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Of Choices, Chances and Changes

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” - Charles Darwin/Leon C. Megginson

Last year, around summer, I made a decision that appeared to be both exciting and overwhelming at the same time: relocating to New York. Prior to the relocation, I was based out of Dhaka, Bangladesh (which had been my home for as long as I could remember). I was working as a Consultant at the International Finance Corporation (World Bank Group) in its Finance & Markets Global Practice, where I was helping to design and implement different policy and strategic advisory engagements with financial institutions and governments in South Asia.

Even though I loved the nature of my role at IFC and the opportunity to make meaningful contribution towards the development of emerging financial markets, I knew that the relocation would unlock a host of new experiences, broaden my horizon and still provide me with an opportunity to build upon on the skills and competencies that I had developed in my career so far. Yet I understood that the relocation would not be completely easy, as any person who has recently gone through this experience would agree.

The experience of leaving a stable job and your network and navigating the maze of a completely unknown job market can often appear to be a daunting experience. However, with 20/20 hindsight, I can say that the same fish-out-of-water experience is unmatched in terms of its ability to develop an ability to cope with change. It might sound clichéd, but dealing with change and constantly learning and unlearning is one of the most rudimentary capabilities required in today's workplace, especially among young professionals.  And why is that? Because most industries today are innovating and evolving at breakneck speed, and any young professional who cannot keep up with the momentum will fall behind.

The U.S. media & entertainment industry is a perfect example. Now, in my current role as an Analyst in Finance Strategy & Planning (Business Development Analysis) team at HBO (Time Warner), I feel that change is the most defining hallmark of the industry. Industry veterans might reiterate that content is the king, but innovation is not limited to this aspect only - it is prevalent throughout the value chain (especially, distribution).

Take, for instance, the degree of competition in the industry. Any person who has been in the industry long enough would attest to the fact that competition has intensified over the years, and this is particularly manifest in the distribution side of the business. In an effort to expand reach, both new players and incumbent ones are introducing different business models (for example, over-the-top/subscription video-on-demand services in addition to the traditional linear/TV cable channels). The aim is to get a bigger share of American eyeballs; however, doing so has become increasingly challenging because media companies are not just competing with one another - they are also competing with Pokémon Go or any mainstream technology that is commanding a share of people's attention.

Media companies have not been too ham-fisted to embrace technology, rendering the latter to be less disruptive. Yet the encounter between the media & entertainment industry and the technology industry has been an interesting one till date. On one hand, you find that media companies are leveraging technology to reach out to "cord-nevers" (i.e., people who never had a cable connection, especially the millennials) through new over-the-top offerings. On the other hand, tech giants (such as Facebook and Google) are pursuing deeper push into video to strengthen their core business (i.e., ad sales).  Do all these serve as a harbinger that show the industry dynamics will significantly change in the future? Only time will tell, but young professionals looking to build a career in this industry should have a positive attitude towards such change and the uncertainty that such change may accompany.

Lastly, while every industry is different, I came across two lessons during my pre-relocation period that are particularly helpful for any young professional  who are looking to relocate or transition from one industry to another.

Lesson 1: You need to really understand yourself and your interests before you decide to move to a different industry.

It's akin to doing a SWOT analysis on one self. Doing so will not only ensure that you capitalize on your strengths when you choose a particular role, it will also help you to appear more confident during job interviews. For instance, if you don't have any interest in films/TV or the current consumer technology trends, then a career in the media and entertainment industry might not be a "great" fit.

Lesson 2: it's very important to build a network within the industry that you wish to join - even if you have to reach out to complete strangers.

This may not help you to get the job but this will definitely make the process seem less puzzling. Hiring processes and their timelines differ across industries. For instance, management consulting jobs as well as strategy roles in Fortune 500 companies include case exercises during interviews, and your trusted network can provide with helpful advice regarding how to face such interviews.

Project Firefly folks - feel free to leave a message below if you want to share your own experience with relocation or have any question regarding the industry or my journey so far.

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In Pursuit of Elusive Growth?

