ahead all depend on the choice that we make. Behind each door is a different destiny. We get to choose which one we want to open and walk through into the world that it opens for us.
Choices are not always easy. As a matter of fact, all the important ones are difficult. The most difficult thing is to choose between two apparently good alternatives. But the choice must be made. Everything else depends on that. We complain about difficulty. We forget that difficulties come to test us so that the prize can be given once we surmount the difficulty. Success goes to those who can overcome difficulties. Each difficulty resets the bar and creates a new definition of excellence without which we would have been lulled into a false sense of security which hides fatal flaws. Only winners get medals, remember? Those who fail are relegated to the garbage pile of the detritus of history.
It is from this background that I have tried to conceptualize and share with you, what I like to call my tools to success. They are:
I discovered the power of prayer. Of asking the One who has the power for His help. Prayer gave me (and continues to do so) a chance to have a private conversation and to ask Allah for what I needed. He knows what that is better than I do, but being able to ask and knowing that He listens and helps gives me the strength that I need. There is an enormous sense of peace in standing in the night in prayer after having done all that is in one’s power, asking for those decisions to be sent down without which all one’s effort will bear no fruit. I am aware of the same sense of communion that the farmer feels when he has tilled the land, made the furrows, spread the fertilizer, sowed the seeds and then looks towards the heavens and raises his hands asking for rain, without which all his effort will be in vain. Yet when he raises his hands, there is no fear in his heart, only hope. And there is a smile on his face. For he is looking for the clouds to come once again, bearing rain as they have done again and again in his life. So also, as I stand, I remember all the times that I have been guided, gently away from what I wanted, to what was good for me though I had not realized it at that time. I was aware that Allah knows, He cares and He has the power to do what it takes. I am content in the fact that I have done my part and made all the effort that I could. Now I stand to ask for His help, confident that He will do what is good for me, even if it means that in a given situation I will not get what I want. My life’s experience shows me that every time that happened I was given something better. Prayer gives me strength in the dark silence of the night which otherwise is the home of fear and confusion.
2. Discipline and Routine
Anxiety creates disorder and disorder enhances fear. A vicious circle that debilitates energy and invites despair. So, the first thing to ensure is that you have a routine and to stick to it with dogged discipline. I had (and continue to have) fixed times to wake up, sleep, eat and for all major activities including reading, writing and the gym. A timetable creates order and predictability in a life that for the new entrepreneur, is suddenly devoid of the usual office routine. Working from home can create lack of discipline that masquerades as freedom. This is very dangerous. I used to dress for work, even though I was going into the next room to do it. Structure is the most powerful aid to fight anxiety.
Adrenalin is the best natural energizer. And you get a lot of it on the treadmill provided you sweat enough. The gym is an absolutely fixed part of my day. I would go to the gym at mid-day because I was relatively free then. But on the days when I was teaching, I would go to the gym after work, which sometimes meant at 10 in the night. Nowadays, I spend an hour walking briskly and alone in the KBR Park in Hyderabad, which is a national forest. One thing for sure; I do not go to bed unless I had my daily adrenaline fix. Exercise is both a physical and psychological booster and I benefited hugely. Another thing, at least in my case, I think better when I am walking. So, when I have some complex problem to work on, I go for a walk. By the time I have walked a few miles, I would have worked it out and it becomes clear. Whatever be the physiological reasons for this, I know it works for me. Try it out. Walking out in the open in a forest, if you can manage it, is the best for the fresh oxygen you get and for the lovely variety of flowers, birds, insects and trees you get to see. Gym in comparison is boring, so I prefer the forest.
The best thing about being poor is that you learn to prioritize. Prioritizing is not always painless. Sometimes it is very painful when you must choose against something you really would have loved to have. But you learn to choose based on what is important and what gives a return. You also learn to be very careful with what you have and to see how you can make your rupee/dollar do the most it can in more than one way. Waste becomes a synonym for death and re-cycling the norm. You learn to depend on other things than the brand of shirt or watch you wear as indicators of your status or worth. You learn to make all your resources count – sometimes several times before they are used up. You learn the importance of planning and information because it helps you to save. The mountain men of the American frontier were crack shots with the long rifle because they were very poor and had to learn how to make every bullet count. They simply could not afford a wasted shot. For my wife and I, when we lived in Bangalore from 1994-97, there were some months in the first year when I did not know if we would have enough money to pay the rent. But the Grace of God ensured that we never defaulted. My wife is a phenomenal manager of home finances and I have always had the good sense to stay out of it. Tight financial control, prioritizing and planning are all learnings; the benefits of hard times.
