international post

Post-war nostrums

2008-11-27T00:31:00.003+05:30

We will have to seriously revisit John Maynard Keynes’ insights if we want to get out of this recessionary nightmare, writes Robert Skidelsky

Expect plans for higher borrowing, tax cuts, and more spending in Monday’s pre-Budget statement. With the UK sliding into depression, it is not surprising that the old Keynesian tool kit is being ransacked. But Keynesian economics is not just about fixing damaged economies. You don’t need very sophisticated economics to spend your way out of a depression. In one form or other ~ usually by war or war preparations ~ governments have been doing it throughout history.

It does require very sophisticated economics to prove that depressions cannot happen. This was the economics Keynes set out to challenge in his great book, The General Theory Of Employment, Interest And Money, written during the Great Depression of the 1930s. His own ideas, he wrote, were “extremely simple, and should be obvious”. Economies were inherently unstable; governments had a vital role to play in stabilising them.

These heresies were too simple and obvious for the economics profession. After a long and rather successful trial run, Keynesian economics was obliterated by the free-market revolution which swept the Anglo-American world under former UK Prime Minister Margaret Thatcher and former US President Ronald Reagan. In a notable comeback, updated versions of the theory Keynes had challenged “proved” that unregulated or lightly regulated market economics were very stable, and that government intervention only made things worse. In apparent disregard for mathematical demonstrations to the contrary, crises and crashes, booms and busts continued to occur, and politicians continued to try to mitigate their consequences, common sense being stronger than logic. This is roughly the situation we are in now. Economic theory points to non-intervention: politics points to intervention. Keynes’s attempt to marry the two in the notion of “practical statecraft” failed.

Keynes’s “simple and obvious” ideas can be summed up in two propositions. The first is that large parts of the future are unknowable. “The outstanding fact,” he wrote, “is the extreme precariousness of our estimates of the basis of knowledge on which our estimates of prospective yield (of securities) have to be made.” The “unknowability” of the future imparted an inherent instability to financial and investment markets, leading to periodic outbreaks of “herd behaviour”, when “new fears and hopes will without warning take charge of human affairs”. He called the economics of his day a “polite technique which tries to deal with the present by abstracting from the fact that we know very little about the future”.

How was this “abstraction” achieved? By assuming, Keynes wrote, that uncertainty could be “reduced” to calculable probability, and therefore to the same status as certainty itself. This underlies today’s “efficient market hypothesis” which treats uncertainty as measurable risk; its acceptance explains the explosion of the derivatives market since the 1980s, which has brought the financial system crashing down.

Keynes’s second proposition is that depressions can last a long time, longer than it is politically safe to tolerate. He did not doubt that markets worked “in the long run”. “But this long run,” he wrote in his best-known remark, “is a misleading guide to current affairs. In the long run we are all dead.”

Keynes offered a number of reasons why economies did not simply “bounce back” after a great shock (the Dow Jones index did not recover its 1929 prices till 1952). However, his clinching argument in his 1930s debates with free market economists such as Friedrich Hayek was political. It was much too risky to allow economies to slide into deep depression. The example of Hitler was vivid in the minds of all democratic politicians. In 1928, at the height of Weimar Germany’s prosperity, the Nazis got 2 per cent of the vote. By 1930 they were up to 18 per cent. In 1933 Hitler was in power.

During that time, German unemployment had risen from two million to six million. Hayek and the free market economists never had an answer to this argument. So what should the British government do now? In 1931 Keynes favoured the devaluation of sterling, but this is now irrelevant: the pound is not fixed to gold as it was in his day, and is sinking quite naturally. The suggestion most favoured by editorial columns is to cut interest rates and go on cutting them. Keynes was certainly not against this, but “cheap money” to counter depression is not specifically Keynesian, and he doubted the efficacy of monetary policy on its own.

The Bank of England might flood the market with money, but this would not necessarily produce lower interest rates ~ and therefore greater lending ~ if the tendency to hoard money was going up at the same time. “The possession of actual money,” Keynes wrote, “lulls our disquietude; and the premium which we require to make us part with money is the measure of the degree of our disquietude.” As the adage has it: you can bring a horse to water but you can’t make it drink.

This leaves fiscal policy as the unique instrument in the Keynesian tool kit. It is idle to speculate whether Keynes would have favoured tax cuts or public spending increases. His remedies were always tailored to their impact on the state of confidence. His essential point was that, in a depression, a government stimulus was needed to offset the decline in private spending. This would mean running a temporary budget deficit. If pessimistic analysts are right in predicting a shrinking of GDP next year in the order of 3 to 4 per cent, the increase in the current deficit might have to be very large, even larger than the 2 per cent Lib Dem leader Vince Cable is proposing.

With output and inflation falling, Keynes would not have worried now about the “dangers of inflation”. He would have expected the budget deficit to shrink automatically as the economy recovered, and would have imposed new taxes as and when they were needed. “The boom, not the slump,” he wrote, “is the right time for austerity at the Treasury.”

The final question is this. Will we be content simply to take Keynes out of his cupboard from time to time, dust him down, and put him in charge of rescue operations, before putting him back firmly in his cupboard? Or will we now try to run our affairs paying proper attention to his insights into financial instability so as to prevent these alternations of mania and panic from periodically seizing control of our lives?

The Independent

The present crisis and the way forward

2008-11-19T13:05:00.001+05:30

Prabhat Patnaik
The Hindu, Nvember 14

The need of the hour is the injection of demand through direct fiscal action by governments across the world.

The current world economic crisis is perceived almost exclusively as a sequel to the collapse of the housing bubble in the United States. This certainly has been its immediate provocation, but an important structural factor underlying it must not be overlooked: the stimulus for booms in contemporary capitalism has come increasingly from such bubbles. The U.S. whose size and strength make it, in the current regime of trade liberalisation, the main determinant of the pace of expansion of the world economy, has increasingly come to rely on such bubbles to initiate and sustain booms.

John Maynard Keynes, writing during the Great Depression, had suggested an alternative stimulus, namely, a comprehensive “socialisation” of investment, whereby the state acting on behalf of society always ensured a level of investment in the economy, and hence a level of aggregate demand, that was adequate for full employment. This entailed not only a jettisoning of the free market system in favour of state intervention, but also restraints on the free global mobility of finance, since meaningful state intervention could not be undertaken if the nation-state faced internationally-mobile capital. “Let finance be primarily national,” he had said.

The Keynesian stimulus was adopted in the post-war period, during what has been called the “Golden Age of Capitalism.” But the process of globalisation, involving above all the globalisation of finance, which began during the period of Keynesian demand management itself, put an end to that stimulus, and removed a host of regulatory measures that characterised the Keynesian regime. Boosts to aggregate demand now come increasingly from the stimulation of private expenditure, associated with the creation of bubbles in asset prices, rather than from an adjustment of public expenditure within the context of reasonably stable asset prices. Not surprisingly, the frequency of financial crises, associated with the bursting of these bubbles, has increased greatly after 1973. The current crisis underscores the need for a new stimulus. Till now, governments have only injected liquidity into the system for stemming the crisis. They initially planned to do so by purchasing “toxic” securities, but eventually had to inject liquidity against equity, through part-nationalisation of financial institutions.

But such injection is not enough. Credit does not start flowing simply because banks can access more liquidity; there has to be adequate demand for credit for viable projects by solvent borrowers. This is absent. Since the injection of liquidity does not improve the solvency of firms saddled with “toxic” securities, the risk associated with lending to them remains prohibitively high. Besides, the anticipation of a recession makes borrowers chary of borrowing and lenders chary of lending.

This anticipation derives from several factors. The bursting of one bubble is not necessarily succeeded by the immediate formation of another. Moreover, the very scale of the current financial crisis gives rise to an anticipation of a prolonged recession. Finally, since the recession has already started, the prospects of crisis-prevention now through the usual monetary instruments (including liquidity injection) appear distinctly dim. The mutually reinforcing tendencies, of increased liquidity preference on the part of private individuals and institutions, and of the real economy sliding downwards, have already started, and will continue, unless governments now act to inject demand into the economy directly.

The third world countries will not escape the effects of this crisis. Many of them whose financial systems are still not sufficiently “opened up” will escape the direct impact of the world financial crisis, but they certainly will have to face the impact of the recession of the real economy. Their export earnings, both merchandise and invisibles, will be hit, causing unemployment and output contraction on the one hand, and foreign exchange crisis, exchange rate depreciation and accentuated inflation on the other. (The latter will be aggravated by the outflow of speculative capital that had come in earlier to the “newly emerging markets” under the aegis of Foreign Institutional Investors).

Two areas are of special concern here. One is the inevitable decline in the terms of trade for primary commodities that will occur in a recession, which will push cash-crop growing peasants into even greater distress. The other is the loss of food security over much of the third world that will inevitably occur.

The loss of food security will occur for several reasons: first, the loss of foreign exchange earnings owing to the decline in exports and in the terms of trade will cause a decline in foodgrain availability in food-importing countries. Secondly, even if food availability is somehow maintained, the decline in the incomes of exporting peasants, small producers and the unemployed will mean inadequate purchasing power in their hands to buy necessary food. And thirdly, if the terms of trade of non-food primary commodities decline relative to food, as has been happening, then both the above problems will be greatly aggravated.

There is a tragic irony here. The booms fed by asset price bubbles not only did not benefit the large mass of peasants, petty producers, agricultural labourers, craftsmen, and industrial workers in the third world, but were actually accompanied by an absolute deterioration in their living standards. This happened not despite the boom but because of it. With the interlinking of global financial markets, asset price booms in the U.S. tended to produce stock market booms, and more generally financial sector booms, even in third world countries, where banks and other financial institutions withdrew from productive sector lending to speculative lending, from rural lending to urban lending, and from agriculture and small-scale sector lending to consumer credit to the affluent, and loans against securities. This damaged the productive base of the peasant and small-scale sector. Secondly, the changed role of the state in the new dispensation where it was more concerned with supporting the financial sector boom than with sustaining peasant and petty production, entailed a withdrawal of state support from the latter sector: input subsidies, the price support system, essential public investment, and state spending on rural infrastructure and on social sectors were all drastically curtailed, to the detriment of the entire small producer economy.

Between 1980-85 and 2000-05 the per capita cereal output in the world declined absolutely by 8 per cent, which also meant an absolute decline in per capita world cereal consumption. But since, taking both direct and indirect consumption into account, the advanced countries witnessed an increase, the decline was particularly sharp in the third world. Even China and India which experienced remarkably high GDP growth rates, did not escape this trend.

Paradoxically, this decline was not accompanied by any rise in relative cereal prices. In fact between these two years the terms of trade of cereals vis-À-vis manufacturing in the world economy declined by nearly 40 per cent, which suggests that the squeeze on the purchasing power of the masses in the third world was even greater. The other side of the speculative boom therefore was a drastic squeeze on the living standards of the masses, especially in the third world (which is why describing the U.S. as the “locomotive” of the world economy is so inapposite: this locomotive while pulling some coaches, pushed back some others). But even though the third world masses suffered from the effects of the speculative boom, they would also suffer additionally from the effects of its collapse.

