In December 2014, Howard Marks sent out a memo to Oaktree clients titled '
The Lessons of Oil'. While discussing the impact of the recent oil price fall, he remarks :
...the current situation with oil also illustrates how difficult it is to understand the full range of potential ramifications. Most people easily grasp the immediate impact of developments, but few understand the "second-order" consequences...as well as the third and the fourth...
He then goes on to illustrate some of the direct consequences and their ramifications. It is mesmerising to see some of those come to life. For instance :
(an oil price decline implies)..investment in oil drilling declines, causing the earnings of oil service companies to shrink, along with employment in the industry..
by causing demand for oil services to decline, reduced drilling leads the service companies to bid lower for business. This improves the economics of drilling and thus helps the oil companies
On 21 April 2015, Wipro came out with its Q4 results. The company was hit by the decline in oil price. According to
this article, Wipro's oil and gas business (i.e.: services to oil and gas companies) accounts for ~16% of the company's total revenues. The CEO said in an interview following the announcement - "
In oil and gas, $1 trillion worth of capital expenditure has been stopped midstream." The article further states that - '
the management continues to see “pricing pressure” in commodity deals, as reflected in the operating margin narrowing to 22.2% from 22.6% at the end of March last year.'
When commoners like me, think of a decline in the oil price, the horizon is limited to the cost of petrol. How cheap is fuel going to be for my car? It doesn't extend to the full range of potential ramifications. The outlook is limited.
It is fascinating to see how two seemingly unrelated events can serve as cause and effect. I believe, a similar concept is that of the
butterfly effect, wherein a small change can lead to totally unexpected consequences.
Just wanted to share some more examples :
i) Weather in Indian Politics
A recent article in Mint postulates that some of India's political movements have been guided by the weather and not just ideology. It talks of the events of 1965, 1973, 1989 & 2002. The idea is that bad weather/monsoon leads to bad harvest, which in turn leads to disgruntled farmers and rising food inflation, which leads to an unhappy populous**. The article goes on to say - "
These examples suggest that weather politics in India has two patterns. The first is a quiet crisis that leads to the exit of a government and the victory of the main opposition party by default: 2002, and to a more limited extent, the crisis of 1966-69, are examples of this trend. 1973 and 1989 represent the other pattern, where the crises presented an opportunity and (JP) Narayan and (VP) Singh made the most of them." So not only does one need a solid ideology, a touch of bad weather would help too.
**A decent monsoon is not only crucial for the farmer but also for the whole nation. Bad monsoon, implies food inflation, implies lesser disposable income for non-essentials. It also means irritable moods due to the prolonged heat and summer. Higher inflation and poor rural demand (due to lower farmer incomes) is bad for consumer companies and companies that focus on agricultural products. It might also be bad for banks for farmers would fail to repay loans. This might force the government to step in and waive off these loans. To fund this, taxes might have to be increased and that would further impact disposable incomes of citizens. Thus, there is good reason why one should hope/pray for a decent monsoon in a country like India.
ii) Right to Die as a Fundamental Right
In 1994, a bench of two judges of the Supreme Court in
P.Rathinam v. Union Of India held that attempt to suicide as an offence was unconstitutional as it was violative of the right to life (which according to the Learned Judges included the right to die). This is a popular view and many of us advocate for the inclusion of the right to die as a fundamental right. In 1996, a petition was decided in the Supreme Court (
Smt. Gian Kaur v. The State Of Punjab), where the issue was a consequence of the 1994 judgement. If the right to die was a fundamental right, then abetment to suicide could no longer be an offence; as anyone helping someone die would be helping the fulfilment of his fundamental rights. Surely, assisting someone fulfil their fundamental rights could not be called an offence.
In Gian Kaur's case, the Hon'ble Court declared the former case to be incorrect and held that while attempt to suicide was an undesirable offence, it could not be declared as a component of the right to life and hence abetment to suicide would still remain an offence. Thus, even though declaring right to die as a fundamental right seems intuitive, it might have serious ramifications in law and hence caution needs to be exercised before making such claims.
iii) Child Marriages - Void?
Another example is that of child marriages. Under Hindu Marriage Act, certain marriages have been declared as void (like second marriages) and certain marriages have been declared as voidable (such as a marriage with inadequate consent). Child marriages have not been declared as either. Section 16 of the Act grants legitimacy to the children of void and voidable marriages (as described in the Act).
In a matter (
Pinninti Venkataramana v. State) that came up before the Andhra Pradesh High Court, the issue was whether child marriages are void or voidable or valid. Interpreting the various provisions of the Act, the Court held that the Act did not explicitly declare child marriages as void. Since, only marriages as described in the Act have the benefit of Sec 16; if the Court were to interpret child marriages as void, the same benefit would not be available to such marriages. Thus, the children born of innocent unions (child marriages) would become illegitimate/bastards. To protect their interest, the Court could not
suo moto declare such marriages as void.
Further, the brides in these marriages must be protected. Given the social strata in which such marriages happen, if marriages were allowed to be broken so simply, then minor brides might be deserted without any protection/maintenance. The minor brides might not be accepted in their parental homes either. Given his, the legislature is right in providing them protection under the law by holding such marriages as valid.
Thus, popular opinion might be that the institution of child marriage must be discouraged and declaring them void is a step in that direction, but there are ramifications to such declaration. (On a side note, child marriages are punishable under Hindu Marriage Act and voidable at the option of the minor party under The Prohibition of Child Marriage Act. Children of such unions are also granted legitimacy under the latter Act.)
I am going to end with two quotes, the second being a little misplaced :
"By becoming interested in the cause, we are less likely to dislike the effect."
-Dale Carnegie
"The world is full of magic things, patiently waiting for our senses to grow sharper"
-W.B. Yeats
