The Unreasonable Man

Arvind Kejriwal

Arvind Kejriwal

“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw

A few months ago, he was carried away to the prison by Delhi Police. In two days he will be Delhi’s Chief Minister.

Kejriwal Getting Carried Away

Kejriwal Getting Carried Away

I always find it instructive to pick up a good topical book which helps me understand what’s going on right now. And so, to understand the Kejriwal Phenomenon, I picked up David and Goliath: Underdogs, Misfits, and the Art of Battling Giants by Malcom Gladwell.

A few passages I highlighted in reveal that Kejriwal The Underdog, represents a pattern.

“He was an underdog and a misfit, and that gave him the freedom to try things no one else even dreamt of.”

“Much of what we consider valuable in our world arises out of these kinds of lopsided conflicts, because the act of facing overwhelming odds produces greatness and beauty… We consistently get these kinds of conflicts wrong. We misread them. We misinterpret them. Giants are not what we think they are. The same qualities that appear to give them strength are often the sources of great weakness.”

“Suppose you were to total up all the wars over the past two hundred years that occurred between very large and very small countries. Let’s say that one side has to be at least ten times larger in population and armed might than the other. How often do you think the bigger side wins? Most of us, I think, would put that number at close to 100 percent. A tenfold difference is a lot. But the actual answer may surprise you. When the political scientist Ivan Arreguín-Toft did the calculation a few years ago, what he came up with was 71.5 percent. Just under a third of the time, the weaker country wins.”

 “T. E. Lawrence could triumph because he was the farthest thing from a proper British Army officer. He did not graduate with honors from the top English military academy. He was an archaeologist by trade who wrote dreamy prose. He wore sandals and full Bedouin dress when he went to see his military superiors. He spoke Arabic like a native, and handled a camel as if he had been riding one all his life. He didn’t care what people in the military establishment thought about his “untrained rabble” because he had little invested in the military establishment. And then there’s David. He must have known that duels with Philistines were supposed to proceed formally, with the crossing of swords. But he was a shepherd, which in ancient times was one of the lowliest of all professions. He had no stake in the finer points of military ritual. We spend a lot of time thinking about the ways that prestige and resources and belonging to elite institutions make us better off. We don’t spend enough time thinking about the ways in which those kinds of material advantages limit our options.”

“Why has there been so much misunderstanding around that day in the Valley of Elah On one level, the duel reveals the folly of our assumptions about power. The reason King Saul is skeptical of David’s chances is that David is small and Goliath is large. Saul thinks of power in terms of physical might. He doesn’t appreciate that power can come in other forms as well—in breaking rules, in substituting speed and surprise for strength. Saul is not alone in making this mistake. In the pages that follow, I’m going to argue that we continue to make that error today…”

“For some reason, this is a very difficult lesson for us to learn. We have, I think, a very rigid and limited definition of what an advantage is. We think of things as helpful that actually aren’t and think of other things as unhelpful that in reality leave us stronger and wiser. Part One of David and Goliath is an attempt to explore the consequences of that error. When we see the giant, why do we automatically assume the battle is his for the winning?”

“What the Israelites saw, from high on the ridge, was an intimidating giant. In reality, the very thing that gave the giant his size was also the source of his greatest weakness. There is an important lesson in that for battles with all kinds of giants. The powerful and the strong are not always what they seem.”

“Courage is not something that you already have that makes you brave when the tough times start. Courage is what you earn when you’ve been through the tough times and you discover they aren’t so tough after all.”


35 thoughts on “The Unreasonable Man

  1. So true…… courage is actually internal…..

  2. Varadha R says:

    A lot of that is because of “confirmation bias” – what worked in the past will work in the future. Think of Microsoft Vs google; Think of apple Vs dell; It is not the strongest species who survive, but the most adaptable. It does not matter if you are David or Goliath, if you are not willing to change with the time,s you will be decimated.

  3. dear sir , very insightfull and when i read , not actually listen to the audio book that was pretty insightfull ,especially about the basketball team where novice , misfits win the tournaments by exploiting weakness inherent in the normal basketball practices , Regards Hitesh

  4. anil1820 says:

    Dear Sir

    I am truly amazed by how many books you read. Might be a very silly question, but share your method which allows one to read and retain more. Might be spead reading books or anything else…. Pls share

  5. NR says:

    Its funny that you brought up Gladwell’s book. Was just reading an interview of Gladwell here at the link below this morning. Very interesting stuff.

