Showing posts with label value. Show all posts
Showing posts with label value. Show all posts
Monday, 15 July 2024
Saturday, 27 January 2024
Saturday, 6 January 2024
Thursday, 4 January 2024
Monday, 18 September 2023
Monday, 14 August 2023
A level Economics: Are Universal Values a form of Imperialism?
They argue that universal values are the new imperialism, imposed on people who want security and stability instead. Here is why they are wrong argues The Economist
Universal and valuable
However, the deepest solution to insecurity lies in how countries cope with change, whether from global warming, artificial intelligence or the growing tensions between China and America. The countries that manage change well will be better at making society feel confident in the future. And that is where universal values come into their own. Tolerance, free expression and individual inquiry help harness change through consensus forged by reasoned debate and reform. There is no better way to bring about progress.
Universal values are much more than a Western piety. They are a mechanism that fortifies societies against insecurity. What the World Values Survey shows is that they are also hard-won.
The fall of the Berlin Wall in 1989 held out the promise that growing prosperity would foster freedom and tolerance, which in turn would create more prosperity. Unfortunately, that hope disappointed. Our analysis this week, based on the definitive global survey of social attitudes, shows just how naive it turned out to be.
Prosperity certainly rose. In the three decades to 2019, global output increased more than fourfold. Roughly 70% of the 2bn people living in extreme poverty escaped it. But individual freedom and tolerance evolved differently. Many people around the world continue to swear fealty to traditional beliefs, sometimes intolerant ones. And although they are much wealthier these days, they often have an us-and-them contempt for others.
The World Values Survey takes place every five years. The latest results, which go up to 2022, canvassed almost 130,000 people in 90 countries. Some places, such as Russia and Georgia, are not becoming more tolerant as they grow, but more tightly bound to traditional religious values instead. At the same time, young people in Islamic and Orthodox countries are barely more individualistic or secular than their elders. By contrast, the young in northern Europe and America are racing ahead. Countries where burning the Koran is tolerated and those where it is a crime look on each other with growing incomprehension.
On the face of it, all this supports the campaign by China’s Communist Party to dismiss universal values as racist neo-imperialism. It argues that white Western elites are imposing their own version of freedom and democracy on people who want security and stability instead.
In fact, the survey suggests something more subtle. Contrary to the Chinese argument, universal values are more valuable than ever. Start with the subtlety. China is right that people want security. The survey shows that a sense of threat drives people to seek refuge in family and racial or national groups, while tradition and organised religion offer solace.
This is one way to see America’s doomed attempts to establish democracy in Iraq and Afghanistan, as well as the failure of the Arab spring. Amid lawlessness and upheaval, some people sought safety in their tribe or their sect. Hoping that order would be restored, some welcomed the return of dictators.
The subtlety the Chinese argument misses is the fact that cynical politicians sometimes set out to engineer insecurity because they know that frightened people yearn for strongman rule. That is what Bashar al-Assad did in Syria when he released murderous jihadists from his country’s jails at the start of the Arab spring. He bet that the threat of Sunni violence would cause Syrians from other sects to rally round him.
Something similar happened in Russia. After economic collapse and jarring reforms in the 1990s, Russians thrived in the 2000s. Between 1999 and 2013, gdp per head increased 12-fold in dollar terms. Yet that did not dispel their accumulated dread. President Vladimir Putin consistently played on their ethno-nationalist insecurities, especially when growth later faltered. That has culminated in his disastrous invasion of Ukraine.
Even in established democracies, polarising politicians like Donald Trump and Jair Bolsonaro, former presidents of America and Brazil, saw that they could exploit left-behind voters’ anxieties to mobilise support. So they set about warning that their political opponents wanted to destroy their supporters’ way of life and threatened the very survival of their countries. That has, in turn, spread alarm and hostility on the other side.
Even allowing for this, the Chinese claim that universal values are an imposition is upside down. From Chile to Japan, the World Values Survey provides examples where growing security really does seem to lead to tolerance and greater individual expression. Nothing suggests that Western countries are unique in that. The real question is how to help people feel more secure.
China’s answer is based on creating order for a loyal, deferential majority that stays out of politics and avoids defying their rulers. However, within that model lurks deep insecurity. It is a majoritarian system in which lines move, sometimes arbitrarily or without warning—especially when power passes unpredictably from one party chief to another.
A better answer comes from prosperity built on the rule of law. Wealthy countries have more resources to spend on dealing with disasters, such as pandemic disease. Likewise, confident in their savings and the social safety-net, the citizens of rich countries know that they are less vulnerable to the chance events that wreck lives elsewhere.
Prosperity certainly rose. In the three decades to 2019, global output increased more than fourfold. Roughly 70% of the 2bn people living in extreme poverty escaped it. But individual freedom and tolerance evolved differently. Many people around the world continue to swear fealty to traditional beliefs, sometimes intolerant ones. And although they are much wealthier these days, they often have an us-and-them contempt for others.
The World Values Survey takes place every five years. The latest results, which go up to 2022, canvassed almost 130,000 people in 90 countries. Some places, such as Russia and Georgia, are not becoming more tolerant as they grow, but more tightly bound to traditional religious values instead. At the same time, young people in Islamic and Orthodox countries are barely more individualistic or secular than their elders. By contrast, the young in northern Europe and America are racing ahead. Countries where burning the Koran is tolerated and those where it is a crime look on each other with growing incomprehension.
On the face of it, all this supports the campaign by China’s Communist Party to dismiss universal values as racist neo-imperialism. It argues that white Western elites are imposing their own version of freedom and democracy on people who want security and stability instead.
In fact, the survey suggests something more subtle. Contrary to the Chinese argument, universal values are more valuable than ever. Start with the subtlety. China is right that people want security. The survey shows that a sense of threat drives people to seek refuge in family and racial or national groups, while tradition and organised religion offer solace.
This is one way to see America’s doomed attempts to establish democracy in Iraq and Afghanistan, as well as the failure of the Arab spring. Amid lawlessness and upheaval, some people sought safety in their tribe or their sect. Hoping that order would be restored, some welcomed the return of dictators.
The subtlety the Chinese argument misses is the fact that cynical politicians sometimes set out to engineer insecurity because they know that frightened people yearn for strongman rule. That is what Bashar al-Assad did in Syria when he released murderous jihadists from his country’s jails at the start of the Arab spring. He bet that the threat of Sunni violence would cause Syrians from other sects to rally round him.
Something similar happened in Russia. After economic collapse and jarring reforms in the 1990s, Russians thrived in the 2000s. Between 1999 and 2013, gdp per head increased 12-fold in dollar terms. Yet that did not dispel their accumulated dread. President Vladimir Putin consistently played on their ethno-nationalist insecurities, especially when growth later faltered. That has culminated in his disastrous invasion of Ukraine.
Even in established democracies, polarising politicians like Donald Trump and Jair Bolsonaro, former presidents of America and Brazil, saw that they could exploit left-behind voters’ anxieties to mobilise support. So they set about warning that their political opponents wanted to destroy their supporters’ way of life and threatened the very survival of their countries. That has, in turn, spread alarm and hostility on the other side.
Even allowing for this, the Chinese claim that universal values are an imposition is upside down. From Chile to Japan, the World Values Survey provides examples where growing security really does seem to lead to tolerance and greater individual expression. Nothing suggests that Western countries are unique in that. The real question is how to help people feel more secure.
China’s answer is based on creating order for a loyal, deferential majority that stays out of politics and avoids defying their rulers. However, within that model lurks deep insecurity. It is a majoritarian system in which lines move, sometimes arbitrarily or without warning—especially when power passes unpredictably from one party chief to another.
A better answer comes from prosperity built on the rule of law. Wealthy countries have more resources to spend on dealing with disasters, such as pandemic disease. Likewise, confident in their savings and the social safety-net, the citizens of rich countries know that they are less vulnerable to the chance events that wreck lives elsewhere.
Universal and valuable
However, the deepest solution to insecurity lies in how countries cope with change, whether from global warming, artificial intelligence or the growing tensions between China and America. The countries that manage change well will be better at making society feel confident in the future. And that is where universal values come into their own. Tolerance, free expression and individual inquiry help harness change through consensus forged by reasoned debate and reform. There is no better way to bring about progress.
Universal values are much more than a Western piety. They are a mechanism that fortifies societies against insecurity. What the World Values Survey shows is that they are also hard-won.
Friday, 23 June 2023
Fallacies of Capitalism 13: The Market as the Sole Arbiter of Value
Here are examples that illustrate how the "market as the sole arbiter of value" fallacy fails to account for the social, cultural, and non-monetary dimensions of human well-being and progress:
Environmental degradation: The market's reliance on monetary transactions often undervalues the importance of environmental sustainability. For instance, the extraction of natural resources like forests or minerals may generate profits in the short term, but the long-term ecological consequences, such as deforestation or habitat destruction, are not adequately factored into market prices. This disregard for environmental costs can lead to irreversible damage to ecosystems and undermine the well-being of future generations.
Inequality and social justice: The market's emphasis on monetary outcomes can exacerbate social inequalities. For example, in education, market-driven systems that rely heavily on private funding and tuition fees may limit access to quality education for low-income individuals, perpetuating educational disparities and social inequality. The market's narrow focus on financial value fails to account for the importance of equal opportunities and social justice in promoting overall well-being and societal progress.
Non-monetary aspects of well-being: The market often overlooks the value of non-monetary aspects of well-being. Consider the work of caregivers, such as stay-at-home parents or individuals caring for elderly family members. Their contributions to society, while not monetarily compensated, are vital for the well-being of families and communities. However, the market's narrow focus on monetary transactions does not adequately recognise or compensate these essential caregiving roles.
