Five Years of Leading the Reserve Bank - Looking Ahead by Looking Back (Tenth Nani A. Palkhivala Memorial Lecture delivered by Dr. Duvvuri Subbarao, Governor, Reserve Bank of India in Mumbai on August 29, 2013)

Swansong of the outgoing Governor of Reserve Bank of India.  An expression of the ever present anguish all over India this time by a prominent member of the elite against the rot the Indian politicians have landed this country in and the resentment is growing, ever growing.... A Tahrir square is taking shape somewhere.

First of all, my sincere thanks to the Nani Palkhivala Memorial Trust, particularly Shri Y.H. Malegam, the widely respected Chairman of the Trust, for extending me the honour of delivering the Palkhivala Memorial Lecture for this year. I know many eminent thought leaders had delivered this memorial lecture in the past, and I attach a lot of value to adding my name to that very select list. Nani Palkhivala 2. I did not have the privilege of meeting or interacting with late Shri Palkhivala. He was already a preeminent public intellectual in the country by the time I had entered the IAS in the early 1970s. But I count myself among the millions of educated Indians who were deeply impressed by Shri Palkhivala’s commitment to protecting India’s democratic institutions, and the intellectual vigour with which he did so. In a career spanning over six decades, he distinguished himself as a brilliant lawyer, a perceptive political scientist, an intelligent communicator and an erudite diplomat, leaving behind a legacy that continues to influence our public discourse in several areas. Topic of My Lecture 3. I deliberated quite a bit on an appropriate topic for a lecture to honour the memory of such an eminent public intellectual. I was also conscious of the fact that this will be my last public lecture as the Governor of the Reserve Bank of India (RBI). Quite understandably, given the Palkhivala context, my thoughts started centering around the role and responsibility of a central bank in a democratic structure. Central banks make macroeconomic policy that influences the everyday life of people; yet they are managed by unelected officials appointed by the government. Such an arrangement is deliberate, based on the logic that an apolitical central bank, operating autonomously within a statutorily prescribed mandate and with a longer time perspective, is an effective counterpoise to a democratically elected government which typically operates with a political mandate within the time horizon of an electoral cycle. 4. An autonomous and apolitical central bank is a delicate arrangement too, and will work only if the government respects the autonomy of the central bank, and the central bank itself stays within its mandate, delivers on that mandate and renders accountability for the outcomes of its policies and actions. 5. Putting the three elements of today’s lecture context together - Shri Palkhivala’s exemplary commitment to preserve and promote values and institutions of democracy in India; the Reserve Bank’s role in the democratic edifice of India; and the completion of my term as the Governor of the Reserve Bank - I determined that the best way I can pay tribute to Shri Palkhivala is to focus on a topic that threads together these three elements. That explains my topic for today: ‘Five Years of Leading the Reserve Bank: Looking Ahead by Looking Back’. “May you live in interesting times!” 6. The Chinese have an adage: “May you live in interesting times.” I can hardly complain on that count. I had come into the Reserve Bank five years ago as the ‘Great Recession’ was setting in, and I am finishing now as the ‘Great Exit’ is taking shape, with not a week of respite from the crisis over the five years. 7. From a central banking perspective, history will mark the last five years for two distinct developments. The first is the extraordinary show of policy force with which central banks responded to the global financial crisis. This has generated a vigorous debate on the short-term and long term implications of unconventional monetary policies as also on the responsibility of central banks for the cross border spillover impact of their policies. The second historical marker will be the manner in which, reflecting the lessons of the crisis, the mandate, autonomy and accountability of central banks are being redefined in several countries around the world. Notwithstanding all the tensions and anxieties of policy management during an admittedly challenging period, I consider myself privileged to have led one of the finest central banks in the world during such an intellectually vigorous period. 8. Against that context, I want to divide my lecture today on “Five Years of Leading the Reserve Bank: Looking Ahead by Looking Back” into two segments. In the first segment, I want to look back over the last five years and give my assessment of the macroeconomic developments during this period and the Reserve Bank’s response. In the second segment, I will address the major challenges for the Reserve Bank on the way forward. I. Macroeconomic Developments Over the Last Five Years and RBI’s Response 9. For analytical purposes, macroeconomic developments over the last five years can be divided into three distinct phases: (i) The global financial crisis and RBI’s response; (ii) Exit from the crisis and RBI’s struggle with growth-inflation dynamics; and (iii) The external sector strains which have accentuated over the last few months and RBI’s efforts to restore stability in the currency market. First Phase (2008/09) - Crisis Management 10. Given all the water that has flown under the bridge since then, the Lehman crisis of 2008 seems an eternity away. Yet, that was the reality that I faced within less than two weeks of taking over as Governor. My intent here is not to rehash the events of those days, but try and put that crisis - and therefore the policy response - in perspective. 11. In order to appreciate that perspective, just throw your mind back to those heady days of 2008. Recall that India was on the verge of being christened the next miracle economy. Growth was surging along at 9 per cent. Fiscal deficit was on the mend. The rupee was appreciating and asset prices were rising. There were inflation pressures but the general perception was that inflation was a problem of success, not of failure. Most importantly, we thought we had ‘decoupled’ - that even if advanced economies went into a down turn, emerging market economies will not be affected because of their improved macroeconomic management, robust external reserves and sound banking sectors. 12. The crisis dented, if not fully discredited, the decoupling hypothesis. It affected virtually every country in the world, including India. So, why did India get hit? The reason was that by 2008, India was more integrated into the global economy than we recognized. India’s two way trade (merchandize exports plus imports), as a proportion to GDP, more than doubled over the past decade: from about 20 per cent in 1998/99, the year of the Asian crisis, to over 40 per cent in 2008/09, the year of the global crisis. 13. If our trade integration was deep, our financial integration was even deeper. A measure of financial integration is the ratio of total external transactions (gross current account flows plus gross capital account flows) to GDP. This ratio had more than doubled from 44 per cent in 1998/99 to 112 per cent in 2008/09, evidencing the depth of India’s financial integration. 14. What this meant was that as the global financial and economic conditions went into a turmoil, we were affected through trade, finance and confidence channels. The Reserve Bank responded to the crisis with alacrity, with policies aimed at keeping our financial markets functioning, providing adequate rupee liquidity, and maintaining the flow of credit to the productive sectors of the economy. Lessons in Crisis Management 15. As someone said, this crisis was too valuable to waste. In the event, we learnt several lessons in crisis management. I will only list the important ones. First, we learnt that in a global environment of such uncertainty and unpredictability, policy action has to be swift, certain and reassuring. Also, during crisis times, it helps enormously if governments and central banks act, and are seen to be acting, in concert. Second, we learnt that action is important, but communication is even more important. When the economic environment is uncertain, market players and economic agents look up to governments and central banks for both reassurance and clarity. Indeed, communication was a critical tool all central banks, including India, adopted in those heady autumn days of 2008. 16. The third lesson we learnt is that even in a multi-nation crisis, governments and central banks have to adapt their response to domestic conditions. There is typically pressure on every country to copy the crisis response of other countries, especially of advanced economies (AEs). For example, AEs were forced to resort to quantitative easing (QE) to loosen monetary conditions, raise inflation expectations and lower real interest rates. Was there any need for emerging market (EM) central banks to do so? I believe there wasn’t because they had sufficient conventional ammunition left. Instead, what we had to show was that we were fully prepared to use it. 17. While on the subject of crisis, I also want to share with you a dilemma. Crisis management is a percentage game. We have to do what we think has the best chance of reversing the momentum. At the same time, we have to weigh the short-term benefits against the longer term consequences, including moral hazards. In 2008, massive infusion of liquidity was seen as the best bet. Indeed, in uncharted waters, erring on the side of caution meant providing the system with more liquidity than considered adequate. This strategy was effective in the short-term, but with hindsight, we know that excess liquidity may have reinforced inflation pressures. In the thick of the crisis, the judgement call we had to make was about balancing the benefits from preventing a crisis against the costs of potential inflation down the line. Remember we were acting in real time. Analysts who are criticising us are doing so with the benefit of hindsight. Second Phase (2010/11) - Exit from the Crisis 18. India recovered from the crisis sooner than even other emerging economies, but inflation too caught up with us sooner than elsewhere. Inflation, as measured by the wholesale price index (WPI), which actually went into negative territory for a brief period in mid-2009, started rising in late 2009, and had remained around 9-10 per cent for all of 2010 and much of 2011, reflecting both supply and demand pressures. Supply pressures stemmed from elevated domestic food prices and rising global prices of oil and other commodities. Demand pressures stemmed from rising incomes and sudden release of pent up demand as recovery began. The supply shocks and demand pressures combined to trigger a wider inflationary process. We were caught in the quintessential central banking dilemma of balancing growth and inflation. 19. In response to the inflation pressures, the Reserve Bank reversed its crisis driven accommodative monetary policy as early as October 2009 and started tightening. We have been criticized for our anti-inflationary stance, ironically from two opposite directions. From one side, there were critics who argued that we were too soft on inflation, that we were late in recognizing the inflation pressures, and that even after recognizing such pressures, our ‘baby step’ tightening was a timid and hesitant response. Had the Reserve Bank acted quickly and more decisively, inflation could have been brought under control much sooner. From the other side of the spectrum, we were criticized for being too hawkish, mainly on the argument that there was no need for the Reserve Bank to respond to inflation driven largely by food and supply shocks, and that we only ended up stifling growth without easing inflation pressures. 20. Let me respond to this criticism from both ends of the spectrum. 21. To those who say that we were behind the curve, my simple response is to recall the context of the years 2010 and 2011. Much of the world was still in a crisis mode, the eurozone crisis was in full bloom and there was a lot of uncertainty globally. And as we learnt from the experience of the 2008 Lehman episode, we remained vulnerable to adverse external developments. Our ‘baby steps’ were therefore a delicate balancing act between preserving growth on the one hand and restraining inflation on the other. 22. With the benefit of hindsight, of course, I must admit in all honesty that the economy would have been better served if our monetary tightening had started sooner and had been faster and stronger. Why do I say that? I say that because we now know that we had a classic V-shaped recovery from the crisis, that growth had not dipped in the Lehman crisis year as low as had been feared, and that growth in the subsequent two years was stronger than earlier thought. But remember, all this is hindsight whereas we were making policy in real time, operating within the universe of knowledge at that time. Just as an aside, this episode highlights the importance of faster and more reliable economic data for effective monetary policy calibration. 23. Let me now respond to the doves who argue that the Reserve Bank was too hawkish in its anti-inflationary stance. 24. First, I do not agree with the argument that the Reserve Bank failed to control inflation but only ended up stifling growth. WPI inflation has come down from double digits to around 5 per cent; core inflation has declined to around 2 per cent. Yes, growth has moderated, but to attribute all of that moderation to tight monetary policy would be inaccurate, unfair, and importantly, misleading as a policy lesson. India’s economic activity slowed owing to a host of supply side constraints and governance issues, clearly beyond the purview of the Reserve Bank. If the Reserve Bank’s repo rate was the only factor inhibiting growth, growth should have responded to our rate cuts of 125 bps between April 2012 and May 2013, CRR cut of 200 bps and open market operations (OMOs) of `1.5 trillion last year. 25. Admittedly, some growth slowdown is attributable to monetary tightening. Note that the objective of monetary tightening is to compress aggregate demand, and so some sacrifice of growth is programmed into monetary tightening. But this sacrifice is only in the short-term; there is no sacrifice in the medium term. Indeed, low and steady inflation is a necessary precondition for sustained growth. Any growth sacrifice in the short term would be more than offset by sustained medium term growth. I want to reiterate once again that the Reserve Bank had run a tight monetary policy not because it does not care for growth, but because it does care for growth. 26. Critics of our monetary tightening must also note that our degrees of freedom were curtailed by the loose fiscal stance of the government during 2009-12. Had the fiscal consolidation been faster, it is possible that monetary policy calibration could have been less tight. 27. And now let me respond to the criticism that monetary policy is an ineffective tool against supply shocks. This is an ageless and timeless issue. I am not the first Governor to have to respond to this, and I know I won’t be the last. My response should come as no surprise. In a $1500 per-capita economy - where food is a large fraction of the expenditure basket - food inflation quickly spills into wage inflation, and therefore into core inflation. Indeed, this transmission was institutionalized in the rural areas where MGNREGA wages are formally indexed to inflation. Besides, when food is such a dominant share of the expenditure basket, sustained food inflation is bound to ignite inflationary expectations. 28. As it turned out, both these phenomena did play out - wages and inflation expectations began to rise. More generally, this was all against a context of consumption-led growth, large fiscal deficits, and increased implementation bottlenecks. If ever there was a potent cocktail for core inflation to rise this was it. And it did - rising from under 3 per cent at the start of 2010 to almost 8 per cent by the end of the next year. It is against this backdrop that our anti-inflationary stance in 2010 and 2011 needs to be evaluated. Third Phase (2012/13) - Pressures in the External Sector 29. Remember, I began my speech with the old Chinese saying - “May you live in interesting times.” So, as inflation began to moderate yielding space for monetary easing to support growth, we got caught up with external sector strains over the last two years and a sharp depreciation of the rupee over the last three months. There has been dismay about the ferocity of depreciation; there has also been a growing tendency to attribute all of this to the ‘tapering’ of its ultra easy monetary policy by the US Fed. 30. Such a diagnosis, I believe, is misleading. Admittedly, the speed and timing of the rupee depreciation have been due to the markets factoring in ‘tapering’ by the US Fed, but we will go astray both in the diagnosis and remedy, if we do not acknowledge that the root cause of the problem is domestic structural factors. 