  6. gaurav26b says:

    Dear Sir,

    I don’t intend to get into specifics political ideologies and utilities. Your insight is absolutely amazing. As a casual observer of history, most of us tend to make judgments about the people and event too pre-maturely. David overcame Goliath… But he knew what is Goliath. Many of the Davids, in a span of considerable time, either give up conquering Goliaths or in process themselves become Goliath. Same can be said of soviet backed communism. Same can be said of national socialism. Who would have thought that a small party (apparently weak compared to the competition in pre-depression Germany) in Weimar republic would unleash unprecedented terror in Europe? Same can be said of Reliance (with due respect to late Dhirubhai who rewarded shareholder in early times, I consider todays Reliance as a metaphoric Goliath from retail investors point of view)
    Related aspect is the definition of success. Picking up your reference to Mr. Kejriwal, I would say Goliath is not conquered. It is just that he is going to face a real Goliath now. Whether he wins, loses or becomes Goliath in turn, I don’t know.
    Your insight on strength and courage is amazing. As FDR said, Courage is not absence of fear but the assessment that there is something more important than fear.


    • I think it was Charlie Munger who wrote: “Never underestimate a man who overestimates himself.”

      He had a point.🙂

      And, btw, that insight you refer to is not mine. It’s Gladwell’s.

  7. Sanjay,

    This probably explains why some (most?) of the great entrepreneurs are college drop-outs. Also explains why some of the smartest in academics remain stuck in job-traps, and ego-traps lifelong. In my school batch, I find the lousiest academic ones doing good sound business (although none are great as yet), and mostly enjoying what they have chosen. And the brightest ones remain stuck in high-paying irrelevant lousy jobs. I am one among the “bright” categories, who came unstuck from the job, but find it much much harder to come unstuck from the “job” mentality, which makes it harder to be an entrepreneur who is open to all possibilities in life, and can spot the openings that life provides!


  8. Even Boiling Frog Syndrome would be apt. Ruling party like a frog in the boiling water, failed to recognize the change or simply choose to be in their comfort zone. Change was happening slowly over the past few years at the ground which they failed to recognize. When it happened, it was already dead.

  9. Sun Tzu said in The Art of War – “The general who wins a battle makes many calculations in his temple before the battle is fought.”

    I just wish this unreasonable man – Mr. Kejriwal – is that general.

    With respect,

  10. Raeez Syed says:

    Very insightful sir.

  11. As always insightful. Thanks a lot sir for the way you connect things. Hats off to you !!!

  12. Recently read the same statistic that 72% of the weaker countries win war in the book ‘The Success Equation’ by Michael Mauboussin []. The author, in the book talks about Skill & Luck and explains how understanding the difference between the two can help in Investing.

    Maybe used in a different context than what Sir/Gladwell use here – Mauboussin uses the same David & Goliath story to make suggestions on how to deal with luck. Essentially, he says that David could not have won against Goliath fighting in a traditional way. Because then, the more skillfull person would have won. To increase his luck, the underdog should fight on his own terms.

    Can read Mauboussin’s paper on underdogs here:

    And his paper on Luck & Skill here:

    (In my opinion, the book is a bit general and the papers are more useful from investing point of view)

    • excelmonkey1 says:


      You think he would be able to reduce your electricity bill by half?


      • I don’t know about that (and I don’t worry too much about it).

        As to his promises about delivering water, I did some work and came to the conclusion that his promises were not far-fetched. Take a look at Delhi Govt’s budget (size of revenues and money spent on water).

        Also see this video, which is old, but it tells you about the possible efficiency gains in the water space.

        I absolutely loved his “engineering-type” logic towards the end of his talk when he used Munger’s proof by contradiction trick to demolish the claims by Delhi Jal Board.

        IIT Engineers have transformed global corporations. Now, its time they transformed Indian Politics.