This is a very tough one but in my view, it is the single most powerful differentiator – what do you invest in your own professional development? Talking of investing in learning without any guarantee that it will ever yield a return, when there isn’t enough money to put food on the table, sounds ridiculous. That is the reason many people subscribe to this thought in principle but do nothing about it in practice. That is a very expensive bargain. I would identify a training course that I wanted to take and then save up for it month by month. Then I would take the time off (which for the entrepreneur has a cost value) to take the course. I set myself a target that I would do at least one course every year, preferably a certification course. After some years, I ran out of certifications that I wanted to take but the annual course routine continues. The benefit of all this was that this strategy gave me a clear edge over my competitors which I never lost. My clients got used to seeing my resume change every year with additional certifications, papers, articles, books. Not that they necessarily gave me business in the new areas but the thought that they were hiring someone who was focused on his own development was a big differentiator in my favor when they were comparing consultants.
Another thing which I did in this line of self development was to write and publish. Every year on an average I write more than 15 papers, 40-50 articles and every two years I publish a book. Writing is the single most powerful tool to develop thinking ability, which in my line is the soul of business. The ability to think clearly and strategically is always helpful no matter what business you are in, yet it is something that most people only do accidentally. Writing helps to structure thought, it forces you to express it in the clearest way and it helps you to put yourself in your reader’s mind. Writing also gives you credibility like nothing else. We have a respect for the written word and those who write and if you can write well (anyone can write well if they try) then you will find that you add value to yourself as well as to your image while clarifying issues in your own mind. Writing also gives you exposure in the best possible way and your name becomes known widely. Writing gives you both visibility and credibility; a big advantage. These are my tools. I hope they will help you as they helped me. If they do, pass them on.
Lastly but by no means the least important is the skill of dealing with people. No matter how talented, powerful, resourceful, energetic, knowledgeable, sexy or beautiful you may be, you can’t and will never succeed without help. Help from people who see the fulfilment of their dreams in helping you. That in one line is your task as an entrepreneur or leader. How can you make them dream your dream as their own? It is not about explaining. But about helping them to link with your heart and see themselves in your dream. Only then will they own it, work for it, invest in it and help you to succeed. This is what every great leader in history did. As Nelson Mandela said, “Speak to their hearts, not to their minds.” As I say, “Show them what’s in it for them.”
Many entrepreneurs, especially technology experts believe that their technology supercedes everything. Nothing could be further from the truth.
In the end, the success of technology depends on the success with which it is marketed. Stories abound about good technologies that never saw the light of day because their promoters didn’t have the people skills to take them to market. Entrepreneurs need people skills like fish need water. They need the skill to relate to different constituents of their environment in different ways. The way to relate to venture capitalists is not the same, as the way to relate to the techy team that is working on the project. The way to relate to your own business partners is not the same, as the way to relate to customers, especially for a product or service which is still untried. But all these are necessary and necessary simultaneously. Too often entrepreneurs forget this and think that their technical knowledge will see them through. It won’t. This is not to decry or discount the importance of technical knowledge and skill. But it is like imagining that to win the Indy 500 all you need is a fast car and driving skill doesn’t matter. You need a fast car alright. No amount of driving skill will enable a Maruti to beat a Ferrari. But without driving skill, you will never beat your competitor’s Ferrari because he is not driving a Maruti.
There are four main skills the entrepreneur needs to learn. Inspiration or motivation, presentation or communication, networking and conflict resolution. It is not in the scope of this article to go into them in detail. But in all of them there is an underlying theme which is to enable the other to see what is in it for them. All these skills need a high degree of engagement with others, be it the people who work for you, customers, potential funders, government officials (often the most difficult and non-productive engagement but must be done) and your own family and social circle. The fine line to walk is to help them to help you. To show them how working with you and for you will help them to achieve their own goals. This means that you must have a very good knowledge of what motivates them, what their issues are and have a genuine desire to help them. I say genuine because acting can’t be sustained. This is most visible in networking which many people believe is a way to use other people. It isn’t. It is an opportunity to build genuine bridges of mutual benefit which work for both parties. Only these last. The best networking people I know are genuinely helpful and look for opportunities to help others who they don’t need and in many cases, will never need. But their work gets noticed and gratitude is contagious. So, when they need someone, people come out of the woodwork for them. There is no substitute for sincerity and sincerity wins hearts.