“Be a part of growing businesses”. Most young professionals – like me – who have googled for career management tips must have stumbled upon this brilliant piece of advice from Warren Buffet, the legendary billionaire whose sheer shrewdness has made him the most successful investor at Wall Street and beyond. And the advice holds ground. After all, a growing business – even if it is still at its nascent stage – provides more opportunities for development since – compared to a large, sluggish company – there is more work than there are people to do them and the marginal reward from going the extra mile is higher. Not surprisingly, the very potential of growth (and the accompanying opportunity for development) has attracted so many young people to Silicon Valley – not just to become entrepreneurs but also to work for fledgling start-ups.

More than five years since the onset of the 2008 global financial meltdown, “growth” is the most sought goal and yet the most elusive one for businesses and economies alike. A business can be regarded as a microcosm for the wider macro-economy in terms of the benefits that growth can unravel for its members. A fast-growing economy is in a better shape to tackle many of its inherent problems, such as infrastructural deficiencies, unemployment and poverty, and to provide opportunities for its members to function at their highest capacity (an idea that remains at the cornerstone of capitalism). Needless to say, in the absence of growth, an economy ceases to provide adequate opportunities for its members – leading to undercapitalization of its members’ potential.

During the last financial crisis, when the prospect of de-growth loomed over developed economies, a ray of hope was brought by the emerging ones – including the elite BRICS nations with awe-inspiring growth rates. Economies, like India and Brazil, rode on double-digit growth rates while the Chinese economy – fueled by its (now speculative) investment-driven growth model – seemed well-poised to overtake the American economy in the offing. Despite bearing their share of the domino effect from the financial crisis, the emerging economies seemed to have the potential to propel the global economy in those difficult times. To the rest of the world, the emerging economies were a source of hope and renewed optimism.

Unfortunately, that very ray of hope has been extinguished. With the emerging economies themselves submerging (following the Fed’s announcement to taper its QE program), half of Europe mired in recession and new challenges brought forth by the US government shutdown, the prospect for the global economy to return to stable growth remains bleak. In no circumstances, the current pace of global growth is enough to sustain the aspirations of young people around the world. Young people represent the very segment with the greatest need to be part of growing businesses and growing economies. The most evident sign of this failure of global economy is in the form of rising youth unemployment. In Europe alone, around 15 million young people remain unemployed. In Italy, the poster boy for the doomed PIIGS economies, one out of every four young people is out of the workforce.

Youth unemployment is a far more serious issue that it appears to be on first glance. It is a reflection of eroding potential and another impending crisis. The generation – that will be at the forefront of running businesses and economies in a couple of decades – is not getting the opportunity to acquire the needed skills and experience. Worse, many young people may not be even able to make the transition to the workforce due to prolonged periods of being unemployed and inexperienced.

Indeed, times like this challenge us to ponder upon this discomforting (and disheartening) question: Is a significant portion of our generation less likely to be part of high-growth companies and economies at the onset of their careers, and thus less likely to get the opportunity to prepare themselves for the unforeseeable challenges of future? Youth unemployment in a global economy characterized by subdued growth is the defining issue confronting this generation and one that demands immediate attention from policymakers around the world.

What about the situation of young people in your country? Do you see yourself in a world of fewer opportunities and more demands? Please post your opinions below or send them through Project Firefly’s Facebook page.

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Corruption: Out of the Closet

The news media are now rife with yet another story of corruption. The perpetrator in question this time is GlaxoSmithKline, whose several executives have been arrested for paying more than $450 million in bribes to Chinese doctors in an effort to increase the sales of the company’s drugs. Even though it is not yet clear why only GSK has been singled out for retribution whereas many of its Chinese counterparts and their murky deals have gone unnoticed, the story brings a pressing question for all of us to ponder on: just how pervasive has corruption become in today’s world? Are we, as a generation, more likely to bend the rules for our own advantage? Will the world ever be free of corruption?

Few economists would probably answer in the affirmative to the last question. After all, many economic theories – such as the “free rider problem” (that is, benefiting from public resources without paying for their due costs) – inherently assume that everyone is corrupt unless proven otherwise, and there is a compelling reason for that. Greed and corruption are not alien to human nature. If given the opportunity, a sizable number of people would not resist the temptation to play the system for their own advantage. This is why a strong case could never be made for socialism: in the absence of individual incentives to work, most of us would rather be “social loafers”.