Cultural diversity and preservation: The market's emphasis on profitability may undervalue cultural diversity and heritage. For instance, traditional arts and crafts, indigenous practices, or endangered languages may not have immediate market demand or generate significant financial returns. Consequently, these cultural elements might be neglected or disappear due to insufficient support or funding. The market's failure to account for the intrinsic value of cultural diversity can lead to the erosion of rich cultural traditions and the loss of unique identities within societies.
Public goods and collective action: Public goods, such as public parks, infrastructure, or scientific research, provide widespread benefits but are often undersupplied by the market. For example, the market may not efficiently allocate resources for basic scientific research that does not have immediate commercial applications. Neglecting such investments can hinder long-term progress, innovation, and societal well-being. The market's focus on profitability may limit the provision of public goods that are essential for collective well-being and social advancement.
By recognising these examples, it becomes evident that relying solely on the market as the sole arbiter of value neglects crucial aspects of human well-being and progress. Policymakers and societies need to consider a broader range of factors, including social, cultural, and non-monetary dimensions, to foster sustainable development, reduce inequalities, and promote a more comprehensive understanding of human welfare.
Saturday, 10 September 2022
Sunday, 5 June 2022
THE PERFORMATIVE POLITICIAN
Nadeem F Paracha in The Dawn
Illustration by AbroPopulism is a way of framing political ideas that can be filled with a verity of ideologies (C. Mudde in Current History, 2014). These ideologies can come from the left or the right. Populism in itself is not a distinct ideology. It is a performative political style.
No matter where it’s coming from, it is manifested through a particular set of animated gestures, images, tones and symbols (B. Moffitt, The Global Rise of Populism, 2016). At the core of it is a narrative containing two main ‘villains’: The ‘elites’ and ‘the other’. Elites are described as being corrupt. And ‘the other’ is demonised as being a threat to the beliefs and values of the ‘majority’.
Populists begin by glorifying the ‘besieged’ polity as noble. They then begin to frame the polity’s civilisation as ‘sacred’. Therefore, the mission to eradicate threats, in this context, becomes a sacred cause. The far-right parties in Europe want to protect Europe’s Christian identity from Muslim intruders. They see Muslim immigration to European countries as an invasion.
Yet, these far-right groups are largely secular. They do not propose the creation of a Christian theocracy. Instead, they understand modern European civilisation as the outcome of its illustrious Christian past. They frame the Muslim immigrant as ‘the other’ who has arrived from a lesser civilisation. So, according to far-right populists in Europe, the Muslim other — tolerated and facilitated by a political elite — starts to undermine the Christian values that aided European civilisations to become ‘great’.
Ironically, most far-right outfits in Europe that espouse such notions are largely critical of conventional Christian institutions. They see them as being too conservative towards modern European values. Far-right outfits are not overtly religious at all — even though their fiery populist rhetoric frames their cause as a sacred undertaking to protect the civilisational role of Christianity in shaping European societies.
Thus, European far-right populists adopt Christianity not as a theocratic-political doctrine, but as an identity marker to differentiate themselves from Muslims (Saving The People, ed. O. Roy, 2016). It is therefore naive to understand issues such as Islamophobia as a tussle between Christianity and Islam. Neither is it a clash between modernity and anti-modernity, as such.
The actions of some Islamist extremists, and the manner in which these were framed by popular media, made Muslim migrants in the West a community that could be easily moulded into a feared ‘other’ by populists. If one takes out the Muslim migrants from the equation, the core narrative of far-right populists will lose its sting.
Muslims in this regard have become ‘the other’ in India as well. Hindu nationalism is challenging the old, ‘secular’ political elite by claiming that this elite was serving Muslim interests to maintain its political hegemony, and that it was repressing values, beliefs and memories of a Hindu civilisation that was thriving before being invaded and dismantled by Muslim invaders.
Here too, the populist Hindu nationalists are not necessarily devout and pious. And when they are, then the actions in this respect are largely performative rather than doctrinal. That’s why, today, a harmless Hindu ritual and the act of emotionally or physically assaulting a Muslim, may carry similar performative connotations. For example, a militant Hindu nationalist mob attacking a Muslim can be conceived by the attackers as a sacred ritual.
Same is the case in Pakistan. The researcher Muhammad Amir Rana has conducted several interviews of young Islamist militants who were arrested and put in rehabilitation programmes. Almost all of them were told by their ‘handlers’ that self-sacrifice was a means to create an Islamic state/caliphate that would wipe out poverty, corruption and immorality, and provide justice. This idea was programmed into them to create a ‘self’ in relation to an opposite or ‘the other’. The other in this respect were heretics and infidels who were conspiring to destroy Islam.
When an Islamist suicide bomber explodes him/herself in public, or when extremists desecrate Ahmadiyya graves, or a mob attacks an alleged blasphemer, each one of these believe they are undertaking a sacred ritual that is not that different from the harmless ones. But Islamist militants are not populists. They have dogmatic doctrines or are deeply indoctrinated.
Not so, the populists. Populists are great hijackers of ideas. There’s nothing original or deep about them. Everything remains on the surface. Take, for instance, the recently ousted Pakistani PM Imran Khan. He unabashedly steals ideas from the left and the right. His core constituency, which is not so attuned to history, perceives these ideas as being entirely new. Everything he says or claims to have done, becomes ‘for the first time in the history of Pakistan.’
But being a populist, it wasn’t enough for Khan to frame his ‘struggle’ (against ‘corrupt elites’) as a noble cause. It needed to be manifested as a sacred conviction. So, from 2014 onwards, he increasingly began to lace his speeches with allusions of him fighting for justice and morality by treading a path laid out by Islam’s sacred texts and personalities. He then began to explain this undertaking as a ‘jihad’.
These were/are pure populist manoeuvres and entirely performative. Once the cause transformed into becoming a ‘jihad’, it not only required rhetoric culled from Islamist evangelists and then put in the context of a ‘political struggle’, but it also needed performed piety — carrying prayer beads, being constantly photographed while saying obligatory Muslim prayers, embracing famous preachers, etc.
And since ‘jihad’ in the popular imagination is often perceived to be something aggressive and manly, Khan poses as an outspoken and fearless saviour of not only the people of Pakistan, but also of the ‘ummah’.
Yet, by all accounts, he is not very religious. He’s not secular either. But this is how populists are. They are basically nothing. They are great performers who can draw devotion from a great many people — especially those who are struggling to formulate a political identity for themselves. There are no shortcuts to this. But populists provide them shortcuts.
Khan is a curious mixture of an Islamist and a brawler. But both of these attributes mainly reside on the surface and in his rhetoric. The only aim one can say that is lingering underneath the surface is an inexhaustible ambition to be constantly admired and, of course, rule as a North Korean premier does. Conjuring lots of adulation, but zero opposition.
Wednesday, 6 April 2022
Saturday, 19 February 2022
Monday, 20 September 2021
Tuesday, 28 July 2020
America's 'untouchables': the silent power of the caste system
We cannot fully understand the current upheavals, or almost any turning point in American history, without accounting for the human pyramid that is encrypted into us all: the caste system. By Isabel Wilkerson in The Guardian
In the winter of 1959, after leading the Montgomery bus boycott that arose from the arrest of Rosa Parks and before the trials and triumphs to come, Martin Luther King Jr and his wife, Coretta, landed in India, in the city then known as Bombay, to visit the land of Mahatma Gandhi, the father of nonviolent protest. They were covered in garlands upon arrival, and King told reporters: “To other countries, I may go as a tourist, but to India I come as a pilgrim.”
He had long dreamed of going to India, and they stayed an entire month. King wanted to see for himself the place whose fight for freedom from British rule had inspired his fight for justice in America. He wanted to see the so-called “untouchables”, the lowest caste in the ancient Indian caste system, whom he had read about and had sympathy for, but who had still been left behind after India gained its independence the decade before.
He discovered that people in India had been following the trials of his own oppressed people in the US, and knew of the bus boycott he had led. Wherever he went, the people on the streets of Bombay and Delhi crowded around him for an autograph. At one point in their trip, King and his wife journeyed to the southern tip of the country, to the city of Trivandrum in the state of Kerala, and visited with high-school students whose families had been untouchables. The principal made the introduction.
“Young people,” he said, “I would like to present to you a fellow untouchable from the United States of America.”
King was floored. He had not expected that term to be applied to him. He was, in fact, put off by it at first. He had flown in from another continent, and had dined with the prime minister. He did not see the connection, did not see what the Indian caste system had to do directly with him, did not immediately see why the lowest-caste people in India would view him, an American Negro and a distinguished visitor, as low-caste like themselves, see him as one of them. “For a moment,” he wrote, “I was a bit shocked and peeved that I would be referred to as an untouchable.”
Then he began to think about the reality of the lives of the people he was fighting for – 20 million people, consigned to the lowest rank in the US for centuries, “still smothering in an airtight cage of poverty,” quarantined in isolated ghettoes, exiled in their own country.
And he said to himself: “Yes, I am an untouchable, and every negro in the United States of America is an untouchable.” In that moment, he realised that the land of the free had imposed a caste system not unlike the caste system of India, and that he had lived under that system all of his life. It was what lay beneath the forces he was fighting in the US.
In the winter of 1959, after leading the Montgomery bus boycott that arose from the arrest of Rosa Parks and before the trials and triumphs to come, Martin Luther King Jr and his wife, Coretta, landed in India, in the city then known as Bombay, to visit the land of Mahatma Gandhi, the father of nonviolent protest. They were covered in garlands upon arrival, and King told reporters: “To other countries, I may go as a tourist, but to India I come as a pilgrim.”