One final word:I want to underline the importance of conceptualization. The reality of life is that raw experience teaches us nothing. What we do with it, is what matters. What we don’t conceptualize we don’t learn. Just being alive is not a condition for the acquisition of wisdom. It is how we live, what we do with what life presents to us, how we change ourselves and how we teach; these are what make us wise. But to do anything at all with raw experience we must take time out and go off into a quiet place physically and in our minds and reflect on what happened.
We need to do that reflection objectively even mercilessly and ask the question, ‘So what did I learn?’ Sometimes the learning may be painful but it is the only way to avoid further pain. It is the only way to make amends and control any damage that our action or the lack of it may have caused. Sometimes in the process of conceptualizing one needs outside help; an objective listener who can give feedback and help to draw the lessons that we need to learn. It is only such learning which is useful and which can be related onward to others. But for all this we need to allocate time and as I said, develop the ability to go off into the quiet place in our mind. I have always been very conscious of the need for this and build this ‘time-out’ into my annual routine. I consider it an investment in myself and benefit from it hugely so I take it very seriously and don’t grudge the cost that is often involved.
Now hold on a minute; reflection time does not always have to mean climbing mountains or secluding yourself in a log cabin in the middle of nowhere. It can be done very adequately and at no cost on your daily commute, provided of course that you are not enslaved to your phone or iPod or whatever. Whatever else you do, you need to eliminate noise and invite silence if you want to achieve anything in this line.
I am one of the most ‘connected’ people in the world and have always been keenly aware of the edge that connectivity gives you. Yet when I am away on these retreats, I shut down totally except for emergencies. I’ve worked very hard to be in touch with myself and to listen to my inner voice; to be at peace with myself without the need for some noise or the other constantly intruding into my mind. This ‘stillness’ is not to be confused with lethargy or boredom.
This is the stillness of the hunting leopard which is crouched in the grass just before the final assault. She appears to be carved in stone. Not a muscle twitches; you can’t even see the rise and fall of her chest as she breathes. Her every sinew is taut to its maximum torque, waiting to be released in the explosion of speed that will catapult her onto her prey before it can properly register what’s happening. She is totally still, totally focused, totally aware of everything around her and everything inside her. This is the moment of highest awareness that one can get, the moment before the leap. That is stillness.
One of the reasons why many people today can’t get past first base when it comes to conceptualizing is because they are unable to focus onto something long enough. It is supposed to be a characteristic of the present generation, ‘The Millennials’. I say, ‘Most welcome’, because it will be so easy to compete against people who can only give partial attention to anything. But for the world that is dangerous as it is distracting. Imagine being led into the new world by people who are only partially tuned in. I think people today are afraid to think and reflect and therefore seek refuge in endless activity. Without depth or breath of knowledge how can anything of value emerge? Strangely even the protests that we see today have no depth, no ideological underpinnings. They are like adolescents throwing tantrums because someone did not give them their toy. That is why they are easily satisfied with the immediate, even when it is abundantly clear that it is coming at the expense of their own future.
Most young people read nothing or very little, other than their course syllabus. Almost nobody reads the classics. Almost nobody reads, writes or quotes poetry. Conversation is a badly linked chain of monosyllabic grunts, words which say something but are supposed to mean the opposite (very bad means very good, believe it or not) and an endless repetition of non-words to describe every conceivable situation and experience. Words reflect thought and depth of intellect. But for this generation a vocabulary of 50 words seems to do very well, thank you very much. It is as if all the enormous effort of human thought and civilization has been suspended in limbo perhaps to be read by those who come to pick up the pieces and then wonder how people who knew so much could have done this to themselves. Nothing that I know which is worth achieving can be achieved with partial attention. Excellence demands total attention and focus.
