And Vijay Says…

Very interesting question early in the morning today from a younger colleague – “How do you keep away emotions from work ?” . I thought it is worth expanding on the point of view I explained to her on the phone.

I have often been told that we should not be emotional and instead we should be objective at work. That is rarely possible in real life in most scenarios – at least for me. So the closest to a good option in my mind is to manage these emotions as a “portfolio” so that I can survive and thrive without unnatural tactics. Before you ask me (since my colleague asked me today morning) – I will tell you that I do not practice breathing exercises or Yoga or chanting . Those are all probably good things to do – just that I have no first hand thoughts to offer.

So here we go .

Fear ,Anger and Courage are the ones that we need to confront the most given the consequences can be terrible. I feel both at times – and the way I control it is by thinking of the worst case. Am I going to lose a deal ? Lose a talented colleague from my team ? Can I fix this now or later? etc. Almost every single time I realize that the worst case is something I can mitigate. That is how I channelize these two emotions – I often convert them to courage to act.

Sadness and Joy – I do not hide Joy. When I am happy people know it. When I am sad – which is not often – people close to me can read it. On work, I feel sad most often when someone who should know better does a less than stellar job. I feel sad more often than I feel angry. And generally when the person realizes it – it helps them course correct.

Disgust , Surprise and Anticipation – Thankfully there are only two or three incidents in my entire career where I was truly disgusted. It just taught me to not work with certain kind of people. Surprise is actually a beautiful feeling in personal life – but unfortunately I am wired in a way that I do everything to avoid surprises at work. I try hard to not surprise anyone myself. I am not sure if this is good or bad – but the dislike for surprises is something I have to live with. I do a lot of anticipation – in the form of plan A/B/C . It is an intellectual pursuit that makes me feel good most of the time.

Trust and Respect – This is the ideal state of operation in my mind. Being liked at work or being feared at work are both long term problems for a leader. Obviously between the two – being liked is the pleasant and easier alternative . The world of business is not fair and often involves decisions that are hard on the people taking those and communicating it to others. If your objective is to be liked – you will be miserable when a hard decision needs to be taken, and others will feel a big let down. If you operate with fear as primary tactic – you will never have a motivated team. So the only real option is to aim for trust and respect as your operating parameters and help everyone get to a frame of mind that you will be fair in all cases.

Kindness and cruelty – This is pretty black and white . I heavily favor kindness. But there is a certain difficulty in how you execute on it. For example – let us say there is a colleague who cannot seem to operate at the next level to earn his promotion. The kind thing to do is to give him a chance to improve and then if he does not – tell him where he stands including the potential of leaving your team. The cruel thing is to tell him he is doing well and then fire him arbitrarily. Telling him that he is doing well when he is not – that falls under cruelty and not kindness in most cases. It is a thin line for a leader to traverse. I cannot say I have mastered it fully.

Shame, Pity and Envy – I do feel shame especially when I make mistakes repeatedly when I should learn and do better. I used to pity myself and feel envy for others – for a long time. That stopped after I got a better perspective from my mentors. There are always going to be some people who are better than you , were luckier than you etc and you are never going to be totally honest about evaluating yourself objectively. Once you make peace with that – Pity and Envy vanishes. It took me a long time to get there and I have had a few lapses – but generally I think I know when to catch myself these days and reorient my thinking.

My late grandfather Prof R Easwara Pillai was an eminent historian and an amazing story teller . He had mastery over three subjects and how they connected with each other – Economics, Politics and History . I grew up listening to him telling me stories that would emphasize useful principles from these three disciplines . I would never forget his explanation of the theory of diminishing marginal utility – the fourth mutton cutlet will not taste as good as the first !

I didn’t major in any of the three subjects my grandfather loved – I chose to become a mechanical engineer like my father . But thanks to the love for all three subjects (especially history) that I developed hearing those stories , I have continued to read up, listen and learn what I could .

For the last couple of months , I have been thinking about the post Covid world from many different angles and have posted some thoughts on future of IT services , the need for holistic solutions , and the impact on China .

Today morning I posted the following on FB about the economic realities that India and US are facing ,

The two major economies that I have an interest in are US and INDIA . Both need to kick back into growth but their options are rather different .

INDIA is a much smaller economy in size – both aggregate and per capita . But it has been growing at a much faster clip . Even with revised numbers – INDIA might be able to grow at around 2% when US etc might enter negative territory .

US – and many other developed countries – has been pumping money to help local businesses get through the hard times . INDIA has not done anything similar – though when it comes to taking care of citizens with food and medicine and containment, INDIA has done a magnificent job . But let’s focus on the economy angle now .

