Trying to Grow

Trying to Grow

“Break the fever”

President Barack Obama

The recently held G20 Summit in Los Cabos, Mexico, made two notable moves. One was the enhancement of IMF’s coffers, and firewall, to over 500 billion dollars from the erstwhile 430 billion, inclusive of a fresh pledge from the BRICS of 75 billion dollars.

This large promised input from developing countries, led by China at 43 billion dollars, Russia, Brazil and India at 10 billion each, and South Africa with 2 billion, may be, as the BBC reported, the most tangible thing to come out of this summit. It also comes with a demand for, but given the present crisis, not an insistence upon, enhanced voting rights in the IMF allocations and other decisions, for the self same BRICS countries. The world as we know it is shifting gears.

This BRICS money will be lent to the Eurozone, and others who need it to contain the fallout, if the debt crisis warrants; but only after exhausting other financial seams available to it. These  amount to an impressive 800 billion dollars.

The other notable point made was a policy direction- endorsed by all, even austerity advocate Germany, to promote fresh growth and jobs. Germany has been pressured into this stance instead of the radical belt-tightening it has been calling for. It is probably unhappy because it has often had to foot large portions of debt refinancing or outright grants outside its borders. This is an unintended consequence of being the strongest economy in the EU.

The Eurozone crisis is costing a great deal more already, with no signs of abatement, than all the costs associated with the reunification of Germany and the stimulation of the impoverished Eastern region rescued from erstwhile Soviet influence.

Growth in Europe, may however mean reaching out beyond the Eurozone where the demand scenario for their technology and skills is far greater. Los Cabos did, after all, bring together 20 countries that collectively account for 80 per cent of global output.

The fact is, it is hard to grow in situ when all your infrastructure is already developed, and there is little to take care of except operations and maintenance or the renewal of obsolete facilities.

Prime Minister Manmohan Singh may have had something like this in mind when he urged the EU to invest in the infrastructure of developing countries. He may well have had India specifically in mind where the investment funds required to develop just some of the infrastructure gaps run into trillions of dollars. And it did get a mention in the 14 page declaration at the end of the Summit. It wasn’t however, a very pointed point: “We will intensify our efforts to create a more conducive environment for development, including supporting infrastructure investment.” But then, that is the tell-tale nature of denial.

The “consumption”, which has been the driver of growth in Europe in recent times, is a spiralling thing without essential purpose. A bigger house is nice but not necessarily essential. Ditto, better cars, holiday homes and indeed, holidays. But improving one’s lifestyle via taking on more and more debt is seen to be undeniably unsustainable now. However, it is very painful to lose, at the individual level, what has been gained, because of a macro level meltdown. It is a prevailing wind that led all to all the profligacy after all.

For the moment, the summiteers, ensconced in the luxury resort at Los Cabos, began on a good note. They celebrated the reprieve in Greece, the world’s 34^th   ranked economy, with the pro-bailout coalition under formation. It has pipped the far Left challenge by a narrow 2 percentage points in the recent elections held there. Greece will stay put in the EU for now, though the threat to secede remains if austerity or debt servicing terms prove too onerous.

Still, right now, it will not precipitate a crisis of confidence both in the Euro and the EU. The election result from Athens also provides an opportunity to try and put its house in order. As a nation it borrowed to consume, and now it has too big an appetite to go on a drastic diet. But Greece can’t be blamed in isolation for doing exactly what the rest of EU and indeed America has done.

This even as the trillion dollar economy of Spain is tottering on the brink, as is that of Italy. These are the 3^rd and 4^th largest economies in the Eurozone. The regular nostrum of a bailout is going to assume titanic proportions in the event of a collapse. This because all of the IMF lending limit of 800 billion dollars plus the Eurozone’s own emergency funds of another 800 billion Euros would not be enough. Germany too would have to dig very deep into its finances.

A related problem is the lack of an integrated financial system in the EU and so very little control of how the new money would be deployed. Besides, it is indeed hard to bring this about because of each nation’s sovereign needs and wants. Nevertheless the classic stagflation notes are evident already with a high cost economy plagued by flagging demand, and it will inevitably aggravate the intent to promote domestic growth as the way out of this predicament.

So growth, bluntly put, may mean going in to develop Africa, Asia, South America, Arabia, and Eastern Europe; many parts of which are rich in natural resources, vast territory, much of it highly arable and lush, huge reserves of petroleum and so on. Western Europe by contrast is over- exploited and over -developed already, a manufacturing wasteland today, with basic manufacturing outsourced overseas.

The Arabs, who have burned their fingers investing their billions in petro-dollars in US and European blue chips, top flight property, privately owned A listers etc, are seeing the truth of this for themselves. Ditto to some extent for the reserves-rich Chinese, who are snapping up companies like the Indians, but have mostly invested trillions of dollars in US Government Treasury Bonds. And this exposure is making them more than a little uneasy too.

But, at the same time, it must be emphasised, the EU and America has a wealth of expertise in multiple fields, academic excellence and great know-how in futuristic technologies, high technology, formidable research capabilities, and a spectacular military industry. All strengths the less developed parts of the world badly need access to.

Europe and its big brother America, in the very same predicament, must therefore, without further prevarication, joint venture with the countries around the world that need their abilities, but this time on far more favourable terms than heretofore.

The tendency in the past has been to make expensive outright sales of second-rate technology or services, while holding back and reserving the latest developments for themselves. From this exploitative mindset, the EU and the US need to come to the table as fair-minded partners, assuming their share of risk and investment. And without hiding behind the over played notion of  “security risk”.