        • excelmonkey1 says:

          I concede that he might improve the water supply situation a bit but electricity is a different ball game

          A chunk of electricity tariff is coming from T&D losses
          in other words aam aadmi ki chori kee hui electricity

          Or this is the indirect way the current system is subsidizing electricity for jhuggi jhopdi (poor man)

          • I just went through this document at this link (

            Its a 23 page PDF which highlights the shameful connivance between Anil Ambani companies and the Congress government. In short words, the discom companies are booking losses and increasing assets in the entity whose ROE has to be computed (So ‘PAT’ is shown lower than what it should be and “Equity” is increased by over capitalizing assets/buying assets from sister companies in inflated rates). If my understanding is right, Discoms run through a ‘government approved target ROE’ system and this fudging helps them loot from us.

            Till now I was pretty irritated with the ‘Socialist’ leanings of AAP. But post this, I am kind of convinced that it is a case of ‘Saving capitalism from capitalists’.

  13. nice article sir i feel india is changing towards growth
    thank u

  14. […] passionate and the unreasonable people are ones who change the […]

  15. Mr.Kejriwal now needs to attract talented individuals (Technocrat /Bureaucrat) from Society / Alma Mater to work on his plan. Day in and Day out people are joining AAP.
    May AAP spreads throughout India !!!

  16. excelmonkey1 says:

    Dear Professor,

    Dr. Surjit bhalla has aptly branded AAP as politically honest but economically dishonest.

    And now as AAP has started the same subsidy voodoo economics as practiced by congress, what kind of effect you see on your stocks? By how many percentage points would India’s equity premium go up because of this populism?

    Thanks in advance


    • Excel, two suggestions. When you do your modeling:

      1. Factor in all relevant variables, not just one that comes immediately to mind (in this case equity premium); and
      2. Don’t be in hurry to arrive at conclusions. You don’t have a publishing deadline like perhaps Dr. Bhalla. Not all subsidies are paid from budget deficits. If there is a lot of wastage because of corruption, then a reduction in wastage not only provides for money for other purposes, it can also result in reduced budget deficits. Yes, it is a zero sum game but this time the players are not just the tax paying citizens and beneficiaries of subsidies. This time we have another possible player – the corrupt system.

      • excelmonkey1 says:

        Sir considering the kind of scrutiny electricity distribution companies go through I suspect there would be more than a few hundred crores of padding. Enough to finance subsidy for a few months.
        What after that?

        • I don’t know the extent of cost padding, if any, in the electricity companies. What I do know is that allegations are serious enough to warrant an audit and I won’t want to make any judgments pre-maturely.

          I also know that any “cost-plus” system is gameable and so when such allegations are raised, getting an audit done is a good decision. Hopefully, we’ll find out the truth soon.

          • excelmonkey1 says:

            Actually the matter is subjudice
            so the soon could be a few years down the line))

          • kumardiwesh says:


            While getting an audit done is fine and actually a welcome step, reducing tariffs before the audit report has concluded anything is dangerous. This is like Mr Kejriwal saying he knows the system is rigged and the audit is being done to prove him right.
            He should have reduced tariffs after the audit report findings. What if no discrepancy is found? Will prices be raised again? It would be political suicide to do that. Mr Kejriwal has amental block in that he ariives at conclusions first and then decides how to justify them.

            • Our man is not afraid of danger. I think that’s quite clear to anyone!

              But, anyway, let’s look at this from an investment perspective – as a kind of a special situation.

              Either there will be significant cost padding found or not. He believes they will be found. He has alleged as much on his site. Check out his “Pol Khol” page:


              So, clearly, he believes that the probability of cost padding being discovered is very high.

              Next, what are the consequences of cost padding being found? I think you’ll agree that if such padding is found, there will be recoverables from those electricity companies. It’s true that those companies will try to resist but a contingent liability for them would exist, no? And that liability would carry an interest rate too, no?

              What are the consequences of cost padding not being found? Under those circumstances, Delhi Govt would have subsidized it’s residents’ electricity bills. Will that break the finances of the government? Check out its P&L. In my view, it won’t and maybe in his view too.

              So, perhaps in his calculation, even if the bad scenario arises, the financial consequences won’t be devastating. And perhaps he gets additional confidence from his ability to derive some efficiency gains elsewhere in his P&L. I don’t know, I am just speculating here but if there is a lot of corruption in any system, then for a person who wants to clean up that system, there must be a lot of efficiency gains to be derived from that cleanup, no? Let’s assume that only 10% annual savings are possible. On a revenue of Rs 35,000 cr, that translates into Rs 3,500 cr of savings a year. That’s a lot of money which allows you to distribute it to whomsoever you believe to be needy, without having the need to increase taxes and without resulting in increased deficits.

