Books

Highest order lateral thinking

Freakonomics by Dr. Stephen J. Lewitt and Stephen J. Dubner; Penguin Books; Price: Rs.270; 320 pp

It’s ironical that post-independence India has produced many eminent economists — several of whom have risen to apex positions in heavyweight institutions such as the World Bank, IMF and ivy league universities in the US — but the Indian economy (until very recently) has been one of the worst performing worldwide. An explanation of this puzzling phenomenon can perhaps be found in this intriguing book first published in 2005, which has since obstinately remained on bestseller lists world over.

Jointly written by Dr. Steven J. Levitt, a Harvard and MIT alumnus who currently teaches economics at the University of Chicago and New York-based author-journalist Stephen J. Dubner, this book was born out of a profile of this maverick "most brilliant young economist in America" written by Dubner in the New York Times magazine in August 2003. In his essay, Dubner drew America’s attention to this "intuitionist" who has the uncanny ability and zest to "sift through a pile of data to find a story that no one else has found".

"In Levitt’s view, economics is a science with excellent tools for gaining answers but a serious shortage of interesting questions. His particular gift is the ability to ask such questions. For instance: If drug dealers make so much money why do they still live with their mothers? Which is more dangerous, a gun or a swimming pool? What really caused crime rates to plunge during the past decade? Do real estate agents have their clients’ interests at heart? Why do black parents give their children names that may hurt their career prospects? Do school-teachers cheat to meet high-stakes testing standards? Is sumo wrestling corrupt?" wrote Dubner while introducing Levitt to the public.

Freakonomics provides answers to all these intriguing questions — hitherto the preserve of sociologists and social scientists — from an economist’s perspective. The result is lateral thinking of the highest order which proves that economics need not be a boring, dismal science, as (unsuccessfully) practised in the subcontinent.

All of the above questions are answered cogently after considerable numbers crunching and data analysis. For instance the first question — why do so many drug dealers who are presumed to be very rich, live with their mothers (in western society adults living with their mothers is a marker of poverty rather than an indicator of natural love and affection) is answered after analysis of valuable data compiled by one Sudhir Venkatesh, a Ph D research student at the University of Chicago, who was providentially gifted a complete four-year record of a gang’s financial transactions bound in spiral notebooks. In the mid 1990s Venkatesh was duly conferred his doctorate and also won a three year stay at Harvard University’s Society of Fellows, where he met Levitt and told him about the spiral notebooks. The result was a detailed study which resolved the paradox of supposedly rich drug dealers unable to afford their own housing.

Likewise by analysing demographic trends in the US in the three decades leading upto the millennium year, Levitt explains that the sharp and unexpected drop in the 1990s of the crime wave which threatened to overwhelm America is less attributable to economic growth and better policing than to the US supreme court’s historic ruling in Roe vs. Wade (1973) which legalised abortion countrywide. By correlating birth data with crime registration records, Levitt proves that after abortion was legalised, 1.6 million mostly poor and unready mothers annually exercised the pro-choice right conferred upon them. Consequently birth rates of unwanted and potentially neglected children who would have taken to criminal ways, plunged dramatically. Hence the unexpected abatement of the rising crime wave of the 1960-1980s.

This methodology of studying records and data to arrive at startling conclusions is applied to prove that estate agents use scare tactics to force people to sell their homes at lower than market price; sumo wrestlers throw bouts; socio-economically insecure parents give their children exotic names which hurt their career prospects; teachers often tamper with children’s marksheets to make themselves look good, and that the backyard swimming pool is more life threatening to children than a gun in the house.

The sub-text of this ingenious book which has insufficiently impacted Indian society because it has been cursorily reviewed — and foolishly promoted as a comedian’s compendium — is the excellent record-keeping and research culture of American society. Levitt’s brilliant refutation of conventional wisdom in matters of great importance — crime, fraud, chicanery — would not have been possible but for the meticulous birth, crime and other records maintained by local government departments. Such a contrast with the haphazard, casual and downright neglectful manner in which records are maintained in India, not to speak of their inaccessibility.

