"Bonus"

It funny the way American media and the politicians are shouting over the AIG executives being paid the bonus.

There are some who want the bonus to be either returned or capped for "xyz complicated reasons."

Then there are those who are fighting that it should be paid if not, "we should consider it, the end of capitalism. And that without 'bonus' senior management will not feel motivated to work and show performance. Therefore, the company (AIG) should pay them (the management) bonus and kick them out."

I checked up on answer.com for its meaning and their business dictionary said -

1. Compensation paid to an employee or employees for achieving a particular sales goal or organizational objective. This is above and beyond either a Commission or a Salary. A corporation achieving a 10% increase in profits may distribute part of the earnings as a bonus to its employees.

2. An unexpected benefit occurring as the result of making a particular action.

That sounds simple. Doesn't it? Maybe the simple reason for not paying the business is for failing to make any profit. So why not just state the simple reason rather than fuming and writing 1000 of words when you can finish it in less than 200.

And if some are still advocating that it (bonus) should be paid then just ask them, why? And, how do they define 'Bonus'? Also which private company pays bonus for failing?

I think these questions will be enough to get the desired results.

Curious Olympics?

Recently I received a mail from a friend of mine, given below is the text of that mail.

What do you say? why should a country bid to host games such as commonwealth, Olympics and so on...

I think there are two factors: pride, and economic growth. I think that growth comes first, and pride follows...

It helps create employment, infrastructure development. The expenditure that the govt incur to prepare for the games gets reimbursed through increase in tourism during those games, and thereafter the image that the country creates for itself attracts further investments and tourism.

So pride / image is just a means to faster growth, and the latter remains the primary objective.

On the other hand, there is a considerable risk: if the govt is not able to provide with sufficient facilities to the guests during those games, then its image takes a beating, and problems follow...

Well before proceeding to the answer, a simple understanding is must; life is not mathematical i.e. 2+2=4, this doesn't happen in life of an individual, entity, nation etc. It's complex!

So assuming that its about economic or pride first and then the there is a follow up of the element would be wrong. Let me put it this way, there are few essential things that happens.

- Government improves infrastructure for a simple reason to give employment and show there is work being allotted. This keeps 'social unrest' away.

- Some business man gets involved to earn money.

- Power brokers and some leaders or people near to the decision makers take their cut and support it also making sure they don't have to bear any downside.

- Now to make sure that the nation can be united there are different policy that statesmen adhere to for example feel superior and hate others is also one of them (have already mentioned this one in my previous blog)

Now it is not that any one factor be termed as major and the other as minor, nor can their be any priority. They all work in tandem. And some where in this whole circus it depends who is more powerful, the traders or the power mongers, who can go to any length to keep power to themselves.

The Mob Psychology

Man is an animal, albeit a social one. We all follow only the “mob psychology.” Best part, most of the time we don’t know that we are following the mob.

Probably we do it to avoid the constant clash of identity, not in all cases but definitely most.

When at home, each of us is an individual, then venturing outside the house, but within the block we identify ourselves with the family or the house. Doesn’t mean that we don’t pay heed the normal identity but to back our self as to ‘who I am?’, we tend to add a secondary identity.

Then once we are in the other part of the town, we tend to identify from out block/colony etc.

The moment one steps out of the city the identity gets bigger too, because while introducing we tend to give the name of the city.

Well just go outside your state or another part of the country and your identity gets promoted. Didn’t get it, the ‘bhaiya’ problem in Mumbai, does that sound familiar?

Take it a step further comes the country, People of Indian Origin (PIO), Ajit Jain may become the next leader of Berkshire, and we (Indians) have been talking about it. Before that we have celebrated every NRI’s achievement from Amartya Sen to Vikram Pandit

.......

Well above was more of an example based on geographical location and the general association we make. There are many others also, from race, religion, language etc.

We (One of my friend and me) define this phenomenon as – “we all are sort of thugs, hence we will always show our strength, be it by numbers of head count, technology, money or by any other means. With that we will also try to get a position that according to that individual is more ‘beneficial.’ And hence, most of ‘us’ (the common people) tend to come together and act as a mob. Not that ‘we’ gain anything out of it; the gainers are the one’s who manipulate and create these mobs (to be more precise, the leaders fuelling the mob psychology).”

Just to give a better instance, Bush’s rhetoric of –“us” and “them” – since 9/11 was an example of building the mob psyche. This worked well enough to get him in the White House the second time. It’s easiest to build on anger and fear. Closer at home we can see, 2002 Gujrat affair (minority bashing; “us & them”), the continuous chaos for years in J&K (again us & them) etc. Though there are times when the manipulators are not able to create any euphoria like the slogan India Shining was a disaster.

And with the coming of election and deteriorating economic conditions, it will not be surprising that the mob psychology will see more light than it should.

The logic of "Cycle"

Well to put in simple terms economic cycles can have two simple comparisons. And its applies to not just economic cycle but to business cycle as well.

The first cycle can be called is the non-market way, or a life’s way. To make it more comparable consider the life cycle of plant, animal or top of the food pyramid humans too. We live a certain number of years and then we die, this is the ultimate statistics. To put it to brutal terms there is no cycle in it; it’s a one way path which ends with death. Ok you need a bigger example then consider communist Russia, or you can look up any monarchs. They all survive for some years or few hundred years max and then get settled in the dust.

Then there is a second type of cycle - the market cycle – which is the natural cycle. Very much like the nature or a complete cycle; the reason mentioning it this way is because it is repetitive in nature, the patterns will be repeated though the time frame may not necessarily be exact. There will be summer, autumn/ monsoon, winter and spring. A country and its economy will have to see it, doesn’t matter if they want to or not.

So the current financial meltdown should not be surprising, since we all are part of this market cycle. The new millennium witnessed financial engineering on an unprecedented level. Complicated financial models were developed to make people reach in short span of time. Then should it be surprising that we have been hit by the draught of credit and flood of pink slips?

This is similar to the excess done by us humans; too much of deforestation or building big dams without considering the biosphere then there will be calamity like massive flood, draught and according to most recent problems that we (humans) have created global warming.

Escaping it is impossible; unless you can figure out a way to escape death, don’t count on getting out of this mess so fast. We all read in school or if not in school then by way of experience we should learn – “You reap what you sow”

Unfortunately public memory is very short. when the time is good rather than taking some of the tough decisions we get greedy; then we tend to forget the lessons learnt a bit too fast.