However, acting in one’s self-interest is not necessarily tantamount to being corrupt, even though people’s unrestrained predisposition to respond towards incentives is a direct cause of the latter. If I may borrow the working definition from Transparency International (an international non-governmental organization that monitors and combats corruption across 176 countries and territories), corruption is “the abuse of entrusted power for private gain”. Hence, the reason that many people – especially those at the bottom of the pyramid in developing countries – can rightfully claim to be the “victims” rather than the “perpetrators” of corruption is that they have never had any power to misuse.

Only a couple of months remain before Transparency International releases its 2013 Corruption Perceptions Index (a ranking of countries based on how corrupt their public sector is perceived to be). Over the years, this index has reinforced people’s belief that poor, developing countries tend to be more corrupt than rich, developed ones – resulting in dismal rankings for many African and South Asian economies. However, overreliance on this index for judging countries can prove to be faulty on two grounds. First, the index completely disregards the corruption taking place in the private sector; hence, the shadowy practices of many multinational corporations (be it in the form of tax evasion or “under the table” payments) remain completely out of the picture.

Second, the results brought forth by this index can be subjective as they are based on polls. Hence, countries, where most people think that they are exploited by high-ranking government officials and their cronies, are likely to suffer from negative biases – unlike those countries where public-sector corruption remains mostly hidden. This is particularly relevant for South Asian countries (including Bangladesh) where there is a tendency among people to stereotype every government official as “inept” and “corrupt”.

Nonetheless, the Corruption Perceptions Index casts light on some interesting findings. The most important one among these is that democracy does not necessarily translate into good governance and hence a country free of corruption. Otherwise, Singapore and Malaysia would not have had such higher scores than many African and Asian democracies.

So, what’s your take on the murky world of corruption? Please post your comments below or send them via Project Firefly’s Twitter or Facebook page.

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Globalization: Still in the Second Gear

Let’s revisit a fairy tale! Three decades ago, Bangladesh’s per-capita income was $220 – just a fraction of the per-capita GDP enjoyed by an OECD economy. Equally deplorable were the living standards shared by the country’s bottom of the pyramid. Due to the absence of an ample number of blue-collar jobs, being the breadwinner for the family used to be a distant dream for countless Bangladeshi women trapped in the vicious cycle of poverty and illiteracy.

Then things gradually began to take a turn for the better, placing the economy of Bangladesh on the path to growth. Swayed by cheap labor and high profit margins, hundreds of European and US apparel companies flocked to Bangladesh for sourcing. The country’s ready-made garment industry boomed, with a plethora of contractors and subcontractors. By 2012, the industry became the livelihood for about 3.5 million workers, most of whom were women. In fact, the success of the ready-made garment industry was so extraordinary that the industry soon became the leading foreign-currency-earning sector of the country, helping the economy to maintain an average annual growth rate of 6 percent for the last ten years. Last year, when McKinsey dubbed Bangladesh as the “next hot spot in apparel sourcing”, it was another testament of the dominant position that the country had acquired in the global apparel sourcing landscape. Bangladesh is now the world’s second-largest apparel exporter, second to only China.

However, several loopholes in this fairy tale have surfaced – loopholes that were blatantly disregarded by Western retailers in their quest for cheap clothing. For many years now, it was evident that many ready-made garment factories, especially those owned by subcontractors, were nothing more than sweatshops where workers made their living in hazardous conditions. It was not until 2012, when two incidents of factory fires claimed the lives of hundreds of garment workers in Bangladesh, that there was a global call for improving working conditions in the garment factories. Unfortunately, little – if any – improvements were made in the run-up to the Rana Plaza tragedy, the latest in the series of crises inflicting damage to the garment industry of Bangladesh.


If Michael Moore decides to make a sequel to “Capitalism: A Love Story”, focusing on the Rana Plaza tragedy will not be a completely bad idea. The tragedy unfolded on April 24, when an eight-story commercial building named Rana Plaza – that housed four garment factories – collapsed, taking with it the lives of 1,127 people and leaving thousands others injured and paralyzed for life. The high death toll made it the world’s second-worst industrial disaster, trailing only the Bhopal disaster that took place in India in the 1980s.