It is impossible to think seriously and consider things in a structured framework seeking beneficial conclusions, if you have some noise-making instrument plugged into your ear all the time. This is the downside of technology today which is the trap that some of us fall into and are unable to control. So, our minds are taken over by the disc jockey, talk show host, news reader, social media updates and alerts, propaganda artist or advertiser to be molded at will and steered into channels of their choice, to think the thoughts they want us to think and come to the conclusions they want us to come to, irrespective of whether or not such conclusions benefit or harm us.
As I mentioned, I think best in the open, in the middle of nature and when I am engaged in some physical activity, so I go trekking or to a wildlife sanctuary or mountain climbing where I spend part of the day in the activity and the rest in reflecting on my life, sitting beside a free standing, solar powered, self-propagating, shade giving, oxygen generator which we so easily chop down to make still more toilet paper. If you still did not recognize the description, try the word, ‘Tree’. In the nights, I read books that I take with me after careful consideration. I have always read two or three books simultaneously and enjoy holding their various themes in my head simultaneously. The mind, like the body, improves with exercise and considering different concepts, sometimes divergent ones is an excellent way to challenge yourself. Reading has always been and continues to be a significant and hugely beneficial activity in my life on which I spend substantial time, energy and money.
This reflection is not a random activity leading to sleep. It is a structured pre-planned activity that I do as follows. Before I go off on these retreats, I ask myself some questions:
1. In the last period (since the last retreat) what were my best & worst experiences?
2. What are the lessons that I am hoping to learn from them?
3. What are the most difficult potential blocks to this learning that I can foresee?
Then when I have finished my climb to the top of the hill, I pour myself a hot cup of tea and reflect on each incident/situation and jot down my thoughts as they occur. Once the thoughts have dried up I then read what I wrote and analyze to see what I can learn. All this needs discipline and practice but can be easily learnt and is a huge benefit. Especially to top it all is the fact that sitting on a hilltop watching the sun setting on the horizon, with a forest and all its sounds at your feet is just about the most enjoyable way that I know, of spending an afternoon.
We, in India, are living in a state of anesthetized anarchy.
We seem to have lost it in more ways than one. In the days of the sabretooth tiger mankind needed to be totally in touch with reality if it wished to avoid being the tiger’s next meal. Since we made the STT extinct we seem to believe that being in touch with reality is not required or at least, is optional. The fact is, that it is neither optional nor unnecessary. It is as critical as it was then, with the only difference that the one who eats you now has changed; not that you will not be on the menu.
As I read what members of the present Bhakti movement are writing with respect to present conditions in India and what the wise gurus of corporate fame speak from their elevated platforms, I pinch myself to remember that the laws that run the world are not made by them and that the One who made those laws hasn’t changed them yet.
Nandan Nilekanni at the TiE Convention for example, takes his constitutional on stage and while he exercises walking back and forth forcing you to do some neck yoga, he tells you how the volume of electronic monetary transactions has gone up from the time people used to send money orders and how in the last three years more people transferred money electronically than they did via money orders for the past one hundred years. That, he declares to a rapt TiE audience, is a sign of development. Audience claps. Behold, anesthetized anarchy in action.
What he forgets to say and those feverishly forwarding the video of this wonderful speech forget to ask, is what percentage of population that volume of monetary transaction represents. What is the reality? The reality is that the total percentage that does electronic banking is 2% of the population of India. So, whatever you want to say about how monetary volumes have increased, they are still all within that 2%. What therefore, is the real meaning of the numbers?
The problem of geeky thinking is nicely mentioned in this article as the ’empathy vacuum’; the bane of life of those who are used to binary thinking and playing with imaginary numbers until they begin to believe in their own creations. What is starkly visible in our country today is a total absence of empathy for those whose lives have been wrecked by the demonetization drive.
Secondly, comparing historical data about the health of an economy using monetary transactional volume alone doesn’t take into account the value of money itself. A person in 1900 sent Rs. 10 by money order. The same person, if he lived that long, in 2000 would have to send Rs. 100,000 by electronic transfer to cover the same expense. So, how does the higher number indicate greater prosperity? But it seems that we have pickled our brains. Statistics can be made to say whatever you want them to say. And that is the game being played. The reason that game succeeds is because we don’t think and don’t ask questions.