He had long dreamed of going to India, and they stayed an entire month. King wanted to see for himself the place whose fight for freedom from British rule had inspired his fight for justice in America. He wanted to see the so-called “untouchables”, the lowest caste in the ancient Indian caste system, whom he had read about and had sympathy for, but who had still been left behind after India gained its independence the decade before.
He discovered that people in India had been following the trials of his own oppressed people in the US, and knew of the bus boycott he had led. Wherever he went, the people on the streets of Bombay and Delhi crowded around him for an autograph. At one point in their trip, King and his wife journeyed to the southern tip of the country, to the city of Trivandrum in the state of Kerala, and visited with high-school students whose families had been untouchables. The principal made the introduction.
“Young people,” he said, “I would like to present to you a fellow untouchable from the United States of America.”
King was floored. He had not expected that term to be applied to him. He was, in fact, put off by it at first. He had flown in from another continent, and had dined with the prime minister. He did not see the connection, did not see what the Indian caste system had to do directly with him, did not immediately see why the lowest-caste people in India would view him, an American Negro and a distinguished visitor, as low-caste like themselves, see him as one of them. “For a moment,” he wrote, “I was a bit shocked and peeved that I would be referred to as an untouchable.”
Then he began to think about the reality of the lives of the people he was fighting for – 20 million people, consigned to the lowest rank in the US for centuries, “still smothering in an airtight cage of poverty,” quarantined in isolated ghettoes, exiled in their own country.
And he said to himself: “Yes, I am an untouchable, and every negro in the United States of America is an untouchable.” In that moment, he realised that the land of the free had imposed a caste system not unlike the caste system of India, and that he had lived under that system all of his life. It was what lay beneath the forces he was fighting in the US.
Martin Luther King Jr visiting India in 1959. Photograph: Rangaswamy Satakopan/AP
What Martin Luther King Jr, recognised about his country that day had begun long before the ancestors of our ancestors had taken their first breaths. More than a century and a half before the American Revolution, a human hierarchy had evolved on the contested soil of what would become the United States – a concept of birthright, the temptation of entitled expansion that would set in motion what has been called the world’s oldest democracy and, with it, a ranking of human value and usage.
It would twist the minds of men, as greed and self-reverence eclipsed human conscience and allowed the conquering men to take land and human bodies that they convinced themselves they had a right to. If they were to convert this wilderness and civilise it to their liking, they decided, they would need to conquer, enslave or remove the people already on it, and transport those they deemed lesser beings in order to tame and work the land to extract the wealth that lay in the rich soil and shorelines.
To justify their plans, they took pre-existing notions of their own centrality, reinforced by their self-interested interpretation of the Bible, and created a hierarchy of who could do what, who could own what, who was on top and who was on the bottom and who was in between. There emerged a ladder of humanity, global in nature, as the upper-rung people would descend from Europe, with rungs inside that designation – the English Protestants at the very top, as their guns and resources would ultimately prevail in the bloody fight for North America. Everyone else would rank in descending order, on the basis of their proximity to those deemed most superior. The ranking would continue downward until one arrived at the very bottom: African captives transported in order to build the New World and to serve the victors for all their days, one generation after the next, for 12 generations.
There developed a caste system, based upon what people looked like – an internalised ranking, unspoken, unnamed and unacknowledged by everyday citizens even as they go about their lives adhering to it and acting upon it subconsciously, to this day. Just as the studs and joists and beams that form the infrastructure of a building are not visible to those who live in it, so it is with caste. Its very invisibility is what gives it power and longevity. And though it may move in and out of consciousness, though it may flare and reassert itself in times of upheaval and recede in times of relative calm, it is an ever-present through-line in the country’s operation.
A caste system is an artificial construction, a fixed and embedded ranking of human value that sets the presumed supremacy of one group against the presumed inferiority of others, on the basis of ancestry and often of immutable traits – traits that would be neutral in the abstract, but are ascribed life-and-death meaning in a hierarchy favouring the dominant caste whose forebears designed it. A caste system uses rigid, often arbitrary boundaries to keep the ranked groupings apart, distinct from one another and in their assigned places.
Throughout human history, three caste systems have stood out. The tragically accelerated, chilling and officially vanquished caste system of Nazi Germany. The lingering, millennia-long caste system of India. And the shape-shifting, unspoken, race-based caste pyramid in the US. Each version relied on stigmatising those deemed inferior in order to justify the dehumanisation necessary to keep the lowest-ranked people at the bottom, and to rationalise the protocols of enforcement. A caste system endures because it is often justified as divine will, originating from a sacred text or the presumed laws of nature, reinforced throughout the culture and passed down through the generations.
As we go about our daily lives, caste is the wordless usher in a darkened theatre, the flashlight cast down the aisles, guiding us to our assigned seats for a performance. The hierarchy of caste is not about feelings or morality. It is about power: which groups have it and which do not. It is about resources: which caste is seen as worthy of them, and which are not; who gets to acquire and control them, and who does not. It is about respect, authority and assumptions of competence: who is accorded these, and who is not.
As a means of assigning value to entire swaths of humankind, caste guides each of us, often beyond the reaches of our awareness. It embeds into our bones an unconscious ranking of human characteristics, and sets forth the rules, expectations and stereotypes that have been used to justify brutalities against entire groups within our species. In the American caste system, the signal of rank is what we call race, the division of humans on the basis of their appearance. In the US, race is the primary tool and the visible decoy – the frontman – for caste.
What Martin Luther King Jr, recognised about his country that day had begun long before the ancestors of our ancestors had taken their first breaths. More than a century and a half before the American Revolution, a human hierarchy had evolved on the contested soil of what would become the United States – a concept of birthright, the temptation of entitled expansion that would set in motion what has been called the world’s oldest democracy and, with it, a ranking of human value and usage.
It would twist the minds of men, as greed and self-reverence eclipsed human conscience and allowed the conquering men to take land and human bodies that they convinced themselves they had a right to. If they were to convert this wilderness and civilise it to their liking, they decided, they would need to conquer, enslave or remove the people already on it, and transport those they deemed lesser beings in order to tame and work the land to extract the wealth that lay in the rich soil and shorelines.
To justify their plans, they took pre-existing notions of their own centrality, reinforced by their self-interested interpretation of the Bible, and created a hierarchy of who could do what, who could own what, who was on top and who was on the bottom and who was in between. There emerged a ladder of humanity, global in nature, as the upper-rung people would descend from Europe, with rungs inside that designation – the English Protestants at the very top, as their guns and resources would ultimately prevail in the bloody fight for North America. Everyone else would rank in descending order, on the basis of their proximity to those deemed most superior. The ranking would continue downward until one arrived at the very bottom: African captives transported in order to build the New World and to serve the victors for all their days, one generation after the next, for 12 generations.
There developed a caste system, based upon what people looked like – an internalised ranking, unspoken, unnamed and unacknowledged by everyday citizens even as they go about their lives adhering to it and acting upon it subconsciously, to this day. Just as the studs and joists and beams that form the infrastructure of a building are not visible to those who live in it, so it is with caste. Its very invisibility is what gives it power and longevity. And though it may move in and out of consciousness, though it may flare and reassert itself in times of upheaval and recede in times of relative calm, it is an ever-present through-line in the country’s operation.
A caste system is an artificial construction, a fixed and embedded ranking of human value that sets the presumed supremacy of one group against the presumed inferiority of others, on the basis of ancestry and often of immutable traits – traits that would be neutral in the abstract, but are ascribed life-and-death meaning in a hierarchy favouring the dominant caste whose forebears designed it. A caste system uses rigid, often arbitrary boundaries to keep the ranked groupings apart, distinct from one another and in their assigned places.
Throughout human history, three caste systems have stood out. The tragically accelerated, chilling and officially vanquished caste system of Nazi Germany. The lingering, millennia-long caste system of India. And the shape-shifting, unspoken, race-based caste pyramid in the US. Each version relied on stigmatising those deemed inferior in order to justify the dehumanisation necessary to keep the lowest-ranked people at the bottom, and to rationalise the protocols of enforcement. A caste system endures because it is often justified as divine will, originating from a sacred text or the presumed laws of nature, reinforced throughout the culture and passed down through the generations.
As we go about our daily lives, caste is the wordless usher in a darkened theatre, the flashlight cast down the aisles, guiding us to our assigned seats for a performance. The hierarchy of caste is not about feelings or morality. It is about power: which groups have it and which do not. It is about resources: which caste is seen as worthy of them, and which are not; who gets to acquire and control them, and who does not. It is about respect, authority and assumptions of competence: who is accorded these, and who is not.
As a means of assigning value to entire swaths of humankind, caste guides each of us, often beyond the reaches of our awareness. It embeds into our bones an unconscious ranking of human characteristics, and sets forth the rules, expectations and stereotypes that have been used to justify brutalities against entire groups within our species. In the American caste system, the signal of rank is what we call race, the division of humans on the basis of their appearance. In the US, race is the primary tool and the visible decoy – the frontman – for caste.
Racial segregation at a bus station in North Carolina in 1940. Photograph: PhotoQuest/Getty Images
Race does the heavy lifting for a caste system that demands a means of human division. If we have been trained to see humans in the language of race, then caste is the underlying grammar that we encode as children, as when learning our mother tongue. Caste, like grammar, becomes an invisible guide not only to how we speak, but to how we process information – the autonomic calculations that figure into a sentence without our having to think about it. Many of us have never taken a class in grammar, yet we know in our bones that a transitive verb takes an object, that a subject needs a predicate, and we know without thinking the difference between third-person singular and third-person plural. We might mention “race”, referring to people as black or white or Latino or Asian or indigenous, when what lies beneath each label is centuries of history, and the assigning of assumptions and values to physical features in a structure of human hierarchy.