What ignited national and global fury the most was the fact that the tragedy could have been easily avoided. Huge cracks on the building were discovered on the day before the tragedy; yet, factory owners – fearing late shipment and order cancellation or airfreight – forced workers to continue to toil in the perilous building. The blame game soon ensued. Western retailers – who tried their best to distance themselves from the tragedy – were blamed for not conducting proper safety audits on the factories before placing orders. Law enforcers were blamed for letting the owner of Rana Plaza construct the building without adhering to national building codes. Western consumers were blamed for their overt love for cheap, fast fashion that has kept wages and working conditions in the Bangladeshi garment factories as deplorable as possible.

Unfortunately, in the aftermath of the crisis, there is a possibility that the rewards from globalization may retreat before Bangladesh can properly enjoy them. Improving fire and building safety conditions in the more than 5000 factories sprawled all over Bangladesh calls for an investment of millions of dollars, most of which will have to come from the Western buyers. Putting an end to labor exploitation is impossible unless wages are significantly raised from the current baseline of $38 per month. All these will translate into higher retail prices for Western consumers. The price increase will be marginal (on average, less than a dollar for every piece of clothing), but retailers remain concerned that this may drive away consumers in an industry characterized by highly elastic demand.

The point is, will Western retailers undertake these initiatives to improve working conditions just to stay in Bangladesh – when there are so many options brought forth by globalization? Vietnam, Indonesia and Cambodia may seem like safer alternatives for the time being; Myanmar, which has just started to open its doors for foreign investors, can offer even cheaper labor.

Cut-throat competition, an undisputable consequence of globalization, means that If Bangladesh wishes to maintain its strong position in the global apparel sourcing landscape, cheap labor has to remain “cheap”; otherwise, Western apparel companies will just find other destinations for sourcing – leaving the millions of garment workers in Bangladesh unemployed and impoverished.

Without a doubt, globalization still has a lot of demerits, with its benefits unequally shared between the rich and the poor countries, between the haves and the have-nots. Otherwise, there would not be so much debate on whether to save the life of a worker or raise the price of a T-shirt.

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Pandora’s Chain

“Passing off horse meat as beef”! This probably sounds like a common recounting of a local butcher’s chicanery in a developing country, where “caveat emptor” still prevails. However, recent events suggest otherwise. European consumers are still reeling from the meat adulteration scandal, which initially erupted in the United Kingdom but has now engulfed much of the continent. Not surprisingly, more and more European consumers are now ditching top-notch supermarkets and food companies in the wake of the scandal. After all, it is not just the meat but also the image of the entire European food industry that has become tainted.

Upon closer inspection, you will find that the horse meat scandal underscores a much more serious problem – the vulnerability of supply chains in today’s highly globalized markets. Investigations had to be carried out for several months to find out exactly which player in the chain from the slaughterhouses to the retailers mislabeled horse meat as beef before the French meat processor Spanghero could be indicted. Identifying this weak link in the supply chain was indeed very difficult – thanks to the highly complex nature of the chain. Now retailers, like Tesco, are paying the price for failing to monitor such disruptions in their supply chains as their sales continue to tumble.


In order to realize gains from specialization and focus on their core competencies, most firms now rely on external suppliers to source inputs for their production. Such high reliance on suppliers results in equally high supply chain risks. The last decade is replete with such incidents – many of which have led unwary consumers to fatal outcomes.

Take, for instance, the Chinese milk scandal that took place in the second half of 2008. More than 300,000 people, mainly infants and children, called in sick (and some faced dire consequences like kidney damage and even death) after consuming milk products of both Chinese and foreign food companies. That was because these companies sourced powdered milk from Chinese milk producers, who had not thought twice before adding the toxic chemical melamine to their powdered milk products in order to boost their protein content.

It is not only the food industry that has exhibited the presence of unscrupulous suppliers. In 2007, Mattel and other US toy manufacturers had to recall millions of children’s toys that were sourced from Chinese suppliers; these toys were tainted with lead paint – a dangerous substance, especially for children. The point is, regardless of its industry, every firm must undertake adequate, proactive strategies for supply chain risk management. Otherwise, it will fail to realize an integral part of its mission – protecting its customers’ interests through thick and thin.

In retrospect, proper supply chain risk management is a tall order – given the highly intricate supply networks held by the prime agents of globalization (that is, the multinational corporations). How can corporations or even governments reduce these challenges? Please post your opinions below or send them through Project Firefly’s Facebook or Twitter.