Behold, anesthetized anarchy in action.
I call it anesthetized because we are the only country in the world where dozens of people can simply die standing in a line to withdraw money from the bank because of the liquidity crunch that the government imposed but nothing happens.
We’re the only country perhaps in the history of the world where money is demonetized in a thriving economy. As someone said, ‘That is like shooting the tires of a racing car in a race’, but nothing happens. We’re the only country in the world which pays no attention to the opinions of Nobel Prize winning scholars, financial experts and bankers and instead applauds politicians whose understanding of economics is exemplified in the measures that have led to the rest of us suddenly being forced to take an interest in economics. Instead of protests people say that this is the price we (not them, mind you) must pay for ‘cleaning’ the economy.
1. We are World No. 1 in absolute poverty far ahead of sub-Saharan Africa.
2. We are World No. 1 in farmer suicides. (is there a global standard for this?)
3. We are World No. 1 in human trafficking. Add bonded labor and we will be World No. 1 in slavery.
4. We are close to the top in illiteracy.
5. Our unemployment figures are mind boggling and just went up thanks to this new initiative to make India cashless. Amazing how quickly that target was achieved.
6. 80% of our graduates are unemployable which tells you something about the quality of our education.
7. Corruption is not only acceptable at all levels of society but it is aspirational.
8. Our politicians and executive (civil service) is mostly corrupt and judiciary is trying to catch up.
9. We have zero tolerance, not for corruption and lies, but for those who dare to speak out against it.
10. Our view of religion is not something that binds people and joins hearts together but something that divides and must be brutally enforced.
11. We have confused loyalty to a political party for loyalty to the country and have branded all dissent, anti-national and unpatriotic.
12. We elect politicians to office only if they belong to our caste, irrespective of everything else.
13. That our politicians are corrupt, mostly uneducated and many have criminal records (including murder), matters not at all in our reckoning. We still elect them.
14. Human life doesn’t have low value in our country, it has no value at all. From 2005 to 2015 over 300,000 farmers committed suicide in India. Result? http://bit.ly/1Lisiy3
15. To break the law with impunity is a measure of social status and an accepted status symbol and is treated as a matter of right by the high and mighty. All of them invariably get away with this, thus reinforcing the principle that some people are more equal than others.
16. Undertrial prisoners are routinely killed by police and the killers are applauded by the media and titled, ‘Encounter Specialist’.
17. Our rape, murder and plunder statistics would do credit to a war zone.
18. In terms of productivity, quality and industry we can’t even compare ourselves to Bangladesh but we feel free to compare ourselves to China. http://bit.ly/2gjOHTa
That is why I call it anesthetized because despite all this, our Bhakti Movement is going strong. Thank god for our blind supporters. People are telling tales to one another voluntarily blind-folded to the reality imagining that if they tell the tale long enough and shout down any dissent, their tale will come true. This is because, those of us who live in cities and are in the so-called upper middle class and grace the stage of entertainment shows like Times Now and others, live in echo chambers. We shout out our opinions and then count the echoes as agreement. All our projections are based on the number of times we heard our own voice echo back to us bouncing off the walls of our echo chambers. We make the most noise. We are the most visible and others like us assess the state of India based on this.
But anyone who has travelled in rural India, where the vast majority of our people live, will tell you a very different tale. A tale of deprivation, crops left to rot in the field or fed to goats because there is no cash to harvest them. The woman who has one buffalo whose milk she sells to her neighbors will tell you that neighbors won’t pay for that milk by credit card. Buffaloes with credit card slots have yet to be born. That woman needs the money in cash that very day to buy food to eat and feed her family. If the money is paid to her bank account on the basis of monthly credit (this is the solution that our accountant friends will instantly give you because they don’t know one end of a buffalo from the other) she won’t have money to eat today and tomorrow. And long before the first month’s amount comes in, she and her buffalo will both have become history.
