Thursday, February 17, 2011

The Economics of Life

Adam Smith, human stock exchange, invisible hand

Adam Smith-The father of economics proposed something way back when events were attributed to either the hand of God or the Devil. He proposed the existence of another hand: the invisible hand of the free market.Since then, this term has been used to justify everything from onion prices to dot com valuations. It has been used to defend the indefensible through its axiomatic nature.  Through its simplicity and universal application, it, once and for all, condemned humans to be profit maximizing machines. Every decision we have taken since then, has boiled down to the basics of demand and supply. Why is gold so pricey despite its limited practical application? High demand fueled by irrational thirst for shiny objects. ­­But one sacrosanct subject stayed beyond the purview of Adam Smith and his Hand. That being,  our own lives…

    This guy..

I was just reading the paper the other day where the article screamed “Another tiger found dead, probe on”. After it was drilled into our heads that only 1411 were alive,  an understandable outrage was prevalent. (BTW, is somebody actually counting down these deaths , it has been 1411 for a freaking long time). What was more surprising was the article diagonally beneath it, in much smaller letters, mentioning the death of 30 people in the winter cold.  Now, I am no human supremacist but surely 30 human deaths >1 tiger death.

     I did what I could to save our kind....

Nope, in this new age of economic existentialism, the economic value of a tiger due to its short supply far outstrips the economic value of one Indian, which let us be fair, there is no short supply of.  Economists bang on about our demographic dividend being our biggest strength. It is really no different than Saudi Arabia boasting about it oil supplies. They waste it because they have lots of it and we can waste our precious resource as well. Will there come a day when India, China and Brazil form an OPEC-like cartel to regulate the flow of manpower? “Hey, Japan, we are only sending you 10 doctors this month, pay up if you want to see the rest of them..” .  A human stock exchange, perhaps?  People you hardly know investing in your education to get a stake in your future earnings.  “Mergers and acquisitions” would have a whole new meaning.  The mind boggles.So before somebody steals this blockbuster idea,  buy a stake in me, or buy me a steak . Both probably cost the same..


Dheeraj said...

buying a steak in somebody - isn't that what we call prostitution?

No, i will not be your pimp.

Gordon.Gekko said...

The net worth for Brands and organisations are evaluated having taken into account a multitude of factors - one of these factors are the people and their brand value behind these organisations/brands. It is easy to imagine a downfall in Infosys' stock the day NRN hangs up his boots; MS stocks have indeed plummeted since Gates bid adieu, and well before the slowdown pronounced itself.

In a lot of ways, when one invests, or buys a stake in a company, he is actually gambling on the capabilities, brand value and net worth of these individuals who are at the heart of the enterprise.

An explicit investment in high potential human beings though, is unlikely to find takers. What do you stand to gain, when you know that human lives are at the end of the day, both expendible and limited to life expectancies.

But it is an interesting idea to dwell upon, and something that reminds me of the so many "fake asset bubbles", from tulips to brass.