              The fact that distributions are preceding the expected efficiency gains should not bother us provided we look at the long-term P&L of Delhi Govt and not just its P&L for the last 4 days. Every expense item need not be preceded by a revenue on a daily basis. What matters is how well he does all this over a longer period. You have to give him time to be able to evaluate and resist the temptation to arrive at conclusions based on what he has done in just a few days.

              Then there are some non financial consequences of these subsidies, which I am sure, you’ll recognize given his precarious minority situation in the assembly.

              Considering all this, I don’t think its a dumb idea from his perspective, or from the perspective of Delhi’s citizens to provide these subsidies. At least its not a dumb idea as of now. Maybe in an year’s time it may look like a dumb idea. Not now, however. It’s an experiment which hasn’t had the time enough for us to determine if it was successful or not.

              But then, you don’t have to agree with me!

              In any case, let’s not forget that we are dealing with “an unreasonable man” here, who believes in low-probability-high-impact possibilities and who is not necessarily as rational, as, say, Warren Buffett. He is probably overconfident about many things. But let us recall a few important lessons from Kahneman’s “Thinking Fast and Slow” about what that bias can do for us.

              “Optimistic bias is a significant source of risk taking. In the standard rational model of economics, people take risks because the odds are favorable—they accept some probability of a costly failure because the probability of success is sufficient. We proposed an alternative idea. When forecasting the outcomes of risky projects, executives too easily fall victim to the planning fallacy. In its grip, they make decisions based on delusional optimism rather than on a rational weighting of gains, losses, and probabilities. They overestimate benefits and underestimate costs. They spin scenarios of success while overlooking the potential for mistakes and miscalculations. As a result, they pursue initiatives that are unlikely to come in on budget or on time or to deliver the expected returns—or even to be completed. In this view, people often (but not always) take on risky projects because they are overly optimistic about the odds they face.

              Optimism is normal, but some fortunate people are more optimistic than the rest of us. If you are genetically endowed with an optimistic bias, you hardly need to be told that you are a lucky person—you already feel fortunate. An optimistic attitude is largely inherited, and it is part of a general disposition for well-being, which may also include a preference for seeing the bright side of everything. If you were allowed one wish for your child, seriously consider wishing him or her optimism. Optimists are normally cheerful and happy, and therefore popular; they are resilient in adapting to failures and hardships, their chances of clinical depression are reduced, their immune system is stronger, they take better care of their health, they feel healthier than others and are in fact likely to live longer. A study of people who exaggerate their expected life span beyond actuarial predictions showed that they work longer hours, are more optimistic about their future income, are more likely to remarry after divorce (the classic “triumph of hope over experience”), and are more prone to bet on individual stocks. Of course, the blessings of optimism are offered only to individuals who are only mildly biased and who are able to “accentuate the positive” without losing track of reality. Optimistic individuals play a disproportionate role in shaping our lives. Their decisions make a difference; they are the inventors, the entrepreneurs, the political and military leaders—not average people. They got to where they are by seeking challenges and taking risks. They are talented and they have been lucky, almost certainly luckier than they acknowledge.”

              • Any cost-plus system is prone to abuse and electricity markets are just one example. Another one, pointed out by Mr. Munger in 2001 was the US healthcare system, where costs spiraled out of control because of perverse incentives. Here is what he said then:


                They didn’t think through the incentive effects of the way they were changing the rules. They created a system wherein they were reimbursing both doctors and hospitals, in effect, on a cost plus percentage of cost basis. The minute they did that, the hospitals and doctors found wonderful ways to talk the patients into buying all kinds of care that got reimbursed. If a guy needed a little, simple test and it wouldn’t be paid for if you did it in a doctor’s office, the doctor would stick him in the hospital – which was good for the hospital and good for the doctor, but bad for the patient and bad for the taxpayers.


                And here is what Mr. Munger said about incentive-caused bias in cost-plus systems which exist in government procurement contracts and law firms:


                The power of incentives to cause rationalized, terrible behavior is also demonstrated by Defense Department procurement history. After the Defense Department had much truly awful experience with misbehaving contractors motivated under contracts paying on a cost-plus-a-percentage-of-cost basis, the reaction of our republic was to make it a crime for a contracting officer in the Defense Department to sign such a contract, and not only a crime, but a felony.