The Indian farmer, the man who sells bananas on a push cart, the fish seller who buys fish from the fisherman and sells it in the market, the daily wage earner on a construction site who works through a searing summer for ten hours to earn Rs. 200 with which to feed his family will all tell you similar stories. For them ‘cashless’ means only one thing – that which they are suffering today. The demonetization initiative, no matter how noble its intentions, has converted these poor people into ‘criminals’ because they don’t have bank accounts and don’t pay tax so their earning is labelled ‘black money’. Demonetization has become demonization and has converted them and us into beggars, unable to withdraw our own hard earned savings on which we paid tax, from our own bank accounts. That this violates our Constitutional Right to property is one of those things that we dare not speak of for fear of being branded anti-national, seditious and god-knows what else. So, we don’t protest. We applaud the noble initiative and thank god that the dead farmer, fisherman, milk seller, buffalo or random individual who dropped dead in a bank queue was not our mother, sister, brother, son, father, spouse or ourself. One must always be grateful.
Economies are not electric lights to be switched on and off at will. Especially not an economy as fragile and complex as the Indian economy. The effect of lost crops will not reverse until the next season. People’s lost faith in the currency and in the entire banking system will not change to trust overnight. What this will do to liquidity needs no imagination to visualize. People’s sudden fear of being literally cashless that has led to postponing purchasing decisions will not increase money supply. Nor will that fear suddenly be replaced by confidence. Our spending has slowed or stopped, our charity has slowed or stopped, our entertaining, holidays, all discretionary spending has slowed or stopped. All these things are the lifeblood of the nation. Where will the transfusion that we need come from?
Firmans are easy to issue but their effects are not in the control of the one issuing the Firman. Neither can those effects be stopped or reversed by a counter Firman. Just as you can’t order clouds to rain, you can’t order crops to grow or the dead to come back to life. The laws of the world don’t change. The one who chooses to shut his eyes to the signs of the sabretooth tiger will surely be his next meal. So, dream on.
Money problems are not money problems, even when they are money problems.
Dire Straits’ famous song has some very politically incorrect lyrics but the refrain, ‘Money for nothing and the chicks for free’ sums up the situation of black marketeers and owners before the demonetization and the name of the songsters – Dire Straits – sums up their situation in India today.
But what are the implications of demonetization? We have seen many theories; conspiracy and otherwise. One of the best articles that I have read is by former Finance and Economic Affairs Secretary, Arvind Mayaram, which is here:
Let’s see what the real, on-the-street effects of demonetization are and what their implications can be.
We are a cash economy and that is not because we have a huge number of people with black money but because we have a huge number of poor people who don’t have bank accounts and don’t deal with anything other than cash. For anyone who has lived or travelled in rural India this needs no explaining. So, I will not waste your time trying to describe what we have seen and experienced all our lives in our country without any problem or complaint. Those who need convincing can try to buy vegetables, fish, eggs, meat or chicken and pay for them with a credit card or cheque. Both buyers and sellers are not evil hoarders and black marketeers but ordinary, garden variety men and women trying to live their lives. This money that is earned by the sellers in never enough to be deposited in a bank. It is used to buy food and necessities for their families, goods to sell the next day and a little bit to set aside for a rainy day. This may accumulate over the years to some thousands. Do these people have documentary evidence about where they got this money from? Can they show that they paid tax on it? Can they show accounts of what they earn daily? Does the vegetable seller, the meat, fish or egg seller have a P&L account and a Balance Sheet? Does she have a PAN card? Does that therefore make them criminals? Here is an article which explains this very well.
Another situation is that of the middle-class housewife. Her husband gives her money to run the home, every month. She may only have completed primary school (in many cases she may not even be literate) but is a master economist. She manages to run a very good home, cook great meals, ensure that everyone has what they need and still she is able to save some money which she keeps hidden in the house. She doesn’t have a bank account. She doesn’t even want a bank account because it involves documentation that she can’t manage on her own and if she asks anyone in the family to help, her secret will be revealed. She doesn’t tell her husband or anyone about this but some day when one of her family needs something urgently she digs into her stock and surprises everyone by saving their skins. Is she a criminal because she does all this secretly? She is not an evil schemer. She is my and your mother.
I can give you many more examples but will let this suffice for the present.
Now comes demonetization and whatever it did to the illegal funds of political parties and black-market wizards, it also wiped out the savings of these people. That is what I am trying to interpret and find the bright side of.