But this has always been the sticking point, right from the days of the North-South Summits that long preceded the present G series summits. Then however, Europe and America could afford to be smug and patronising. The more equitable space was mostly filled by the USSR, which partnered most of the developing nations on reasonable terms, while at the same time extending their spheres of influence. But that bipolar world too, is gone forever, even as the imperialist hangovers persist.

One does not have to go too far back. Some of the more recent annual Davos Economic Summits in Switzerland exhibited some of this neo-colonial attitude too, but today it is hard for the West to get away with it. Some of the shoe is now on the other foot, as it has always been for the then designated “Third World”.

The developing world has long had to brace itself to maintain some vestiges of its dignity, with “starving millions”, near zero growth, and debt enough to bankrupt them. Today we could affix such labels on the EU and America.

The US and the EU are decidedly broke and understandably bewildered, but are still having trouble getting off their high horses. They find it terrifying that their former “South” is relentlessly pushing to change places at the high table with them.

Their resistance to the changed equation will only lengthen the agony of shrinkage and being driven into genteel poverty if not outright depression, and prolong their years of difficulty. It is, after all, the kind of poverty that comes from not being able to afford the splendour and riches around them anymore.  

There is, as always, a way out. It is evident even in Greece, where the international, globe girding shipping tycoons are doing just fine thank you. They are, along with their international billionaire friends, keeping their heads down, of course, almost embarrassed for being viable, strong, efficient and profitable.

At the G20 Summit, national leaders of leading countries around the globe confined themselves to comments on process, rescheduling debt, vague pronouncements on being determined to revive their economies, other micro statements on coping, but they are still evading the main point, probably from fear of the political fallout.

Growth itself is in surfeit in the Eurozone, as the weak recovery figures show when another wave of crisis has not hit it. The EU has over capacity and high costs ruling everything except cutting-edge technology. And like America, most routine manufacturing of everyday things has long been outsourced to China and other lower cost parts of the world.

The twenty year boom experienced in the West before the bust has been based on consumerism and borrowed money. The curtain has undeniably come down in grief and tears over this model, even as it was once thought to be so much smarter than the earlier earn and spend idea.   

The communiqué at the end of the Los Cabos G 20 summit ran into 85 points. The last two said:

“84. We thank international organizations, including the UN, IMF, World Bank, WTO, FSB, ILO, FAO, and OECD, as well as civil society, for their input into the G20 process. Their reports and recommendations have provided valuable inputs to G20 discussions, in areas ranging from sustainable development to financial regulation.

85. We look forward to the rest of the work that will take place during Mexico’s Presidency until November 30. On 1 December, 2012, Russia will start chairing the G20. We will convene in St. Petersburg, under the Chairmanship of Russia. We thank Mexico for hosting a successful Los Cabos Summit”.

These points reveal the ongoing nature of summitry, and the growing importance of long term soft loaning institutions that are set up to channel the money,  without which many world economies of note are not going to make it.

The Eurozone has been profuse in its promises to put its house in order, but even the leaders may not fully accept, or even be aware that the house itself has changed irrevocably. There will be no going back to fiscal prudence. The madness has already cast everyone on a very different shore. Tomorrow it has to be a new Europe, willing to partner its former dependants and colonies, but in a generous and honourable manner.

Without this, there will be no survival or peace for the erstwhile masters. The subject peoples are fine in comparison, but the masters cannot, any more, survive without their help and collaboration. Thankfully, enough goodwill exists in the heart of the once subordinate. There is little malice harboured despite the many injustices perpetrated in the past.

Meanwhile, Europe is readying Euro 750 billion to rescue itself and a beleaguered Spain and Italy. It may be only the first tranche however. The world is in the process of being reordered. Perhaps this change is what the Mayan prophecy of 2012 actually meant. Not quite the physical end of the world but the beginning of a substantial new order.

(1,999 words)

21^st June 2012


Published as the Cover Story in The Sunday Pioneer, AGENDA Section on 23rd June 2012 as "Reordering the world" and online at www.dailypioneer.com

Gautam Mukherjee and online at www

The Bigger they are...

The Bigger they are…

There are now a slew of films on the “financial crisis”. It has become something of an independent genre in Hollywood and amongst independent film makers trying to make sense of the turmoil. Most of them, despite massive simplification and dramatisation, are still a little dry and difficult for non-financial people to grasp. But, fact is, the prospect of double-dip recession in Europe and America, and its knock-on effect on all parts of the world including India and China, is now omnipresent. This financial hangover will persist for several years to come and profoundly change the way the world takes its decisions.

In 2008, it began with the bail-out of investment bank Bear Stearns followed by the collapse of “Too big to Fail” Lehman Brothers, the 4^th largest bank on Wall Street. The latter, like the former, was brought down by huge real-estate assets on its books which had lost most of its value in the bursting of a long-standing property bubble.

Investment wizard Warren Buffet, the “Oracle of Omaha”, went hunting for bargains, and made some investments on Wall Street. But he was, in his gentle chiding style, critical of a developing culture in which the banks had been taking substantial trading risks using their own money. The scale and multiplier effect of such investments dwarfed the prior system of trading only on behalf of those clients keen on higher than usual returns.

AIG, one of the world’s largest insurers, was the next giant institution to wobble badly from the contagion of the investment banking excesses, and was saved only with the help of massive Government assistance on both sides of the Atlantic.

This was followed by practically every icon on America’s “Main Street”, including the largest property mortgage companies, automobile companies, engineering and appliance companies, high-street businesses, all facing considerable difficulties, even as the US economy slowed to near-negative territory.

But, looking back from 2012, America and Europe, has survived the first onslaught of a financial jeopardy so severe, that it has not been seen since the events that led to The Great Depression of the 1930s. Credit however goes to the Obama Administration in keeping the situation from spinning into a cascade of financial ruin by bold stimulation, swift intervention and nationalisation where necessary.

At the time, and since, the crisis has been portrayed as a consequence of the overweening greed on the part of the financial men which could, and would, be reined in by greater Government supervision. As it turns out, this was not quite the whole truth, because now it is entire countries and regions, including the EU, that are going down.

The entire 17 member EU is in deep financial trouble. In hindsight, it is probably because it is a quasi-financial union with no control over the financial policies and actions of the individual countries that compose it. But now, this weakness cannot be attributed to only certain countries in it that have been irresponsible, because all of them, indeed all of the Western world, has been on a sovereign borrow-and-spend spree ever since massive deregulation was introduced in the 1980s. President Ronald Reagan started the dismantling of “big government” in America and set off the trend elsewhere. So it isn’t just private greed of the finance men chasing ever bigger payoffs for themselves, but the “new normal” of national debt, several, no, many, times the annual sovereign income, that has brought about the global financial crisis.

So much so, that if the situation keeps deteriorating towards a break-up of the EU, the demise of the Euro, or a failure to prevent economic collapse of major financial institutions in Europe; it will also have a catastrophic effect on the American economy. The US, in fragile recovery presently, will also be driven into another recession.

The American presidential elections, due in November, will also be affected by international news of this order. Mr. Obama therefore, has a massive stake in defusing the crisis in Europe before it snowballs out of control. Of course, his success in doing this will be good news for everyone.

But right now, Spain, is the most recent recipient of a first tranche Euro 100 billion bail-out. Greece, Ireland and Portugal, have all received hundreds of billions to prop up their Sovereign debt servicing and banking systems.  Italy may be next in line requesting help. The world no longer even talks of the early collapse of tiny Iceland, in late 2008.

India’s own woes of policy paralysis, immense corruption, high commodity prices, inflation, huge, if not yet alarming national debt, deficits climbing ever higher, poor international trade statistics, and sharp economic slowdown, are about to be compounded further by these global developments. Chief Economic Adviser Kaushik Basu has been recently quoted as saying we won’t be “impervious” to developments in Europe, currently India’s biggest export market.

Domestically, we are threatened not only by poor productivity, stalled reform, bad infrastructure, high interest rates, dependence on imported fuel, and weak economic data; but our policy obsession with an ever growing welfare agenda that we simply cannot finance without worsening our deficits beyond already very high levels.

In addition, coalition partners with great power, such as Mamata Banerjee of Paschimbanga, are demanding a “financial package”; meaning massive aid and grants, plus a rescheduling and part waiver of the state’s accumulated debt from the Centre, just in order to stay afloat.

In the private sector too, many media groups in the TV broadcast space are in financial trouble, and have sold stake in recent months to industrial houses keen on obtaining a foot-hold in the business. The Kishore Biyani led Future Group too is selling non-essential assets and stake in its companies to retire mountains of unsustainable debt. The airline space is replete with examples, most notably Kingfisher Airlines, crippled, not just by difficult regulatory and policy impacts, but its own over-leveraging.

The moralists are fond of saying nothing comes without consequence and history is indeed replete with the playing out of unintended consequence, but the key point of fiscal responsibility cannot be set aside.  It is what has got the world in this mess. Being let off the leash cannot be taken as a licence to run amuck.

After all, regulation is just a way of having the Government play the authority figure. Introducing deregulation was intended to free entrepreneurs to exercise their initiative. Some want to go back to the old ways before all this happened, but since no one is exactly blameless, the best we can aim for is a much greater degree of self-regulation going forward.

(1,097 words)

12^th June 2012

Gautam Mukherjee

Published as "How the giants fell" in The Pioneer as Edit Page Leader on June 14th, 2012 and online at www.dailypioneer.com and in the ePaper. Also archived under Columnists at www.dailypioneer.com, home page.

Chronicle of the Bomb and Pistol Wallahs

BOOK REVIEW

Title: CHITTAGONG    Summer of 1930

Author: Manoshi Bhattacharya

Publisher: Harper Collins Publishers India, 2012

Chronicle of the Bomb and Pistol Wallahs

The author of this painstaking and novelised account of the Chittagong Armoury Raid of 1930, Manoshi Bhattacharya, is a former Indian Navy doctor who continues to practice in the NCR region. She chronicles, replete with a great deal of melodramatic Bengali idiomatic colour, the doings of a schoolmaster who led 65 of his students in an insurgency to sack the police Armoury at Chittagong in 1930.

The idea of the ring leader Surjya Sen, or “Masterda”, was to inspire similar insurgencies elsewhere in British India with a view to hasten the end of the Raj. The Armoury is indeed sacked, but most of the insurgents are tracked down over several years thereafter and either hanged or jailed by the British. And yet, and this is the point of this book, it is incidents and actions such as this, that finally saw the British “Quit India” in 1947. We are presented with dollops of Netaji Subhas Chandra Bose style militancy, complemented by the back drop of Mahatma Gandhi’s difficult to fault nationalism, ahimsa, and diplomacy.

And yet, to read such a book in today’s context is not a very comfortable experience. Terrorism is all too real and unpredictable in our lives today. The Palestinians, for example, cry themselves hoarse that the Jewish State was born out of the most blood curdling terrorism against British administration. This does not stop the State of Israel from playing simultaneous bully and victim with lashings of the Holocaust to bolster its brio.

It is difficult to read Ms. Bhattacharya’s book as history in 2012, though it describes events that took place 80 years ago, when exactly the same justificatory coloration is being applied to the terrorism/freedom movement, depending on your perspective, to the protracted goings on in Kashmir today.