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Profits for Prophets

2012 was definitely an eventful year for the world, and it was made even more memorable by a few archaeologists who dug up an ancient Mayan calendar and predicted that the world would come to an end on December 21 (which was purported to be the last day of a 5,125-year-long cycle in the Mayan Long Count Calendar). Undoubtedly, the Mayan prophecy generated a lot of publicity – insofar that a small French village called Bugarach (touted as the “safest” place during an apocalypse) had to be blocked off to prevent the entry of hundreds of frantic visitors.


If the apocalypse had indeed occurred on December 21, the two hundred or so “fortunate” residents of Bugarach would have commended the Mayans for being the most successful fortune-tellers ever. However, the prediction did not come true – just like numerous other doomsday predictions which are made almost every year (mostly by religious fanatics) but which rarely receive as much hype as the Mayan prophecy did. Take, for instance, the late Jeane Dixon – a famous American fortune-teller – who rose to fame after accurately predicting the assassination of the American President John F. Kennedy. According to her, 2020 would mark the end of the world; the prediction came in soon after her prior prediction of an apocalypse (dated for February 4, 1962) became a fallacy.

Making predictions has never been a pastime of only the professional fortune-tellers. In fact, Steve Levitt (the author of Freakonomics) explains why almost everyone is so keen about making predictions. According to him, it is all about how incentives come into play – people have “strong incentives” for making predictions since they will be remembered and praised if their predictions come true. However, nobody has any incentive to ridicule the people whose predictions go wrong. In other words, the world quickly forgets all the wrong predictions but remembers and lauds the ones that turn out to be true.

It is impossible to disagree with Levitt. When I first read Michael Lewis’s highly acclaimed book “The Big Short: End of the Doomsday Machine”, I could not help but notice how the entire book is filled with admiration for the unsung prophets of the financial crisis – people who correctly predicted the 2008 housing bubble and made huge profits out of it. If things turned out differently, nobody would have written an article – let alone a book – just to deride the so-called prophets for being wrong.

Now even the general public can make hay out of their predictions – thanks to the flourishing online prediction markets. Here people can wager their money on the outcomes of current events – be it presidential elections or the Academy Awards. Two of the most popular online prediction markets are Intrade (based in Ireland) and Bets of Bitcoin (based in the United States). In fact, on several occasions, the bettors at Intrade were even more accurate than Gallup polls for predicting the outcomes. For instance, Intrade correctly predicted that Obama would win the 2008 presidential election and that he would win a second term last year. This week, the bettors at Intrade predicted that Steven Spielberg’s Lincoln would win the Best Picture Award in this year’s Academy Awards; we will have to wait for another month to see if the prediction turns out to be correct.

Just like price discovery is one of the central functions of stock markets, prediction markets like Intrade make it possible to find the probability of an uncertain event taking place. The accuracy of prediction markets can be attributed to the wisdom of the crowd phenomenon (that is, the collection opinion of a diverse group of people is far more likely to be correct than the opinion of an individual). In my opinion, online prediction markets are poised for growth, and it would be interesting to see how businesses use these markets in making their strategies in future. For instance, retailers may decide to cut back on inventory if the majority of bettors at prediction markets predict an increase in inflation or unemployment rate.

However, for the time being, not everything is favorable for such prediction markets – especially Intrade. Last month, Intrade had to pull out of the United States (its largest market at that time) after the U.S. Commodity Futures Trading Commission (CFTC) sued it for allowing users to bet on the prices of gold and crude oil. In addition, the transparency of these prediction markets has also been questioned. If other countries take similar draconian measures against prediction markets, the number of users (and hence the accuracy) of these prediction markets will hit the skids.

So, what are your predictions for the future of these prediction markets? Please post your comments below or send them through Project Firefly’s Facebook or Twitter.

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Digital Piracy and the Economics of Karma

If I have to recommend one book to any new mom, it will probably be “Un Milagro En Equilibrio” (“A Miracle in Equilibrium”) by Lucía Etxebarría, an award-winning Spanish novelist. And that’s not because this is one of a handful of books by Spanish authors that are available in English versions in the bookstore near my house. Instead, my fondness towards this book stems from the fact that this was my first epiphany of the power of motherhood. Unfortunately, the creator of this much cherished book – Lucía Etxebarría – has recently decided to quit writing. As strange as it may sound, the reason for the untimely retirement of this highly gifted writer is not her apathy towards writing but online piracy.