31. What are these structural factors? At its root, the problem is that we have been running a current account deficit (CAD) well above the sustainable level for three years in a row, and possibly for a fourth year this year. We were able to finance the CAD because of the easy liquidity in the global system. Had we used the breathing time that this gave us to address the structural factors and brought the CAD down to its sustainable level, we would have been able to withstand the ‘taper’. In the event, we did not. We therefore made ourselves vulnerable to sudden stop and exit of capital flows driven by global sentiment; the eventual cost of adjustment too went up sharply. 32. But what drives the CAD so high? Basic economics tells us that the CAD rises when aggregate demand exceeds aggregate supply. There is an argument that this logic is not applicable to us in the current juncture given the sharp slow down in growth. But we need to recognize that the CAD can increase substantially even in a low growth environment if supply constraints impact both growth and external trade as has been the case with us. 33. The only lasting solution to our external sector problem is to reduce the CAD to its sustainable level and to finance the reduced CAD through stable, and to the extent possible, non-debt flows. Reducing the CAD requires structural solutions - RBI has very little policy space or instruments to deliver the needed structural solution. They fall within the ambit of the government. Structural adjustment will also take time. In the interim, we need to stabilize the market volatility, a task that falls within the domain of the Reserve Bank. 34. It is the avowed policy of the Reserve Bank not to target a level of exchange rate and we have stayed true to that policy. Our efforts over the last few years, particularly the last three months, have been to smoothen volatility as the exchange rate adjusts to its market determined level so as to make the near-term cost of adjustment less onerous for firms, households and banks. 35. There has been criticism that the Reserve Bank’s policy measures have been confusing and betray a lack of resolve to curb exchange rate volatility. Let me first of all reiterate that our commitment to curbing volatility in the exchange rate is total and unequivocal. I admit that we could have communicated the rationale of our measures more effectively. 36. But our actions were consistent. Our capital account measures were aimed at encouraging inflows and discouraging outflows. Also, we tightened liquidity at the short end to raise the cost of short-term money so as to curb volatility. At the same time, we wanted to inhibit the transmission of the interest rate signal from the short end to the long end as that would hurt flow of credit to the productive sector of the economy. So, we instituted an Indian version of “operation twist”. 37. I must reiterate here that it is not the policy of the Reserve Bank to resort to capital controls or reverse the direction of capital account liberalization. Notably, the measures that we took did not restrict inflows or outflows by non-residents. II. Challenges for the Reserve Bank on the Way Forward 38. Now let me turn to the second part of my lecture. Several times over the last five years. I have often been asked about the challenges for the Reserve Bank on the way forward. As I finish my term as Governor of this great institution, this is a question that has been playing repeatedly in my mind. I am deeply conscious that this is not a seminar, so I will highlight, but only briefly, four challenges that the Reserve Bank will need to address in order to remain a premiere policy institution. Managing Policy in a Globalizing World 39. The first challenge on my list is for the Reserve Bank to learn to manage both economic and regulatory policies in a globalizing world. The global financial crisis, the eurozone sovereign debt crisis as well as the currency market volatility over the last few months have emphatically demonstrated how external developments influence our domestic macroeconomic situation in complex, uncertain and even capricious ways. In making our policies, we have to factor in external developments, particularly the spillover impact of the policies of advanced economies on our macroeconomy. This will become even more important as India’s integration with the global economy increases. Surely, globalization is a double edged sword. It comes with costs and benefits. The Reserve Bank needs to sharpen the analytical and intellectual rigour to make policies that exploit the advantages of globalization and mitigate its risks. 40. Over the last five years, as an institution, we have learnt quite a lot about managing policy in a globalizing world. Yet the learning curve ahead is steep. My wish is that the Reserve Bank should take the lead in setting standards for how an emerging market central bank manages policies in a globalizing world. In other words, we should become the best practice that other central banks emulate. Knowledge Institution 41. The second on my list of challenges is that the Reserve Bank must position itself as a knowledge institution. The crisis has shown that knowledge matters. Those central banks which are at the frontiers of domain knowledge and are pushing the envelope in terms of policies and actions will be better equipped to deal with the complexities of macroeconomic management in an increasingly dynamic and interconnected world. 42. There is obviously no template or manual for becoming a knowledge institution nor is there a comprehensive list of attributes. Becoming a knowledge institution is a continuous process of learning from the best practices in the world, oftentimes reinventing them to suit our home context, pushing the envelope, asking questions, being open minded, acting with professionalism and integrity and encouraging an institutional culture that cuts through hierarchies. The Reserve Bank will also need to review its HR policies so as to build a talent endowment that can meet the challenges on the way forward. Keep Your Ear Close to the Ground 43. When I was appointed Governor of the Reserve Bank in 2008, I went to call on the Prime Minister before I took charge. A man of few words as we all know, he told me one thing that stuck in my mind: “Subbarao, you are moving from long experience in the IAS into the Reserve Bank. In the Reserve Bank, one runs the risk of losing touch with the real world. With your mind space fully taken up by issues like interest rates, liquidity traps and monetary policy transmission, it is easy to forget that monetary policy is also about reducing hunger and malnutrition, putting children in school, creating jobs, building roads and bridges and increasing the productivity of our farms and firms. Keep your ear close to the ground.” 44. In the five years that I have been at the Reserve Bank, I have followed this wise counsel to the best of my ability. We have introduced a number of initiatives. The outreach programme of village visits by top executives of the Reserve Bank, village immersion programme for our younger officers, town hall shows and meetings with focus groups, conferences with frontline managers, conventions of business correspondents, to mention some of the important ones. 45. As a result of all these initiatives, the Reserve Bank is more conscious today than before that the policies it makes have a meaning if, and only if, they make a positive difference to the real world. For example, one of the core concerns of the Reserve Bank’s anti-inflationary stance is that inflation hurts, but hurts the poor much more than the better off. But the poor are not an organized, articulate lobby. As a public policy institution, the Reserve Bank has the responsibility to make that extra effort to listen to the silent ‘voice of the poor’. 46. Outreach is not a discrete task; it is a continuous process. As I said earlier, the policies of the Reserve Bank impact the everyday lives of people. The Reserve Bank will remain a useful and relevant institution only if it is able to understand the hopes and aspirations of ordinary people and factor them into its policy calculus. Autonomy and Accountability 47. The crisis over the last five years has reopened some fundamental questions about central banks - their mandates, the limits to their autonomy and the mechanisms through which they render accountability. These questions are playing out in India too. Several committees have suggested that the mandate of the Reserve Bank should be narrowed on the argument that its currently broad mandate is diluting its focus on price stability - the core concern of monetary policy. The Financial Sector Legislative Reforms Commission (FSLRC) which submitted its report to the Government in March this year has argued that the mandate of the Reserve Bank should be restricted to monetary policy and regulation of banks and the payment system. 48. In the context of the mandate of central banks, one needs to keep in mind that the global financial crisis was a powerful rebuke to central banks for neglecting financial stability in the pursuit of price stability. In the immediate aftermath of the crisis, which saw the US Fed and other central banks provide liquidity in spades and use unconventional tools, a consensus had emerged that financial stability needed to be explicit in the objectives of monetary policy. Then the euro zone debt crisis forced the ECB to bend and stretch its mandate to bail out sovereigns, in essence implying that a central bank committed to financial stability could not ignore sovereign debt sustainability. Put differently, the fundamentalist view of a central bank with a single-minded objective (price stability), and a single instrument (short-term interest rate) is being reassessed across the world. 49. The jury is still out, but a consensus is building around the view that central banks now need to balance price stability, financial stability and sovereign debt sustainability. How this is to be achieved is the big question. 50. Clearly there are no easy answers. But there are certain tenets that must inform the thinking over this issue. First, the fundamental responsibility of central banks for price stability should not be compromised. Second, central banks should have a lead, but not exclusive, responsibility for financial stability. Third, the boundaries of central bank responsibility for sovereign debt sustainability should be clearly defined. Fourth, in the matter of ensuring financial stability, the government must normally leave the responsibility to the regulators, assuming an activist role only in times of crisis. 51. The crisis has made a strong case for a more expanded role for central banks. Do we ignore all that, and fall back on the old understanding of what a central bank should or should not do to change the RBI’s remit and scope of influence? That could turn out to be sub-optimal, even risky. 52. Related to all this is the question about the limits to the autonomy of the Reserve Bank and where and to what extent it should defer to the executive. Finally, there are also questions about the accountability of the Reserve Bank for the outcomes of its policies. 53. As Governor of the Reserve Bank, I not only welcomed the debate on these issues, but even encouraged it, in the firm belief that such a debate is in the larger public interest. At various times and in various contexts, I have responded to the issues in the debate. This is not the time and platform for extensive engagement on these issues. Here, I only want to give my broad view. 54. Admittedly, the Reserve Bank has a mandate that is wider than that of most central banks. This is an arrangement that has served the economy well. There are synergies in the various components of the Reserve Bank’s mandate and we should not forefeit those synergies. Surely, our institutional structures must adapt to the changing socioeconomic context, but any such change must be brought about only after extensive debate and discussion. 55. Notably, in a full length feature on the Reserve Bank in 2012, The Economist had said that the RBI is a role model for the kind of full service central bank that is back in fashion worldwide. There is something to that. 56. It is also important that the mandate of the Reserve Bank is written into the statute, so that it is protected from the political dynamics of changing governments. 57. In the opening part of my lecture today, I explained the rationale for an autonomous central bank. Like in most other developing economies, the Reserve Bank was not born autonomous; it gained its autonomy over time as a result of the lessons of international experience and the maturity of our political executive who saw the benefits of preserving the autonomy of the Reserve Bank. On its part, the Reserve Bank earned this autonomy by staying committed to the pursuit of larger public interest. 58. Accountability is the flipside of autonomy. The Reserve Bank of India Act does not prescribe any formal mechanism for accountability. Over the years, however, certain good practices have evolved. Let me briefly illustrate. We explain the rationale of our policies, and where possible indicate expected outcomes. The Governor holds a regular media conference after every quarterly policy review which is an open house for questions, not just related to monetary policy, but the entire domain of activities of the Reserve Bank. 59. The Reserve Bank also services the Finance Minister in answering parliament questions relating to its domain. Most importantly, the Governor appears before the Parliament’s Standing Committee on Finance whenever summoned, which happens on the average three to four times a year. 60. It has often struck me that for a public policy institution with such a powerful mandate, these mechanisms for accountability are both inadequate and unstructured. Perhaps, we should institute an arrangement whereby the Governor goes before the Parliament Standing Committee on Finance twice a year to present a report on the Reserve Bank’s policies and outcomes and answers questions from the members of the Committee. In my view, this will not only secure the accountability structure but also protect the Reserve Bank from any potential assaults on its autonomy. 61. I have dwelt a bit longer on this last challenge of autonomy and accountability if only because we have not debated this in the larger public domain as much as we should have. And to the Reserve Bank staff, I want to say that they must be as zealous about rendering accountability as they are about guarding its autonomy. Thank God, the Reserve Bank Exists 62. A final thought on this issue of autonomy and accountability. There has been a lot of media coverage on policy differences between the government and the Reserve Bank. Gerard Schroeder, the former German Chancellor, once said, “I am often frustrated by the the Bundesbank. But thank God, it exists.” I do hope Finance Minister Chidambaram will one day say, “I am often frustrated by the Reserve Bank, so frustrated that I want to go for a walk, even if I have to walk alone. But thank God, the Reserve Bank exists.” Conclusion 63. Let me now conclude. Over the course of this lecture, I have looked back to the last five years and indicated how that period divided into three different phases of complex policy challenges. I made an assessment of the Reserve Bank’s policy response and addressed some of the criticism of that policy response at a broad level. Then, I looked ahead to four challenges that the Reserve Bank must address in order to remain a responsible, relevant and intellectually agile policy institution. 64. It has been an enormous privilege for me to serve the Reserve Bank of India over the last five years. There were taxing times, testing times, anxious times. But at all times, I moved on with the confidence that there is a great institution behind me that will keep me in the right direction. I have been deeply impressed by the professionalism, intellectual agility and commitment of the staff and officers of the Reserve Bank. This is an institution that has served the country with dignity and distinction and will continue to set exacting standards for professional integrity and work ethic. Dharma 65. Nani Palkhivala said, “Dharma lives in the hearts of public men; when it dies, no constitution, no law, no amendment can save it.” If I can extend that thought a little, a nation prospers only if its public institutions are guided by dharma. The Reserve Bank of India tops the list of India’s public institutions that are guided by Dharma and Dharma alone.