In the Palestinian/Lebanese/Israeli context, long considered to be one of the most dangerous flash points in the globe, probably followed by the India/Pakistan/China theatre, it can be argued that the Hizbollah and Hamas are imitators of the early Jewish bombings of hotels and massacres of villages pre 1948.

So, when we see the tumultuous developments in Iran, Syria (a key backer of the Hezbollah), in Egypt, in Yemen and elsewhere in the restive area, we still don’t find Israel exactly vulnerable.  The US backed military might of Israel is considerable. It has substantial, if undeclared, nuclear weaponry and formidable surveillance and armament building capacities. Iran may, as yet be barking, but Israel can, if it wants, seriously bite.

Today, the Al Qaeda and their satellites and fellow travellers, such as the Lashkar-e-Taiba, or the Taliban, are a menace to the entire Judeo-Christian-Hindu world, with their perpetual insistence on Jihad and their chilling sophistication. Their blood-thirstiness, growing out of fundamentalist religious fervour, is considerable, and seeks to be received as legitimate grievance. It also extends, even-handedly, to all whom  they consider apostate within the Islamic world itself.

But this Chittagong insurgency, described in Ms Bhattacharya’s book, has more in common with a Biggles like derring-do combined with a Hardy Boys innocence, than the calculation and fanaticism of a modern 21^st century terrorist outfit, including the well trained and outfitted Maoist insurgents.

Masterda and his pupils get the guns from the Chittagong Armoury alright, before indulging in some crackling arson, but not, alas, the bullets, which are stacked, cannily enough, elsewhere and out of harm’s way.  And they also don’t get to kill any of the British Officers in town, rushing in on their lair on Good Friday, to find they’ve gone home early.

The prose in Chittagong is a little turgid, suffering from its attempts at fictionalisation. And after the horrors routinely perpetrated in recent times by the LTTE under the late Prabhakaran, the Maoists, the North Eastern Insurgents, The ISI, The Taliban, Al Qaeda and so on; the thesis of the book seems to suffer from a degree of moral hazard. One finds oneself siding with the British, who stand-in for the Indian Authorities in the mind’s eye. And I find myself hoping all the miscreants are rounded up and put out of their misery at the earliest.

Unfortunately,  to further compound the disengagement, there is little or no characterisation of all the dramatis personae , and so no identification with them for the reader. They come on and off the stage as so many clones of each other, fuelled either by a lofty nationalism and frequent, if somewhat creepy bouts of “Anondo” or joy at perpetrating some minor damage.

The British in the book too are faceless caricatures, with their references to “natives” and their impenetrable stiff upper lip. Also, there is absolutely no love interest, or even a woman featured in this book full of would be tragic heroes. Though there is much male camaraderie, hugging, and congratulatory back-slapping, this too is not the stuff of engaging historical fiction.

(805 words)

10^th June 2012

Gautam Mukherjee

Published in The Sunday Pioneer AGENDA Section BOOKS Page on Sunday 17th June 2012 as "Bomb & Pistol Wallahs" and online at www.dailypioneer.com

Capitalism Welfarism Creditism

Capitalism Welfarism Creditism

Capitalism has always been in the natural order of things. Today it may find itself betrayed and debilitated by an excess, almost a paroxysm of noblesse oblige, a misguided attempt to right the wrongs of centuries by institutionalising entitlement. And this is further aggravated by combining with the urges stemming from its innate greed.

This is essentially an unnatural coupling, because all Caesars have ruled in the “name” of the people, subscribing to a lofty concept of common weal for propagandist purposes, while doing very little other than consolidating their own position. And this has not changed with the switching of the label.

Capitalism, in its natural habitat, translates into a few rich men and lots of poor ones. This has the requisite tooth and claw to keep it vital and indeed viable. There have been Kings and Commoners, land-owning Lords, and tenanted, nearly powerless, often landless Serfs.

Later on came the Industrial Barons and their humble, faceless, workers. These are two sides of the same coin in marked contrast to each other, coexisting and jostling for survival, each in its place, and for a very long time now.  The current Information Age has its own heroes and villains, but the major spoils of technological advancement and innovation belong, as always, to the few as opposed to the many.

Wars have been fought over land and territory with its attendant perquisites of rapine loot and pillage. And, of course, subjugation; and sometimes,  the enslavement of the vanquished. Fairness did not enter into it. Might was mostly right and it was believed the many were put on earth to serve the needs and desires of the few.

The pitch however started to queer over pamphleteering notions of natural justice and religion led clarion calls towards a sense of obligation induced in the more fortunate towards their brethren. This softening of stance was considered to be a mark of civilisation that went a long way to soothe the domineering urges of the savage breast, and something to aspire for.

A longing for a new order took over, in which a majority, as opposed to a privileged minority, should be provided the wherewithal to experience a modicum of surplus and disposable income. And also for this hoi polloi to enjoy a basic dignity of livelihood and creature comfort, without discrimination or hindrance or the circumscribing of their aspirations, attained by merit, rather than the so called “accident of birth”.

This sense of natural justice without the exacting and culling natural laws of the jungle, did not however manifest in common transaction for ages, except in terms of occasional philanthropy and whimsical charity, quite often designed to glorify the giver rather than assuage the hurts of the receiver.  A case in point are the grand temples, churches, mosques and synagogues built by the mighty. It is perhaps this that prompted Marx to call religion the “opium of the masses” and attempt to overthrow its hold on the pious. Nevertheless, this long era of denial of opportunity lasted right through the agrarian economy and land-holding based centuries around the world.

The first possibility of a more equitable chance at the brass ring came about with the Industrial Revolution in the West, with its need for millions of production line workers. Notice that the Imperial Age which preceded it did nothing to elevate its own lesser folk, except incidentally, even while it made the imperial and colonial powers very rich at the expense of its subjects and vassals.

But the French articulation of “Liberté, égalité, fraternité” gained momentum after the First World War, when the upper, land-owning classes found themselves decimated. Also, soon after, greater profits beckoned from industry with its mass production values, rather than the traditional non-mechanised growing of wheat and rice, or the rearing of livestock.

Suddenly then, despite the creeping change over the ages, manifested in events such as the Abolition of Slavery, the French Revolution and the American Civil War, a radical change in circumstance came in 1918, after the “Great War to end all wars” as the poignant slogan of the time had it.

And after it passed, it was the turn of the butcher, the baker, and the candle-stick maker in a manner of speaking. And they were joined by the restive independence movements amongst subject colonies around the globe. These worthies were able to make the cut by dint of sheer survival, and numerical strength.

But these uplifted peoples, created thus by war’s bloody circumstance or the struggles for independence, began the institutionalising of entitlement, being both judge and jury in the firmament. It is these inheritors that sanctioned and upheld both Marxism and Socialism depending on where they lived. And where they lived determined whether they were new nations emerging from the clutches of imperialism or former colonial powers cut down to size by the rising winds of democracy and revolution, grown in the crucible of natural justice.

Theorists, from pure Marxists to adherents of the milder Fabian Socialist movement, broadly subscribe to the empowerment of the many, based, not alas, on merit, but a sense of restitution to being poor and deprived.

Inevitably this “commendable” began to warp the engines of devil-take-the- hindmost capitalism. This survival-of-the-fittest caveat emptor world view became likened, in a mocking Hitlerist way, to being essentially fascist and obtusely unfashionable. This, particularly in one-man-one-vote style democracies.

Even as the no-questions-asked feel-goodism of economically unviable welfarism took hold amongst the many, a section of conservatives, keen on balancing budgets and preserving a meritocracy and rule of the privileged never took to it.  But, slowly and surely, political compulsions mutated the old style Capitalism into a centrist, diluted by socialist ideas form, somewhat embarrassed to promote its free market roots.

A great deal of the red ink in the now digital ledgers of the economies around the world is there because of unsustainable welfare schemes. These are not only proving very costly to fund but have turned their recipients lazy and righteous. In Europe and America the spending on such schemes cannot any more be withdrawn or reduced without dire political consequences. And a key country in the EU such as France has recently voted to kick out austerity by electing a Socialist Government for the first time in 16 years.

Countries like Greece, with several others waiting in the wings, on the brink of blatant default on its Sovereign Debt, are almost ready to cut loose from the EU  at the prospect of losing its gravy train of grants and bail-outs.  

 And India too, a mere one trillion dollar economy, is feeling the strain of subsidies it cannot bear and welfare schemes that threaten to turn it into a banana republic. The “Social sector”, if one can call the creation of vote banks by a form of bribery, seems to have run away with itself like the dish eloping with the spoon. We too are facing a disconnect between our ability to earn in terms of our GDP and our spending on uplifting the poor.

Today’s world is such that it isn’t availability of capital, technology or human ingenuity that has put the strain on Capitalism.  It is not even the corruption and scams and bank collapses. It is predominantly the promotion of the “free lunch” mentality whether it has come from easy credit and the recklessness it encourages, or Government subsidy and welfarism.

The crux of the crisis engulfing the world economy, both in the developed world and the emerging nations is the extent of deficit financing ever since the world moved from the Gold Standard to other ways of underpinning the value of its currencies. This is a norm of financial management both at the macro and micro levels now with an enormous and inbuilt potential to spin out of control.

Today, the engines of growth have slowed to such an extent that the debt servicing is proving very difficult. This particularly when inflation and high commodity prices are playing havoc with currency values and earning potentials simultaneously. But since this is our bed we have to sleep in it. There is a way out however. We can lengthen the repayment curve on easy terms and rise thereby above the turbulence of the short term.

At one time, just a few decades ago, it was the “Third World” that needed the long term soft credit offered by august institutions like the IMF, the World Bank, the ADB and other such lending institutions, set up by the West.

But today the Sovereign Debt built up in more optimistic times by most of the EU raft of 17 countries leaves the lending countries, mainly Germany and France more than a little queasy. And Germany and France and their economically lesser brethren in turn are tied to a none too healthy America, with its $ 1 trillion budget deficit and many more trillions of national debt.

In turn, the star economic performer of today’s world, China too is going to be severely impacted if the American economy does not recover sufficiently within a year or two. It is an interconnected world now, in which the leading economies and the emerging ones are all victims of a borrow and spend profligacy that is proving too much to bear.   And so a perpetual repayment crisis seems to loom with its threatened domino effect.

The only remedy seems to be in terms of rescheduling debt on concessional terms and long tenure so that the countries in question can limp into their muted recoveries given protracted periods of time.  The once and still “First World” needs a little “Third World” style help to survive. Fortunately they have a road map of such pilgrim’s progress. They can evaluate the good impact of institutional development funding of large tracts of Africa and Asia and even Europe and South America in the post WWII era.

Of course, it will feel a bit funny to sit in the visitor’s chair. But since the West has a considerable edge both in military and technological terms that could change the game dramatically, besides great pools of expertise it need not worry very much. There are supplicants and supplicants and asking for a loan from a bank you own or fund substantially is none too onerous.

The other notion, promoted by Socialists and guilty Capitalists alike is the ham-fisted idea of punitively taxing the rich and cutting the spend, not on the deleterious subsidies and welfare schemes, but on an undefined other. What might this be? Is it infrastructure perhaps so that we can face future shock after shock? Or is it the size of a bloated Government forever aggrandising its own hew and heft? Or is it just so much empty rhetoric and hot air?

But getting away from this futile blame game let us look at the positives. The fact is that what some people call “creditism”, the leveraging of one’s financial future to access benefits today, may not be the old balance your ledger style of doing things, but it is here to stay. Western Governments have largely rejected austerity with its bone crushing spectres of The Great Depression in favour of a more productive use of resources to create new wealth and jobs.

At the individual level, it is entrepreneurship, technological genius and innovation, perhaps exemplified by the spectacular if maverick doings of Steve Jobs, Bill Gates,  and Warren Buffet that show the way. And the impact of Facebook, Google and Twitter, You Tube, the people behind them, and that of smart phones, on all our lives.

The ability to grow through vision and reinvention shown by our own Ratan Tata, Mukesh Ambani, and NRI heavyweight Laxmi Mittal, the last of whom specialises in buying and developing distressed steel mills etc. long before it came  to be considered smart, who best personify the possibilities. Great fortunes are waiting to be made in an atmosphere of adversity. It is not time, not at all, to write the obituary for Capitalism.  Booms and busts are no more than adjustments in a system best allied to human nature itself.

(2,015 words)

8^th June 2012

Gautam Mukherjee


Published in The Sunday Pioneer as the Cover Story on Sunday 10th June 2012 as "Capitalism endangered" and online at www.dailypioneer.com

The Prince & Conceptism

The Prince and Conceptism

“ If you get to learn something even from the worst of creatures don’t hesitate.”

Chanakya

One of the most famous primers on realpolitik was written by a wannabe courtier in involuntary retirement. It did not win Niccolo Machiavelli his summons back to the charmed circle, but his suggestions, written like aphorisms, in then modern and colloquial Italian rather than the formal Latin, persist in the popular imagination to this day.

After all, the slim little book called The Prince, in preference to his lengthier explorations, written in 1513, is why “Machiavellian” is a contemporary description of expediency. Witness this: “Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage.”

Machiavelli had his turn in the sun during the Renaissance, and the intrigue laden world of the Medicis he was cultivating. There were other people, in those times, cast in a similar mould, all with their entreating, persuasive, often elegantly written primers. It was the age of patronage, and you had to peddle your wares before the mighty.

Notably, amongst the others, there was Balthasar Gracian, a Jesuit priest, with his slim and witty insights written in the 1600s, his style and content dubbed an ism before many others emerged. Gracian’s work was called “conceptism”, epitomised in his “The Art of Worldly Wisdom”, a book of 300 maxims plus commentary.

And then there was Giacomo Casanova, the renowned modernist lover and chronicler, who wrote himself into posterity in the 1700s, with not a little to say to the Doges of Venice, but also as it turned out, to the world. Casanova wrote to capture a world he knew would disappear, like his youth and vitality, and this, his memoirs, instructs us still.

Here in India, we had dear old Chanakya of course, and he preceded all in the West by centuries. Chanakya advised Emperor Chandragupta Maurya, the first King of a united India to rival anything the British or the Mughals accomplished many centuries later. Chanakya, something of a Shakesperean Richard the IIIrd; ungainly, ugly, but most acute, predated Machiavelli by 1,800 years.

But where oh where is the political theorist worth his salt or semantics nowadays? He or she is not only missing in action here in India, but across the world stage too. And this at a time when long held civilisation bolts and moorings, certainly those fashioned after the Industrial Revolution, are under severe strain.

There is no Adam Smith, Marx and Engels, no Hobbes, or Locke or Rousseau, not even Harold Laski in today’s world! The Gurus have exited en masse, replaced by a lot of technology on autopilot without anyone in the Captain’s Seat.

There are no political theorist cum practioners of the calibre of Genghis Khan or Mao (remember his little red book) or Stalin, or Deng, or Charles De Gaulle, or Jawaharlal Nehru for that matter. Today’s mistakes are sins of omission and commission with villains pulling strings from behind the arras.

The world is ruled by political pygmies, in a sequel to the decline and fall of the eponymous Roman Empire, but minus Julius, minus Augustus, Marcus Aurelius, minus all the ones remembered favourably by history.

Unless, that is, one insists on mentioning the failures, such as Bahadur Shah Zafar, beatified despite his disgrace, his ineffectual and mortified memory being attached to our own desi Fleet Street, in an act of municipal flatulence. Or the villains, that strutted across the stage for brief seasons, gorging on blood and human suffering and now reduced to caricatures reeking with blame.

 All the political colossuses though, like the legendary one at Rhodes, a lost wonder, have been erased from the face of the earth. But why, when the challenges the modern world is facing are grave enough to threaten the extinction the Mayans predicted, for this very year 2012? Where are the super heroes when you need them?

Still, we can perhaps take comfort that the end of the world is far from nigh. But the occurrence of flounder-worthy icebergs and elaborate, disguising orchestras seems to be proliferating. All it takes, after all, is one little mistake.

Oddly, there is nothing frenetic about our impending sense of doom, assuaged as it is with aspirational baubles and a stiff libation or two. But that may be no more than post modernist sang froid, the gristle and grist stuff of denial.

India, waiting for good times, will, alas, have to wait a little longer, like a deserving bride without a worthwhile groom in sight. It takes nothing away from our eligibility except a sneaking fear of wilting on the vine.

But why is this, with so much intelligence and ability going a begging here and around the world? Is it because we need pygmies rather than giants to transform the world into a more equitable and just entity? Could it be because it is the rule of mediocrity that ultimately nurtures, whereas a larger presence etiolates and enervates?

Is it time for the State to be tamed by the meek?  Did Marx have it right when he predicted the Capitalist State would “fade” and “crumble”, even as the Communism he spawned and inspired died a premature death? Will the world collapse under the weight of its “contradictions”, or its innate debauchery? Or is this much ado about nothing and just rank, paranoid exaggeration, a dirty nightmare caused by ill digested information?

 How can a Hollande and Merkel work together without imploding? But in doing so, yoked together like a bull and a horse, do they benefit the poor, as the riff raff in The Tale of Two Cities, presentimenting La Revolution.

Is it time for all of Europe to collect free wine from a spilt barrel? Sans culottes is not sans sense after all, and a dirge composer can also fashion a waltz. When dawn comes, it will clear the heads and eyes of both victor and vanquished, and all those queuing up on either side of the tug of war, for the churning.

It is ironic and anachronistic to have a Finance Minister from the Indira Gandhi era that is too indispensable to be trusted is it not? And the wonder of it is that the polity we live in thinks nothing of it.

The power of mediocrity is that it can readily and invariably put intelligence to shame.  But as Balthasar Gracian put it long ago: “Always leave something to wish for; otherwise you will be miserable from your very happiness.” Gracian had a way with words, but we should be so lucky.

(1,102 words)

29^th May 2012

Gautam Mukherjee


Published on  31st May 2012 as Leader on the Edit Page entitled "Rule of the mediocre" and online at www.dailypioneer.com

Beautiful & Slight

BOOK REVIEW

Title: Difficult Pleasures

Author: Anjum Hasan

Publisher: Penguin Viking 2012

Price: Rs. 399/-

Beautiful and Slight

The “Difficult Pleasures” of the title lops into view on page 111 of this handsomely produced book in a story entitled “Immanuel Kant in Shillong”. Hasan has the protagonist say: “It’s such a difficult pleasure-talking,” right in the middle of the page, when confronted with an emotion laden confession/apology on the part of a long ago transgressor. 

This short story also grapples with the Kantian idea of the “Categorical imperative- act only on that maxim through which you can, at the same time, will that it should be a universal law”. The charming thing is that Kant is decidedly not for the intellectually challenged. But not getting it can, and in this instance does, have some poignant consequences. Consequences that also ironically visit the best student of Immanuel Kant in the class.

All Anjum Hasan’s stories in this volume are interiorscapes in the main, and one enjoys being let into other people’s heads with such skill. But, and this is the rub- nothing very much happens. The evocation of moods and emotions is good but the plotting is weak.

When this young writer marries her considerable talent for honest description and controlled language with strong plot lines, she will have no difficulty winning the prizes she has already been shortlisted for, and I dare say, bigger ones too. The question, as is often the case with poet-writers who naturally incline to visualising, is whether they can muster enough detachment from the beautiful image to tell a riveting story.  

Anjum Hasan is undoubtedly an elegant writer and considerably acknowledged for being so. Her previous book of poetry Street on the Hill located in her erstwhile hometown of Shillong, was heralded as a fresh new and original voice from the North East, where her parents, originally from Uttar Pradesh, were professors.

Hasan now lives in Bangalore. Her debut novel, Lunatic in my Head, yes, with a character enamoured of Seventies mystic rockers Pink Floyd,  was shortlisted for the Crossword Book Award. This was followed by Neti Neti, also shortlisted by the Hindu Best Fiction Award.

I personally like the story named “Saturday Night,” in which a frustrated house maid steals the baby in her charge as something her blasé employers absolutely cannot take in their stride, but only to foist it surreptitiously on another couple randomly encountered.

A couple, where the man wants to start a family after a year of marriage but his careerist wife does not. The two stories of the maid in her efficient but taken-for-granted existence, looking after the home and son of her employers, and that of the yuppie couple, run in parallel. That is, until they dramatically intersect. The couple gives the signalling maid a lift during their headlong dash to the Bangalore airport. And she leaves the baby behind in the car when she gets off at an intersection.

Hasan demonstrates masterful insight into the ambivalence of the careerist wife, one with a ticking body clock. It is she who is subconsciously motivated to have her husband stop the car to give the fleeing maid and baby a lift. This, even though she is late on the way to a conference abroad. This story is an illustration of what Anjum Hasan can do when she combines plot and the dexterity of her writing style.

It is fashionable nowadays to write palimpsests with muted tonalities. But there should be something more to remember a book like this beyond the pleasure of well crafted prose. Except, of course, the encomiums of the already initiated, those literary types with refined sensibilities that populate the edit departments of publishing houses.

And yet post-modernism, into which genre this set of short stories might be classified, does not wish to do a Maupassant or O. Henry. That kind of writing is now considered old hat, despite their highly memorable stories that delighted and continue to delight millions. Neither would the posher elements of the current literary establishment welcome what it considers “obvious” writing.

After all, it is indeed a function of good literary prose to explore frontiers, and not be afraid to experiment with both style and content. Anjum Hasan’s Difficult Pleasures does contribute to all of this. But the parallel point that might be considered is best illustrated by the erstwhile “art cinema” of decades past now become far more accessible. It is today a genre of mainstream, particularly in the urban multiplexes. The bold new hybrids retain their ability to break new ground while proving commercially successful at the same time.

The dwindling reading public in the digital age, is largely middle-brow in temperament. It generally wants its healthy diet of intellectual stimulation with a few condiments for the salivatory glands. Or am I using the Kantian “Categorical Imperative” here to fly my own kite at Anjum Hasan’s expense?

(800 words)

20^th May 2012

Gautam Mukherjee

Published on Sunday 27th May 2012 in The Sunday Pioneer AGENDA Section BOOKS Page as "Beautiful & Slight" and online at www.dailypioneer.com

Precious

Precious

Precious means valuable and to be guarded to be sure. But it also means, in another context, a self regard disproportionate to circumstance. A stance which is irritating and irksome to others, but the person in question, and in this context the country he or she represents, is oblivious to the discomfort his or her attitude is causing.

A lot of our babudom and politico inspired schemes and proposals that hover in the air threatening to turn into laws bear such description. User friendliness is not their objective. Perhaps an urge to bully and dominate born out of a neo-colonial rule book animates their conception.

And this preciousness of attitude has been there from the start of our journey as an independent nation. Remember the infamous Krishna Menon harangues from an assumed Socialist pulpit that lasted for a record number of hours at the United Nations? Or Mr. Nehru lecturing the United States on non-alignment. Even as we begged them for military assistance as China overwhelmed our forces in 1962. And remember the food assistance from JFK as we ran short?

Though we have come a long way, the preciousness persists to date, now into the second decade of the 21^st century, in place of  the reasonable global outlook that would have made better sense. Foreigners and NRIs find it very difficult to do business with it, but our Government seems to need it for its own self esteem. Or is it the imperial influence of sitting in the North and South Blocks, up on Raisina Hill, flanking the way to Rashtrapati Bhavan, where the very stones breathe of ICS satraps and Viceroys?

And it isn’t as if everyone who is a citizen and “ordinarily resident” is entirely at peace with the routine highhandedness, arrogance and pomposity of Indian governance either, even though we may be used to it and perhaps resigned to our lot.

The preciousness does incalculable harm, both to our near-term and longer horizoned prospects, and damages our reputation as a country. The flip flop on GAAR (General anti-avoidance rules) with its burden of proof shifting from the tax authorities to the tax payer  and back again, along with its grandiose postponement for a year as a concession to the protests it sparked, is a case in point.

Happily, postponement of implementation in the Indian context may mean dropping the notion altogether. The strenuous argument that several other countries have clauses in their tax laws similar to GAAR and impose them retrospectively did not cut much ice. Besides do we want the investment we don’t have in-country, estimated at several trillion US dollars, for infrastructure development alone, or don’t we? And if we do, it makes sense to be attractive about it, does it not?

 But meanwhile, because we took our time over calling it off for the time being, global observers have had a field day questioning the “India Growth Story” afresh, in the absence of a “dependable economic environment” for FDI (Foreign direct investment).  

US rating agency Standard and Poor (S&P), too have dropped our sovereign rating a notch to “negative” from “stable” based on the drooping state of our economy, the precipitous fall in our annual GDP forecasts, our burgeoning deficits, our stalled industry and business climate, our falling agricultural outputs etc. As it is India’s rating is BBB- which is the lowest investment grade rating offered by S&P.

Of course, the carping aside, the foreigners will come, because of the substantial opportunities offered by the huge and growing Indian market, in a world that is stagnating in many of its parts. But the GAAR attracted so much criticism because of its jingoistic tone and its retrospective focus. Besides having a natural advantage is not an excuse for gracelessness.

Another irritant in the same vein is the law-making in Delhi with regard to GPA (General Power of Attorney) transfers of property with retrospective effect from October 2011, when the Supreme Court of India pronounced on the matter. It might set off a quick-fix revenue garnering option in other states too.  

Property and its development in the face of considerable demand is a propellant of both employment and the industries it draws upon. And yet, even in an economy buffeted by high oil prices, high interest rates, and rampant inflation, the Court and Government proceeds to score yet another self-goal.

In a property market slowed by high-interest rates and tight credit, making transfers tough and more expensive is probably ill-timed. But then, the Supreme Court upholds the law without much regard for ground realities when it gets around to it, and the Government seems to flex its muscles and set about putting pressure on others particularly whenever its own performance leaves much to be desired. At other times, it amends the law to suit itself and outflank the judiciary.

The GPA transfers of leasehold, or indeed freehold property, has gone on for years with the transfers duly registered by the Government without murmur. Why then should it open up a can of such succulent worms all of a sudden, that too retrospectively, using a Supreme Court order to protect itself? It wants the extra revenue by way of stamp duty of course. Hence a new attempt to right a neglected wrong.

Never mind that the finding, let alone obtaining the cooperation of people whom one has bought the property from on an irrevocable GPA, may be difficult. This notwithstanding, the Government wants not only that we should do so, but first have the seller pay to convert the properties to freehold if they qualify per criterion of “authorised” and “unauthorised”, and then effect a sale with the buyer paying for the Government’s applicable stamp duties.

The bogey of “unauthorised” construction has always been good for extractions of tribute. It gets built in the first place because of such lubrication, and then it comes apart because of eventual court orders.

The demolition squads come by years after the fact, on “unauthorised” properties or extensions. One may well ask why so much unauthorised construction comes up regularly. But we all know it does so with the connivance of the relevant authorities, and under their protective watch.

One may also ask why no attempt is made to punish those in the Government who have connived at such law-breaking. And why only the owners of the unauthorised construction should have their property demolished, that too at their own expense.

One can ask, but don’t hold your breath if you want any replies, because the bribery and corruption trail leading towards the authorities is not anything if not fairly inpenetrable.

 

(1,108 words)

10 May 2012

Gautam Mukherjee


Published as Leader Edit under title" Waking up a little late" on Edit Page of The Pioneer on 17th May 2012 and also online at www.dailypioneer.com