                And, by the way, although the government was right to create this new felony, much of the way the rest of the world is run, including the operation of many law firms and a lot of other firms, is still under what is, in essence, a cost- plus-a-percentage-of-cost reward system. And human nature, bedeviled by incentive-caused bias, causes a lot of ghastly abuse under these standard incentive patterns of the world.


  17. Great Post as always! I am under fascination of Kejriwal and AAP’s success as well as Malcolm Gladwell’s David/Goliath has been high on my mind. Your post connecting the two is a great perspective!

    Anyone needing a little more information on Malcolm Gladwell’s David and Goliath can listen to this TED talk by the author.

    Arvind Kejriwal has made impossible possible so far! I found it absolutely astonishing when a seasoned political party like BJP could not even try (at least in their meeting with Lt.Gov.) to form Government even when they were only few seats short. When had that happened last time in Indian Politics? Lot of activists and general people have come out in AK’s support. He will need many more of these soon! There are hard and complex problems that will need to be solved and it is only active and sustained support and involvement of smart and intelligent people that can make this “swaraj” movement possible.

    Links and documents above on water and electricity in Delhi are enlightening. Water talk is from 2007 – does anyone know if bulk meters have been installed in Delhi since then? It is shameful the way the multinational companies, foreign governments, international organizations, like World Bank, etc have manipulated and controlled India so far through corrupt politicians. Kejriwal has provided a possibility of getting rid of corrupt politicians and I hope that people will jump on this opportunity!

  18. Thank you, Mr Bakshi. A fine discussion over here.

    There are a lot of cynics out there who do not want to provide time to Mr Arvind Kejriwal to take actions and find cause for disbelief and a can’t do attitude for whatever is proposed (or not).

    Whether this cynicism, disbelief and can’t do attitude is due to past bad experience (a-la VP Singh or JP) or due to their individualistic political leanings is hard to decide.

    However, it is clear that the more disbelief to what is possible, the lower the proportionate expectations. And if AAP is able to deliver a large portion of what they have promised, it will be a positive surprise. As with the stock market, any positive surprises are likely to be cheered.

    Mr Kejriwal’s actions so far in this short period as CM gives us hope that it is possible to clean up the system, provided there is a will. And where there is a will, there is no place for cynicism.

    • Read this to see how much can be saved from reducing corruption by even a small amount.


      Govt. Expenditures/G&S Purchases
      Goods and Services Purchases that constitute the expenditure side of the budget of government at every level. This includes wages & salaries and therefore hiring and recruitment and contracts for construction and maintenance of roads etc. My informal inquires & reading suggests that the cut that government as a whole takes (shared between the functionaries & the bosses) has gone up progressively from about 15% in the 1960-70s to a range of 30% to 50% in the 2000s


  19. I read the whole article. I think there is a high possibility that this is true, although Dr Virmani has only had the information through informal sources (I doubt there can be any other way in any case).

    As to his point that “the cut that government as a whole takes (shared between the functionaries & the bosses) has gone up progressively from about 15% in the 1960-70s to a range of 30% to 50% in the 2000s”, some thoughts to ponder:

    Earlier, bureaucrats and politicians used to work in silos as corruption was an exception to the rule, so sharing of the ill-gotten gain was minimal. Now, corruption has got so institutionalised that a clean bureaucrat or politician is the exception to the rule.

    This also means that corrupt bureaucrats and politicians take care of their own in an institutionalised way. For example, we read press reports that politicians following opposing ideologies enter into business arrangements. Unfortunately, this trend runs across all mainstream political parties – some more, some less. Which effectively translates into: whosoever is in power, looks after the other – this is truly the corrupt winning over those who remain silent.

    Mr Kejriwal has provided an outlet, a voice to these silent people. Whether AAP will be successful or not, only time can tell. But I hope for India’s sake that this clean-up momentum gets stronger and our corrupt mindset is cleaned once and for all.

  20. Fascinating video .. The unreasonableness of OUR man oozes out of every word he speaks here…is something like this Swaraj thing possible ?

    don’t know why but I envy delhiites now or are we too eager to pass our judgment as always..anyways a great watch this.
    As u shared early, Sir,its a blessing to be optimistically biased

  21. […] “The Unreasonable Man | Fund Professor.” David and Goliath. N.p., n.d. Web. 14 July 2014 <; […]

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