A Colored Man’s Constitution (in NYT on Aug 30, 2013)

Patrolling the streets of New Orleans on the evening of Sept. 1, 1863, a police officer found a small sheaf of handwritten papers. They were hard to read, written mostly in halting, misspelled English. Glancing over a page, the policeman may have seen at first only snatches of apparently incoherent prose: “Carrige Drivers preachers of the Gospel the best Soldiers the united States Can Raise but the tel lies Sometimes and so dos all negro traders the get Drunk and lawiers and merchants.”
Parts of the document, though, were written perfectly. And they sounded familiar. At the top of the same page, the police officer would have read these lines: “the president Shall be Commander in Chief of the Army and navy of the united States” — a verbatim quotation of Article II, Section 2, of the United States Constitution.
The police officer may not have read the document with sufficient care to deduce exactly what it was all about. But he must have lingered long enough over some of the writer’s clearer lines — “we Care nothing a bout the union we heave been in it Slaves over two hundred And fifty years”; “we are the Blackest and the bravest race” — to decide that these eight handwritten pages meant trouble. He turned them over to the chief of police, who forwarded them the next day to a Union general. There’s no evidence the general followed up on the matter in any way. The only consequence of the police officer’s actions is that these pages, instead of withering and blowing away down the “public street” in which he found them, were preserved in military archives.
What almost was lost to history is a rare glimpse into the mind of a former slave living through the Civil War. His identity is unknown — he signed his name “A Colored Man.” In eight laboriously written pages — a mix of memoir, exposé, political theory, quotation and outrage — he reimagined the Constitution from an African-American perspective.