The demonetization did wipe out the value of cash sitting in warehouses and suitcases of political parties and businessmen. And it did and will bring in cash into the vaults of banks who seem to have emptied those vaults lending to the same (or similar) businessmen who reneged on those loans. Those loans are still outstanding, post demonetization. The one who didn’t repay the loan continues to enjoy his ill-gotten gains. But the middle class and poor of the country paid the bank on his behalf. That is a very neat arrangement, if you ask me.
How and why does black money get generated? The main driver is the fact that political parties are not compelled to show their sources of funds. This is the strangest of phenomena where every individual is compelled to show where he earned his money from and must pay tax on it. Even charities in this country must apply for and get tax exemption failing which they have to pay tax on donations which they collect and disburse in charity. But a political party which gets a million times more, need not show how it got that money or from whom. I am sure I don’t need to explain the implications of that on the black-market economy, corruption and hoarding. That situation remains as it is. So though the funds of those political parties and politicians who were not in the know reverted to their original value or less (Rs. 1000 = Rs. 5; in this case Rs. 0) the doors to accumulate such funds once again, no questions asked, remain open. As for those in the know; the originators of this idea, their associates, families and friends, mint employees and managers, drivers, secretaries, servants and others of power brokers and of course the usual suspects (friends in need); all had ample time to save their hoards.
As for all the talk about reducing fiscal expense and so on, Arvind Mayaram has spoken about that in the article above, so I won’t repeat it. It must be obvious to anyone who knows what the word ‘fiscal’ means. What I want to repeat however is what Arvind Mayaram said which goes to the core of the issue in terms of the future and that is the issue of faith. Not faith in god but faith in paper.
People save money and keep those savings in paper currency because they believe that the value of their savings will not be nullified. They have faith in the currency though they know that the actual paper has no intrinsic value. Even though inflation erodes the value of their savings people don’t convert their savings to gold or immovable property because liquidity is more important for them than whatever loss of value that may take place over time. This is what ensures that money remains in circulation and is not taken out of the market and parked in gold. Paper money exists because people have faith.
That is the reason also why in Islam, Zakat (@2.5%) is liable every year on gold and silver even if you have to sell some of the gold and silver to pay what you are liable to pay in that year. Obviously, this reduces your stock of gold and hypothetically speaking it can reduce over time to a level where you are no longer liable to pay Zakat. Despite that Islam decreed that you must sell a part of the gold and give that money in charity because Islam recognized the importance of keeping money in circulation.
It doesn’t take great imagination to see what will happen if people lose faith in the currency. That is the reason, as Mayaram says and we all know, the US dollar has never been demonetized though it is the most counterfeited currency and the most trusted currency in all black-market deals. Faith in the currency must be balanced against whatever negative effects that may happen because of unaccounted currency. Those negative effects must be neutralized in other ways; for example by making political parties account for their cash inflows, state funding for elections and eliminating Income Tax.
Demonetizing currency destroys faith in the currency, discourages people from keeping their savings in paper money, encourages them to take their savings out of circulation because it pits importance of liquidity against saving the capital amount. It places huge hardship on the weakest and least influential people in society. It further disempowers those who are already the weakest; women (housewives, mothers), illiterate daily wage earners (headload workers, porters, construction workers, beggars), small business owners (you must understand this in the Indian context to know what I mean by ‘small’), small service providers (rickshaw pullers, thela walas etc.).
It is easy for the powers that be to talk about accepting the inconvenience because they don’t have to face it themselves and can easily turn a blind eye to the fact that a daily wage earner standing in a queue at a bank to exchange his life savings for the snazzy new currency is also losing his wage for that day. For many that is a very significant loss. For some it may mean that when they return the next day to their job, they find that the job has gone because someone else has been employed in their place. I won’t list the kinds of suffering that housewives, the old and sick and so on are undergoing standing for hours in serpentine queues. Those who are interested can go and talk to people standing in those queues. Or even better, go and stand in such a queue yourself to see how it feels to stand for six hours without food or water or shade or anywhere to rest your tired legs. People are doing more than that.
It is clear that the move to demonetize currency was taken without sufficient thought about all its intended and unintended consequences and without adequate preparation for its seamless and painless implementation. If that had been done, there would have been no reason for the tearful histrionics and theatrics that we are witnessing which are probably good for TRP ratings but not for anything else.