Likewise, although assumed as a given by the authors, Freakonomics is a testimonial to the deeply-embedded research culture of America’s university system. Sudhir Venkatesh was fully funded and encouraged by the University of Chicago while he researched the lives and modus operandi of black gangs of the city’s southside and was awarded a Harvard scholarship for his effort — an inconceivable outcome in contemporary India’s government-dominated university system where research thesis papers tend to be shallow and inconsequential.

Readers of this book are likely to take away different insights from it. For this reviewer it offered a penetrating insight into America’s orderly local governance (record keeping), and research orientation of American academia (indicative of a continuous improvement mindset). It is this combination which has made the US the preferred destination of every potential emigrant worldwide. And of every genuine student.

Not the measure of the man

Institution Building in India — Some Experiences by J. Philip; Himalaya Publishing; Price: Rs.295; 242 pp

Although politicians — and indeed most lay people — are unlikely to agree, the real architects of modern India are its builders of durable institutions. For the simple reason that institutions survive individuals and that the strength of a nation is the sum total of the power of its institutions.

One such builder of strong institutions is J. Philip, founder president of the Bangalore-based Xavier Institute of Management and Entrepreneurship (XIME, estb.1991) and former director of IIM-Bangalore, who also acquired hands-on experience in industry prior to transforming into a career academic.

Philip’s progression from an academic to education entrepreneur was prompted by a tragic accident. In 1986, his 22-year-old daughter Maria was killed by a shunting engine while crossing a railway line in Madras. Three months before her death, Maria had extracted a promise from her father, who was director of the then strife-torn IIM-Bangalore, to harness his formidable knowledge and expertise to promote a model B-school independent of government control. It was a promise he was determined to fulfill.

After completion of his five year term (1985-90) as director of IIM-B and putting its house in order, XIME admitted its first batch of students in July 1991. Currently XIME which has matured into a fully-fledged B-school with excellent infrastructure facilities on its landscaped 4.3 acre campus in Electronics City, Bangalore is commonly ranked among the country’s top 20 B-schools.

However Institution Building in India is also a somewhat sketchy autobiography of Philip who began his career as a small-time lawyer in 1957 after graduating from Kerala University. Evidently dissatisfied with the legal profession, in 1958 he enrolled with XLRI, Jamshedpur. Offered a teaching position after graduation, Philip acquainted himself with the basics of business management education and the essentials of institutional development at this highly-rated B-school.

In 1971, Philip took charge of the floundering Management Training Institute (MTI) of the public sector Hindustan Steel (later renamed SAIL), India’s largest steel manufacturing company. Philip’s brief was to transform MTI — plagued with "bureaucracy, corruption, unaccountability, indiscipline, irresponsible union leaders, and non-performance" — into a model training institute for steel industry managers and executives within 12 months. It took him nine years (1971-1980).

In 1980 he made a switch from the austere environment of SAIL to the uber luxury ambience of the private sector Oberoi Group of Hotels where he took charge as vice-president (human resources). In his five eventful years at Oberoi, where he revamped the executive remuneration structure of the group and laid a firm foundation for this service sector group which has since matured into a globe-girdling chain of high-end hotels. In 1985 he was invited to set right the then strife-torn IIM-B.

In the chapter ‘My years with IIM-Bangalore’ Philip recounts how using a combination of persuasion, tact and authority he weakened the institute’s employees’ union which went on strike at the slightest excuse, instilled a work ethic in the faculty, introduced new academic programmes and bolstered student numbers, to transform the floundering IIM-B into one of the country’s most respected B-schools.

But while Institution Building in India offers valuable advice to academic (and business) leaders about building durable institutions, Philip has conspicuously failed to comment on the larger socio-economic scene. The result is a context-less autobiography and author-centred recitation of events following each other in rapid succession and recounted with excessive detail. The three decades 1960-90s were tumultuous years in the political and economic history of India, culminating in the forced liberalisation and deregulation of the economy in 1991. As a business management expert with experience of public and private corporates, Philip must have acquired valuable insights and insider information on how the Indian economy was pushed to the brink of bankruptcy. But these insights and information are not shared with the reader.

Moreover the book could have done with better editing, printing and more polished language. Excellent academics don’t necessarily make good writers. Given his pre-eminent status in business management education, Philip would have had little problem finding a professional biographer/writer to collaborate with to write this autobiography. The consequence is a book which doesn’t measure up to the author and his notable achievements.