The unfortunate reality is that India can not afford to do what US does in terms of a massive influx of cash into the economy . If we look at the tax revenue assumptions in last budget – we can easily figure out that it was unrealistic to begin with . Now with income and trade both coming down , there is no way to make a lot of tax revenue in this fiscal .

US can absolutely print money – dollar is a strong reserve currency . That’s a limited option for INDIA . I have no doubts INDIA will also print some rupees but the inflationary risk is higher and may be 1% of GDP via this method is already enough to take INDIA back to a period no one cares to be in .

INDIA Government thus will need to borrow heavily at least for this year – some from within the country and some from abroad .

Government bonds are a viable strategy . But the domestic market for it will be weakened by both corporate and personal savings affected by the shut down . Still – there are still healthy and large balance sheets who might think about this favorably . And there are plenty of rich people and some NRI inflow to make this work

International borrowing is a more complicated problem . INDIA has made it easier to invest . But that means we need consistent tax policies (which doesn’t happen very well) , tight inflation management (which is quite good now but needs to continue), and consistently good credit ratings (also done decently so far). But there is one thing INDIA can not control – investors can also trigger a liquidation based on how their home country policies (and political rhetoric) changes . All that said – INDIA needs international money to get through this .

Whatever happens , I hope government doesn’t get stupid and just start taxing more on existing base like the disastrous policy of 1974 that Mrs Gandhi brought out . The irony was that MMS was the tax policy creator who then under Rao was also the bold leader to bring INDIA to the modern world .

I hope INDIA starts to take manufacturing seriously from now on – especially when there is a global will to move some out of China . That in turn might be something that US needs to look at seriously too . A lot of the pain in US was caused by letting

most of manufacturing leave our shores .

The two historic events that are used to compare and contrast the covid crisis are the Great Depression and the spanish flu . I had a chance to read up on the former a lot during the 2008 financial crisis and I brushed up on that a bit in the past few weeks .

The most chilling part of that horrible decade starting 1929 was the rise of Adolf Hitler . Just a few years ago – he tried to overthrow the government and got jailed. Strangely he wasn’t deported to his birthplace of Austria because the good judge thought Hitler thought and acted like a German and hence can stay in Germany . Nazis were not taken seriously – and eventually Bavaria even let them back into official existence . Hitler by then had realIzed that being a demagogue was a lot easier to get to his goals than the use of violence . The depression gave him the perfect platform – primarily around tackling unemployment – to consolidate power . By 1933 he was the Chancellor of Germany !

A lot of evil happened in his long tenure . It made me think about the trio of depression, demagoguery and democracy – which is the unfortunate intersection of economics , politics and history .

History – even recent history – is full of people who used demagoguery to great effect for their purposes . Senator McCArthy might be the best example that a lot of people can relate to in this context .

Demagoguery is not binary – it’s a continuum for politicians in any functioning democracy and probably cannot be avoided . So then the logical next question for me is what’s the flaw in democracy itself ?

History and politics have an intersection in the past that perhaps can provide a clue .

The great philosopher Socrates wasn’t a big fan of democracy the way it was practiced in Greece . His point of view was something like this

A ship needs a captain who knows how to navigate a ship at sea – and not just a random person who was elected to the role of captain by people who don’t know what skills a captain needs . Similarly if you let people to vote who haven’t been taught to think deeply about the role of politics and administration – then you will get bad results and rabble rousers !

Essentially Socrates put the onus on educating people before they are allowed to vote . So in his view – you can’t vote just because you are of a certain age and was born inside the country .

Given the general lack of civics education in this country , I guess what we dislike about politicians can be traced back at least partly back to us ! And if we haven’t thought through what we need in our elected representatives and administrators – and a depression hits us , the demagogues will have a field day and we may not like the results very much .

What happened to Socrates eventually ? Demagogues of the time charged him with “corruption of the youth” and by a thin majority, the 500 jurors voted him guilty . He was – quite tragically – put to death by poison .

The life of Socrates was some 2400 years ago , and Hitler’s was less than a century ago . If we haven’t yet learned the lessons from the past intersections of economics, politics and history – we better start now !

All over the world, there is anger and frustration about how China handled the pandemic . I fully share that view – we could have all handled this disaster much better if the Chinese government did a more responsible job. And I doubt any of us believe the stats coming out of China – and we live with it only because there is no other source of good information to rely on. There are more conspiracy theories floating around now than I can keep up with – which is perhaps normal for these times.

A lot of American politicians have already been calling for a hard break with China because of what they did with the Corona pandemic. That was my first instinct too – but as I thought through this more, I doubt this is a pragmatic solution anymore. As always, these are just my personal views.

Calling Corona Virus as China Virus is just dangerous

It is perfectly normal for nationalist feelings to surge when we feel attacked . It is also a great point that plenty of viruses were named in the past after country of origin ( including some like Spanish Flu where there are stories that it was an unfair tag ) . So when we cloak our hatred for Chinese government with an academic argument to hide our bias – we tend to forget how it affects Asian people everywhere.