The need of the hour is the injection of demand through direct fiscal action by governments across the world. For activating governments for this, two conditions have to be satisfied. The first is control over cross-border financial flows, for otherwise governments will continue to remain prisoners to the caprices of globally-mobile speculative finance capital. The second is the setting up of an international financial facility, operated on principles different from the Bretton Woods Institutions, which not only makes concessional finance available to developing economies, but also enables them to substitute long-term loans for their current short-term borrowing.

The general objective of larger government spending must be the reversal of the squeeze on the living standards of the people everywhere. In India, China and other third world countries, however, in addition to welfare state measures, larger government expenditure has to be oriented towards a substantial increase in agricultural, especially foodgrains, output.

In short, the new paradigm must entail inter alia a foodgrain-led growth strategy (on the basis of peasant, not corporate, agriculture), sustained through larger government spending, which simultaneously rids the world of both depression and financial and food crises. The trade and financial arrangements of the world economy have to be oriented towards achieving this end.

(Based on a presentation by Professor Patnaik at the United Nations General Assembly on October 30 as a member of the Interactive Panel of the UNGA on the Global Financial Crisis.)

How Roosevelt checked the Supreme Court during the Great Depression

2008-11-19T13:02:00.000+05:30

T. R. Andhyarujina
The Hindu, November 14

His court packing bill encountered opposition. Though he lost the battle, he won the war to change the attitude of the Supreme Court judges.

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The U.S. Supreme Court invalidated 10 vital New Deal laws
In 1937, Roosevelt announced a Bill to change the Court’s composition
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The present world economic crisis originating from the United States and measures to tackle it there brings back memories of the Great Depression of the 1930s and the New Deal legislation of President Roosevelt to overcome it. One of the gripping chapters of that saga is how the U.S. Supreme Court initially thwarted important parts of the New Deal legislation of President Roosevelt by declaring them unconstitutional and how the President attempted to overcome the judicial obstruction to the New Deal laws by packing the Court with judges of his choice.

When President Roosevelt of the Democratic Party came to office in 1932 for his first term, 7 out of the 9 judges of the U.S. Supreme Court had been appointed by earlier Republican Presidents. From 1935 onwards a majority of conservative judges of ages over 70 of the Supreme Court invalidated 10 vital New Deal laws that were enacted by the Congress to overcome social and economic insecurity arising from the Great Depression, notably the National Industrial Recovery Act, the Railroad Retirement Act and the Agricultural Adjustment Act. The Court held these laws violated the freedom of contract of individuals and due process of law. President Roosevelt strongly criticised these decisions as an overreach of judicial authority frustrating the social and economic forces needed to combat the Great Depression.

Critics of the Court singled out four of the judges, Justices Van Devanter, McReynold, Sutherland and Butler as the “Four Horsemen of Reaction.” Together with the swing vote of Justice Owen Roberts they created a majority of 5 judges to 4 to invalidate important New Deal laws.

Roosevelt made these decisions of the Supreme Court thwarting the New Deal laws his re-election manifesto and promised to overcome the judicial veto when re-elected. On November 3, 1936 Roosevelt was re-elected with an electorate landslide and on February 5, 1937, he announced his Judiciary Reorganizing Bill 1937 to change the Court’s composition of the adverse majority to his programmes. This came to be known as the notorious Court Packing Plan of Roosevelt.

The essence of this proposed legislation was to replace every sitting judge of the Supreme Court over the age of 70 and six months with a new judge. Roosevelt would then have the chance to appoint six more judges, presumably having his philosophy of being favourable to the New Deal legislation and thereby increasing the size of the Court to 15 judges.

Roosevelt promoted this law in one of his “Fireside Chats” on the national radio to the nation on March 9, 1927. It remains today as the most outspoken and withering criticism of a nation’s Supreme Court of judicial overreaching into domains of the executive and legislature. His words are worth recalling.

Roosevelt said, “In the last four years the Court has been acting not as a judicial body, but as a policy-making body. When Congress has sought to stabilise national agriculture, to improve the conditions of labour, to safeguard business against unfair competition, to protect our national resources, and in many other ways, to serve our clearly national needs, the majority of the court has been assuming the power to pass on the wisdom of these acts of Congress — and to approve or disapprove the public policy written in these laws.”

He went on to say “The Court has improperly set itself up as a third house of the Congress — a super-legislature, reading into the Constitution words and implications which are not there, and which were never intended to be there. We have, therefore, reached the point as a nation where we must take action to save the Constitution from the Court and the Court from itself. We must find a way to take an appeal from the Supreme Court to the Constitution itself. We want a Supreme Court, which will do justice under the Constitution and not over it. In our courts we want a government of laws and not of men.”

Roosevelt’s court packing bill rightly encountered strong opposition in the nation as subverting the independence of the highest court and it failed to pass into law. Although Roosevelt lost the battle he won the war to change the attitude of the judges of the Supreme Court. Within a few days of Roosevelt’s Fireside chat, on March 29, 1937, Justice Owen Roberts, who held the decisive swing vote position, changed his previously held view of opposition on an important New Deal regulation relating to minimum wages thus enabling the court by 5 to 4 to hold it valid. This was the famous “Switch in time that saved the Nine” in judicial history of the U.S.

There followed important changes in the Court’s view on the National Labour Act and Social Security tax which the Court now held to be valid and constitutional. Shortly, thereafter, the leader of the four Horsemen Justice Van Devanter resigned realising as one observer said that “the jig was up.” Six months later Justice Sutherland also resigned. The complexion of the Supreme Court totally changed without Roosevelt’s court packing plan. Roosevelt went on to appoint five new justices in his second term in usual course. With these changes Supreme Court’ s attitude to economic reform laws changed for all times to an understanding deference in policy matters of government.

This interlude in the history of the U.S. Supreme Court has lessons for all democracies governed by the rule of law. First is that even the highest judiciary at times tends to overstep its limits and intrude into policies of government with disastrous results for the nation. Secondly, methods to pack the court by government to obtain favourable verdicts can never be the means to correct the court verdicts even if they are egregiously wrong.

(The writer is a senior advocate and former Solicitor-General of India.)

Corrections and Clarifications

An article "How Roosevelt checked the Supreme Court during the Great Depression" (Op-Ed, November 14, 2008) said, in the sixth paragraph, that Roosevelt promoted this law in one of his "Fireside Chats" on the national radio to the nation on March 9, 1927. It should have been "Tuesday, March 9, 1937". President Roosevelt's 35 minute 28 second-long speech was called the "Fireside Chat on Reorganization of the Judiciary".

When tax-and-spend becomes borrow-and-spend

2008-11-19T12:59:00.000+05:30

Peter Bradshaw

I.O.U.S.A — a thoroughly admirable picture by documentary film-maker Patrick Creadon — takes the driest subject in the world — America’s national debt — and makes you deeply ashamed of not having been worried about it before now.

Its thesis is that America’s crack-cocaine-style debt addiction is a more serious problem than either terrorism or global warming. The budget deficit of the U.S. has risen to an eye-watering $9tn; its trade deficit is $738.6bn; its political leaders are casual about waste, and its feckless, want-it-now citizens buy stuff on credit and have abandoned the habit of saving, drummed into them by their provident parents and grandparents.

Creadon and his camera team follow General David Walker, the former U.S. comptroller as he travels across the country, attempting to tell America what it very much does not want to hear. America is spending much, much more than it earns. The result, as Mr. Micawber might have put it, is misery. Or future misery, anyhow.

It is all very well for Keynes to say that in the long run we are all dead — but our children will be alive. Mightn’t they have to pick up the bills?

Dishonest and pusillanimous politicians of both parties are terrified of unpopular tax hikes, says Creadon. So they borrow the money. During the second World War, America issued war bonds, and U.S. citizens were told that buying them was a stern patriotic duty.

Nowadays, debt is quite different. Debt is sexy; it can be repackaged and reconfigured in a hundred financial instruments that generate income. The political right, supposedly the stern guardians of financial rectitude, are as spendthrift as anyone else. Tax-and-spend has become borrow-and-spend. And naturally, only unsophisticated hayseeds who don’t understand the financial world would worry about the political consequences.

But wait — who is lending America money? Not Americans, but foreigners: largely the Chinese, who in any case enjoy a massive trade imbalance. China now has such hefty loans that these amount to what Creadon calls a “nuclear” financial weapon.

— © Guardian Newspapers Limited, 2008

Tech Companies, Long Insulated, Now Feel Slump

2008-11-18T14:03:00.000+05:30

ASHLEE VANCE
NYT, November 15, 2008

The technology industry, which resisted the economy’s growing weakness over the last year as customers kept buying laptops and iPhones, has finally succumbed to the slowdown.

In the span of just a few weeks, orders for both business and consumer tech products have collapsed, and technology companies have begun laying off workers. The plunge is so severe that some executives are comparing it with the dot-com bust in 2000, when hundreds of companies disappeared and Silicon Valley lost nearly a fifth of its jobs.

October “was like turning a switch,” said Robert Barbera, chief economist at the Investment Technology Group, a research and trading firm. “Everything pretty much shut down.”

After industry leaders like Intel and Nokia warned of slowing sales this week, investors aggressively sold technology stocks. On Friday, the Nasdaq composite index, which is full of technology names, fell 5 percent. Advanced Micro Devices and eBay both dropped more than 10 percent.

Tech companies directly account for about 4 percent of the nation’s employment. And globally, companies and governments spend about $1.75 trillion on technology a year, according to Forrester Research. But the industry’s importance to the world economy is larger than its size might suggest. Technology has fueled many of the productivity gains of the last two decades. And about half of the capital spending by corporations goes toward technology products, according to Moody’s Economy.com.

As struggling businesses cut back on spending of all kinds, a slowdown in tech proved inevitable.

During the dot-com crash, technology companies were victims of Internet hype that they helped create. Once the enthusiasm faded, so did the boom-era sales on software and infrastructure equipment.

However, consumer enthusiasm for products like video games, wireless phones and high-definition televisions helped the industry recover.

This time around, the tech sector finds itself at the mercy of a double-barreled slump in both corporate and consumer spending caused by the housing decline and the economic crisis on Wall Street. Technology companies are also feeling the effect of frozen credit markets as business and government customers struggle to finance computer and software purchases that can run to millions of dollars.

“We have never seen anything like this in history,” said William T. Coleman III, a Silicon Valley veteran who founded the software maker BEA Systems and is now chief executive at a start-up called Cassatt.

Best Buy, the leading electronics retailer, declared this week that “rapid, seismic changes in consumer behavior” had fostered the worst conditions in its 42-year history, and its main rival, Circuit City Stores, filed for bankruptcy protection. Nokia, the world’s largest maker of cellphones, predicted Friday that global sales of handsets would fall in 2009, which would be only the second decline ever.

Technology giants like Intel, which makes chips for personal computers and servers, and Cisco Systems, which makes network equipment, warned that revenue was plummeting at rates last seen in 2001.