The case of Lucía Etxebarría is just a reflection of how rampant digital piracy has become and how discouraging it can be for authors. The plague of piracy affects other creative professionals, such as artists and filmmakers. For instance, according to a study by the Motion Picture Association of America, Hollywood bears an annual loss of $20.5 billion and 140,000 jobs due to digital piracy. Even then, artists and movie producers can generate income from other means (such as concert and box-office tickets). However, what will happen to writers whose livelihoods depend on only royalties from the sales of their books? For many authors, the number of illegal copies downloaded in pdf format is far higher than the number of original copies sold.


The rejection of the anti-piracy treaty ACTA (Anti-Counterfeiting Trade Agreement) by the European Union demonstrates that the fight to protect intellectual property rights is not going to be easy. Similarly, extending “Public Lending Rights” to digital libraries does not hold much promise. Draconian measures to punish owners of sites that allow illegal file sharing – such as the New Zealand-based Megaupload – have not been very popular among most Internet users. After all, many people do not regard digital piracy as “stealing” but as “sharing”. In their defense, a few people cite that they would have never bought the original version of the book – even if they had no access to the illegal copy.

Not surprisingly, most readers of this post will not think twice before downloading an illegal file from the Internet – even if they know that this would be a breach of intellectual property rights. In other words, almost all of us would prefer to be freeloaders if we have the option to be so. However, those who regard piracy as benign sharing should realize that every action has consequences, even if such consequences may not seem very apparent at present. And nowhere is this theory of karma more at play than in the world of economics. If digital piracy continues to flourish at the present rate, more and more gifted writers would respond to the change in economic incentives and switch to professions with better income – just like Lucía Etxebarría. For this reason, there would be fewer pieces of impressive literature for us to enjoy and appreciate in future.

Indeed, there will be no escape from karma – unless, of course, stringent measures to curb digital piracy become successful or writers start receiving fair compensations for their losses. Unfortunately, both of the two situations seem unlikely.

The overarching question is: Will the world be able to break the cycle of karma and cope with the challenges of internet piracy? Please post your comments below or send them through Project Firefly’s Facebook or Twitter.



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Inside the Darwinian Jungle

Last week, the Dhaka Stock Exchange, the largest stock exchange of Bangladesh, declined once again. It was certainly not an astonishing piece of news for the numerous small-scale individual investors in Bangladesh who have become much stronger – or more aptly, indifferent – after witnessing the free fall of stock prices since the stock market crash in 2010.

Much of the blame for the crash – and the ensuing unfortunate exit of small investors - could be put upon the “greater fool theory” that pervaded the industry before the crash. Acting upon this theory, momentum market participants made speculative investments that were not based on the fundamental or intrinsic value of the stocks while wrongly assuming that they would always be able to resell the stocks at higher prices to another investor (the greater fool). The speculative bubble, which continued to get inflated, was bound to burst in the days ahead. And, in 2010, it eventually did!

Even then, I can’t help but wonder if the losses borne by the small-scale investors were aggravated by the carefully planned and carefully executed actions of manipulators operating within the industry. In the aftermath of the crisis, many small investors alleged that they had fallen prey to the artificial price surge caused by a few unscrupulous, large-scale investors (colloquially known as “the gamblers”).

It will not be surprising if there are some shades of truth in those allegations. After all, the Dhaka Stock Exchange – just like the stock markets of most developing countries in Asia, Africa and Latin America – remains largely unregulated. It is impossible to accurately estimate the extent of securities fraud taking place in the market – be it in the form of stock price/volume manipulation, insider trading or front running. The odds of getting caught in such corporate crimes are slim in Bangladesh; moreover, even if an unlucky “gambler” gets convicted once in a blue moon, the penalty is likely to be low enough so as not to deter such illegal behavior in the future. In financial terminology, the potential returns from engaging in securities fraud are much higher than their accompanying risks, making them highly profitable affairs. Unfortunately, in the absence of more stringent regulations, securities fraud may soon become an essentially risk-free crime in Bangladesh – just like, according to the economists at Priceonomics, stealing bikes has recently become a risk-free offense in San Francisco.

In the century-old book “The Jungle”, the American socialist Upton Sinclair painted a grim picture of Social Darwinism, in which only the fittest members of the society could survive at the expense of the relatively weak members. The similarity between Sinclair’s Darwinian Jungle and an unregulated stock market (like Dhaka Stock Exchange) is frightening. In the contemporary jungle, the small-scale investors can easily fall prey to the predatory activities of fraudulent institutional investors – not because the former are not greedy themselves but because they lack the knowledge or information to properly comprehend the intricacies of modern finance.


I am probably taking a highly cynical view of the financial market and, like Sinclair, unreasonably leaving the element of human benevolence out of the picture. However, can such humanity be really found amid the rampant greed of the market participants who can easily exploit information asymmetry or swing the market in their favor?

The question brings forth an important – albeit highly debatable – issue to ponder on. How justified is the comparison between the financial industry and the Darwinian jungle? Please post your comments below or send them through Project Firefly’s Facebook or Twitter.



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The Economics of Happiness

With midterm exams going on (or – for others - coming up in a couple of weeks), I can presume that at least one out of every five people reading this article is not treading on air. In my opinion, having no time to do things that one truly enjoys – rather than dealing with exam stress itself – is what makes the mid-semester days so gloomy.

However, lately, what has been lifting the moods of people on this side of the planet is the 2012 Happy Planet Index report by the New Economics Foundation. In particular, many have dubbed Bangladesh’s impressive ranking of 11 (out of 151 countries) as being tantamount to the saying that “money can’t buy happiness”. In fact, a leading daily, The Daily Star, reported this news with the headline “Bangladesh 11th happiest nation”. For me, Bangladesh being the 11th happiest nation – despite the fact that more than a quarter of the population remain caught up in a hopelessness-based poverty trap and still go to sleep every night with hungry stomachs – was a tough piece of news to swallow.

The Happy Planet Index was received with great enthusiasm in other South Asian countries as well. Pakistan’s Dawn was quoted as saying “Pakistanis happier than Indians and Americans” while India’s Rediff ran the story with the headline “India among most happy nations, China way behind”.

Since then, many hypotheses have emerged because of the Happy Planet Index rankings. Amusingly, a few supporters of the Occupy Wall Street movement suggested that the dismal ranking of the United States (105) was due to the growing incoming disparity in the nation. In other words, according to them, the United States is “unhappy” because the nation’s 99 percent is unhappy, as only the 1 percent of the population owns almost all of the country’s wealth.

However, here is a word of caution for everyone who has become too engrossed with the Happy Planet Index: the Index – despite its misleading name – does measure “happiness”. Nor does it fully reflect how “happy” a nation is, relative to others. If you dig deeper into their methodology (which is included in their report), you will find that the Happy Planet Index is calculated in the following way:



Experienced well-being is the only one out of the three components that signifies happiness. This score is derived by asking respondents from a country to rate their life using a 10-point “Ladder of Life” scale, with 0 representing the worst possible life and 10 representing the best possible life.

Not surprisingly, rich nations – such as the United States, the United Kingdom, Australia, Canada and Switzerland – are some of the highest scorers when it comes to experienced well-being, with scores above 7 out of 10.

However, what keeps their final ranking in the Index down is their high ecological footprint, which, in turn, depends on their total CO2 emissions.
In other words, the Happy Planet Index does not measure the total utility that the nation’s citizens enjoy; instead, it measures the “sustainable well-being” of the nation – that is, the level of efficiency with which the nation is consuming natural resources to maintain a given level of happiness.


That makes more sense if you look at the top 10 countries in the Index. Nine out of these ten nations are located in the Caribbean and Latin America. Due to the relatively low levels of industrialization of their economies, these countries have low ecological footprints, which, in turn, bolster their HPI rankings.

If the HPI was really what the media and their followers deemed it to be, it would have been a sharp refutation to the economic studies that have always found a positive correlation between a country’s happiness and its GDP. Unless some revolutionary changes in human nature occur, the adage “money can’t buy happiness” (which, in my opinion, is a dangerously Utopian concept) will not hold water.

What are your opinions regarding the Happy Planet Index? Do you think it is a better indicator of human well-being than other economic indicators like GDP? Please leave your comments below or send them through Project Firefly’s Facebook or Twitter.



Upoma Dutta's picture

A Weekend To-Do: Falling in Love with Finance

A week ago, I started my last semester as an undergraduate. It is astounding how rapidly the last few years flew by, leaving an everlasting imprint on me. I would say I am fortunate because, after three and a half years of university education, I am armed with something that many would-be graduates do not have – a lucid, specific ambition that, in my case, leads towards a career in finance. The goal may come as a surprise – after my last blog posts which painted a grim picture of the financial industry and which, like a reader said, were enough to “scare all finance majors”. However, here is my piece of advice to all recent and would-be graduates – be aware of all the pros and cons of your chosen profession, divide the pros by 1.5 and multiply the cons by 1.5, and if you still think that the pros outweigh the cons, then you made the right choice.

Speaking of making informed career choices, I remember talking to a friend with a dual major in marketing and finance. Having recently landed a job as a brand manager for a beverage company, she was quick to point out her two reasons for choosing marketing (or more specifically, branding) over finance. First, finance – as a field of practice – left little scope for engaging her creative mind. Second, amidst the thousands of job seekers, she could not take this huge risk of rejecting a guaranteed job lest she should remain unemployed for another few months. Her first reason did not startle me; by now, I have met a horde of people who regard “creative finance” as an oxymoron. After all, in their opinion, what creativity can be expected in a career laden with crunching numbers and poring over paperwork?


Everyone is entitled to his or her own opinion; however, this does not suffice to mean that the opinion will necessarily be right or wholesome. If you want to join the financial industry but are reluctant just because you think the work will be mundane, first ponder on why capital is more accessible (and thus cheaper) than it was, say, twenty years ago. The credit should go to the gigantic list of extremely sophisticated (albeit complex) financial innovations – from ARMs (adjustable rate mortgages) through CDOs (collateralized debt obligations) to SIVs (structured investment vehicles) – all geared to make the financial industry more adept in fulfilling its fundamental role: channeling funds from the borrowers to the lenders. Now that’s what I call downright creativity in its most kinetic form!

In my opinion, an idea that will revolutionize the world of finance before long will be crowdfunding, by which individuals or businesses can raise small amounts of equity from a number of investors via an online platform. In other words, instead of receiving $10,000 from a single investor, an individual or business can receive $100 from 100 different investors and fulfill their capital and liquidity needs. The concept is already gaining momentum in the developed financial markets. It seems to me that crowdfunding holds immense potential in extending the basic financial services to the unbanked and underbanked low-income segments of the world, especially those in developing economies like Bangladesh.

Microfinance has long been championed as a way to combat poverty – as demonstrated by Professor Muhammad Yunus and Grameen Bank (for which they later received the Nobel Peace Prize). However, in recent times, after becoming a global phenomenon, microfinance is losing its edge in poor nations (where it is needed the most) as microfinance institutions struggle with high interest rates. In this scenario, crowdfunding may be a more viable option – by being an effective mechanism for channeling the idle income of businesses and households in urban areas to more productive uses, such as supporting the projects of the micro-entrepreneurs in rural regions. Crowdfunding’s main ingenuity lies in the fact that it can make financial intermediation take place where it would not have occurred otherwise.

However, in order to harness the potential of crowdfunding, developing countries would require young people with firm belief in the merits of finance – not those who abandon the financial industry because they have the false notion that it is “uncreative” or “socially useless”. Even if you know which career is right for you, the job crisis can make it difficult for you to opt for such a career. Theodore Roosevelt once said, “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing”. For would-be graduates, the best thing will be to choose a career where their passion lies, and the next best thing will be to be unsure about their career-passion match and explore various jobs in order to find their niche. However, the worst thing will be to blindly accept any job that they can get after graduation – even if they know that their passion lies somewhere else.

On a final note, if you are considering pursuing a career in finance, the fact that this is the most powerful engine driving the global economy may be a source of inspiration. You probably already got a hint of its immense power in your Corporate Finance or Valuation course; you could value a firm at $10,000 or $100,000 – all you needed to do is alter one assumption in your Excel spreadsheet. The question is: do you want to spend your entire career doing these meaningless calculations or explore the other, more progressive areas of finance – in order to create a lasting positive impact on not just your life but also the society? The choice is yours!

On the other hand, I will benefit from knowing how you decided which career was right for you. Are you still happy with the career path that you have chosen for yourself? Please post your comments below or send them through Project Firefly’s Facebook or Twitter.

Best regards,