He may have had no more than one or two readers in 1863 (and probably not appreciative ones). For readers today, this remarkable document remains surprisingly relevant. Over the ensuing 150 years, African-American political rights have seen rises and ebbs, from the 14th and 15th Amendments to Jim Crow segregation and disenfranchisement, from the Voting Rights Act to the demise of the Voting Rights Act this year at the hands of the Supreme Court. The Colored Man understood that who counts in America was essentially a matter of interpretation. Although his writing may have been unpolished, he was a savvy reader and interpreter, and he knew the stakes of interpreting the Constitution were — as they continue to be — very high.
As summer waned in 1863, the Union had some cause for optimism and pride. Victories at Gettysburg and Vicksburg had brightened the North’s military prospects. The Emancipation Proclamation had been issued back in January, and the Army had begun enlisting black soldiers. The most celebrated African-American regiment, the 54th Massachusetts, had distinguished itself in battle at Fort Wagner in July. It was becoming clearer and clearer that the nation was going through not just a terrible war but also a watershed in its identity: more than four million black people who had been deprived of every right were going to become members of American society.
How exactly that was going to happen remained unclear, especially in New Orleans. The Emancipation Proclamation did not apply here; the southern parishes of Louisiana were among the places Lincoln exempted because they already were under Union control in late 1862. Planters outside the city still held slaves, yet the Union Army was accepting — and, in some instances, forcing — black men into the ranks. Many African-Americans simply did not know what their status was. As the Colored Man put it: “it is retten that a man can not Serve two masters But it Seems that the Collored population has got two a reble master and a union master . . . one wants us to make Cotton and Sugar And the siell it and Keep the money the union masters wants us to fight the battles under white officers.” Slavery and freedom, in short, seemed jumbled up together. And the Colored Man, mingling his own words with those of the Constitution, had found a mode of writing that matched his subject.
He had to have had a copy of the Constitution laid out on the table where he was writing. Each of the half-dozen times he quotes from it, every word is in place, spelled perfectly. On some occasions, the Colored Man draws on other government documents, but these he must have committed to memory. He paraphrases one of the last clauses of the Emancipation Proclamation: “the Collored man Should Guard Stations Garison forts and mand vessels according to his Compasitys.”
Though deprived, like all enslaved people, of a formal education, the Colored Man had somehow achieved hardscrabble literacy, and he used it to become distinctly well versed in American political culture. Today it’s hard to find people outside the Beltway who carry copies of the Constitution with them and know phrases from executive orders by heart. The abolitionist William Lloyd Garrison had called the Constitution a “covenant with death, and an agreement with hell” because its framers sanctioned slavery, but the Colored Man valued it highly.
The first and simplest point the Colored Man seeks to make is that freed people embrace the nation’s legal framework and founding documents. The United States had harbored slavery from the beginning, and in Louisiana the Colored Man saw the federal government abusing black people at worst and botching emancipation at best. But the proper response, he implied, was neither to rebel against the American political system — rebellion is what slaveholders did — nor to leave the country — colonization is what racist white northerners (and even Lincoln himself, for a time) wanted. Carefully recopying the Preamble in his own hand — even adding a little flourish on the “W” — the Colored Man seized the first-person plural, making a demonstration of belonging among “We the People.”
Though committed to the American republic, the Colored Man certainly was not blind to its imperfections. In fact, his dominant theme is hypocrisy. In almost every anecdote he relates about current events in southern Louisiana, a white Unionist or federal official says one thing and then does another: “on the 4 of last July it was Said to the colored population that the were all free and on the 4 of August locked up in Cotton presses like Horses or hogs By reble watchmen.” He describes going to the office of a white Unionist lawyer whom he had heard make speeches about black freedom. Before seeing to the Colored Man’s business, the lawyer wanted to know whether he was “free or Slave.” He replied that he was free, but the lawyer then asked if he was born free. “No Sir Said i.” Feeling the enduring stigma of slavery, he wrote, “we have been made fools of.”
By juxtaposing anecdotes about federal abuses with quotations from the Constitution, the Colored Man broadens these individual stories into a sweeping charge that the nation is not living up to its ideals. Only a few lines separate his careful inscription of the Preamble and his recollection that he “heard a federal officer say after the fall of Port hudson to a Collored Soldier we will not want any more negro Soldiers go home to your master.”
Nevertheless, the Colored Man seems to find that the events of the war were conspiring to unlock the Constitution’s potential as a better, more just document — a true guarantee of African-Americans’ place in society. Despite his outrage over the Union army’s offenses, the Colored Man clearly is pleased about, and proud of, the enlistment of black men, whom he called “the best Soldiers the united States Can Raise.” In fact, he carefully works out the constitutional logic by which military service will translate into citizenship.
After paraphrasing the part of the Emancipation Proclamation that officially welcomed African-American men into the military, the Colored Man pivots to a quotation of the Second Amendment in its entirety. Then, he quotes the tail end of Article VI: “we are to Support the Constitution but no religious test Shall ever be required as a qualification to Any office or public trust.” It seems like a random sequence of excerpts, but it’s not.
The association is fairly plain between colored men garrisoning forts and the “right of the people to keep and bear arms.” If they are shouldering muskets in the Union Army, African-Americans must be among the “people” whose rights are protected by provisions such as the Second Amendment.
How, and why, the Colored Man moves from there to “no religious test” is more obscure. But the two words that are the Colored Man’s own, not pulled from official documents — we are — reveal the thrust of his argument. He substituted those two words for “The senators and representatives before-mentioned, and the members of the several state legislatures, and all executive and judicial officers, both of the United States and of the several states, shall be bound by oath or affirmation . . .” Into that company the Colored Man writes himself and everyone he’s writing for. Once enlisted in the army, African-Americans are rights-bearing people, and once they are that, they stand equal to everyone else, senators and judges not excepted.
Seated with pen and paper, writing and thinking his way through the progress of the war and the state of African-American rights in 1863, the Colored Man was also reading and re-reading the Constitution that lay on the table. In it he discerned a certain kind of elasticity, if not the kind Constitutional scholars talk about. What he read he copied, rearranged and saw anew. Frederick Douglass famously taught himself to write by copying a white child’s letters in the margins of a cast-off schoolbook. The Colored Man, too, wrote in margins, teaching himself politics by copying a model. He also grasped a great truth of the American experiment, that the Constitution is a paradox — a rock-solid foundation and a matter for constant reevaluation.
Sources: Statement of A Colored Man, enclosed in Lt. Col. Jas. A. Hopkins to Brig. Gen. James Bowen, 2 September 1863, H-99 1863, Letters Received, ser. 1920, Civil Affairs, Department of the Gulf, Record Group 393 Part I, National Archives Building, Washington, D.C. A transcription appears in Ira Berlin, Barbara J. Fields, Steven F. Miller, Joseph P. Reidy, and Leslie S. Rowland, eds., “Free at Last: A Documentary History of Slavery, Freedom, and the Civil War” (New York: New Press, 1992), 453-458.
Christopher Hager, associate professor of English at Trinity College in Hartford, is the author of “Word by Word: Emancipation and the Act of Writing.”

Why India’s Economy Is Stumbling (from NYT)

Succinct analysis....the only question is why likes of the Subramanian don't get heard in India?

___

August 30, 2013

Why India’s Economy Is Stumbling

By ARVIND SUBRAMANIAN

 WASHINGTON — FOR the past three decades, the Indian economy has grown impressively, at an average annual rate of 6.4 percent. From 2002 to 2011, when the average rate was 7.7 percent, India seemed to be closing in on China — unstoppable, and engaged in a second “tryst with destiny,” to borrow Jawaharlal Nehru’s phrase. The economic potential of its vast population, expected to be the world’s largest by the middle of the next decade, appeared to be unleashed as India jettisoned the stifling central planning and economic controls bequeathed it by Mr. Nehru and the nation’s other socialist founders.       

But India’s self-confidence has been shaken. Growth has slowed to 4.4 percent a year; the rupee is in free fall, resulting in higher prices for imported goods; and the specter of a potential crisis, brought on by rising inflation and crippling budget deficits, looms.

To some extent, India has been just another victim of the ebb and flow of global finance, which it embraced too enthusiastically. The threat (or promise) of tighter monetary policies at the Federal Reserve and a resurgent American economy threaten to suck capital, and economic dynamism, out of many emerging-market economies.

But India’s problems have deep and stubborn origins of the country’s own making.

The current government, which took office in 2004, has made two fundamental errors. First, it assumed that growth was on autopilot and failed to address serious structural problems. Second, flush with revenues, it began major redistribution programs, neglecting their consequences: higher fiscal and trade deficits.

Structural problems were inherent in India’s unusual model of economic development, which relied on a limited pool of skilled labor rather than an abundant supply of cheap, unskilled, semiliterate labor. This meant that India specialized in call centers, writing software for European companies and providing back-office services for American health insurers and law firms and the like, rather than in a manufacturing model. Other economies that have developed successfully — Taiwan, Singapore, South Korea and China — relied in their early years on manufacturing, which provided more jobs for the poor.

Two decades of double-digit growth in pay for skilled labor have caused wages to rise and have chipped away at India’s competitive advantage. Countries like the Philippines have emerged as attractive alternatives for outsourcing. India’s higher-education system is not generating enough talent to meet the demand for higher skills. Worst of all, India is failing to make full use of the estimated one million low-skilled workers who enter the job market every month.

Manufacturing requires transparent rules and reliable infrastructure. India is deficient in both. High-profile scandals over the allocation of mobile broadband spectrum, coal and land have undermined confidence in the government. If land cannot be easily acquired and coal supplies easily guaranteed, the private sector will shy away from investing in the power grid. Irregular electricity holds back investments in factories.

India’s panoply of regulations, including inflexible labor laws, discourages companies from expanding. As they grow, large Indian businesses prefer to substitute machines for unskilled labor. During China’s three-decade boom (1978-2010), manufacturing accounted for about 34 percent of China’s economy. In India, this number peaked at 17 percent in 1995 and is now around 14 percent.

In fairness, poverty has sharply declined over the last three decades, to about 20 percent from around 50 percent. But since the greatest beneficiaries were the highly skilled and talented, the Indian public has demanded that growth be more inclusive. Democratic and competitive politics have compelled politicians to address this challenge, and revenues from buoyant growth provided the means to do so.

Thus, India provided guarantees of rural employment and kept up subsidies to the poor for food, power, fuel and fertilizer. The subsidies consume as much as 2.7 percent of gross domestic product, but corruption and inefficient administration have meant that the most needy often don’t reap the benefits.