Dozens of start-ups, like the messaging service Twitter and the electric carmaker Tesla Motors, have been cutting staff members as they prepare for a slow economy.

And on Friday, Sun Microsystems, a leading maker of computers used by financial services companies, announced that it would lay off as many as 6,000 employees, or 18 percent of its work force.

The turnaround has been as sudden as it is severe. Until late September, a number of large technology companies maintained an optimistic stance, despite the obvious distress in the global economy.

Cisco was the first large technology company to reveal its sales data from October, noting a 9 percent fall in sales compared with the same month last year. On Nov. 5, Cisco, which is based in San Jose, cautioned that because of a “completely different environment,” revenue in its current quarter could plummet as much as 10 percent — a major reversal from the 7 percent growth that Wall Street had been expecting.

Intel, the world’s largest chip maker, followed this week, warning that sales in the fourth quarter could fall as much as 19 percent compared with the same period last year.

Even Google, an advertising juggernaut that many analysts said they believed would weather a downturn better than other companies, is now feeling the impact.

About eight weeks ago, the company’s chief executive, Eric E. Schmidt, told reporters, “My guess is that the drama is in New York and not here.” A month later, Google surprised Wall Street when it reported strong financial results for the quarter that ended Sept. 30, sending its shares up 10 percent.

But Google’s stock has dropped 16 percent since, as the same analysts who were upbeat about its results have since cut their revenue and profit forecasts. This week, its shares dipped below $300 for the first time in three years, well below their $742 peak. And the company, known for its torrid hiring and free-spending on employee perks, has begun the most serious belt-tightening in its 10-year history.

“We don’t know as managers how long the crisis goes,” Mr. Schmidt said last week.

For all the gloom, the tech industry is still far healthier than Wall Street. Unlike the banks, many technology companies are flush with cash. Cisco has close to $27 billion; Google, $14 billion; and Apple, $24 billion. It is likely that some of these funds will go toward acquiring struggling competitors. “The guys that aren’t as strong will be good pickings,” Mr. Coleman said.

Powered by technology, Silicon Valley has stood out as a bright spot for jobs in the United States, with employment growing at about 2 percent a year while national employment slowed. Through 2007, the region continued to add 20,000 jobs, although that positive trend has started to change.

“With this now having become a worldwide event, it’s clear that the job losses will come,” said Stephen Levy, director of the Center for Continuing Study of the California Economy.

Given the unpredictability of the current economy, the industry’s past experience will only go so far, said Chris Cornell, an economist with Economy.com. “It would be a tragic mistake for C.E.O.’s who did a great job fighting the last recession to think the same tactics will work this time,” he said.

Miguel Helft contributed reporting.

SOMETHING OF A MIRACLE - Obama has to redefine the US to itself, and to the world

2008-11-17T14:31:00.001+05:30

Westminster gleanings
Anabel Loyd
The Telegraph, 17 November

The tension of Election Day in Washington, when 92 per cent of the district of Columbia voted for Barack Obama but still dared not expect victory, vanished in a collective sigh of relief when he was declared president-elect at 11pm. The euphoria began on the next breath and with unseasonably warm, damp weather rotting the residual grimacing Halloween pumpkins, Washington has a spring in its step, heedless of continuing market falls or the soldiers in fatigues and desert boots pouring in and out of the Pentagon. The opposition has gone to ground; the Grand Old Party is engaged in post mortems; the president has invited his successor and his family to the White House; African Americans have seen a second coming and it belongs to them. We forget that 40 years ago, an eyeblink in history, within the memory of most of the current population here, they could not vote. The shame and the residual cruelty of hundreds of years of slavery are still very close at hand.

Expectations are so high. The world has watched Obama win and believes that if an African American can become president of the United States of America, anything is possible. Whatever happens, Obama has transformed the US. On Wednesday morning, two African American women on the subway, one bouncing with sleepless joy, decked out in Obama tee shirt, cap, backpack and badges, agreed that his mixed-race status was important, his ability to straddle and perhaps now finally remove the barriers between two worlds. Others have suggested that his non-slave ancestry gave him a confidence and impetus that no descendant of slavery, still carrying the wounds five generations on, could have achieved. For non-Americans, it took the television shots of Jesse Jackson weeping as he watched the new president-elect to remind us of that heritage.

The less-charitable have suggested that his emotion was for himself and for a presidential bid that never was, but whatever passing regrets, that crowd in Chicago was living the moment. They were rewarded by a speech of remarkable statesmanship and gravitas, even in celebration, from a man of stature, power and serenity, already confident of his ability to lead. The typhoon of hope anticipating this election, now heralding the inauguration of the new president, is worth the laying aside of contemporary British scepticism — the urge to undermine pedestals, especially those stood on by American icons, to blow in the wind of change with the rest of the world.

What now? In an instant this week, things have appeared to get better, but staggering responsibility rests on a man with unique global status and power, but apparently little experience. He is a man who has four short years before he has to fight again the same battles, when, whatever the successes, the clarity of a message of change will be obfuscated by the inevitable compromises and failures of office, the slowing of campaign urgency in the face of government bureaucracy.

An Obama activist — expert on public policy and federalism, former member of the Clinton administration, and senior Fulbright scholar to India — dismissed my concerns over the style-versus-substance issues we are familiar with in the UK, with an explication of the machine led by and supporting the president-elect. Most of his path to the White House has been well out of the standard political limelight, but rooted in principles of community organizing learnt during years of local politics in Chicago. It is his understanding of the need for inclusiveness and community-building that has been the scaffolding for a decentralized campaign spearheaded by cutting-edge IT programmes and providers to bring the message into people’s homes. This has resonated with first-time voters to bring them into a vast community of hope, empowered by its involvement in the process of the election and the sense of its own ability to make change, demonstrated by the long patient lines of voters on November 4. This was democracy. Its result has revived America’s reputation as the land of opportunity.

Every campaign-helper received an email of thanks from the president-elect by Wednesday morning. During the campaign, they have been made to feel constantly in touch with their candidate. Countless blogs, groups, messages-boards, have kept people in the loop, part of something new, exciting, where they were essential for success. The secret of Obama’s stratospheric funding too has been in the desire to be part of this new community. People have gone on giving whatever they can manage. It is probable that the giving will begin again when it is needed, and that fears of the vast sums required to run a re-election campaign starting, on recent history, in not much more than a couple of years may be unwarranted as the community finds new resources. The sums of money spent on a campaign are beyond the imagination of poorer parts of the world. By 2012, we will know if they are well spent. Obama spoke on the night of November 4 of the time needed to make changes — if he can continue to communicate clearly the slow processes of government and be seen to be moving forward, he will hold his community together.

Once upon a time, Tony Blair preached community in the UK. He failed first by reverting to domineering leadership as he gathered all the strings of government in his hands and played puppet-master to his colleagues and, by inference, to the country. Ultimately, he failed on the back of his divisive support for President Bush in the wars that have shattered international reputations and remain at the bottom of the poisoned chalice inherited by Obama. In Washington, everyone wants peace, but the domestic and world economic situation has risen like oil to the surface, and even the current ecstasy is tinged with the sobriety of job losses and failing companies as markets continue to fall. There is little sense of the usual relaxation or the hidden infighting over appointments of the period of transition between presidential administrations. Clear decisions are already being made on roles, previously agreed in case of victory, and the president-elect is up and running and deeply involved in building new economic plans.

Concerns exist that his decision-making process may be too collegial and therefore too slow. Obama is on a knife-edge between the need to change processes of policy-making and implementation from the top-down, centralized approach initiated in the Clinton years to lay a path for the worst efforts of George W. Bush, and the importance of a fast forward decisiveness on both domestic and foreign issues. For now, he is on the case, and may achieve a balance that holds fast to consensus as the watchword whilst understanding the need for the aggression and, to quote the Washington Post, “sharp-edged approach to politics” of his new chief of staff, Rahm Emanuel. A veteran of the Clinton administration, Emanuel adds a level of continuity, experience and rigorousness of policy to the new team with what is likely to be an essential core of steel. Meanwhile, the transition website continues to build the sense of the importance of popular and individual involvement in the processes of the next administration with its opening message, “It’s your America, share your ideas.”

There are suggestions that Franklin D. Roosevelt is Obama’s role model, but, however appalling the Great Depression, Roosevelt in 1932 had far fewer balls to juggle at once, only later making the international decisions that brought the US into World War II. The new president and his secretary of state have instantly to involve themselves in the wars of their predecessors, to start the long processes of withdrawal and extrication, and attempt to play peace-maker without playing god. Opposition, quiet for now, will rear its head at the first signs of weakness or failure, and the whole world will be watching. At the same time, the president has to deal with the global economic, energy and environment issues so disastrously handled by the Bush administration. At home, campaign promises made ahead of vital and immediate measures towards economic salvage mean tax changes and, vital to the poor, health as well as education policy reforms. The new president has to redefine the US to itself and to the world. He has to maintain the hope as the wheels of government and international relations grind slow. We may have seen something of a miracle this month. They are saying in Washington, too, that the quality of the new administration will be remarkable as people hungry for change rush to accept badly paid jobs to be part of Obama’s new world. Another miracle perhaps.

So, can he do it? Well, time will tell. But, for the moment, I’ll go with the hope. Yes, he can.

BEYOND THE MILESTONE - Unless Obama’s victory heralds changes, it will remain a symbol

2008-11-16T15:36:00.001+05:30

Postscript
Githa Hariharan
The Telegraph, November 16

There has been a flood of reaction to Barack Obama’s triumph in the presidential elections, and it will probably be a good while before this unruly flood abates. But soon after the news was confirmed, there was a recurring reaction that neatly combined disbelief, amazement and sheer gratitude in a single and simple sentence. “I never thought I would see this day.” This spontaneous reaction was heard over and over again in America. The statement, so heartfelt that it almost sounds raw-skinned, could be understood as saying one of three things. It could be an indication of the relief so many feel at the passing of the eight torturous years of a particularly vicious government. It’s a relief that allows for some hope that “unilateral” decisions will make way for some “multilateral” attempts at decision-making. In other words, there may be hope that the American government will learn to speak to more people and hear more people — both in America and elsewhere.

The reaction could be amazement that a more “international” person — a man of a more heterogeneous background in terms of race, nationality and life experience — is actually going to the White House. In which case, it may be possible to hope that at least some of the insular and jingoistic baggage of the past can be left behind. Perhaps more than lip service will be paid to the fact that contemporary America is, more than ever, a nation of immigrants. And if this can happen, there may even be an acknowledgement that the “American way of life” — something so often anxiously defended by conservatives as if it is an old museum piece that must be preserved in cotton wool — is actually a dynamic, debatable idea.