I was born and raised in India. I have lived roughly half my life outside India now. No one should find it hard to guess my ethnicity if they see or hear me. And yet – when 9/11 happened, a lot of people mistakenly thought I was Arab. It is not an exaggeration to say I was afraid for my life at that time. Absurd as it might sound to people who know the difference – that is how this works. Ignorant people who also feel under attack – they react in absolutely nasty ways that you may not realize. So please resist the temptation to tag China – your words and tweets can unintentionally hurt innocent people !

Capital and Talent problems

America and other countries consciously let China become a single point of failure in their global supply chains – be it clothing, semiconductors, auto, pharma , medical equipment or any number of things we all need every day. The capital required to rebuild all of that in every country is huge. And even if governments agree to find the money to do it – in most cases, the skills are just not there in quantity and quality to make it happen in reasonable time. And it will take time and resources away from many other priorities.

Even if we just think about the world of medicine – equipment and drugs – we should be scared at how much we depend on China for our population to stay alive. Now that they have flattened the curve, and their factories are buzzing again – they have an upper hand already while rest of the world is still figuring out its response. I don’t know how much of a sustained advantage that will be – but its worth keeping it in perspective. For now, they are helping US and others ( and with it comes some complaints on poor quality)  – though perhaps not just out of just humanitarian reasons.

Realistically – even if just the rich countries like USA start bringing all this in-house we are going to have to wait decades to get it done. And given we tend to value our economy over and above other interests – the cold calculations will probably stop most private sector companies to do a total shift back to homeland.  Best case I see is that we will shift some significant manufacturing capacity to Vietnam, India etc in near term.

That is all good and much needed – but China probably will remain a single point of failure for a lot longer even in a well planned transition.

How about Tariffs as a way to keep China in line ?

US has played this hand with China already and we found that all that happens is that it is not the exporter that gets stuck with the bill, and its the importer – and that is passed on to the end customer. On top of that – we also had to take some tariffs off already because of our dependence on China to get through this pandemic.

If we look at this from a Chinese exporter’s point of view – they may also come to the conclusion that they should perhaps reduce US as a big market, and start building markets elsewhere. USA is big strong economy and can still hold some punitive power with China. But that is not the case for the smaller economies – their constraints will make them do things which US will be able to avoid.

Net-net – Tariff is not much of a magic wand to wield !

Corona might not be the last pandemic – it may just be a beginning

I don’t wish it in the least – but that is the pragmatic assumption for now. I have no doubts that we will learn a lot from handling COVID19 and hence will have a better playbook for the next time. But what is the role of China in that future playbook ?

Since the whole mess started in China – and since China has allegedly controlled it significantly now – it is quite possible that they may be the first to come out with a treatment plan and vaccine too. Don’t we want them to share it ? Not just now for the current crisis – but going forward as well.

I am not an expert on pandemics – but I do remember reading frequently about US and China co-operating in tackling past pandemics from George Bush’s term in office all the way to Obama’s time ( joint effort to help Africa). I would think that model is what works for the world – as in for common folk like you and me. Virus is not nationalist in its kinetics, and there is no good reason in my mind why the solution to prevent its spread should be nationalist.

When it comes to saving lives – China and US and everyone else should let science lead, and politics follow ! The other way around is stupid.

We need a better balance of Nationalism and Global Co-operation 

Pendulum always swings to extremes. Now it is swinging to an extreme on nationalism. But its side effects are yet to be seen.

In India – there are states closing their boundaries physically to stop people from neighboring states to enter in times of pandemic. It is not clear how the supply chains of food and health care will get affected when states do it. Will it next happen within districts within a state ? Taken to an extreme – nationalism can be quite destructive !

US may not be much different either . What happens if richer states can offer more money and take medical pros and medicines from poorer states ? I hope we won’t see it play out that way – but when we feel under attack, its normal to close in. Toilet paper hoarding is roughly the same thing at a micro level – people with money to hoard will keep doing it and people with less money will disproportionately suffer.

Although off topic here – climate change is one of those things we can look at as an example. There is no effective solution to climate change if China does not play nice. And China has limited incentive to play nice if it gets isolated globally !

Parting thoughts

It is not a comfortable position for any of us ( Certainly not for me) to think China apparently continues to hold an unfair advantage despite their mistakes. We largely brought this on ourselves with our significant focus on the economy and lesser focus on healthcare, infra, education etc. It is not as if we did not have some huge advantages – we enjoyed a prolonged bull market as a result of sending more work to China. I hope and pray we learn from this history and have a more balanced and holistic view going forward.