Whatever the effects of demonetization may prove to be on black money, what is clear is that faith in paper currency has taken a very big hit. I am not sure if this loss of faith can ever be restored. The thought that is uppermost in the minds of people is that if the government can do this once, it can do it again. And if one government can do it, then so can another government. Try to think of what conclusion the average man and woman standing in long queues to exchange old notes for new; who may even lose a part of his savings in this process, will come to.
Sadly, our media won’t show us the truth as it is not viable for them. But ignoring the truth won’t change it. Reality, unrecognized has a nasty way of biting very hard when you are not looking. That is perhaps something that those who demonetized currency didn’t think of. That is also something that may show its effect in the elections; the only place where politicians and political parties are held to account. Jai Hind.
Good intentions are not a substitute for systematic action.
Neither is enthusiasm a substitute for discipline.
Noise is different from music
We all have the same 24 hours and no, tomorrow won’t have more. All tomorrows have only 24 hours. ‘Tomorrow I’ll have more time,’ is the biggest self- deception line of all time. The key to managing time is to prioritize. Assess all prospective actions in terms of their impact on your overall goal and then decide what to do and when. Yes you have to first have an overall goal. The sooner you write one – yes, you have to actually write it down – the bigger your advantage. There is something in the nature of written down goals which invokes action. Then you devise a strategy to achieve your goal. That will involve creating steps which consist of individual actions and the time to take each one. Then you act.
Key ingredient: Discipline. Discipline is the key to life and to dieting: The big secret of dieting is to realize that my mouth is my property. Nobody can put anything in it that I don’t want them to. Discipline is where the rubber meets the road. It is walking your talk; to do what you claim you want to accomplish. It is to get up early in the morning so that you have more time in which to reach your goal. Discipline is to wake up every morning and work to make your dream can come true. Because a dream is not what you see in your sleep.
A dream is that which does not let you sleep.
An extremely useful tool to manage time is the humble ‘Checklist’. It is a wonderful tool to minimize mistakes and ensure that all the critical things get done. Managing time is about discipline and execution. Actually doing what you set out to do. It sounds simple but is not so easy for some people. But once you get used to this very useful ‘regimentation’ you will realize its value. There is nothing cute about freedom that results in waste of resources. Time is a resource – a non-renewable one to boot.
Money measures nothing except greed.
When money becomes the objective, misery is the return.
Service is the goal, the result of which is prosperity.
Money is an effect, a result. What do I mean? Well, you see, we live in a world of cause and effect. The fundamental rule here is, ‘If you want an effect, work on the cause.’ For example, peace is an effect; it is the result of justice. So if you want peace, then seek to ensure justice for all. If injustice prevails, peace can never come about because people will fight against injustice as indeed they should and peace will be disturbed.
Similarly, money is the result of intelligent effort. The effort can be dishonorable or honorable. Both kinds yield money. One yields money coupled with anxiety, fear, disgrace, hatred, shame, and the ill will of people. The other kind yields money with respect, honor, goodwill, love, gratitude and the prayers of people. Your call which kind you want. Remember, the second kind is actually easier. And you will sleep better too.
Remember also that money is a measure of nothing except greed. It is what you do with money which counts, not how much you have. So seek to do something with money that has a lasting positive effect. That is what gives meaning to money and makes it a source of benefit to you and others and gives you an opportunity to leave behind a legacy of honor.
As the lyrics of the famous song by Abba go:
Money, money, money
Must be funny
In the rich man’s world
Money, money, money
In the rich man’s world
All the things I could do
If I had a little money
It’s a rich man’s world
The biggest killer globally today is not war but poverty. And that is not the result of lack of resources but lack of compassion and concern. The fact that we have created a world in which 62 of the richest people own more than 50% of the global population, is not simply astonishing and shameful but very encouraging. Because what we created, we can change. That we must change it, is not something that needs emphasis. A world (or country) with a huge income and wealth disparity is less prosperous, less peaceful and less happy than a country where the income/wealth disparity is not so marked. It is in the interest of everyone, including the wealthy, that wealth is shared. That increases disposable income and buying power which translates into a stronger economy and more prosperity. Strangely the powers that be, who are supposed to be intelligent, don’t seem to understand this and insist on cornering resources at the cost of the vast majority.