Meanwhile, rural subsidies have pushed up wages, contributing to double-digit inflation. India’s fiscal deficit amounts to about 9 percent of gross domestic product (compared with structural deficits of around 2.5 percent in the United States and 1.9 percent in the European Union). To hedge against inflation and general uncertainty, consumers have furiously acquired gold, rendering the country reliant on foreign capital to finance its trade deficit.

Economic stability can be restored through major reforms to cut inefficient spending and raise taxes, thereby pruning the deficit and taming inflation. The economist Raghuram G. Rajan, who just left the University of Chicago to run India’s central bank, has his work cut out for him. So do Prime Minister Manmohan Singh, also an economist, and the governing party, the Indian National Congress. These steps need not come at the expense of the poor. For example, India is implementing an ambitious biometric identification scheme that will allow targeted cash transfers to replace inefficient welfare programs.

India can still become a manufacturing powerhouse, if it makes major upgrades to its roads, ports and power systems and reforms its labor laws and business regulations. But the country is in pre-election mode until early next year. Elections increase pressures to spend and delay reform. So India’s weakness and turbulence may persist for some time yet.

Arvind Subramanian, a senior fellow at both the Peterson Institute for International Economics and the Center for Global Development, is the author of “Eclipse: Living in the Shadow of China’s Economic Dominance.”

George Saunders and the Art of Living

So here is another great writer and speaker who is able to capture so meticulously your entire inner voice. From NYT, August 9, 2013.

 

George Saunders’s Advice to Graduates (Syracuse 2013 Commencement speech)

By JOEL LOVELL

It’s long past graduation season, but we recently learned that George Saunders delivered the convocation speech at Syracuse University for the class of 2013, and George was kind enough to send it our way and allow us to reprint it here. The speech touches on some of the moments in his life and larger themes (in his life and work) that George spoke about in the profile we ran back in January — the need for kindness and all the things working against our actually achieving it, the risk in focusing too much on “success,” the trouble with swimming in a river full of monkey feces.

The entire speech, graduation season or not, is well worth reading, and is included below.

Down through the ages, a traditional form has evolved for this type of speech, which is: Some old fart, his best years behind him, who, over the course of his life, has made a series of dreadful mistakes (that would be me), gives heartfelt advice to a group of shining, energetic young people, with all of their best years ahead of them (that would be you).
And I intend to respect that tradition.
Now, one useful thing you can do with an old person, in addition to borrowing money from them, or asking them to do one of their old-time “dances,” so you can watch, while laughing, is ask: “Looking back, what do you regret?”  And they’ll tell you.  Sometimes, as you know, they’ll tell you even if you haven’t asked.  Sometimes, even when you’ve specifically requested they not tell you, they’ll tell you.
So: What do I regret?  Being poor from time to time?  Not really.  Working terrible jobs, like “knuckle-puller in a slaughterhouse?”  (And don’t even ASK what that entails.)  No.  I don’t regret that.  Skinny-dipping in a river in Sumatra, a little buzzed, and looking up and seeing like 300 monkeys sitting on a pipeline, pooping down into the river, the river in which I was swimming, with my mouth open, naked?  And getting deathly ill afterwards, and staying sick for the next seven months?  Not so much.  Do I regret the occasional humiliation?  Like once, playing hockey in front of a big crowd, including this girl I really liked, I somehow managed, while falling and emitting this weird whooping noise, to score on my own goalie, while also sending my stick flying into the crowd, nearly hitting that girl?  No.  I don’t even regret that.

But here’s something I do regret:

In seventh grade, this new kid joined our class.  In the interest of confidentiality, her Convocation Speech name will be “ELLEN.”  ELLEN was small, shy.  She wore these blue cat’s-eye glasses that, at the time, only old ladies wore.  When nervous, which was pretty much always, she had a habit of taking a strand of hair into her mouth and chewing on it.
So she came to our school and our neighborhood, and was mostly ignored, occasionally teased (“Your hair taste good?” – that sort of thing).  I could see this hurt her.  I still remember the way she’d look after such an insult: eyes cast down, a little gut-kicked, as if, having just been reminded of her place in things, she was trying, as much as possible, to disappear.  After awhile she’d drift away, hair-strand still in her mouth.  At home, I imagined, after school, her mother would say, you know: “How was your day, sweetie?” and she’d say, “Oh, fine.”  And her mother would say, “Making any friends?” and she’d go, “Sure, lots.”
Sometimes I’d see her hanging around alone in her front yard, as if afraid to leave it.
And then – they moved.  That was it.  No tragedy, no big final hazing.
One day she was there, next day she wasn’t.
End of story.
Now, why do I regret that?  Why, forty-two years later, am I still thinking about it?  Relative to most of the other kids, I was actually pretty nice to her.  I never said an unkind word to her.  In fact, I sometimes even (mildly) defended her.
But still.  It bothers me.

So here’s something I know to be true, although it’s a little corny, and I don’t quite know what to do with it:

What I regret most in my life are failures of kindness.  Those moments when another human being was there, in front of me, suffering, and I responded…sensibly.  Reservedly.  Mildly.Or, to look at it from the other end of the telescope:  Who, in your life, do you remember most fondly, with the most undeniable feelings of warmth?

Those who were kindest to you, I bet.
It’s a little facile, maybe, and certainly hard to implement, but I’d say, as a goal in life, you could do worse than: Try to be kinder.
Now, the million-dollar question:  What’s our problem?  Why aren’t we kinder?
Here’s what I think:
Each of us is born with a series of built-in confusions that are probably somehow Darwinian.  These are: (1) we’re central to the universe (that is, our personal story is the main and most interesting story, the only story, really); (2) we’re separate from the universe (there’s US and then, out there, all that other junk – dogs and swing-sets, and the State of Nebraska and low-hanging clouds and, you know, other people), and (3) we’re permanent (death is real, o.k., sure – for you, but not for me).
Now, we don’t really believe these things – intellectually we know better – but we believe them viscerally, and live by them, and they cause us to prioritize our own needs over the needs of others, even though what we really want, in our hearts, is to be less selfish, more aware of what’s actually happening in the present moment, more open, and more loving.

So, the second million-dollar question:  How might we DO this?  How might we become more loving, more open, less selfish, more present, less delusional, etc., etc?

Well, yes, good question.
Unfortunately, I only have three minutes left.
So let me just say this.  There are ways.  You already know that because, in your life, there have been High Kindness periods and Low Kindness periods, and you know what inclined you toward the former and away from the latter.  Education is good; immersing ourselves in a work of art: good; prayer is good; meditation’s good; a frank talk with a dear friend;  establishing ourselves in some kind of spiritual tradition – recognizing that there have been countless really smart people before us who have asked these same questions and left behind answers for us.
Because kindness, it turns out, is hard – it starts out all rainbows and puppy dogs, and expands to include…well, everything.
One thing in our favor:  some of this “becoming kinder” happens naturally, with age.  It might be a simple matter of attrition:  as we get older, we come to see how useless it is to be selfish – how illogical, really.  We come to love other people and are thereby counter-instructed in our own centrality.  We get our butts kicked by real life, and people come to our defense, and help us, and we learn that we’re not separate, and don’t want to be.  We see people near and dear to us dropping away, and are gradually convinced that maybe we too will drop away (someday, a long time from now).  Most people, as they age, become less selfish and more loving.  I think this is true.  The great Syracuse poet, Hayden Carruth, said, in a poem written near the end of his life, that he was “mostly Love, now.”
 

And so, a prediction, and my heartfelt wish for you: as you get older, your self will diminish and you will grow in love.  YOU will gradually be replaced by LOVE.   If you have kids, that will be a huge moment in your process of self-diminishment.  You really won’t care what happens to YOU, as long as they benefit.  That’s one reason your parents are so proud and happy today.  One of their fondest dreams has come true: you have accomplished something difficult and tangible that has enlarged you as a person and will make your life better, from here on in, forever.

Congratulations, by the way.

When young, we’re anxious – understandably – to find out if we’ve got what it takes.  Can we succeed?  Can we build a viable life for ourselves?  But you – in particular you, of this generation – may have noticed a certain cyclical quality to ambition.  You do well in high-school, in hopes of getting into a good college, so you can do well in the good college, in the hopes of getting a good job, so you can do well in the good job so you can….

And this is actually O.K.  If we’re going to become kinder, that process has to include taking ourselves seriously – as doers, as accomplishers, as dreamers.  We have to do that, to be our best selves.
Still, accomplishment is unreliable.  “Succeeding,” whatever that might mean to you, is hard, and the need to do so constantly renews itself (success is like a mountain that keeps growing ahead of you as you hike it), and there’s the very real danger that “succeeding” will take up your whole life, while the big questions go untended.
So, quick, end-of-speech advice: Since, according to me, your life is going to be a gradual process of becoming kinder and more loving: Hurry up.  Speed it along.  Start right now.  There’s a confusion in each of us, a sickness, really: selfishness.  But there’s also a cure.  So be a good and proactive and even somewhat desperate patient on your own behalf – seek out the most efficacious anti-selfishness medicines, energetically, for the rest of your life.

Do all the other things, the ambitious things – travel, get rich, get famous, innovate, lead, fall in love, make and lose fortunes, swim naked in wild jungle rivers (after first having it tested for monkey poop) – but as you do, to the extent that you can, err in the direction of kindness.  Do those things that incline you toward the big questions, and avoid the things that would reduce you and make you trivial.  That luminous part of you that exists beyond personality – your soul, if you will – is as bright and shining as any that has ever been.  Bright as Shakespeare’s, bright as Gandhi’s, bright as Mother Teresa’s.  Clear away everything that keeps you separate from this secret luminous place.  Believe it exists, come to know it better, nurture it, share its fruits tirelessly.