But most of all, the reaction is gratitude for witnessing a milestone in African-American history. At this point, anyway, very few people would dilute this gratitude by carping about whether Obama is “black enough”. Nor can this reaction be mistrusted as either “merely emotional” or as “overemphasizing race”. It’s impossible to forget that this election victory has happened in a country where white did mean master and black did mean slave. There’s no getting away from this history, or its legacy. In fact, there is no need to go all the way back to the years of slavery. Just the last 50-odd years would do to get a sense of the distance travelled, and the pain suffered en route. It hasn’t been that long since racial discrimination and racial stereotypes were not only real, they were also legal.

Not all that long ago, in 1955, in Montgomery, Alabama, a member of the National Association for the Advancement of Colored People, Rosa Parks, was arrested for refusing to give up her bus seat to a white passenger. The subsequent bus boycott organized by the black community in Montgomery lasted for more than a year till the buses were desegregated. Parks, an icon of the civil rights movement, died three years too early to witness the milestone of 2008 — she died at the age of 92 in 2005.

A year before Parks’s gesture to affirm black rights, the 1954 landmark case, Brown versus Board of Education of Topeka, Kansas, resulted in a unanimous judgment from the supreme court. The court ruled that segregation in public schools was unconstitutional, overturning the 1896 Plessy versus Ferguson judgment that sanctioned “separate but equal” segregation of the races. The 1954 ruling stated that “separate educational facilities are inherently unequal”. It paved the way for large-scale desegregation — a process fraught with difficulty, and a process, many would argue, that is yet to be fully achieved in 2008.

Again, it was only four decades back, 44 years to be precise, that Lyndon B. Johnson signed the most sweeping civil rights legislation to prohibit discrimination of all kinds based on race, colour, religion or national origin. Asserting that civil rights laws alone are not enough to remedy discrimination, President Johnson issued Executive Order 11246, which enforced affirmative action for the first time. It required government contractors to “take affirmative action” toward prospective minority employees in all aspects of hiring and employment.

But while laws and executive orders are important, neither can bridge that wide and frustrating gap between sanctioned equality and flesh-and-blood inequality. In 1964, the same year President Johnson signed the Civil Rights Act, the bodies of three civil rights workers — two white, one black — were found in an earthen dam, six weeks into a federal investigation. The civil rights workers were men in their early twenties, working to register black voters in Mississippi. When they went to investigate the burning of a black church, they were arrested by the police on speeding charges, and incarcerated for several hours. Then they were released after dark into the hands of the Ku Klux Klan, who murdered them. The sad tailpiece of this already tragic story is that it was only as recently as 2005 — on the 41st anniversary of the Mississippi civil rights murders of 1964 — that the ringleader, Edgar Ray Killen, was convicted of manslaughter.

It is true that the 2008 electoral verdict in America is not as much about race as it is about a rejection of the Bush years, and what they have done to both America and other parts of the world. But in embracing the idea of change, the American electorate has come upon a powerful milestone for equality.

Despite greed, warmongering and the seduction of empire, America and Americans have travelled a long and difficult road towards this milestone. Now that a black man will soon move into the White House, will the ground realities really change? Will the mainstream political voices address the racial and economic disadvantage eating into the lives of the common Americans more directly? Will they find alternative strategies to the military bullying abroad? Will there be real attempts to shift attitudes and dispel stereotypes — not only about African-Americans, but also Arabs, Muslims, foreigners?

For now, there is a terrible temptation to romanticize Obama as the new and wondrous knight of utopia. There is an equally strong temptation to air the mothballed liberal voices in America, let them have their say, or sing and celebrate for a happy, if brief, intermission. The intermission is brief because a milestone is only a signpost. Its rhetoric may be moving; it may be cathartic. But it has to lead to something, and something substantial enough to make the milestone meaningful. Otherwise, it is only a fragile symbol in a museum. In his address at the Democratic National Convention, in San Francisco in 1984, Jesse Jackson referred to “the call of conscience, redemption, expansion, healing and unity”. “Leadership,” he said, “must heed the call of conscience, redemption, expansion, healing and unity, for they are the key to achieving our mission.” If the possibilities the milestone of 2008 suggest are not to be squandered, the call of conscience may demand that at least some of the policies and practices of the Bush years will have to be put in reverse gear as soon as possible.

LALGARH NEWS

2008-11-16T14:46:00.004+05:30

Maoists threaten Lalgarh war
The Telegraph CORRESPONDENT

Midnapore, Nov. 12: Maoists today threatened an armed resistance in West Midnapore’s Lalgarh where tribals have been protesting police raids and detentions following a blast that missed the chief minister by minutes.

CPI (Maoist) state secretary Kanchan said: “We are with the people of Lalgarh. Our guerrilla squad is with them to build an armed resistance. I appeal to the Lalgarh people to follow the Nandigram path by setting up road blocks and snapping electricity and telephone connections to teach the CPM and police a lesson.”

Villagers armed with bows and arrows tonight placed at least 30 trees at various points on the road that branches off NH 6 and leads to Jhargram town. They also blocked the road connecting Jhargram with Jamboni. “They are trying to cut off the town,” a police officer said.

The road to Jhargram from Midnapore town had not been touched till late tonight.

In East Midnapore’s Nandigram, villagers led by the Trinamul Congress and all- egedly aided by Maoists had created a similar island of unrest, cut-off from the administration.

In Jhargram, the villagers wrote on the road: “The police have to explain why innocent villagers were arrested on suspicion of being Maoists.”

Tribal youths continued to obstruct the state highway connecting Midnapore town with Bandwan in Purulia.

“The Maoists have been instigating the villagers. We have got some vital information after questioning three persons picked up from Binpur and Jamboni on November 6,” said West Midnapore police chief R.K. Singh. He declined comment when asked why the intelligence branch had failed to tip off the administration about Maoist activities.

Armed policemen had pounced on schoolchildren returning from a soiree and tried to link them with the rebels while probing the blast at Salboni that hit a car in Union minister Ram Vilas Paswan’s convoy on November 2. Women were allegedly beaten up during the raids that followed.

District magistrate N.S. Nigam said the allegations of police misconduct would be probed. “I appeal to the agitating villagers to return home and let us redress their grievances through talks,” he said.

Detentions by ‘mistake’ that made Lalgarh dig up roads
PRONAB MONDAL

Lalgarh (West Midnapore), Nov. 11: Headmaster Asim Ganguly woke up on November 4 morning to hear two of his Class VIII students had been arrested in connection with the Maoist blast two days earlier. He couldn’t believe his ears.

“They are normal, innocent boys who wouldn’t dream of doing anything subversive,” the head of Vivekananda Vidyapith in Kanthapahari, Lalgarh, said today. “The police action was absurd, cruel and high-handed.”

The arrest of the two 14-year-olds and a friend — and police raids that led to women being beaten up — were the main reason Lalgarh’s villagers have dug up roads, Nandigram style, to keep the administration at bay.

Buddhadeb Patra and Goutam Patra were picked up with Aben Murmu — a 15-year-old Class VIII student from Ramakrishna High School — on November 3 night on suspicion of links with the Maoists who had tried to bomb the chief minister’s car the day before.

All three were freed on bail four days later but Ganguly hasn’t yet recovered from the shock. “Why didn’t the police get in touch with me first? I’ve taught these boys and watched over them for so many years now — wouldn’t I know what sort they were?”

Perhaps to give their action a semblance of credibility, the police had initially bloated the ages of the boys by four years each to 18, 18 and 19. However, the man they dragged out of bed at 3 the next morning in Barapelia village was 62.

Retired teacher Khamananda Mahato, who used to teach at Ganguly’s school, said: “Some 200 armed policemen surrounded my house, their faces covered with black cloth. They ordered me to accompany them.”

Mahato’s wife was ill and he requested them to wait till morning, but they would not agree. At Lalgarh police station, he was asked to identify a man he had never seen, and was held till 4pm. Mahato today said he was still “traumatised”.

“Mastermoshai was a very popular teacher. It’s absurd to link him to any anti-national activity,” Ganguly, 40, said of his former colleague.

District police chief Rajesh Kumar Singh admitted the arrests and the detention were “mistakes”. He said: “We had no evidence and so did not oppose the boys’ bail plea. We also dropped their names from the chargesheet.”

Mahato, Singh added, “lives in an area that is a Maoist corridor; so we thought he might know some of the suspects. Later we realised that he didn’t.”

The boys said they were returning from a baul performance at Kanthapahari, 4km from their home in Banshber, around 11pm when armed policemen pounced on them.

“They threw me by the collar inside a van, flat on the floor, my face shoved between their boots. Not a single question was asked, not who we were, or where we were from,” Aben said.

Within minutes, Goutam and Buddhadeb too were flung inside the van and, like Aben, lay prone on the floor.

“I was so frightened, I started crying,” Goutam said. “A policeman prodded me with his boot and shouted he would kick me to death unless I stopped. I tried to smother my sobs and then the van started moving.”

At Salboni police station, when the boys were repeatedly asked to name their dadas (Maoist seniors), one of them, clueless about what they were being asked, replied he didn’t have a dada (elder brother).

“The police slapped us and beat us but they got nothing out of us because we didn’t know anything,” Buddhadeb said.

After some time, they were pushed into the lock-up. “One night here, and you’ll be talking tomorrow,” a policeman said.

The boys were charged with waging war against the country, causing hurt with dangerous weapons and attempt to murder.

“How could the police think my son would do any such thing?” wept Pratima Patra, Goutam’s mother, at her mud hut. “I went to Lalgarh and fell at officers’ feet but they wouldn’t listen.”

The boys were released only when village after village erupted in protest. The agitators today dug up a road in Salboni and continued blocking the Midnapore-Bandwan highway despite a promise yesterday to repair it.

In Lalgarh, CPM leaders run for guns

Indian Express

Kolkata, November 14 : When it comes to political leaders moving with a gun-toting entourage, there is little difference these days between Western Uttar Pradesh and the Maoist-affected areas of West Midnapore.
During its trip to Lalgarh, several encounters of The Indian Express with the zonal leaders of the CPM proved that panic has struck the party hard ever since the tribal agitation began on November 5.

Those blessed with clout are granted security personnel from the state’s armed forces. The officials in the district administration confided that over 100 grassroots leaders now move with private protectors. The threat perception is said to be “real” from Maoists, who have strong pockets of influence in the region.

On way to Lalgarh, at Bottola Chalk near the local CPM party office, The Indian Express met Anuj Pande, the party’s zonal committee secretary. Moving around with gun-totting securitymen provided by the government, Pande still looks a scared man.

World Leaders Vow Joint Push to Aid Economy

2008-11-16T14:29:00.001+05:30

MARK LANDLER
NYT, November 16, 2008

WASHINGTON — Facing the gravest economic crisis in decades, the leaders of 20 countries agreed Saturday to work together to revive their economies, but they put off thornier decisions about how to overhaul financial regulations until next year, providing a serious early challenge for the Obama administration.

Though the countries’ stimulus packages were cast as ambitious steps, they mainly reflected measures that the countries were already undertaking to respond to the crisis. What remains to be seen is whether, working with a new White House, the leaders will cast aside their political and economic differences to embrace more radical changes, including far-reaching but fiercely debated proposals to overhaul regulation.

The group planned its next meeting for April 30, 101 days after President-elect Barack Obama is sworn into office.

Mr. Obama, who sent emissaries but did not attend at the meeting, will find common ground with the leaders in his support of a further stimulus program in the United States — something President Bush opposes. The group called for more fiscal measures to cushion the blow of a downturn that is hitting rich and poor countries.

Two senior advisers for Mr. Obama, Madeleine K. Albright and James A. Leach, met privately with leaders on the sidelines. And Mr. Obama addressed the meeting only obliquely on Saturday in his first radio address as president-elect, in which he expressed appreciation that Mr. Bush “has initiated this process, because our global economic crisis requires a coordinated global response.”

Meeting here, in the capital of the country where the crisis began, the extraordinary gathering of leaders from the Group of 20, representing wealthy countries and major emerging economies, began what participants said would be a broad reform of the institutions that have governed global markets since World War II.

In a five-page communiqué that mixed general principles with specific steps, the G-20 pledged a new effort to bolster supervision of banks and credit-rating agencies, scrutinize executive pay and tighten controls on complex derivatives, which deepened the recent market turmoil.

“Our nations agree that we must make the financial markets more transparent and accountable,” President Bush said. He warned that “a meeting is not going to solve the world’s problems,” and described the talks as the beginning of a process that would carry over to the next administration.

With dueling press briefings and statements through the weekend, it was clear that bridging ideological gaps among nations afflicted with different versions of the economic contagion would provide the new president and other world leaders with a daunting challenge.

There is also a more basic philosophical divide across the Atlantic: Europeans in general favor more state control over markets, even to the point of granting regulators cross-border authority, while the United States stresses the primacy of national regulators. President Nicolas Sarkozy of France, who called on Mr. Bush to organize the meeting, alluded to those differences, saying the negotiations, even on general principles, had been challenging.

Mr. Sarkozy said: “I am a friend of the United States of America, but if you ask, was it easy? No, it wasn’t easy.” He added that he did not fly to Washington “simply for the pleasure of traveling.”

He said the Americans had made concessions even by agreeing to discuss issues like regulatory coordination and executive pay. The communiqué, however, suggested there were concessions on both sides.

Prodded by Mr. Bush, who earlier in the week gave an impassioned defense of capitalism, the leaders reaffirmed their commitment to free markets and trade. But they also clearly laid blame for the crisis at the doorstep of the United States, saying “some advanced countries” had taken inadequate steps to prevent a buildup of dangerous risks.

The meeting set out a road map for overhauling regulations in a wide range of areas, and assigned the work to groups of experts. At the next meeting, which Mr. Sarkozy proposed to hold in London, the leaders will debate specific proposals developed by those groups.

Among those measures is a European proposal to set up so-called colleges of supervisors, which would meet regularly to share information about global banks with operations in many countries.

Another idea is to expand the membership of the Financial Stability Forum, an influential group of finance ministers and central bankers from industrialized countries, to include emerging markets like Brazil and China.

Still, for all the talk of action and history-making change, some experts said the outcome was disappointing.

“This is plain-vanilla stuff they could have agreed on without holding a meeting,” said Simon Johnson, an economist at the Massachusetts Institute of Technology and a former chief economist of the International Monetary Fund. “What’s new, except that this is the G-20 instead of the G-7?”

Despite broad support for economic stimulus, the leaders were not able to agree on a coordinated global effort. The Bush administration, which does not favor a further stimulus, resisted that idea. And the proposal for colleges of supervisors fell short of an international regulatory agency favored by the French. The Bush administration opposes any regulatory agency with cross-border authority.

The statement did not single out hedge funds as needing regulation, which Germany has long advocated. German diplomats said they were satisfied that the issue would be addressed later. “There shall be no blind spots,” said the German chancellor, Angela Merkel.

Despite playing up the role of the International Monetary Fund as a vehicle for helping developing countries in crisis, the leaders did not call for an expansion in the fund’s lending resources.

Collectively, the leaders here represented countries that account for 85 percent of the world’s economy. But the guest list was more remarkable for what it said about the shifting landscape of power. With the United States and Europe struggling economically and consumed by efforts to stabilize their banks, China, Japan and Saudi Arabia emerged as the likeliest candidates to help distressed countries.

In one of the few concrete commitments, the Japanese prime minister, Taro Aso, pledged to increase lending to the I.M.F. by up to $100 billion, and he encouraged other cash-rich countries to do the same. On Saturday, the fund added Pakistan to its list of countries receiving emergency funds. Pakistan said it had agreed to a loan of $7.6 billion to prevent a default by its government.

Some leaders were simply eager to be heard. “Emerging market countries were not the cause of this crisis, but they are amongst its most affected victims,” the prime minister of India, Manmohan Singh, said.

The leaders convened in the colonnaded great hall of the National Building Museum, a 19th-century building that served as headquarters for the United States Pension Fund after the Civil War. It was also the place Senator Hillary Rodham Clinton used to end her presidential campaign last June.

Mr. Bush, accompanied by his Treasury secretary, Henry M. Paulson Jr., sat between Brazil’s president, Luiz Inácio Lula da Silva, who chairs the Group of 20, and Prime Minister Aso.

Afterward, Mr. Bush acknowledged that expanding the group from the customary seven or eight industrialized powers to 20 nations raised the risk that nothing substantive would get done.

But Mr. Bush said the meeting had been surprisingly substantive, and he seemed enthusiastic about one of the more arcane proposals: a clearinghouse for the $33 trillion market in credit default swaps.

These derivatives, which act as a form of insurance against the failure of an underlying asset, have been blamed for exacerbating the recent market upheaval. A clearinghouse would back trades in credit default swaps and absorb losses if a dealer in these securities failed.

Mr. Bush said he felt compelled to act because “if you don’t take decisive measures, then it’s conceivable that our country could go into a depression greater than the Great Depressions.”

When Mr. Sarkozy first proposed the meeting, some predicted it would be dominated by finger-pointing. Now, some critics said the communiqué did not go far enough in assigning blame for the crisis.

“Anyone looking for the G-20 to issue a mea culpa on the global financial crisis will be sadly disappointed,” said Kenneth S. Rogoff, a professor of economics at Harvard. The leaders “curiously downplay the huge culpability of the political leadership in the U.S. and Europe.”

With Mr. Bush’s imminent departure, however, there seemed to be little appetite to pile on the United States.

With Congress likely to consider a stimulus package in the coming weeks or in January, Mr. Johnson of M.I.T. said Mr. Obama might be able to go to the next summit meeting with strong evidence of American action.

“The U.S., despite having broken all the china, may end up playing a decisive role in fixing this situation,” he said.

Steven Lee Myers, David D. Kirkpatrick and Sheryl Gay Stolberg contributed reporting.

Withdraw police cases against BESU students

2008-11-14T13:46:00.002+05:30

To: Governor, West Bengal, INDIA
To
The Chancellor, Bengal Engineering & Science university &
The Hon’ble Governor of West Bengal .

Sir,

We are watching the affairs of the BESU institution with concern and regret. A premier institution, 150-year old, turning out young builders of the country is being destroyed for petty partisan interests. Taking advantage of a scuffle between two sections of students, a matter which the departmental teachers had themselves almost settled, the VC called the police and closed the institution sine die from 6.11.08. The police arrested eleven students from the campus . Teachers were individually insulted by top police officers.

The police brought bailable charges against three students belonging to the students' wing of the major ruling party, and they were released on P.R.Bond on the same day. But non-bailable charges, although false and even, perhaps, laughable, were brought against eight students without such affiliation, and they spent four nights in jail.. This act of the police exemplifies how the police and the administration carry out abjectly the orders of the major ruling party.

Surprisingly enough , BESU Board of Management in its meeting on 13.11.08 resolved that

1) Henceforth the Law and Order problem of BESU will be handled by the police

2) A new code of conduct of the students will be enforced which ought to be signed by the students and their guardians, in spite of the fact that there exists a code of conduct;

3) A code of conduct for the teachers will also be enforced.

In the present instance there are two major partisan interests:

(i)
Students are being shown just before the union elections the extent to which the college administration and the police are prepared to go in victimising those who refuse to support the major ruling party's students' wing.

(ii) The elevation of BESU to IIEST status is sought to be prevented to continue the state government's stranglehold over the BESU.

In the circumstances we appeal to you to ensure
(a) the withdrawal of all charges against students
(b) the withdrawal of police from the campus
(c) the withdrawal of draconian decisions of the Board of Management unprecedented for any educational institution
(d) security for students through internal measures
(e) redressal of the grievances of the students, and
(f) initiation of a discussion with the students, teachers, alumni and guardians to restore normalcy in the Institute.

Sincerely,

The Undersigned
click here to sign petition

Studs Terkel’s Legacy: A Vivid Window on the Great Depression

2008-11-08T14:21:00.000+05:30

ADAM COHEN
NYT, November 8, 2008

After the great crash of 1929, the Wells-Grand Hotel in Chicago began losing guests. The ones who remained had more time for idle pastimes. “The decks of cards were wearing out more quickly” and “the black and red squares of the checkerboard were becoming indistinguishable.”

Those are the recollections of Studs Terkel, from his classic oral history of the Great Depression, “Hard Times.” I found myself re-reading the book this week because of the confluence of two unhappy events: the economic downturn and the death of Mr. Terkel on Oct. 31. He was 96.

I knew Mr. Terkel a bit — enough to appreciate his gentle nature, his deep interest in people of all sorts and his drive to reform the world. As I turned the pages of “Hard Times,” I was struck by the remarkable fit between historian and subject.

In Mr. Terkel’s wide-ranging interviews, the horrors of the Depression come through vividly. A manual laborer on the San Francisco waterfront recalled that when a sugar refinery offered four jobs to a crowd massed at the gates, “a thousand men would fight like a pack of Alaskan dogs” over them.

Dorothy Day, the Catholic social activist, told Mr. Terkel that in 1933 and 1934, “there were so many evictions on the East Side, you couldn’t walk down the streets without seeing furniture on the sidewalk.” An African-American hobo, Louis Banks, said that when he rode on top of boxcars, there was a railroad policeman who wouldn’t ask him to get off the train; he would just shoot.

Rich people also suffered in the Depression, and though they generally had more resources to fall back on, Mr. Terkel documented their woes with the same care he devoted to the hardest hit. Diana Morgan, a young woman from a wealthy Southern family, spoke of returning home from college and finding no cook or cleaning woman. The telephone had been disconnected. “And this was when I realized that the world was falling apart,” Ms. Morgan said.

Mr. Terkel noted the heavy psychological toll the Depression took on Americans. “The suddenly idle hands blamed themselves, rather than society,” he recalled. “No matter that others suffered the same fate, the inner voice whispered, ‘I’m a failure.’ ”

Radicalism swept the land, several of Mr. Terkel’s interview subjects recalled. “People were talkin’ revolution all over the place,” Joe Morrison, a steel worker, said. “You met guys ridin’ the freight trains and so forth, talkin’ about what they’d like to do with a machine gun.” In the Farm Belt, farmers frequently resorted to violence, including the near-lynching of an Iowa judge considered too willing to grant foreclosures.

Mr. Terkel, who worked for the Work Progress Administration’s Federal Writers’ Project, was highly sympathetic to the New Deal. The book contains a whole section of New Dealers reminiscing, including the economist Joe Marcus, who recalled the satisfaction of being part of Roosevelt’s crusade. “Laws could be changed,” Mr. Marcus said. “So could the conditions of people.”

Jane Yoder of Evanston, Ill., told Mr. Terkel how miraculous it was when her father, an unemployed blacksmith, found a W.P.A. job. “This was a godsend,” she said. “It meant food, you know. Survival, just survival.”

“Hard Times” does not romanticize the Depression, but at least a few of Mr. Terkel’s subjects managed to find silver linings. E.Y. Harburg was a young businessman whose company went bust after the crash. His friend Ira Gershwin told him to get a pencil and a rhyming dictionary and get to work. “When I lost my possessions, I found my creativity,” Mr. Harburg said. “I felt I was being born for the first time.”

He later wrote “Brother, Can You Spare a Dime?,” the Depression victim’s anthem, and the lyrics to songs in “The Wizard of Oz.”

“Hard Times” ends with an interview with Virginia Durr, a grand old Alabama woman I knew years ago when I lived in the state. Mrs. Durr, who fought the poll tax and bailed out Rosa Parks when she was arrested before the Montgomery Bus Boycott, was raised in genteel, sheltered circumstances. The Depression transported her.

“It was the first time I had seen the other side of the tracks,” Mrs. Durr told her good friend Mr. Terkel. “The rickets, the pellagra — it shook me up. I saw the world as it really was.”

She seems to have been speaking for Mr. Terkel, who also came of age in the 1930s. His lifelong empathy for the disenfranchised was rooted in the troubled era recalled so vividly in “Hard Times.”

The Obama Agenda

2008-11-08T00:41:00.000+05:30

PAUL KRUGMAN
NYT, November 7, 2008

Tuesday, Nov. 4, 2008, is a date that will live in fame (the opposite of infamy) forever. If the election of our first African-American president didn’t stir you, if it didn’t leave you teary-eyed and proud of your country, there’s something wrong with you.

But will the election also mark a turning point in the actual substance of policy? Can Barack Obama really usher in a new era of progressive policies? Yes, he can.

Right now, many commentators are urging Mr. Obama to think small. Some make the case on political grounds: America, they say, is still a conservative country, and voters will punish Democrats if they move to the left. Others say that the financial and economic crisis leaves no room for action on, say, health care reform.

Let’s hope that Mr. Obama has the good sense to ignore this advice.

About the political argument: Anyone who doubts that we’ve had a major political realignment should look at what’s happened to Congress. After the 2004 election, there were many declarations that we’d entered a long-term, perhaps permanent era of Republican dominance. Since then, Democrats have won back-to-back victories, picking up at least 12 Senate seats and more than 50 House seats. They now have bigger majorities in both houses than the G.O.P. ever achieved in its 12-year reign.

Bear in mind, also, that this year’s presidential election was a clear referendum on political philosophies — and the progressive philosophy won.

Maybe the best way to highlight the importance of that fact is to contrast this year’s campaign with what happened four years ago. In 2004, President Bush concealed his real agenda. He basically ran as the nation’s defender against gay married terrorists, leaving even his supporters nonplussed when he announced, soon after the election was over, that his first priority was Social Security privatization. That wasn’t what people thought they had been voting for, and the privatization campaign quickly devolved from juggernaut to farce.

This year, however, Mr. Obama ran on a platform of guaranteed health care and tax breaks for the middle class, paid for with higher taxes on the affluent. John McCain denounced his opponent as a socialist and a “redistributor,” but America voted for him anyway. That’s a real mandate.

What about the argument that the economic crisis will make a progressive agenda unaffordable?

Well, there’s no question that fighting the crisis will cost a lot of money. Rescuing the financial system will probably require large outlays beyond the funds already disbursed. And on top of that, we badly need a program of increased government spending to support output and employment. Could next year’s federal budget deficit reach $1 trillion? Yes.

But standard textbook economics says that it’s O.K., in fact appropriate, to run temporary deficits in the face of a depressed economy. Meanwhile, one or two years of red ink, while it would add modestly to future federal interest expenses, shouldn’t stand in the way of a health care plan that, even if quickly enacted into law, probably wouldn’t take effect until 2011.

Beyond that, the response to the economic crisis is, in itself, a chance to advance the progressive agenda.

Now, the Obama administration shouldn’t emulate the Bush administration’s habit of turning anything and everything into an argument for its preferred policies. (Recession? The economy needs help — let’s cut taxes on rich people! Recovery? Tax cuts for rich people work — let’s do some more!)

But it would be fair for the new administration to point out how conservative ideology, the belief that greed is always good, helped create this crisis. What F.D.R. said in his second inaugural address — “We have always known that heedless self-interest was bad morals; we know now that it is bad economics” — has never rung truer.

And right now happens to be one of those times when the converse is also true, and good morals are good economics. Helping the neediest in a time of crisis, through expanded health and unemployment benefits, is the morally right thing to do; it’s also a far more effective form of economic stimulus than cutting the capital gains tax. Providing aid to beleaguered state and local governments, so that they can sustain essential public services, is important for those who depend on those services; it’s also a way to avoid job losses and limit the depth of the economy’s slump.

So a serious progressive agenda — call it a new New Deal — isn’t just economically possible, it’s exactly what the economy needs.

The bottom line, then, is that Barack Obama shouldn’t listen to the people trying to scare him into being a do-nothing president. He has the political mandate; he has good economics on his side. You might say that the only thing he has to fear is fear itself.

Change I Can Believe In

2008-11-08T00:39:00.000+05:30

DAVID BROOKS
NYT, November 7, 2008

I have dreams. I may seem like a boring pundit whose most exotic fantasies involve G.A.O. reports, but deep down, I have dreams. And right now I’m dreaming of the successful presidency this country needs. I’m dreaming of an administration led by Barack Obama, but which stretches beyond the normal Democratic base. It makes time for moderate voters, suburban voters, rural voters and even people who voted for the other guy.

The administration of my dreams understands where the country is today. Its members know that, as Andrew Kohut of the Pew Research Center put it on “The NewsHour,” “This was an election where the middle asserted itself.” There was “no sign” of a “movement to the left.”

Only 17 percent of Americans trust the government to do the right thing most or all of the time, according to an October New York Times/CBS News poll. So the members of my dream Obama administration understand that they cannot impose an ideological program the country does not accept. New presidents in 1932 and 1964 could presuppose a basic level of trust in government. But today, as Bill Galston of the Brookings Institution observes, the new president is going to have to build that trust deliberately and step by step.

Walking into the Obama White House of my dreams will be like walking into the Gates Foundation. The people there will be ostentatiously pragmatic and data-driven. They’ll hunt good ideas like venture capitalists. They’ll have no faith in all-powerful bureaucrats issuing edicts from the center. Instead, they’ll use that language of decentralized networks, bottom-up reform and scalable innovation.

They will actually believe in that stuff Obama says about postpartisan politics. That means there won’t just be a few token liberal Republicans in marginal jobs. There will be people like Robert Gates at Defense and Ray LaHood, Stuart Butler, Diane Ravitch, Douglas Holtz-Eakin and Jim Talent at other important jobs.

The Obama administration of my dreams will insist that Congressional Democrats reinstate bipartisan conference committees. They’ll invite G.O.P. leaders to the White House for real meetings and then re-invite them, even if they give hostile press conferences on the White House driveway.

They’ll do things conservatives disagree with, but they’ll also show that they’re not toadies of the liberal interest groups. They’ll insist on merit pay and preserving No Child Left Behind’s accountability standards, no matter what the teachers’ unions say. They’ll postpone contentious fights on things like card check legislation.

Most of all, they’ll take significant action on the problems facing the country without causing a mass freak-out among voters to the right of Nancy Pelosi.

They’ll do this by explaining to the American people that there are two stages to their domestic policy thinking, the short-term and the long-term.

The short-term strategy will have two goals: to mitigate the pain of the recession and the change the culture of Washington. The first step will be to complete the round of stimulus packages that are sure to come.

Then they’ll take up two ideas that already have bipartisan support: middle-class tax relief and an energy package. The current economic and energy crisis is an opportunity to do what was not done in similar circumstances in 1974 — transform this country’s energy supply. A comprehensive bill — encompassing everything from off-shore drilling to green technologies — would stimulate the economy and nurture new political coalitions.

When the recession shows signs of bottoming out, then my dream administration would begin phase two. The long-term strategy would be about restoring fiscal balances and reforming fundamental institutions.

By this time, the budget deficit could be zooming past $1.5 trillion a year. The U.S. will be borrowing oceans of money from abroad. My dream administration will show that it understands that the remedy for a culture of debt is not more long-term debt. It will side with those who worry that long-term deficits could lead to ruinous interest-rate hikes.

My dream administration will announce a Budget Rebalancing Initiative. Somebody like Representative Jim Cooper would go through the budget and take out the programs and tax expenditures that don’t work. “If we have no spending cuts, then we’re saying government is perfect. Nobody believes that,” Cooper says.

Having built bipartisan relationships, having shown some fiscal toughness, having seen the economy through the tough times, my dream administration will then be in a position to take up health care reform, tax reform, education reform and a long-range infrastructure initiative. These reforms may have to start slow and on the cheap. But real reform would be imaginable since politics as we know it would be transformed.

Is it all just a dream? I hope not. In any case, please be quiet and let me have my moment.

An Eternal Revolution

2008-11-08T00:36:00.001+05:30

By ORLANDO PATTERSON
NYT, November 7, 2008

BARACK OBAMA’S victory marks the end of another magnificent chapter in America’s experience of democracy. But rather than being seen as a radical transition, it is best viewed as part of an ever-evolving process that began with the election of George Washington in 1789. To interpret it as a foundational change, ushering something new and unknown, is to diminish the past, to unduly singularize Mr. Obama’s achievement and to raise unrealistic expectations about his presidency.

Mr. Obama owes his victory, first, to his gift of leadership and personality: the hybrid cool of his charisma, his cathartic power to mine unity from difference. But his triumph depended on voters, first prone to see his candidacy as exotic, to recognize it as something that could (and would) only happen here. That they did stems in large part from the founding fathers’ clear vision of the ideal makeup of a democracy: an inclusive electorate, political participation and political power sharing.

This was a vision that terrified as much as it fascinated the conservative men who were often amazed at what they had signed on to in 1787: a revolutionary “charter of power granted by liberty,” in James Madison’s nervously triumphalist prose. So they promptly ensured that it would only very slowly threaten the political hegemony of older white men.

Three groups, in particular, were excluded from the process: blacks, women and the young. The history of American democracy can be read in good part as the struggle of all three to become fully included in the process. The 2008 campaign was remarkable in the way all three groups worked together to realize, finally and fully, the ambivalent vision of the founders.

Most important to the Obama victory was the long struggle of black Americans to be incorporated in the public sphere. That entailed not just the dismantlement of Jim Crow but the election of black officers at all levels of the political system. The sheer presence of significant numbers of blacks in positions of political authority was as much the cause as the consequence of the profound change in white political attitudes. Colin Powell’s flirtation with a presidential run was a critical point in this shift in white attitude, effectively priming the nation for the possibility of a black candidate. But so too were the appointments of blacks such as Secretary of State Condoleezza Rice and former Commerce Secretary Ron Brown.

And while disdained by most social scientists, the cultural dimension of black public incorporation also prepared the way: a white population that venerates Will Smith, Oprah Winfrey and Michael Jordan, its youth steeped in hip-hop, has already gone a long way toward accepting a black leader in the highest office of the public sphere, even if whites are reluctant to do the same in their segregated private lives.

Of equal importance in explaining Senator Obama’s triumph, however, are American women. This campaign was, in a remarkable way, a condensed re-enactment of the entire intertwined struggle of blacks and women for political inclusion. White women first rejected their confinement to the role of virtuous motherhood in the private sphere of the early Republic by championing the very public struggle for the abolition of slavery. In much the same way, the modern second wave of feminism was facilitated by, and partly modeled on the black civil rights movement.

Black achievement has always presaged female advancement, not always from the noblest of motives: if blacks could vote, enjoy protection from discrimination and run for office, so should women. Hillary Clinton’s forceful campaign, however important, pales in comparison with this historic American tendency in explaining why a female president is now a near certainty and not long off.

But women have always repaid the debt. A quiet but momentous change took place in the 1980s that was just as important as the civil rights movement in explaining Barack Obama’s victory: the epochal shift in the voting behavior of women who, for the first time since enfranchisement, voted in greater numbers, and more progressively, than men. In raw demographic terms, the most important factor in explaining the Obama victory was women voting by a 13 percent margin in his favor, while men were almost evenly split. President Obama would neglect this base of support at his peril.

Finally, there is the much discussed resurgence in the youth vote. Here, again, change is best viewed as a critical moment in a pre-existing process. American youths have long voted at distressingly low levels, although the turnout of eligible voters between 18 and 29 surged moderately between 2000 and 2004, from 36 to 47 percent. While Tuesday’s exit polls are showing only an incremental change in this rate, Mr. Obama had a powerful impact on youth activism, deploying young Americans in voter mobilization ground operations and in the game-changing use of the Internet for voter outreach and campaign finance.

Young voters went 2-to-1 in Mr. Obama’s favor on Tuesday. Their advocacy in the Iowa caucuses was likely the decisive factor in his all-important victory there. The most lasting effect of all this may be a permanent shift of the youth vote toward the Democratic Party, although one can certainly expect the Republicans, who made successful efforts on campuses in the Ronald Reagan years, to mount a challenge.It appears, too, that the intense bonding of younger Americans with the youthful Mr. Obama initiates the transmission of power from baby boomers, who have for so long consumed the nation’s assets and attention, to a younger generation from whom so much has already been taken, in social security and resources.

To view the election of Barack Obama as notable only as an example of breaking through a racial barrier is to misunderstand the greater flow of our ever-more-inclusive democracy. America has, at last, delivered, in creating the most sublime example of democratic governance since its invention in Greece 25 centuries ago.

Orlando Patterson is a professor of sociology at Harvard and the author of “The Ordeal of Integration.”

BESU

2008-11-07T00:58:00.000+05:30

Dear Friends,

The Bengal Engineering College, now a university, the BESU, has been closed sine die by its VC on November 6, after he called in the police to punish a section of the students who do not follow the dictates of the SFI, the students' organisation of the major ruling party.The VC found this opportnity to please his political masters after two groups of students owing allegiance to the two political groupings came to blows in the Electrical Engineering department. Teachers of the department had separated the hostile groups, and have gone on record to say that they would have restored peace given the time, when a police party led by the SP, Howrah district, burst on the scene, jostling with the students and insulting teachers individually. Eleven students were arrested.

The police try to justify their unwonted behaviour by alleging that a DSP was manhandled and the students were instigated by "Naxalite" teachers. If the DSP was manhandled it is unfortunate. but is it the case of the police that violence against police personnel is to be punished, but police violence is always justified? The police do not regret the fact that students were injured. In fact, guardians have complained to the media that the injuries of the arrested students went untreated in custody. The police in CPI(M)-ruled West Bengal is fast developing into a Political Police. Otherwise, why do they feel the need to raise the Naxalite bogey?

All this is happening because students' union elections are impending and the VC wants to intimidate all opposition to the SFI. This is the same VC who was earlier treated to an overwhelming vote of no confidence by the teachers, on both counts, academic and administrative. A self-respecting man would have resigned.

Talking of resignation, why is the registrar still there, although a bit of investigative search led to the discovery that he did not have the requisite educational qualifications?

The major ruling party is, in this case, trying to justify summoning the police. But the cat was well out of the gap at Howrah court on November 7, when the police brought bailable charges against 3 SFI supporters. and non-bailable ones against 8 others who did not belong to the fold of the SFI.

Friends, these 8 boys are in jail custody. They will be produced again on Tuesday, November 11. Before that happens all bodies like the TASAM, the FAMA, the APDR, the Nagarik Mancha, the MASUM , all little magasines, students' organisations and intellectuals should hand in memoranda to the Governor, who is the Chancellor, too, asking for:

(1) immediate withdrawal of all charges and release of the 8 arrested students,

(2) condemning the police action, and(3) removal of the partisan VC.We only have Monday to organise. But every one will certainly rise to the occasion.

Greetings.
Dipanjan Rai Chaudhuri

Mahatma and EMS - Gandhi Still An Enigma To The Marxists

2008-11-05T22:43:00.003+05:30

Subrata Mukherjee
The Statesman, Nvember 5, 2008

EMS Namboodiripad has provided a penetrating evaluation of Mahatma Gandhi in Mahatma and the Ism (1948). He wrote: “It is a measure of the enormous significance of the role played by Gandhiji in the history of our national movement that every trend and faction inside the Congress, and almost every political party barring the Communist Party, uses the name of Gandhiji and his teachings for justifying and defending its policies. Serious attempts to assess the role and significance of Gandhiji and his teachings should, therefore, be considered of enormous practical importance for the further development of the democratic movement”.

Namboodiripad has highlighted Gandhi’s ability to organise the masses against the forces of imperialism and feudalism. This was his major source of strength. His weakness was his firm belief in non-violence. “It served to restrain the mass of workers and peasants who want to shake off the triple yoke of imperialism, feudalism and capitalism”.

Three features

EMS has examined the three striking features of the Gandhian movement in South Africa: (1) it was a movement encompassing all classes; (2) even with the support of the richest sections of Indian society, the movement’s real strength came from the militant and the self-sacrificing spirit of the poor working class of Indians in South Africa; and (3) in spite of this, the course of the movement was decided by Gandhi rather than by the representatives of the working class. Arguably, the most important aspect was Gandhi’s general outlook and the gulf between his ideas and those of Marx, Engels and Lenin.

As Namboodiripad saw it, a person with such reactionary perceptions entered the Indian political scene towards the end of the First World War and became the undisputed leader of the national movement. On the face of it, this appears to be an extraordinary achievement especially when few people agreed with the basic principles of Gandhism. But a deeper analysis brought to the surface the reasons for Gandhi’s almost instant success. “For, all that was out of the ordinary, religious and spiritualistic in Gandhi’s social outlook, all that was unique in the tactics which he pursued in order to realise his political aims and objectives, had one peculiar quality ~ they were all perfectly suited to the requirement of the class (bourgeois class) that was daily growing in Indian society and was increasingly asserting itself in the country’s national-political life.”

In spite of this basic coherence, there were important differences between other leaders of the bourgeois-democratic movement and Gandhi. The others applied the political process of modern capitalistic countries, especially Great Britain to India. The “moderates’’ and the “extremists” were fashioned after the Tories or the Liberals. But Gandhi “based himself not on the philosophy, economics, sociology and political science of the modern bourgeoisie, but on Hinduism with a perceptible influence of Christianity”. Yet, the same group eventually accepted Gandhi’s leadership. Unlike the other leaders, “Gandhiji associated himself with the masses of the people, their likes, problems, sentiments and aspirations”.

In Namboodiripad’s reckoning, the non-cooperation movement failed because Gandhi and his advisers did not appreciate the militancy of the people and their participation. Gandhi’s doctrinal adherence to non-violence limited his leadership. The result was that, though Gandhi “spoke out so magnificently against exploitation of India’s masses, he largely did what the exploiting interests wanted. The people’s upsurge was like a pawn on the counter of bargaining with the British and when it threatened to go out of hand and smash Britain and Indian vested interests, the reins were tightly pulled back”. However, in this assertion there is no attempt to analyse the Indian situation in depth or give specific examples to substantiate the charges.

On the salt satyagraha, Namboodiripad remarks that “while the people were magnificently responding to the call of the Congress, its leadership headed by Gandhiji was doing its best to divert their enthusiasm and militancy to channels which were safe for the bourgeoisie”. This was done in a number of ways: (1) though the Congress leadership headed by Gandhi accepted on paper the immediate object of complete independence, this was not followed in actual practice. The 11-point demand, on the fulfillment of which he promised to call off the movement, had nothing to do with attaining the objective of complete independence; (2) The direct action was limited to a few satyagrahis even though there was talk of mass civil disobedience; (3) With the obvious intention of restricting the scope of the movement, the demands of workers and peasants were completely excluded.

However, in the subsequent Karachi session of the Congress, many demands of the working class were accepted and the resolution on fundamental rights was passed. However, this change was accepted not on a belated realisation of their problems, but as Namboodiripad contends, due to two political considerations: (1) to create an impression that the Congress was leading the fight for the realisation of workers’ and peasants’ demands; and (2) to secure the implementation of the 11-point demand from the British administration on the basis of popular strength.

In 1932, Gandhi was arrested. According to Namboodiripad, instead of leading massive political movements he was focused more on relatively minor issues of social reform. He has also raised the issue of why Gandhi changed his technique ~ especially when there were no signs of violence. His attention to such social issues as Harijan uplift was a well thought out tactic for meeting the challenge of the political situation. Otherwise, it would not have secured the unanimous support of the right-wing leadership of the Congress.

Namboodiripad ignores Gandhi’s political philosophy which, in passing, he refers to it as reactionary. He has acknowledged that in spite of his leadership of the bourgeoisie, he was not with this class on every issue. It is Gandhi’s idealism that made him the Father of the Nation. As evident from the Mahatma’s reference to the Italian example, he was not only concerned with the oppressed people under colonialism but also with the nature and content of freedom.

Unique role

The shortcoming in Namboodiripad’s analysis is his dismissal of Gandhi’s political theory which dealt with rural and urban differences and conflict, the need for labour intensive industry, the labour-capital relationship, the education system and the village as the basis of swaraj. He was focused on Gandhi the social activist.

There is no denying that Gandhi was essentially a political activist and any evaluation would have to deal primarily with that aspect. But this does not mean that the entire assessment should be confined exclusively to his role in the various movements in which he participated, especially when there existed a theoretical side of considerable importance.

Namboodiripad credits Gandhi for initiating mass movements and his unique role as an anti-imperialist fighter but ignores the Mahatma’s constructive programme, his assessment of the Indian situation as outlined in his Autobiography which largely reinforced belief in the policy of “one step at a time’’ and the compulsions to provide a united front to counter British Imperialism.

The inadequacy of Namboodiripad’s analysis, like that of Hiren Mukerjee’s critique of Gandhi, both written immediately after independence, is aptly reflected in Sardesai’s lament in the Mahatma’s birth centenary year. He continues to be an enigma to the Marxists even 60 years after the publication of Namboodiripad’s classic.

The writer is Professor, Department of Political Science, University of Delhi

The Republican Rump

2008-11-05T22:37:00.001+05:30

PAUL KRUGMAN
NYT,November 3, 2008

Maybe the polls are wrong, and John McCain is about to pull off the biggest election upset in American history. But right now the Democrats seem poised both to win the White House and to greatly expand their majorities in both houses of Congress.

Most of the post-election discussion will presumably be about what the Democrats should and will do with their mandate. But let me ask a different question that will also be important for the nation’s future: What will defeat do to the Republicans?

You might think, perhaps hope, that Republicans will engage in some soul-searching, that they’ll ask themselves whether and how they lost touch with the national mainstream. But my prediction is that this won’t happen any time soon.

Instead, the Republican rump, the party that’s left after the election, will be the party that attends Sarah Palin’s rallies, where crowds chant “Vote McCain, not Hussein!” It will be the party of Saxby Chambliss, the senator from Georgia, who, observing large-scale early voting by African-Americans, warns his supporters that “the other folks are voting.” It will be the party that harbors menacing fantasies about Barack Obama’s Marxist — or was that Islamic? — roots.

Why will the G.O.P. become more, not less, extreme? For one thing, projections suggest that this election will drive many of the remaining Republican moderates out of Congress, while leaving the hard right in place.

For example, Larry Sabato, the election forecaster, predicts that seven Senate seats currently held by Republicans will go Democratic on Tuesday. According to the liberal-conservative rankings of the political scientists Keith Poole and Howard Rosenthal, five of the soon-to-be-gone senators are more moderate than the median Republican senator — so the rump, the G.O.P. caucus that remains, will have shifted further to the right. The same thing seems set to happen in the House.

Also, the Republican base already seems to be gearing up to regard defeat not as a verdict on conservative policies, but as the result of an evil conspiracy. A recent Democracy Corps poll found that Republicans, by a margin of more than two to one, believe that Mr. McCain is losing “because the mainstream media is biased” rather than “because Americans are tired of George Bush.”

And Mr. McCain has laid the groundwork for feverish claims that the election was stolen, declaring that the community activist group Acorn — which, as Factcheck.org points out, has never “been found guilty of, or even charged with” causing fraudulent votes to be cast — “is now on the verge of maybe perpetrating one of the greatest frauds in voter history in this country, maybe destroying the fabric of democracy.” Needless to say, the potential voters Acorn tries to register are disproportionately “other folks,” as Mr. Chambliss might put it.

Anyway, the Republican base, egged on by the McCain-Palin campaign, thinks that elections should reflect the views of “real Americans” — and most of the people reading this column probably don’t qualify.

Thus, in the face of polls suggesting that Mr. Obama will win Virginia, a top McCain aide declared that the “real Virginia” — the southern part of the state, excluding the Washington, D.C., suburbs — favors Mr. McCain. A majority of Americans now live in big metropolitan areas, but while visiting a small town in North Carolina, Ms. Palin described it as “what I call the real America,” one of the “pro-America” parts of the nation. The real America, it seems, is small-town, mainly southern and, above all, white.

I’m not saying that the G.O.P. is about to become irrelevant. Republicans will still be in a position to block some Democratic initiatives, especially if the Democrats fail to achieve a filibuster-proof majority in the Senate.

And that blocking ability will ensure that the G.O.P. continues to receive plenty of corporate dollars: this year the U.S. Chamber of Commerce has poured money into the campaigns of Senate Republicans like Minnesota’s Norm Coleman, precisely in the hope of denying Democrats a majority large enough to pass pro-labor legislation.

But the G.O.P.’s long transformation into the party of the unreasonable right, a haven for racists and reactionaries, seems likely to accelerate as a result of the impending defeat.

This will pose a dilemma for moderate conservatives. Many of them spent the Bush years in denial, closing their eyes to the administration’s dishonesty and contempt for the rule of law. Some of them have tried to maintain that denial through this year’s election season, even as the McCain-Palin campaign’s tactics have grown ever uglier. But one of these days they’re going to have to realize that the G.O.P. has become the party of intolerance.

When Consumers Capitulate

2008-10-31T20:12:00.004+05:30

PAUL KRUGMAN
NYT, October 31, 2008

The long-feared capitulation of American consumers has arrived. According to Thursday’s G.D.P. report, real consumer spending fell at an annual rate of 3.1 percent in the third quarter; real spending on durable goods (stuff like cars and TVs) fell at an annual rate of 14 percent.

To appreciate the significance of these numbers, you need to know that American consumers almost never cut spending. Consumer demand kept rising right through the 2001 recession; the last time it fell even for a single quarter was in 1991, and there hasn’t been a decline this steep since 1980, when the economy was suffering from a severe recession combined with double-digit inflation.

Also, these numbers are from the third quarter — the months of July, August, and September. So these data are basically telling us what happened before confidence collapsed after the fall of Lehman Brothers in mid-September, not to mention before the Dow plunged below 10,000. Nor do the data show the full effects of the sharp cutback in the availability of consumer credit, which is still under way.

So this looks like the beginning of a very big change in consumer behavior. And it couldn’t have come at a worse time.

It’s true that American consumers have long been living beyond their means. In the mid-1980s Americans saved about 10 percent of their income. Lately, however, the savings rate has generally been below 2 percent — sometimes it has even been negative — and consumer debt has risen to 98 percent of G.D.P., twice its level a quarter-century ago.

Some economists told us not to worry because Americans were offsetting their growing debt with the ever-rising values of their homes and stock portfolios. Somehow, though, we’re not hearing that argument much lately.

Sooner or later, then, consumers were going to have to pull in their belts. But the timing of the new sobriety is deeply unfortunate. One is tempted to echo St. Augustine’s plea: “Grant me chastity and continence, but not yet.” For consumers are cutting back just as the U.S. economy has fallen into a liquidity trap — a situation in which the Federal Reserve has lost its grip on the economy.

Some background: one of the high points of the semester, if you’re a teacher of introductory macroeconomics, comes when you explain how individual virtue can be public vice, how attempts by consumers to do the right thing by saving more can leave everyone worse off. The point is that if consumers cut their spending, and nothing else takes the place of that spending, the economy will slide into a recession, reducing everyone’s income.

In fact, consumers’ income may actually fall more than their spending, so that their attempt to save more backfires — a possibility known as the paradox of thrift.

At this point, however, the instructor hastens to explain that virtue isn’t really vice: in practice, if consumers were to cut back, the Fed would respond by slashing interest rates, which would help the economy avoid recession and lead to a rise in investment. So virtue is virtue after all, unless for some reason the Fed can’t offset the fall in consumer spending.

I’ll bet you can guess what’s coming next.

For the fact is that we are in a liquidity trap right now: Fed policy has lost most of its traction. It’s true that Ben Bernanke hasn’t yet reduced interest rates all the way to zero, as the Japanese did in the 1990s. But it’s hard to believe that cutting the federal funds rate from 1 percent to nothing would have much positive effect on the economy. In particular, the financial crisis has made Fed policy largely irrelevant for much of the private sector: The Fed has been steadily cutting away, yet mortgage rates and the interest rates many businesses pay are higher than they were early this year.

The capitulation of the American consumer, then, is coming at a particularly bad time. But it’s no use whining. What we need is a policy response.

The ongoing efforts to bail out the financial system, even if they work, won’t do more than slightly mitigate the problem. Maybe some consumers will be able to keep their credit cards, but as we’ve seen, Americans were overextended even before banks started cutting them off.

No, what the economy needs now is something to take the place of retrenching consumers. That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldn’t spend.

Let’s hope, then, that Congress gets to work on a package to rescue the economy as soon as the election is behind us. And let’s also hope that the lame-duck Bush administration doesn’t get in the way.

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COMMENTS BY NYT READERS
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.October 31, 2008 10:45 am
Link
As a pessimist, I thought I should mention two relevant issues.

First, the Federal government's finances are in bad shape and are already projected to get worse (in the short run) and vastly worse (in the longer run, as the Baby Boom retires). Foreigners are already showing that they are uncomfortable with their existing holdings fo US debt, and are already moving to eliminate the dollars as the international medium of exchange. In the past, it might have been reasonable to treat Federal spending as if could, for all intents and purposes, be turned up as far as required to restore aggregate demand. But now, that may no longer be a realistic assumption. It's not even a question of whether a large fiscal stimulus would be politically feasible, at this point it's edging into a question of whether its technically possible to borrow that much more money than we're already going to have to borrow under current policy.

In my opinion, this is yet another reason to despise the Bush administration. They were handed the opportunity to strengthen our fiscal position and they frittered it away. Now we have to deal with this from a standpoint of fiscal weakness instead of strength.

The second practical issue with non-rebate stimulus is the time lag and the constraints of our kan-ban economy. The cycle of legislation, issuance of regulations, request for proposal, bidding, acceptance of bids -- by itself, that would take about year if it were expedited, possibly more. So a year from now, we'd be just about ready to start spending the money. Then we would get to find out all the factors that would be in short supply if we decided to (e.g.) triple the pace of road and bridge reconstruction.

So, if the Feds can borrow the money, maybe there's still a role for whatever stimulus might act in the short run. Which means, I think, giving money away to somebody. If that's not rebate checks, then someone needs to suggest some better alternative that is equally short-acting.
— chogan, Virginia

Recommend Recommended by 0 Readers 102.October 31, 2008 10:45 am
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Mr. Krugman,

Subsequently unemployment will accelerate and further dampen consumer spending. Consumers have known about our failing economy prior to the third quarter, but the gov't plods along slow as ever. What we need is a full scale "Marshall" plan for the economy. Infrasturucture, alternative energies and other neglected areas need to get ramped up. Dawdling in a time of crisis will make the situation more dire. Assertiveness and tremendous leadership is required. What's next food lines and looking like Cuba ?
— RMD, Davidsonville, MD

Recommend Recommended by 0 Readers 103.All Editors' Selections » EDITORS' SELECTIONS (what's this?) October 31, 2008 10:45 am
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Time for a New New Deal.

Don't cut us a check. Send America to work. