Insights from Greeks: The Evolution of Morality and Religion

All cultures have their notions of religion, morality and the supernatural. Religion is most commonly based on dogma and defines morality. Divine powers are someone you turn to in your hour of difficulty or need because they can do things that you can’t. I am going through an interpretation of Homer’s Odyssey, set in eighth century Greece. Couldn’t help but compare how our thinking has evolved on the subjects.

First interesting insight is about religion. Religion in Homerian Greek (and more so a few centuries before that) is primarily based on rituals and ceremonies than on dogma and doctrines based on nature of God and man.  As a result it is flexible and open to interpretation. Gods aren’t the upholders of morality, just beings which can be approached by mortals. God’s are not beyond their vices either. (I can’t help but draw a parallel with certain aspects of Hindu religion). But in the Homerian Greece Gods are more moods than powers. When Aphrodite (the Greek God of love) shines on Helen, that emotion overpowers all her decisions and actions to the extent of her leaving her husband and child for another man. Homer’s protagonists of do not make a choice against the will of Gods. They don’t engage in deliberation to act. They go with the flow. In fact those with the power to choose against the will of Gods are actually bad people (the suitors). Professor Dreyfus, who teaches a psychology course based on the poem at University of Berkeley, says that Homer believes that those who go with the emotion actually lead a fuller life.  (He was kind enough to reply to my mail almost immediately. Bragging Time – I finished the full podcast series.)

Also thought provoking is the Greek idea of morality which (at least till then) is very tribal. Friendship, though more valued than love, is an alliance based on mutual advantage. Humanity – supposed to be an instinct today – is an aspiration, often forsaken under forces of passion and interest.  An average Greek (not the philosopher) owes service to a friend as much as he owes pursuit and injury to an enemy. Mercy, compassion and reasonableness are special graces than necessary duties.

I can’t help but contrast with the thinking of today. My first instinct is to lean towards the right to making one’s own choices. I also believe that the choices have to be deliberated e after weighing the pros and cons, including how one’s actions affect other people. I am also guilty of assuming fairness, compassion and reasonableness are fundamental traits defining us as a species. The idea that less than 2000 years we thought completely differently is an eye-opener.

I thought more about the Greek notion of morality and realized it follows naturally with going with the flow. Ancient Greeks were not afraid of acting on their first instinct. It can even be said that they were less hypocrite than people of today. But I am still not ready to believe that world would be better place if all us of did that. 

PS: That we seek divine help in difficult times is another human weakness I guess.

Globalization & FDI: The winds of change

I have been interested in the phenomenon of Foreign Direct Investment for a while. Till a few years ago, FDI implied the flow of foreign funds into a developing country. The direction was almost taken to be granted and the thoughts of India investing in Europe or Americas didn't cross my kind. Money flowing into the economy was an important indicator of the country's standing and opinion in foreign markets. An important proxy indicator of the possibilities, untainted by government statements. The last ten years of growth have however bought us to a new ground; winds of FDI now clearly blow in both directions.

There is this interesting editorial in Financial Times that shows how the growth in emerging markets has affected the flow of FDI. The article points out that FDI arising out of BRIC nations, Indonesia and South Africa has risen from a mere $10bn in 2003 to $12bn in 2008. A growth of 1100% percent. I remember a headline from the WSJ marketplace front page section about a Chinese company (Sichuan Tenzhong) bidding for the GM Hummer division. The reporter had used the word 'Unknown' literally in the headline. I searched the first four columns and didn't find the name of the company mentioned anywhere.

Coming back to the FT article, it uses four recent examples from the automobile sector involving mergers and purchases by Chinese and Indian companies. Next important learning most of these FDI transactions are M&A transactions and not Greenfield projects. A comparatively easier route with ready access to talent and technology and also a much faster path to growth giving these companies an immediate foothold. To me it is also an indication of the speed of the changes to come.

For the companies in developed markets this therefore is a time of reckoning. Clearly countries like Indian and China are no longer just places to outsource for cheap manufacturing and talent. They are also potential competitors and partners, presenting a need to engage and keep a tab on. The virtues of the 'next billion customers' in growing populations of China and India has already been extolled enough.
I am reminded of the principle of the state of equilibrium. It might be a useful reminder for those in power both in the developing and emerging economies.

You can access the article written by the Matthew Slaughter, associate dean and professor of management at the Tuck School of Business, Dartmouth here

Book Update: Just finished Dan Brown's The Lost Symbol.

Movie Update: Avatar is in a class of its own. Despite its over the top second half, Three Idiots is thoroughly entertaining. Sherlock Homes is a well shot and acted period drama with an unconvincing Dan Brown style story

End of Capitalism as we know it ?

Ben Bernake addressing the 'The Economic Club' in New York. His statements indicate a shift of long term US policy as we have known it  

a.  Monetary policy has its limits in addresses crises like these and innovative solutions are needed

b.  We need to create systematic authorities to address large non-bank firms that pose systematic risk

c.   We did not have a mechanism;  no body, no authority, no markets for all those securities

d.   There is a problem that these assets do not trade, there is no liquidity and no independent  price discovery. 

If all this retrospection were to be translated into policy talk, he means that policies which let financial firms have there own models to evaluate assets values & risks need to be re-evaluated. The assets should be traded in exchanges & have market determined values. This part of it, to have  a clearing house and an exchange for these assets, is a much agreed view by now.

 

Statement a evaluates a current situation and, statement c clearly indicates part of the helplessness of the US policy as it was, to prevent this situation and provide a way forward. Probably indication of new separate regulatory bodies for non-banks (unlike a situation earlier where Investment Banking firms had no regulatory authorization)

Now add up c , d & the latest actions of US treasury

1. To take a stake in banks

2. To put conditions like 

           a.  No more golden parachutes .,

            b.  Limits on executive compensation (top 5)

            c.  Limits on risk 

            d.  And, government to have voting rights on matters that affect the investment.  

All this together symbolises a distinct shift in from the free for all market to a more centralised one. The reluctance of the US government, adequately pointed out time & again in various statements underscores the point even more. Total communism as was practised by the erstwhile Soviet Union died long time ago and now is the time of reckoning for complete capitalism and free markets. 

This is the system that they have moved to back home in India,  there are markets and there are regulatory bodies - some government owned and quite a few self regulatory ones like AMFI. We decided to move away from the socialist view of Nehrus after about four decades of being independent, leading to about a decade and half of higher growth but we have still maintained a hold on things. The risk taken are far lower. The banks have a minimum capital ratio of 9% stipulated by RBI unlike the US banks where the minimum is only 4% and a bank is supposed to be well capitalised at above 6%. And none of this applied to Investment Banks, a institution category that no longer exists in the US financial system.  This is also the thought shared by some of those European & Asian economies for who moved from extremes on either side to the centralised point of view.