And someday, in 80 years, when you’re 100, and I’m 134, and we’re both so kind and loving we’re nearly unbearable, drop me a line, let me know how your life has been.  I hope you will say: It has been so wonderful.
Congratulations, Class of 2013.
I wish you great happiness, all the luck in the world, and a beautiful summer.

Big change in DU

Delhi University VC makes his case for shift to four-year undergraduate courses

Shekhar Gupta Posted online: Mon May 13 2013, 03:33 hrs

In this Walk the Talk on NDTV 24x7 with The Indian Express Editor-in-Chief Shekhar Gupta, Delhi University Vice-Chancellor Dinesh Singh makes his case for the shift to four-year undergraduate courses and says there was “no railroading” I am at Delhi University’s Vice-Chancellor’s office and my guest today is eminent mathematician Prof Dinesh Singh. It is one thing to teach mathematics, it’s quite another to balance all these complex equations of politics, policy and change. I agree with you entirely. It’s almost impossible to do that but there is a mathematical theory called complexity theory. Maybe that will help me. How does that help? Explain that to somebody who never got more than 33 in math and gave up from Class 10 on. It’s not mathematics that works here in the university. It’s really about administering a large institution in which there are all kinds of pulls, pressures, needs, requirements and, really, balance. One needs to balance all of these so that the the university moves in the right direction. The symbol that represents this university is an elephant. And India also is often regarded as an elephant. You are not getting into the beehive equation just now... No... One of my predecessors used to say that (the university) is like the republic of India. And it is. But then the republic is also moving in some ways and so are we. You have the advantage of being a mathematician. And mathematics has the beauty and elegance of logic. So use that power of logic and your mathematical training to explain the new four-year-degree course to me. Because that is the new sort of war that has broken out right now. Unfortunately, it seems to appear that there is a war. It’s happening more outside the university, not as much inside. If you look at systems within the university, they are working in harmony. Our institutions—the academic council, the executive council, our faculty bodies—all of them are working in harmony to create this system. So there is not so much trouble here. But as luck would have it, many external forces seem to be interested in what is happening and there are some here also. So how does your four-year course help? Let’s come to brass tacks. So here is how it works. We assume that generally...students in school begin to get some idea of what they are interested in. So suppose you are a student in school about to leave and you are interested in history and you will seek some sort of major course in history to enable you further. Students would seek admission into the history Honours programme of the University of Delhi. A small number would get that. Others would be shunted into the BA Pass programme. And they are deprived of this major exposure to history. Now, in this four-year programme, every student has got a much larger chance of getting an Honours degree in the subject that she/he has displayed interest and ability in at the school level. Now that’s some harmony with your inner calling. So you are banishing the distinction between Honours students and Pass students, which is a caste system in a way. Yes, we have banished that. Now you have to perform and earn your Honours degree. Everyone has an even chance. Two, you have chosen history. But along the way, is it only history that will enable your inner calling to be manifested in the real world? So how do we ensure that? In addition to what you have chosen as your Honours discipline at the entry level, you will be exposed to a set of foundation courses. Eleven of them... Yes, but not all together. They kick in the first and second years. These foundation courses enable you in different ways. So there is a foundation course on philosophy, psychology, communication and life. This really enables any student. Who would not want to be a good communicator in life, whether you study mathematics or physics or history? There is a foundation course on mathematical ability. That’s not about proving mathematical theorems. It is about recognising the importance of data in our everyday life. And it has been tried and tested. Elaborate that a little bit. If you have read this Sherlock Holmes story, The Adventure Of the Dancing Men, there is this person who consults Sherlock Holmes. He says every morning I wake up and I find a bunch of handwritten pieces of paper on which there are dancing figures inscribed and I can’t make head or tail of it. So what does Holmes do? He figures these are encrypted. So how does he crack them? I read this story in the ninth grade and that’s when I understood what data means. That’s when I learnt that the letter ‘e’ in the English language is the most frequently used letter for words. So Holmes looks at that dancing figure which occurs most often in the messages and puts that down as ‘e’. Then he looks for two-letter words and three-letter words...and decrypts the whole message. Now that’s called understanding data. About a 100 years ago, there was an Englishman by the name of Grierson. He came to India and he surveyed large tracts of land in north India. And he recognised how language changes. The data he produced was amazing. He said after every 10 kos—a unit of measurement a little more than a mile—the language changes. That is an enormously interesting piece of data. And I am told that no one has ever constituted a similar survey after that. What’s missing in our daily life is this importance of handling data and using it to our benefit in many ways. But tell me, why the foundation courses? Are you aiming at employability? Are you aiming at the discovery of the inner self which, I suspect, is not going to cut much ice with people who are in the debate? It may or may not cut ice, but it will work for sure. These are means of enabling students. There is a foundation course on business and entrepreneurship. These are short courses, one-semester-long courses. Do you have teachers to teach these courses? Yes, we have teachers. We have identified teachers in every college. And they are beginning to face orientation courses, starting May 20. So all these teachers will go through rigorous orientation programmes for two months running. So they will be better enabled to teach. This is the finest university in the country. Why should it need drastic change? Isn’t the DU degree itself a ticket to jobs and recognition? For a bunch of students from elite institutions, and not all from the elite as well, it’s okay. Life is hunky dory for all kinds of reasons. You could put them in a well and they would still do well. But if you look at the ground reality... Just four to five weeks ago, I called a major corporate institution from Mumbai. They flew an entire team down here and that means they were dead serious about it...It was a major multinational finance institution, India-based. They wanted to hire and they had lots of openings. And I arranged for a blind interview with 1,100 potential graduates of this university whose names and data for marks were supplied. No college and no social background was given. And they spent much effort and time. Out of these 1,100, they chose only three. That’s a telling comment. We are sitting on a time bomb. So they found only three students employable out of the 1,100? Absolutely. They said that we don’t think we will come back again, it was quite a waste of time for us. They said that off the record, but they said it. That’s very disturbing. So that was a problem. What about your elite colleges? St Stephen’s, SRCC, LSR? I have looked at some of these elite colleges. They do hire and campus placements take place. They hit the headlines (when they say) we got so many people with the pay packet... Rs 10 lakh, 12 lakh... Yes, but that’s for a handful. The rest are not even picked up by the institutions. So they are left unemployed. The college that gets talked about all the time is SRCC. Do you have any data there? It is your college with the highest employability. This is not hard data but data that you get in conversations—I am very sure that about half the graduates from Shri Ram College of Commerce are not picked up in the campus placement. So you are trying to get employability. Absolutely. That’s one of the games here. To get our students to be employable. You don’t mind if it takes a year longer? Oh no, I don’t mind at all. Because then it makes the student’s life a little better. Let me put forward some points of criticism. One, that you have not done adequate preparation. It’s a good idea but you don’t have teachers, you are carrying thousands of vacancies. Estimates vary between 3,000 and 5,000. Second, you don’t have physical infrastructure. Three, there is not sufficient choice. Four, you are allowing too many exits. It’s like a train that stops at 10 stations on the way. So you can get off anywhere, so you don’t get to any real destination. Like a hop-on, hop-off or a ‘Ho-Ho’ bus. When it comes to infrastructure, we have been working hard at this. We have been talking to every college principal and almost all of them have clearly mentioned to us in writing that they can handle this issue. Teaching positions: certainly, some more positions will be needed. But colleges are well prepared to start the programme and we have enough positions now. We have begun to allocate them college by college. Not many of these positions will be needed immediately. They will kick in after a year or so and by then, we will make the appointments. Our orientation programmes are kicking in, plus our faculty are fairly good. These are knowledge-based courses. They have been brought about by the faculty themselves. It isn’t the vice-chancellor who drives the effort. It comes from the ground upwards. A very conservative estimate tells me that more than 2,500 faculty have participated in creating these courses from January till today. So, that’s a large number. And physical infrastructure? In terms of space etc, the colleges are ready. Just one thing that’s going to happen—generally, colleges tend to finish their teaching in most of the courses, except science, by about 1 or so. Now, colleges will have to more or less have teaching organised from 9 to 5. This doesn’t mean every student sits everyday from 9 to 5 and not every teacher sits everyday from 9 to 5. But different times have to be utilised for different teaching. But this will definitely increase teachers’ workload... The workload will be exactly as per UGC norms. The workload doesn’t increase. That has to work exactly the way we have worked this out. But how do you manage if you don’t increase your faculty? You don’t increase your workload, you increase your teaching time, you increase your degree duration—I mean this is magic... It’s almost that. At least for a mathematician, it doesn’t work. Because in math, the numbers have to add up. I have information from all colleges. Typically, a college says that in the course of the four-year programme, we will have 16 new positions and the others are already in place. They have worked out their time-tables. Each teacher has to teach, if I remember correctly, 16 hours a week. So we have 16-20 positions and so many hours get added up and that’s the extra teaching load that kicks in. Otherwise, all these positions are in place. Aren’t you getting into esoterica sometimes when you talk about Sanskrit and math etc? This is a time when people do BBA, MBA, MCA—all these degrees that pay lots of money. Parents sell their homes just so that children can get jobs. And you are saying Sanskrit, math, foundation level... They will all help them get jobs. Let me explain. Sanskrit students can work in many ways. I learnt, incidentally, that there is a significant demand in some European nations for teachers of Sanskrit. And these students want to go. You can be a student of Sanskrit, but you can work in the area of linguistics. That’s a huge area. And, when you do that, you need exposure to some other subjects. Now, a Sanskrit student in the earlier system had no option. He was straight-jacketed. Now, if he wants, he can pick up a minor in mathematics, he can pick up a minor in computer science, all of these will increase your employability, not just in Sanskrit, but with a minor, you could take a masters in mathematics if you want it. Because many global scholars in many disciplines have also studied Sanskrit... Oh yes. I read Frits Staal’s work on the Vedas and he writes that when he attended (Noam) Chomsky’s lectures at MIT, it became immediately apparent to him that the reason why Chomsky brought about this revolution in linguistics was because he knew the Paninian system of grammar and he knew mathematics. So he understood the grammatical principles, put it into a mathematical framework and created a revolution. Our Sanskrit students have never been exposed to mathematics. I have no idea how many Chomskys we have lost. But why are so many followers of Chomsky against your change? There is a strong Left opposition to this change. I seem to think so. And they are all decent people. Oh, certainly. Some of them are the best teachers in the university. I respect them. But change has never been easy. I understand it. It’s also good to be resistant to change. You cannot immediately allow everything to happen. It can be dangerous. But this change is being called dangerous and hasty. You are going from three to four years, you have not given more than one year of consultation. Of course, we are a country that loves committees and endless deliberation. We have done more than one year of consultation. When I became V-C, I consulted about 4,000 students. I called all 4,000 into a single auditorium and we took written feedback from them. I stayed with them for eight hours. And I talked to so many of them to figure out what they felt was wrong with the system, what would they like. The next day, I met 800 teachers. And this process has continued over two years. It wasn’t just me, my colleagues too. You don’t see any merit in a one-year postponement now? Oh no. It won’t bring any more benefits. Everyone recognises, I most of all, that there will always be some teething troubles. But that will happen whether we do it this year or next. All preparations that we feel need to be taken care of seem to have been taken care of. Nandan Nilekani once said that the challenge of working in Delhi was how to carry out big change in a minimally invasive manner. Have you been minimally invasive or could you have handled it better? Minimally invasive versus railroading? Rest assured, there was no railroading. We followed all processes. There was resistance even to the semester system... Yes, there was a huge resistance at that point in time. And the semester system has benefited students like anything. And in the end, a one-year postponement was demanded… Yes, it was. And they didn’t do anything for a year when they were given a year’s time, no major changes came about in the framing of the syllabi. Eventually, at the last moment, these departments just bifurcated the annual syllabi and converted to semester mode. That was a huge let down. The fact is that IITs already have a four-year undergraduate degree with semester system. Why just IITs? I looked at a list of universities. Ambedkar University has a four-year programme. The Indian Institute of Science has one, the University of Allahabad has. There are many universities with a four-year programme. Tell me this, this two-year drop off, three-year drop off, four-year drop off... I looked at the figures. Each year, about 25,000 students drop out of the university without a piece of paper that recognises that. Out of about 2 lakh? More than 12 per cent drop out? That’s a lot. Yes. From the numbers that are admitted, about 30 per cent drop out. And they don’t get a piece of paper that says they spent so much time in the university. I am encouraging them to stay on by offering them a chance to get an Honours degree. That’s a huge incentive. But, suppose they do drop out after two years, what do we do? In two years’ time, we also give them some knowledge-based skills, at least their employability goes up. So they get a diploma in two years? Yes. And they can come back within a 10-year period and complete a degree. So that option is there. And they get yet another one if they do three years? If they stay for three years, they get a Bachelor’s degree with a major subject. So it says Bachelors with Major in history. So, it’s not as if the three-year degree course has disappeared. No, it hasn’t. It’s better than the BA Pass. Except for Honours, which you have to get in four years. Also, the three years is better than the BA Pass degree. Now there is a Bachelors with a subject major, which the past degree didn’t allow. So what is it that you wish you had told your critics in time or something that you would tell them now? Because this die is cast. Yes, this die is cast. And, I would tell them to recognise that there is a little wisdom on this side as well. It isn’t just one person alone. Look, there are 51 of my finest faculty. These are people who got Bhatnagar prizes, there are Humboldt Fellows, there are Fellows of our academies. All our deans, almost all our heads, they have jointly written a statement saying that all of us have worked in this system, all of us have participated, we recognise the merits of the system, it’s a good system. They also mention that there will be pitfalls. But which system will not have pitfalls? So you understand the sense of responsibility. Because if you botch up, then it’s a botch, nobody changes anything for a very long time. God forbid that this will be a botch-up. Now here it is what I call project management work. Based on our own estimates, our review system, there will be no botch-up. There will be some glitches. This is the city of Muhammad bin Tughlaq. Don’t go forward and come back. Hopefully, that’s not going to happen. What’s next for you? Will you start focusing on your Masters programmes and PhDs now? What we will do now is once this programme kicks in and has stabilised, we will work with our faculty to relook the Masters programme. It will be largely credit-based. So if you come from this system after a four-year degree, you will need about a year’s credit to get the Masters degree. If you come with a three-year degree, roughly two years’ credit will have to kick in before you get it. So the number of years studied will remain the same. Yes. And your parting words to those teachers who think that with this additional load, they will not have time for research? On the other hand, every college teacher now will have time to do more research because research is part of the undergraduate curriculum. So he will have a chance to mentor and guide these really bright students. ...she will have a chance. I agree with you. Again, we are trying to get data recorded, but I think lady teachers are in a majority in this university. As time passes, so will the students be. Oh, yes. They are certainly more than half now in our university, the lady students. They will all have a chance to do research. All the undergraduates who get into the Honours programme and all our faculty in the colleges. I am not sure if they will all be convinced listening to you, but you have made a very good case. And since you have embarked on change now, good luck to you...But you are a brave man to do this.