What people look like – or rather, the race they have been assigned, or are perceived to belong to – is the visible cue to their caste. It is the historic flashcard to the public, showing how people are to be treated, where they are expected to live, what kinds of positions they are expected to hold, whether they belong in this section of town or that seat in a boardroom, whether they should be expected to speak with authority on this or that subject, whether they will be administered pain relief in a hospital, whether their neighbourhood is likely to adjoin a toxic waste site or to have contaminated water flowing from their taps, whether they are more or less likely to survive childbirth in the most advanced nation in the world, whether they may be shot by authorities with impunity.
Caste and race are neither synonymous nor mutually exclusive. They can and do coexist in the same culture, and serve to reinforce each other. Caste is the bones, race the skin. Race is what we can see, the physical traits that have been given arbitrary meaning and become shorthand for who a person is. Caste is the powerful infrastructure that holds each group in its place.
Caste is fixed and rigid. Race is fluid and superficial, subject to periodic redefinition to meet the needs of the dominant caste in what is now the US. While the requirements to qualify as white have changed over the centuries, the fact of a dominant caste has remained constant from its inception – whoever fit the definition of white, at whatever point in history, was granted the legal rights and privileges of the dominant caste. Perhaps more critically and tragically, at the other end of the ladder, the subordinated caste, too, has been fixed from the beginning as the psychological floor beneath which all other castes cannot fall.
Caste is not a term often applied to the US. It is considered the language of India or feudal Europe. But some anthropologists and scholars of race in the US have made use of the term for decades. Before the modern era, one of the earliest Americans to take up the idea of caste was the antebellum abolitionist and US senator Charles Sumner, as he fought against segregation in the north. “The separation of children in the Public Schools of Boston, on account of color or race,” he wrote, “is in the nature of Caste, and on this account is a violation of Equality.” He quoted a fellow humanitarian: “Caste makes distinctions among creatures where God has made none.”
We cannot fully understand the current upheavals, or almost any turning point in American history, without accounting for the human pyramid that is encrypted into us all. The caste system, and the attempts to defend, uphold or abolish the hierarchy, underlay the American civil war and the civil rights movement a century later, and pervade the politics of the 21st-century US. Just as DNA is the code of instructions for cell development, caste has been the operating system for economic, political and social interaction in the US since the time of its gestation.
In 1944, the Swedish social economist Gunnar Myrdal and a team of the most talented researchers in the country produced a 2,800-page, two-volume work that is still considered perhaps the most comprehensive study of race in the US. It was titled An American Dilemma. Myrdal’s investigation into race led him to the realisation that the most accurate term to describe the workings of US society was not race, but caste – and that perhaps it was the only term that really addressed what seemed a stubbornly fixed ranking of human value.
The anthropologist Ashley Montagu was among the first to argue that race is a human invention – a social construct, not a biological one – and that in seeking to understand the divisions and disparities in the US, we have typically fallen into the quicksand and mythology of race. “When we speak of ‘the race problem in America’,” he wrote in 1942, “what we really mean is the caste system and the problems which that caste system creates in America.”
There was little confusion among some of the leading white supremacists of the previous century as to the connections between India’s caste system and that of the American south, where the purest legal caste system in the US existed. “A record of the desperate efforts of the conquering upper classes in India to preserve the purity of their blood persists to until this very day in their carefully regulated system of castes,” wrote Madison Grant, a popular eugenicist, in his 1916 bestseller, The Passing of the Great Race. “In our Southern States, Jim Crow cars and social discriminations have exactly the same purpose.”
In 1913, Bhimrao Ambedkar, a man born to the bottom of India’s caste system, born an untouchable in the central provinces, arrived in New York City from Bombay. He came to the US to study economics as a graduate student at Columbia, focused on the differences between race, caste and class. Living just blocks from Harlem, he would see first-hand the condition of his counterparts in the US. He completed his thesis just as the film The Birth of a Nation – the incendiary homage to the Confederate south – premiered in New York in 1915. He would study further in London and return to India to become the foremost leader of the untouchables, and a pre-eminent intellectual who would help draft a new Indian constitution. He would work to dispense with the demeaning term “untouchable”. He rejected the term Harijans, which had been applied to them by Gandhi, to their minds patronisingly. He renamed his people Dalits, meaning “broken people” – which, due to the caste system, they were.
Race does the heavy lifting for a caste system that demands a means of human division. If we have been trained to see humans in the language of race, then caste is the underlying grammar that we encode as children, as when learning our mother tongue. Caste, like grammar, becomes an invisible guide not only to how we speak, but to how we process information – the autonomic calculations that figure into a sentence without our having to think about it. Many of us have never taken a class in grammar, yet we know in our bones that a transitive verb takes an object, that a subject needs a predicate, and we know without thinking the difference between third-person singular and third-person plural. We might mention “race”, referring to people as black or white or Latino or Asian or indigenous, when what lies beneath each label is centuries of history, and the assigning of assumptions and values to physical features in a structure of human hierarchy.
What people look like – or rather, the race they have been assigned, or are perceived to belong to – is the visible cue to their caste. It is the historic flashcard to the public, showing how people are to be treated, where they are expected to live, what kinds of positions they are expected to hold, whether they belong in this section of town or that seat in a boardroom, whether they should be expected to speak with authority on this or that subject, whether they will be administered pain relief in a hospital, whether their neighbourhood is likely to adjoin a toxic waste site or to have contaminated water flowing from their taps, whether they are more or less likely to survive childbirth in the most advanced nation in the world, whether they may be shot by authorities with impunity.
Caste and race are neither synonymous nor mutually exclusive. They can and do coexist in the same culture, and serve to reinforce each other. Caste is the bones, race the skin. Race is what we can see, the physical traits that have been given arbitrary meaning and become shorthand for who a person is. Caste is the powerful infrastructure that holds each group in its place.
Caste is fixed and rigid. Race is fluid and superficial, subject to periodic redefinition to meet the needs of the dominant caste in what is now the US. While the requirements to qualify as white have changed over the centuries, the fact of a dominant caste has remained constant from its inception – whoever fit the definition of white, at whatever point in history, was granted the legal rights and privileges of the dominant caste. Perhaps more critically and tragically, at the other end of the ladder, the subordinated caste, too, has been fixed from the beginning as the psychological floor beneath which all other castes cannot fall.
Caste is not a term often applied to the US. It is considered the language of India or feudal Europe. But some anthropologists and scholars of race in the US have made use of the term for decades. Before the modern era, one of the earliest Americans to take up the idea of caste was the antebellum abolitionist and US senator Charles Sumner, as he fought against segregation in the north. “The separation of children in the Public Schools of Boston, on account of color or race,” he wrote, “is in the nature of Caste, and on this account is a violation of Equality.” He quoted a fellow humanitarian: “Caste makes distinctions among creatures where God has made none.”
We cannot fully understand the current upheavals, or almost any turning point in American history, without accounting for the human pyramid that is encrypted into us all. The caste system, and the attempts to defend, uphold or abolish the hierarchy, underlay the American civil war and the civil rights movement a century later, and pervade the politics of the 21st-century US. Just as DNA is the code of instructions for cell development, caste has been the operating system for economic, political and social interaction in the US since the time of its gestation.
In 1944, the Swedish social economist Gunnar Myrdal and a team of the most talented researchers in the country produced a 2,800-page, two-volume work that is still considered perhaps the most comprehensive study of race in the US. It was titled An American Dilemma. Myrdal’s investigation into race led him to the realisation that the most accurate term to describe the workings of US society was not race, but caste – and that perhaps it was the only term that really addressed what seemed a stubbornly fixed ranking of human value.
The anthropologist Ashley Montagu was among the first to argue that race is a human invention – a social construct, not a biological one – and that in seeking to understand the divisions and disparities in the US, we have typically fallen into the quicksand and mythology of race. “When we speak of ‘the race problem in America’,” he wrote in 1942, “what we really mean is the caste system and the problems which that caste system creates in America.”
There was little confusion among some of the leading white supremacists of the previous century as to the connections between India’s caste system and that of the American south, where the purest legal caste system in the US existed. “A record of the desperate efforts of the conquering upper classes in India to preserve the purity of their blood persists to until this very day in their carefully regulated system of castes,” wrote Madison Grant, a popular eugenicist, in his 1916 bestseller, The Passing of the Great Race. “In our Southern States, Jim Crow cars and social discriminations have exactly the same purpose.”
In 1913, Bhimrao Ambedkar, a man born to the bottom of India’s caste system, born an untouchable in the central provinces, arrived in New York City from Bombay. He came to the US to study economics as a graduate student at Columbia, focused on the differences between race, caste and class. Living just blocks from Harlem, he would see first-hand the condition of his counterparts in the US. He completed his thesis just as the film The Birth of a Nation – the incendiary homage to the Confederate south – premiered in New York in 1915. He would study further in London and return to India to become the foremost leader of the untouchables, and a pre-eminent intellectual who would help draft a new Indian constitution. He would work to dispense with the demeaning term “untouchable”. He rejected the term Harijans, which had been applied to them by Gandhi, to their minds patronisingly. He renamed his people Dalits, meaning “broken people” – which, due to the caste system, they were.
A statue of Bhimrao Ambedkar under a flyover in Amritsar, India. Photograph: Narinder Nanu/AFP/Getty Images
It is hard to know what effect his exposure to the American social order had on him personally. But over the years, he paid close attention, as did many Dalits, to the subordinate caste in the US. Indians had long been aware of the plight of enslaved Africans, and of their descendants in the US. Back in the 1870s, after the end of slavery and during the brief window of black advancement known as Reconstruction, an Indian social reformer named Jyotirao Phule found inspiration in the US abolitionists. He expressed hope “that my countrymen may take their example as their guide”.
Many decades later, in the summer of 1946, acting on news that black Americans were petitioning the United Nations for protection as minorities, Ambedkar reached out to the best-known African American intellectual of the day, WEB Du Bois. He told Du Bois that he had been a “student of the Negro problem” from across the oceans, and recognised their common fates.
“There is so much similarity between the position of the Untouchables in India and of the position of the Negroes in America,” Ambedkar wrote to Du Bois, “that the study of the latter is not only natural but necessary.”
Du Bois wrote back to Ambedkar to say that he was, indeed, familiar with him, and that he had “every sympathy with the Untouchables of India”. It had been Du Bois who seemed to have spoken for the marginalised in both countries as he identified the double consciousness of their existence. And it was Du Bois who, decades before, had invoked an Indian concept in channelling the “bitter cry” of his people in the US: “Why did God make me an outcast and a stranger in mine own house?”
I began investigating the American caste system after nearly two decades of examining the history of the Jim Crow south, the legal caste system that grew out of enslavement and lasted into the early 70s, within the lifespans of many present-day Americans. I discovered that I was not writing about geography and relocation, but about the American caste system – an artificial hierarchy in which most everything that you could and could not do was based upon what you looked like, and which manifested itself north and south. I had been writing about a stigmatised people – 6 million of them – who were seeking freedom from the caste system in the south, only to discover that the hierarchy followed them wherever they went, much in the way that the shadow of caste (as I would soon discover) follows Indians in their own global diaspora.
The American caste system began in the years after the arrival of the first Africans to the Colony of Virginia in the summer of 1619, as the colony sought to refine the distinctions of who could be enslaved for life and who could not. Over time, colonial laws granted English and Irish indentured servants greater privileges than the Africans who worked alongside them, and the Europeans were fused into a new identity – that of being categorised as white, the polar opposite of black. The historian Kenneth M Stampp called this assigning of race a “caste system, which divided those whose appearance enabled them to claim pure Caucasian ancestry from those whose appearance indicated that some or all of their forebears were Negroes”. Members of the Caucasian caste, as he called it, “believed in ‘white supremacy’, and maintained a high degree of caste solidarity to secure it”.
While I was in the midst of my research, word of my inquiries spread to some Indian scholars of caste based in the US. They invited me to speak at an inaugural conference on caste and race at the University of Massachusetts in Amherst, the town where WEB Du Bois was born and where his papers are kept.
There, I told the audience that I had written a 600-page book about the Jim Crow era in the American south – the time of naked white supremacy – but that the word “racism” did not appear anywhere in the narrative. I told them that, after spending 15 years studying the topic and hearing the testimony of the survivors of the era, I had realised that the term was insufficient. “Caste” was the more accurate term, and I set out to them the reasons why. They were both stunned and heartened. The plates of Indian food kindly set before me at the reception thereafter sat cold due to the press of questions and the sharing that went on into the night.
At a closing ceremony, the hosts presented to me a bronze-coloured bust of the patron saint of the low-born of India, Bhimrao Ambedkar, the Dalit leader who had written to Du Bois all those decades before.
It felt like an initiation into a caste to which I had somehow always belonged. Over and over, they shared stories of what they had endured, and I responded in personal recognition, as if even to anticipate some particular turn or outcome. To their astonishment, I began to be able to tell who was high-born and who was low-born among the Indian people there, not from what they looked like, as one might in the US, but on the basis of the universal human response to hierarchy – in the case of an upper-caste person, an inescapable certitude in bearing, demeanour, behaviour and a visible expectation of centrality.
On the way home, I was snapped back into my own world when airport security flagged my suitcase for inspection. The TSA worker happened to be an African American who looked to be in his early 20s. He strapped on latex gloves to begin his work. He dug through my suitcase and excavated a small box, unwrapped the folds of paper and held in his palm the bust of Ambedkar that I had been given.
“This is what came up in the X-ray,” he said. It was heavy like a paperweight. He turned it upside down and inspected it from all sides, his gaze lingering at the bottom of it. He seemed concerned that something might be inside.
“I’ll have to swipe it,” he warned me. He came back after some time and declared it OK, and I could continue with it on my journey. He looked at the bespectacled face, with its receding hairline and steadfast expression, and seemed to wonder why I would be carrying what looked like a totem from another culture.
“So who is this?” he asked.
“Oh,” I said, “this is the Martin Luther King of India.”
“Pretty cool,” he said, satisfied now, and seeming a little proud.
He then wrapped Ambedkar back up as if he were King himself, and set him back gently into the suitcase.
It is hard to know what effect his exposure to the American social order had on him personally. But over the years, he paid close attention, as did many Dalits, to the subordinate caste in the US. Indians had long been aware of the plight of enslaved Africans, and of their descendants in the US. Back in the 1870s, after the end of slavery and during the brief window of black advancement known as Reconstruction, an Indian social reformer named Jyotirao Phule found inspiration in the US abolitionists. He expressed hope “that my countrymen may take their example as their guide”.
Many decades later, in the summer of 1946, acting on news that black Americans were petitioning the United Nations for protection as minorities, Ambedkar reached out to the best-known African American intellectual of the day, WEB Du Bois. He told Du Bois that he had been a “student of the Negro problem” from across the oceans, and recognised their common fates.
“There is so much similarity between the position of the Untouchables in India and of the position of the Negroes in America,” Ambedkar wrote to Du Bois, “that the study of the latter is not only natural but necessary.”
Du Bois wrote back to Ambedkar to say that he was, indeed, familiar with him, and that he had “every sympathy with the Untouchables of India”. It had been Du Bois who seemed to have spoken for the marginalised in both countries as he identified the double consciousness of their existence. And it was Du Bois who, decades before, had invoked an Indian concept in channelling the “bitter cry” of his people in the US: “Why did God make me an outcast and a stranger in mine own house?”
I began investigating the American caste system after nearly two decades of examining the history of the Jim Crow south, the legal caste system that grew out of enslavement and lasted into the early 70s, within the lifespans of many present-day Americans. I discovered that I was not writing about geography and relocation, but about the American caste system – an artificial hierarchy in which most everything that you could and could not do was based upon what you looked like, and which manifested itself north and south. I had been writing about a stigmatised people – 6 million of them – who were seeking freedom from the caste system in the south, only to discover that the hierarchy followed them wherever they went, much in the way that the shadow of caste (as I would soon discover) follows Indians in their own global diaspora.
The American caste system began in the years after the arrival of the first Africans to the Colony of Virginia in the summer of 1619, as the colony sought to refine the distinctions of who could be enslaved for life and who could not. Over time, colonial laws granted English and Irish indentured servants greater privileges than the Africans who worked alongside them, and the Europeans were fused into a new identity – that of being categorised as white, the polar opposite of black. The historian Kenneth M Stampp called this assigning of race a “caste system, which divided those whose appearance enabled them to claim pure Caucasian ancestry from those whose appearance indicated that some or all of their forebears were Negroes”. Members of the Caucasian caste, as he called it, “believed in ‘white supremacy’, and maintained a high degree of caste solidarity to secure it”.
While I was in the midst of my research, word of my inquiries spread to some Indian scholars of caste based in the US. They invited me to speak at an inaugural conference on caste and race at the University of Massachusetts in Amherst, the town where WEB Du Bois was born and where his papers are kept.
There, I told the audience that I had written a 600-page book about the Jim Crow era in the American south – the time of naked white supremacy – but that the word “racism” did not appear anywhere in the narrative. I told them that, after spending 15 years studying the topic and hearing the testimony of the survivors of the era, I had realised that the term was insufficient. “Caste” was the more accurate term, and I set out to them the reasons why. They were both stunned and heartened. The plates of Indian food kindly set before me at the reception thereafter sat cold due to the press of questions and the sharing that went on into the night.
At a closing ceremony, the hosts presented to me a bronze-coloured bust of the patron saint of the low-born of India, Bhimrao Ambedkar, the Dalit leader who had written to Du Bois all those decades before.
It felt like an initiation into a caste to which I had somehow always belonged. Over and over, they shared stories of what they had endured, and I responded in personal recognition, as if even to anticipate some particular turn or outcome. To their astonishment, I began to be able to tell who was high-born and who was low-born among the Indian people there, not from what they looked like, as one might in the US, but on the basis of the universal human response to hierarchy – in the case of an upper-caste person, an inescapable certitude in bearing, demeanour, behaviour and a visible expectation of centrality.
On the way home, I was snapped back into my own world when airport security flagged my suitcase for inspection. The TSA worker happened to be an African American who looked to be in his early 20s. He strapped on latex gloves to begin his work. He dug through my suitcase and excavated a small box, unwrapped the folds of paper and held in his palm the bust of Ambedkar that I had been given.
“This is what came up in the X-ray,” he said. It was heavy like a paperweight. He turned it upside down and inspected it from all sides, his gaze lingering at the bottom of it. He seemed concerned that something might be inside.
“I’ll have to swipe it,” he warned me. He came back after some time and declared it OK, and I could continue with it on my journey. He looked at the bespectacled face, with its receding hairline and steadfast expression, and seemed to wonder why I would be carrying what looked like a totem from another culture.
“So who is this?” he asked.
“Oh,” I said, “this is the Martin Luther King of India.”
“Pretty cool,” he said, satisfied now, and seeming a little proud.
He then wrapped Ambedkar back up as if he were King himself, and set him back gently into the suitcase.
Monday, 11 May 2020
Coronavirus crisis: does value investing still make sense?
The strategy that once worked for Keynes and Buffett has performed badly writes Robin Wigglesworth in The Financial Times
When Joel Greenblatt went to Wharton Business School in the late 1970s, the theory of “efficient markets” was in full bloom, approaching the point of becoming dogma among the financial cognoscenti. To the young student, it all felt bogus.
Mr Greenblatt had already developed a taste for calculated gambles at the dog racing tracks. Reading the wildly fluctuating stock prices listed in newspapers also made him deeply sceptical of the supposed rationality of markets. One day he stumbled over a Fortune article on stockpicking, and everything suddenly fell into place.
“A lightbulb went off. It just made sense to me that prices aren’t necessarily correct,” recalls Mr Greenblatt, whose hedge fund Gotham Capital clocked up one of the industry’s greatest ever winning streaks until it was closed to outside investors in 1994. “Buying cheap stocks is great, but buying good companies cheaply is even better. That’s a potent combination.”
The article became his gateway drug into a school of money management known as “value investing”, which consists of trying to identify good, solid businesses that are trading below their fair value. The piece was written by Benjamin Graham, a financier who in the 1930s first articulated the core principles of value investing and turned it into a phenomenon.
One of Graham’s protégés was a young money manager called Warren Buffett, who brought the value investing gospel to the masses. But he isn't the only one to play a role in popularising the approach. Since 1996, Mr Greenblatt has taught the same value investing course started by Graham at Columbia Business School nearly a century ago, inculcating generations of aspiring stock jocks with its core principles.
Mr Greenblatt compares value investing to carefully examining the merits of a house purchase by looking at the foundation, construction quality, rental yields, potential improvements and price comparisons on the street, neighbourhood or other cities.
“You’d look funny at people who just bought the houses that have gone up the most in price,” he points out. “All investing is value investing, the rest is speculation.”
However, the faith of many disciples has been sorely tested over the past decade. What constitutes a value stock can be defined in myriad ways, but by almost any measure the approach has suffered an awful stretch of performance since the 2008 financial crisis.
Many proponents had predicted value investing would regain its lustre once a new bear market beckoned and inevitably hammered the glamorous but pricey technology stocks that dominated the post-2008 bull run. This would make dowdier, cheaper companies more attractive, value investors hoped.
Instead, value stocks have been pummelled even more than the broader market in the coronavirus-triggered sell-off, agonising supporters of the investment strategy.
“One more big down leg and I’m dousing my internal organs in Lysol,” Clifford Asness, a hedge fund manager, groused in April.
Value investing has gone through several bouts of existential angst over the past century, and always comes back strongly. But its poor performance during the coronavirus crisis has only added to the crisis of confidence. The strength and length of the recent woes raises some thorny questions. Why has value lost its mojo and is it gone forever?
Search for ‘American magic’
Berkshire Hathaway’s annual meeting is usually a party. Every year, thousands of fans have flocked to Omaha to lap up the wisdom of Mr Buffett and his partner Charlie Munger, the acerbic, terse sidekick to the conglomerate’s avuncular, loquacious chairman. Last weekend’s gathering was a more downbeat affair.
A shaggy-haired Mr Buffett sat alone on stage without his usual companion, who was stranded in California. Instead of Mr Munger, Greg Abel, another lieutenant, sat at a table some distance away from Berkshire’s chairman. Rather than the 40,000 people that normally fill the cavernous CHI Health Center for the occasion, he faced nothing but a bunch of video cameras. It was an eerie example of just how much the coronavirus crisis has altered the world, but the “Oracle of Omaha” tried to lift spirits.
“I was convinced of this in World War II. I was convinced of it during the Cuban missile crisis, 9/11, the financial crisis, that nothing can basically stop America,” he said. “The American magic has always prevailed, and it will do so again.”
Berkshire’s results, however, underscored the scale of the US economy’s woes. The conglomerate — originally a textile manufacturer before Mr Buffett turned it into a vehicle for his wide-ranging investments — slumped to a loss of nearly $50bn in the first three months of the year, as a slight increase in operating profits was swamped by massive hits on its portfolio of stocks.
A part of those losses will already have been reversed by the recent stock market rally triggered by an extraordinary bout of central bank stimulus, and Mr Buffett’s approach has over the decades evolved significantly from his core roots in value investing. Nonetheless, the worst results in Berkshire’s history underscore just how challenging the environment has been for this approach to picking stocks. After a long golden run that burnished Mr Buffett’s reputation as the greatest investor in history, Berkshire’s stock has now marginally underperformed the S&P 500 over the past year, five years and 10 years.
But the Nebraskan is not alone. The Russell 3000 Value index — the broadest measure of value stocks in the US — is down more than 20 per cent so far this year, and over the past decade it has only climbed 80 per cent. In contrast, the S&P 500 index is down 9 per cent in 2020, and has returned over 150 per cent over the past 10 years.
Racier “growth” stocks of faster-expanding companies have returned over 240 per cent over the same period.
Ben Inker of value-centric investment house GMO describes the experience as like being slowly but repeatedly bashed in the head. “It’s less extreme than in the late 1990s, when every day felt like being hit with a bat,” he says of the dotcom bubble period when value investors suffered. “But this has been a slow drip of pain over a long time. It’s less memorable, but in aggregate the pain has been fairly similar.”
Underrated stocks
Value investing has a long and rich history, which even predates the formal concept. One of the first successful value investors was arguably the economist John Maynard Keynes. Between 1921 and 1946 he managed the endowment of Cambridge university’s King’s College, and beat the UK stock market by an average of 8 percentage points a year over that period.
In a 1938 internal memorandum to his investment committee, Keynes attributed his success to the “careful selection of a few investments” according to their “intrinsic value” — a nod to a seminal book on investing published a few years earlier by Graham and his partner David Dodd, called Security Analysis. This tome — along with the subsequent The Intelligent Investor, which Mr Buffett has called “the best book about investing ever written” — are the gospel for value investors to this day.
There are ways to define a value stock, but it is most simply defined as one that is trading at a low price relative to the value of a company’s assets, the strength of its earnings or steadiness of its cash flows. They are often unfairly undervalued because they are in unfashionable industries and growing at a steadier clip than more glamorous stocks, which — the theory goes — irrational investors overpay for in the hope of supercharged returns.
Value stocks can go through long fallow periods, most notably in the 1960s — when investors fell in love with the fast-growing, modern companies like Xerox, IBM and Eastman Kodak, dubbed the “Nifty Fifty” — and in the late 1990s dotcom boom. But each time, they have roared back and rewarded investors that kept the faith.
“The one lesson we’ve learnt over the decades is that one should never give up on value investing. It’s been declared dead before,” says Bob Wyckoff, a managing director of money manager Tweedy Browne. “You go through some uncomfortably long periods where it is not working. But this is almost a precondition for value to work.”
The belief that periodic bouts of suffering are not only unavoidable but in fact necessary for value to work is entrenched among its adherents. It is therefore a field that tends to attract more than its fair share of iconoclastic contrarians, says Chris Davis of Davis Funds, a third-generation value investor after following in the footsteps of his father Shelby MC Davis and grandfather Shelby Cullom Davis.
“If you look at the characteristics of value investors they don’t have a lot in common,” he says. “But they all tend to be individualistic in that they aren’t generally the type who have played team sports. They weren’t often president of their sororities or fraternities. And you don’t succeed without a fairly high willingness to appear wrong.”
But why have they now been so wrong for so long? Most value investors attribute the length of the underperformance to a mix of the changing investment environment and shifts in the fabric of the economy.
The ascent of more systematic, “quantitative” investing over the past decade — whether a simple exchange-traded fund that just buys cheap stocks, or more sophisticated, algorithmic hedge funds — has weighed on performance by warping normal market dynamics, according to Matthew McLennan of First Eagle Investment Management. This is particularly the case for the financial sector, which generally makes more money when rates are higher.
The usual price discount enjoyed by value stocks was also unusually small at the end of the financial crisis, setting them up for a poorer performance, according to Mr Inker. Some industries, especially technology, are also becoming oligopolies that ensure extraordinary profit margins and continued growth. Moreover, traditional value measures — such as price-to-book value — are becoming obsolete, he points out. The intellectual property, brands and often dominant market positioning of many of the new technology companies do not show up on a corporate balance sheet in the same way as hard, tangible assets.
“Accounting has not kept up with how companies actually use their cash,” he says. “If a company spends a lot of money building factories it affects the book value. But if you spend that on intellectual property it doesn’t show up the same way.”
As a result, GMO and many value-oriented investors have had to adapt their approach, and focus more on alternative metrics and more intangible aspects of its operations. “We want to buy stocks we think are undervalued, but we no longer care whether it looks like a traditional value stock,” Mr Inker says.
Mr McLennan points out that while the core principles won’t change, value investing has always evolved with the times. “It’s not a cult-like commitment to buying the cheapest decile [of stocks]. We invest business-by-business,” he says. “I don’t know what the alternative is to buying businesses you like, at prices you like.”
Bargain hunt
Can value investing stage a comeback, as it did in when the dotcom bubble burst in the early 2000s, or the “Nifty Fifty” failed to justify investor optimism and fell to earth in the 1970s?
There has clearly been a shift in the corporate landscape over the past few decades that could be neutering its historical power as an investing approach. It is telling that the recent stock market rebound has been powered primarily by big US technology companies, despite value investors having confidently predicted for a long time that their approach would shine in the next downturn. Value stocks tend to be in more economically-sensitive industries, and given the likelihood of the biggest global recession since the Depression, their outlook is exceptionally murky, according to an AQR paper published last week.
“If value investing was like driving my four kids on a long car ride, we’d be very deep into the ‘are we there yet?’ stage of the ride, and value investors are justifiably in a world of pain,” Mr Asness wrote. However, the odds are now “rather dramatically” on the side of value.
Redemption could be at hand. there has in recent days been a cautious renaissance for value stocks, indicating that coronavirus may yet upend the market trends of the past decade. This stockpicking approach often does well as economies exit a recession and investors hunt for bargains.
Devotees of value investing certainly remain unshakeable in their faith that past patterns will eventually reassert themselves. Citing a common saying among adherents, Mr Wyckoff argues that “asking whether value is still relevant is like asking whether Shakespeare is still relevant. It’s all about human nature”.
Mr Greenblatt, who founded Gotham Asset Management in 2008, says that his students will occasionally quiz him on whether value investing is dead, arguing that computers can systematically take advantage of undervaluation far more efficiently than any human stockpicker can. He tells them that human irrationality remains constant, which will always lead to opportunities for those willing to go against the crowd.
“If you have a disciplined strategy to value companies, and buy companies when they’re below fair value you will still do well,” he says. “The market throws us pitches all the time, as there are so many behavioural biases . . . You can watch 20 pitches go by, but you only need to try to hit a few of them.”
When Joel Greenblatt went to Wharton Business School in the late 1970s, the theory of “efficient markets” was in full bloom, approaching the point of becoming dogma among the financial cognoscenti. To the young student, it all felt bogus.
Mr Greenblatt had already developed a taste for calculated gambles at the dog racing tracks. Reading the wildly fluctuating stock prices listed in newspapers also made him deeply sceptical of the supposed rationality of markets. One day he stumbled over a Fortune article on stockpicking, and everything suddenly fell into place.
“A lightbulb went off. It just made sense to me that prices aren’t necessarily correct,” recalls Mr Greenblatt, whose hedge fund Gotham Capital clocked up one of the industry’s greatest ever winning streaks until it was closed to outside investors in 1994. “Buying cheap stocks is great, but buying good companies cheaply is even better. That’s a potent combination.”
The article became his gateway drug into a school of money management known as “value investing”, which consists of trying to identify good, solid businesses that are trading below their fair value. The piece was written by Benjamin Graham, a financier who in the 1930s first articulated the core principles of value investing and turned it into a phenomenon.
One of Graham’s protégés was a young money manager called Warren Buffett, who brought the value investing gospel to the masses. But he isn't the only one to play a role in popularising the approach. Since 1996, Mr Greenblatt has taught the same value investing course started by Graham at Columbia Business School nearly a century ago, inculcating generations of aspiring stock jocks with its core principles.
Mr Greenblatt compares value investing to carefully examining the merits of a house purchase by looking at the foundation, construction quality, rental yields, potential improvements and price comparisons on the street, neighbourhood or other cities.
“You’d look funny at people who just bought the houses that have gone up the most in price,” he points out. “All investing is value investing, the rest is speculation.”
However, the faith of many disciples has been sorely tested over the past decade. What constitutes a value stock can be defined in myriad ways, but by almost any measure the approach has suffered an awful stretch of performance since the 2008 financial crisis.
Many proponents had predicted value investing would regain its lustre once a new bear market beckoned and inevitably hammered the glamorous but pricey technology stocks that dominated the post-2008 bull run. This would make dowdier, cheaper companies more attractive, value investors hoped.
Instead, value stocks have been pummelled even more than the broader market in the coronavirus-triggered sell-off, agonising supporters of the investment strategy.
“One more big down leg and I’m dousing my internal organs in Lysol,” Clifford Asness, a hedge fund manager, groused in April.
Value investing has gone through several bouts of existential angst over the past century, and always comes back strongly. But its poor performance during the coronavirus crisis has only added to the crisis of confidence. The strength and length of the recent woes raises some thorny questions. Why has value lost its mojo and is it gone forever?
Search for ‘American magic’
Berkshire Hathaway’s annual meeting is usually a party. Every year, thousands of fans have flocked to Omaha to lap up the wisdom of Mr Buffett and his partner Charlie Munger, the acerbic, terse sidekick to the conglomerate’s avuncular, loquacious chairman. Last weekend’s gathering was a more downbeat affair.
A shaggy-haired Mr Buffett sat alone on stage without his usual companion, who was stranded in California. Instead of Mr Munger, Greg Abel, another lieutenant, sat at a table some distance away from Berkshire’s chairman. Rather than the 40,000 people that normally fill the cavernous CHI Health Center for the occasion, he faced nothing but a bunch of video cameras. It was an eerie example of just how much the coronavirus crisis has altered the world, but the “Oracle of Omaha” tried to lift spirits.
“I was convinced of this in World War II. I was convinced of it during the Cuban missile crisis, 9/11, the financial crisis, that nothing can basically stop America,” he said. “The American magic has always prevailed, and it will do so again.”
Berkshire’s results, however, underscored the scale of the US economy’s woes. The conglomerate — originally a textile manufacturer before Mr Buffett turned it into a vehicle for his wide-ranging investments — slumped to a loss of nearly $50bn in the first three months of the year, as a slight increase in operating profits was swamped by massive hits on its portfolio of stocks.
A part of those losses will already have been reversed by the recent stock market rally triggered by an extraordinary bout of central bank stimulus, and Mr Buffett’s approach has over the decades evolved significantly from his core roots in value investing. Nonetheless, the worst results in Berkshire’s history underscore just how challenging the environment has been for this approach to picking stocks. After a long golden run that burnished Mr Buffett’s reputation as the greatest investor in history, Berkshire’s stock has now marginally underperformed the S&P 500 over the past year, five years and 10 years.
But the Nebraskan is not alone. The Russell 3000 Value index — the broadest measure of value stocks in the US — is down more than 20 per cent so far this year, and over the past decade it has only climbed 80 per cent. In contrast, the S&P 500 index is down 9 per cent in 2020, and has returned over 150 per cent over the past 10 years.
Racier “growth” stocks of faster-expanding companies have returned over 240 per cent over the same period.
Ben Inker of value-centric investment house GMO describes the experience as like being slowly but repeatedly bashed in the head. “It’s less extreme than in the late 1990s, when every day felt like being hit with a bat,” he says of the dotcom bubble period when value investors suffered. “But this has been a slow drip of pain over a long time. It’s less memorable, but in aggregate the pain has been fairly similar.”
Underrated stocks
Value investing has a long and rich history, which even predates the formal concept. One of the first successful value investors was arguably the economist John Maynard Keynes. Between 1921 and 1946 he managed the endowment of Cambridge university’s King’s College, and beat the UK stock market by an average of 8 percentage points a year over that period.
In a 1938 internal memorandum to his investment committee, Keynes attributed his success to the “careful selection of a few investments” according to their “intrinsic value” — a nod to a seminal book on investing published a few years earlier by Graham and his partner David Dodd, called Security Analysis. This tome — along with the subsequent The Intelligent Investor, which Mr Buffett has called “the best book about investing ever written” — are the gospel for value investors to this day.
There are ways to define a value stock, but it is most simply defined as one that is trading at a low price relative to the value of a company’s assets, the strength of its earnings or steadiness of its cash flows. They are often unfairly undervalued because they are in unfashionable industries and growing at a steadier clip than more glamorous stocks, which — the theory goes — irrational investors overpay for in the hope of supercharged returns.
Value stocks can go through long fallow periods, most notably in the 1960s — when investors fell in love with the fast-growing, modern companies like Xerox, IBM and Eastman Kodak, dubbed the “Nifty Fifty” — and in the late 1990s dotcom boom. But each time, they have roared back and rewarded investors that kept the faith.
“The one lesson we’ve learnt over the decades is that one should never give up on value investing. It’s been declared dead before,” says Bob Wyckoff, a managing director of money manager Tweedy Browne. “You go through some uncomfortably long periods where it is not working. But this is almost a precondition for value to work.”
The belief that periodic bouts of suffering are not only unavoidable but in fact necessary for value to work is entrenched among its adherents. It is therefore a field that tends to attract more than its fair share of iconoclastic contrarians, says Chris Davis of Davis Funds, a third-generation value investor after following in the footsteps of his father Shelby MC Davis and grandfather Shelby Cullom Davis.
“If you look at the characteristics of value investors they don’t have a lot in common,” he says. “But they all tend to be individualistic in that they aren’t generally the type who have played team sports. They weren’t often president of their sororities or fraternities. And you don’t succeed without a fairly high willingness to appear wrong.”
But why have they now been so wrong for so long? Most value investors attribute the length of the underperformance to a mix of the changing investment environment and shifts in the fabric of the economy.
The ascent of more systematic, “quantitative” investing over the past decade — whether a simple exchange-traded fund that just buys cheap stocks, or more sophisticated, algorithmic hedge funds — has weighed on performance by warping normal market dynamics, according to Matthew McLennan of First Eagle Investment Management. This is particularly the case for the financial sector, which generally makes more money when rates are higher.
The usual price discount enjoyed by value stocks was also unusually small at the end of the financial crisis, setting them up for a poorer performance, according to Mr Inker. Some industries, especially technology, are also becoming oligopolies that ensure extraordinary profit margins and continued growth. Moreover, traditional value measures — such as price-to-book value — are becoming obsolete, he points out. The intellectual property, brands and often dominant market positioning of many of the new technology companies do not show up on a corporate balance sheet in the same way as hard, tangible assets.
“Accounting has not kept up with how companies actually use their cash,” he says. “If a company spends a lot of money building factories it affects the book value. But if you spend that on intellectual property it doesn’t show up the same way.”
As a result, GMO and many value-oriented investors have had to adapt their approach, and focus more on alternative metrics and more intangible aspects of its operations. “We want to buy stocks we think are undervalued, but we no longer care whether it looks like a traditional value stock,” Mr Inker says.
Mr McLennan points out that while the core principles won’t change, value investing has always evolved with the times. “It’s not a cult-like commitment to buying the cheapest decile [of stocks]. We invest business-by-business,” he says. “I don’t know what the alternative is to buying businesses you like, at prices you like.”
Bargain hunt
Can value investing stage a comeback, as it did in when the dotcom bubble burst in the early 2000s, or the “Nifty Fifty” failed to justify investor optimism and fell to earth in the 1970s?
There has clearly been a shift in the corporate landscape over the past few decades that could be neutering its historical power as an investing approach. It is telling that the recent stock market rebound has been powered primarily by big US technology companies, despite value investors having confidently predicted for a long time that their approach would shine in the next downturn. Value stocks tend to be in more economically-sensitive industries, and given the likelihood of the biggest global recession since the Depression, their outlook is exceptionally murky, according to an AQR paper published last week.
“If value investing was like driving my four kids on a long car ride, we’d be very deep into the ‘are we there yet?’ stage of the ride, and value investors are justifiably in a world of pain,” Mr Asness wrote. However, the odds are now “rather dramatically” on the side of value.
Redemption could be at hand. there has in recent days been a cautious renaissance for value stocks, indicating that coronavirus may yet upend the market trends of the past decade. This stockpicking approach often does well as economies exit a recession and investors hunt for bargains.
Devotees of value investing certainly remain unshakeable in their faith that past patterns will eventually reassert themselves. Citing a common saying among adherents, Mr Wyckoff argues that “asking whether value is still relevant is like asking whether Shakespeare is still relevant. It’s all about human nature”.
Mr Greenblatt, who founded Gotham Asset Management in 2008, says that his students will occasionally quiz him on whether value investing is dead, arguing that computers can systematically take advantage of undervaluation far more efficiently than any human stockpicker can. He tells them that human irrationality remains constant, which will always lead to opportunities for those willing to go against the crowd.
“If you have a disciplined strategy to value companies, and buy companies when they’re below fair value you will still do well,” he says. “The market throws us pitches all the time, as there are so many behavioural biases . . . You can watch 20 pitches go by, but you only need to try to hit a few of them.”
Thursday, 14 February 2019
Taxes and money - Modern Monetary Theory MMT
A Counter view - The Destructive Idiocy of Modern Monetary theory
Thursday, 26 July 2018
How do beliefs arise - Thinking in Bets – Making smarter decisions when you don’t have all the facts – by Annie Duke Part 2
Excerpts
How we think we form abstract beliefs:
1.
We hear something.
2.
We think about it and vet it, determining
whether it is true or false; only after that.
3.
We form our belief.
We actually form abstract beliefs this way:
1.
We hear something.
2.
We believe it to be true.
3.
Only sometimes, later, if we have the time or
the inclination, we think about it and vet it, determining whether it is, in
fact, true or false.
If we were good at updating our beliefs based on new
information, our haphazard belief formation process might cause us relatively
few problems. Sadly, this is not the way it works. We form beliefs without
vetting most of them and maintain them even after receiving clear, corrective
information.
Truthseeking, the desire to know the truth regardless of
whether the truth aligns with the beliefs we currently hold, is not naturally
supported by the way we process information. We might think of ourselves as
open-minded and capable of updating our beliefs based on new information, but
the research conclusively shows otherwise. Instead of altering our beliefs to
fit new information, we do the opposite, altering our interpretation of that
information to fit our beliefs.
“We do not simply react to an event…. We behave according to
what we bring to the occasion” (Hastorf and Cantrill). Our beliefs affect how
we process all new things, ‘whether the thing is a football game, a
presidential candidate, Communism or spinach.”
Once a belief is lodged, it becomes difficult to dislodge.
It takes a life on its own, leading us to notice and seek out evidence
conforming our belief, rarely challenge the validity of confirming evidence,
and ignore or work hard to actively discredit information contradicting the
belief. This irrational circular information processing pattern is called motivated
reasoning.
Wednesday, 31 January 2018
Lessons from the IPL Auction 2018
Suresh Menon in The Hindu
Both Neville Cardus and C.L.R. James asked whether cricket is an art, and answered in different ways. Cardus compared cricket to music while for James it belonged alongside theatre, opera and dance. Thus, art, yes, but the performing arts, and for what happens on the field.
It is now safe to say that cricket belongs to the visual and plastic arts — painting and sculpture — but not for what happens on the field. The IPL auction has added another dimension with the question: what is the value of a player? Is he like a Jeff Koons or an M.F. Hussain?
Is Jayadev Unadkat worth ₹11.5 crores? Is Hashim Amla not worth anything at all? The comparison with art is inevitable. A painting is worth exactly what someone is prepared to pay for it. In his book The Value of Art: Money, Power, Beauty, the art dealer Michael Findlay gives a more sophisticated explanation.
“The commercial value of art,” he says, “is based on collective intentionality. Human stipulation and declaration create and sustain the commercial value.” Replace “art” with “cricketer” and that still holds. If, based on sports metrics and private algorithms, Mumbai Indians think Krunal Pandya is worth ₹8.8 crores, you cannot argue.
On a weekend when every Test-playing country was engaged in an international, the focus was on a hotel ballroom in Bangalore. You can read all kinds of meaning into this. “It will be a distraction,” South Africa’s captain Faf du Plessis had said earlier. Kamlesh Nagarkoti, at the Under-19 World Cup in New Zealand said, “I went and sat inside the washroom even as my bidding was going on.” It went on and on and didn’t stop till it had reached ₹3.2 crores.
It was possible to switch channels between the auction and the incredible Indian performance at the Johannesburg Test. Virat Kohli certainly wasn’t distracted — his ₹17 crores was already in the bank. It would be interesting to discover which event garnered the more eyeballs; that should tell us the direction the sport is taking. In The Australian, Gideon Haigh wrote a piece headlined: IPL auction now the real centre of world cricket.
A union minister tweeted that most players didn’t deserve half the amounts they were bought for. Politicians are allergic to such transparent contract negotiations. However, what he and others find difficult to deal with is the fact that the market decides value. And the market can be cruel and ageist, often casually dispensing with high-performing players of the past. It is influenced by the ego of the bidder too. Monetary value is not always the same as cricketing worth.
Part of the confusion is caused by top players going unsold. In the recent Test, Amla and Ishant Sharma put in inspiring performances, yet find themselves with no role in the IPL. The way to reconcile this is to acknowledge that IPL and Test cricket are as different from each other — tactically, physically, psychologically, emotionally — as soccer and cricket or kabaddi and tennis. They just happen to use the same equipment.
It took the franchises some time to realise this. The inaugural auction had nothing to go by and established Test players were most sought after. Royal Challengers had Rahul Dravid, Jacques Kallis, Wasim Jaffer, Shivnarine Chanderpaul. Today they would have to depend on pity-selection by friends in the franchises, if at all. Cricket has changed, the IPL most of all, and auctions, even if not fully professional yet are headed in that direction. Data is king. How good are you between overs 11 and 16, for example?
Both Neville Cardus and C.L.R. James asked whether cricket is an art, and answered in different ways. Cardus compared cricket to music while for James it belonged alongside theatre, opera and dance. Thus, art, yes, but the performing arts, and for what happens on the field.
It is now safe to say that cricket belongs to the visual and plastic arts — painting and sculpture — but not for what happens on the field. The IPL auction has added another dimension with the question: what is the value of a player? Is he like a Jeff Koons or an M.F. Hussain?
Is Jayadev Unadkat worth ₹11.5 crores? Is Hashim Amla not worth anything at all? The comparison with art is inevitable. A painting is worth exactly what someone is prepared to pay for it. In his book The Value of Art: Money, Power, Beauty, the art dealer Michael Findlay gives a more sophisticated explanation.
“The commercial value of art,” he says, “is based on collective intentionality. Human stipulation and declaration create and sustain the commercial value.” Replace “art” with “cricketer” and that still holds. If, based on sports metrics and private algorithms, Mumbai Indians think Krunal Pandya is worth ₹8.8 crores, you cannot argue.
On a weekend when every Test-playing country was engaged in an international, the focus was on a hotel ballroom in Bangalore. You can read all kinds of meaning into this. “It will be a distraction,” South Africa’s captain Faf du Plessis had said earlier. Kamlesh Nagarkoti, at the Under-19 World Cup in New Zealand said, “I went and sat inside the washroom even as my bidding was going on.” It went on and on and didn’t stop till it had reached ₹3.2 crores.
It was possible to switch channels between the auction and the incredible Indian performance at the Johannesburg Test. Virat Kohli certainly wasn’t distracted — his ₹17 crores was already in the bank. It would be interesting to discover which event garnered the more eyeballs; that should tell us the direction the sport is taking. In The Australian, Gideon Haigh wrote a piece headlined: IPL auction now the real centre of world cricket.
A union minister tweeted that most players didn’t deserve half the amounts they were bought for. Politicians are allergic to such transparent contract negotiations. However, what he and others find difficult to deal with is the fact that the market decides value. And the market can be cruel and ageist, often casually dispensing with high-performing players of the past. It is influenced by the ego of the bidder too. Monetary value is not always the same as cricketing worth.
Part of the confusion is caused by top players going unsold. In the recent Test, Amla and Ishant Sharma put in inspiring performances, yet find themselves with no role in the IPL. The way to reconcile this is to acknowledge that IPL and Test cricket are as different from each other — tactically, physically, psychologically, emotionally — as soccer and cricket or kabaddi and tennis. They just happen to use the same equipment.
It took the franchises some time to realise this. The inaugural auction had nothing to go by and established Test players were most sought after. Royal Challengers had Rahul Dravid, Jacques Kallis, Wasim Jaffer, Shivnarine Chanderpaul. Today they would have to depend on pity-selection by friends in the franchises, if at all. Cricket has changed, the IPL most of all, and auctions, even if not fully professional yet are headed in that direction. Data is king. How good are you between overs 11 and 16, for example?
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