How Big Data Is Playing Recruiter for Specialized Workers

April 27, 2013

How Big Data Is Playing Recruiter for Specialized Workers

By MATT RICHTEL

WHEN the e-mail came out of the blue last summer, offering a shot as a programmer at a San Francisco start-up, Jade Dominguez, 26, was living off credit card debt in a rental in South Pasadena, Calif., while he taught himself programming. He had been an average student in high school and hadn’t bothered with college, but someone, somewhere out there in the cloud, thought that he might be brilliant, or at least a diamond in the rough.

That someone was Luca Bonmassar. He had discovered Mr. Dominguez by using a technology that raises important questions about how people are recruited and hired, and whether great talent is being overlooked along the way. The concept is to focus less than recruiters might on traditional talent markers — a degree from M.I.T., a previous job at Google, a recommendation from a friend or colleague — and more on simple notions: How well does the person perform? What can the person do? And can it be quantified?

The technology is the product of Gild, the 18-month-old start-up company of which Mr. Bonmassar is a co-founder. His is one of a handful of young businesses aiming to automate the discovery of talented programmers — a group that is in enormous demand. These efforts fall in the category of Big Data, using computers to gather and crunch all kinds of information to perform many tasks, whether recommending books, putting targeted ads onto Web sites or predicting health care outcomes or stock prices.

Of late, growing numbers of academics and entrepreneurs are applying Big Data to human resources and the search for talent, creating a field called work-force science. Gild is trying to see whether these technologies can also be used to predict how well a programmer will perform in a job. The company scours the Internet for clues: Is his or her code well-regarded by other programmers? Does it get reused? How does the programmer communicate ideas? How does he or she relate on social media sites?

Gild’s method is very much in its infancy, an unproven twinkle of an idea. There is healthy skepticism about this idea, but also excitement, especially in industries where good talent can be hard to find.

The company expects to have about $2 million to $3 million in revenue this year and has raised around $10 million, including a chunk from Mark Kvamme, a venture capitalist who invested early in LinkedIn. And Gild has big-name customers testing or using its technology to recruit, including Facebook, Amazon, Wal-Mart Stores, Google and Twitter.

Companies use Gild to mine for new candidates and to assess candidates they are already considering. Gild itself uses the technology, which was how the company, desperate for programming talent and unable to match the salaries offered by bigger tech concerns, found this guy named Jade outside of Los Angeles. Its algorithm had determined that he had the highest programming score in Southern California, a total that almost no one achieves. It was 100.

Who was Jade? Could he help the company? What does his story tell us about modern-day recruiting and hiring, about the concept of meritocracy?

PEOPLE in Silicon Valley tend to embrace certain assumptions: Progress, efficiency and speed are good. Technology can solve most things. Change is inevitable; disruption is not to be feared. And, maybe more than anything else, merit will prevail.

But Vivienne Ming, who since late in 2012 has been the chief scientist at Gild, says she doesn’t think Silicon Valley is as merit-based as people imagine. She thinks that talented people are ignored, misjudged or fall through the cracks all the time. She holds that belief in part because she has had some experience of it.

Dr. Ming was born male, christened Evan Campbell Smith. He was a good student and a great athlete — holding records at his high school in track and field in the triple jump and long jump. But he always felt a disconnect with his body. After high school, Evan experienced a full-blown identity crisis. He flopped at college, kicked around jobs, contemplated suicide, hit the proverbial bottom. But rather than getting stuck there, he bounced. At 27, he returned to school, got an undergraduate degree in cognitive neuroscience from the University of California, San Diego, and went on to receive a Ph.D. at Carnegie Mellon in psychology and computational neuroscience.

During a fellowship at Stanford, he began gender transition, becoming, fully, Dr. Vivienne Ming in 2008.

As a woman, Dr. Ming started noticing that people treated her differently. There were small things that seemed innocuous, like men opening the door for her. There were also troubling things, like the fact that her students asked her fewer questions about math then they had when she was a man, or that she was invited to fewer social events — a baseball game, for instance — by male colleagues and business connections.

Bias often takes forms that people may not recognize. One study that Dr. Ming cites, by researchers at Yale, found that faculty members at research universities described female applicants for a manager position as significantly less competent than male applicants with identical qualifications. Another study, published by the National Bureau of Economic Research, found that people who sent in résumés with “black-sounding” names had a considerably harder time getting called back from employers than did people who sent in résumés showing equal qualifications but with “white-sounding” names.

Everybody can pretty much agree that gender, or how people look, or the sound of a last name, shouldn’t influence hiring decisions. But Dr. Ming takes the idea of meritocracy further. She suggests that shortcuts accepted as a good proxy for talent — like where you went to school or previously worked — can also shortchange talented people and, ultimately, employers. “The traditional markers people use for hiring can be wrong, profoundly wrong,” she said.

Dr. Ming’s answer to what she calls “so much wasted talent” is to build machines that try to eliminate human bias. It’s not that traditional pedigrees should be ignored, just balanced with what she considers more sophisticated measures. In all, Gild’s algorithm crunches thousands of bits of information in calculating around 300 larger variables about an individual: the sites where a person hangs out; the types of language, positive or negative, that he or she uses to describe technology of various kinds; self-reported skills on LinkedIn; the projects a person has worked on, and for how long; and, yes, where he or she went to school, in what major, and how that school was ranked that year by U.S. News & World Report.

“Let’s put everything in and let the data speak for itself,” Dr. Ming said of the algorithms she is now building for Gild.

Gild is not the only company now scouring for information. TalentBin, another San Francisco start-up firm, searches the Internet for talented programmers, trawling sites where they gather, collecting “data exhaust,” according to the company Web site, and creating lists of potential hires for employers. Another competitor is RemarkableHire, which assesses a person’s talents by looking at how his or her online contributions are rated by others.

And there’s Entelo, which tries to figure out who might be looking for a job before they even start their exploration. According to its Web site, the company uses more than 70 variables to find indications of possible career change, such as how someone presents herself on social sites. The Web site reads: “We crunch the data so you don’t have to.”

This application of Big Data to recruiting is “is absolutely worth a try,” said Susan Etlinger, an analyst of the data and analytics industries at the Altimeter Group. But she questioned whether an algorithm would be an improvement over what employers already do: gathering résumés, or referrals, and using traditional markers associated with success.

“The big hole is actual outcomes,” she said. “What I’m not buying yet is that probability equals actuality.”

Sean Gourley, co-founder and chief technology officer at Quid, a Big Data company, said that data trawling could inform recruiting and hiring, but only if used with an understanding of what the data can’t reveal. “Big Data has its own bias,” he said. “You measure what you can measure,” and “you’re denigrating what can’t be measured, like gut instinct, charisma.”

He added: “When you remove humans from complex decision-making, you can optimize the hell out of the algorithm, but at what cost?”

Dr. Ming doesn’t suggest eliminating human judgment, but she does think that the computer should lead the way, acting as an automated vacuum and filter for talent. The company has amassed a database of seven million programmers, ranking them based on what it calls a Gild score — a measure, the company says, of what a person can do. Ultimately, Dr. Ming wants to expand the algorithm so it can search for and assess other kinds of workers, like Web site designers, financial analysts and even sales people at, say, retail outlets.

“We did our own internal gold strike,” Dr. Ming said. “We found this kid in Los Angeles just kicking around his computer.”

She’s talking about Jade.

MR. DOMINGUEZ grew up in Los Angeles, the middle child of five. His mother took care of the household; his dad installed telecommunications equipment — a blue-collar guy who prized education.

But Jade had a rebellious streak. Halfway through high school, Mr. Dominguez, previously a straight-A student, began wondering whether going to school was more about satisfying requirements than real learning. “The value proposition is to go to school to get a good job,” he told me. “Philosophically, shouldn’t you go to school to learn?” His grades fell sharply, and he said he graduated from Alhambra High School in 2004 with less than a 3.0 grade-point average.

Not only did he reject college, he also wanted to prove that he could succeed wildly without it. He devoured books on entrepreneurship. He started a company that printed custom T-shirts, first from his house, then from a 1,000-square-foot warehouse space he rented. He decided that he needed a Web site, so he taught himself programming.

“I was out to prove myself on my own merit,” he said. He concedes that he might have taken it a little far. “It’s a little immature to be motivated by proving people wrong,” he said.

He got a tattoo on his arm in flowery script that read “Believe.” He sort of laughs about it now, though he still feels that he can accomplish what he puts his mind to. “It’s the great thing about code,” he said of computer language. “It’s largely merit-driven. It’s not about what you’ve studied. It’s about what you’ve shipped.”

When Gild went looking for talent, it assumed that the San Francisco and Silicon Valley areas would be picked over. So it ran its algorithm in Southern California and came up with a list of programmers. At the top was Mr. Dominguez, who had a very solid reputation on GitHub — a place where software developers gather to share code, exchange ideas and build reputations. Gild combs through GitHub and a handful of other sites, including Bitbucket and Google Code, looking for bright people in the field.

Mr. Dominguez had made quite a contribution. His code for Jekyll-Bootstrap, a function used in building Web sites, was reused by an impressive 1,267 other developers. His language and habits showed a passion for product development and several programming tools, like Rails and JavaScript, which were interesting to Gild. His blogs and posts on Twitter suggested that he was opinionated, something that the company wanted on its initial team.

A recruiter from Gild sent him an e-mail and had him come to San Francisco for an interview. The company founders met a charismatic, confident person — poised, articulate, thoughtful, with an easy smile, a tad rougher around the edges than other interview candidates, said Sheeroy Desai, Mr. Bonmassar’s co-founder at Gild and the company’s chief executive.

Mr. Dominguez wore a vibrant green hoodie to the interview. He asked pointed questions, like this one: Did the company worry that it would be perceived as violating privacy by scoring engineers without their knowledge? (It didn’t believe so, and he didn’t, either. Gild says it uses only publicly available information.)

They asked him some pointed but gentle questions, too, like whether he could work in a structured environment. He said he could. The company made Mr. Dominguez a job offer right away, and he accepted a position that pays around $115,000 a year.

“He’s a symbol of someone who is smart, highly motivated and yet, for whatever reason, wasn’t motivated in high school and didn’t see value in college,” Mr. Desai said.

Mr. Desai did go to college, at M.I.T., one of those schools that recruiters value so highly. It was there, he said, that he learned how to cope with pressure and to work with brilliant people and sometimes feel humbled. But while one’s work at school isn’t inconsequential, he said, “it’s not the whole story.” He asserts that despite his degree in computer science, “I’m a terrible developer.”

David Lewin, a professor at the University of California, Los Angeles, and an expert in management of human resources, said that asking what someone could do was an important question, but so was asking whether the person could accomplish it with other people. Of all the efforts to predict whether someone will perform well in an organization, the most proven method, Dr. Lewin said, is a referral from someone already working there. Current employees know the culture, he said, and have their reputations and their work environment on the line. A recent study from the Yale School of Management that uses Big Data offers a refinement to the notion, finding that employee referrals are a great way to find good hires but that the method tends to work much better if the employee making the referral is highly productive.

For his part, Dr. Lewin is skeptical that an algorithm would be a good substitute for a good referral from a trusted employee.

One of Gild’s customers is Square, a San Francisco-based mobile payment system. Like many other high-tech companies, Square is aggressively hiring, and it’s finding the competition for great talent as intense as it was during the dot-com boom, according to Bryan Power, the company’s director of talent and a Silicon Valley veteran. Mr. Power says Gild offers a potential leg up in finding programmers who aren’t the obvious catches.

“Getting out of Stanford or Google is a very good proxy” for talent, Mr. Power said. “They have reputations for a reason.” But those prospects have many choices, and they might not choose Square. “We need more pools to draw from,” he said, “and that’s what Gild represents.”

Gild’s technology has turned up some prospects for Square, but hasn’t led directly to a hire. Mr. Power says the Gild algorithm provides a generalized programming score that is not as specific as Square needs for its job slots. “Gild has an opinion of who is good but it’s not that simple,” he said, adding that Square was talking to Gild about refining the model.

Despite the limited usefulness thus far, Mr. Power says that what Gild is doing is the start of something powerful. Today’s young engineers are posting much more of their work online, and doing open-source work, providing more data to mine in search of the diamonds. “It’s all about finding unrecognized talent,” he said.

MR. DOMINGUEZ has worked at Gild for eight months and has proved himself a talented programmer, Mr. Desai said. But he also said that Mr. Dominguez “sometimes struggles to work in a structured environment.” His co-workers try not to bug him when he’s sitting at his computer, locked into that work zone.

In meetings, Mr. Dominguez speaks his mind. He’s happier, he said, “as long as I can have a say in how the system is built,” or it’s just another system he would have to conform to. He bristles slightly at the growth of the company, which has expanded to 40 people from 10 in the last six months, adding layers of management and bureaucracy.

“The truth is that’s in my nature to do stuff in my own way; inevitably I want to start my own company,” he said, but he’s quick to add: “I do appreciate and the respect the opportunity the company’s given me because I think it’s very clear they hired me on merit. I will always appreciate that.”

Dr. Ming says the young man is both a great find and still an unknown. Of course, he is just a single example, one heralded by the company, but who cannot alone either validate or disprove the method.

“He’s got the lone-wolf thing going on,” Dr. Ming said. “It’s going well early but it could get tougher later on.”

The algorithm did a good job measuring what it can measure. It nailed Mr. Dominguez’s talent for working with computers. What is still unfolding is how he uses his talent over the long term, working with people.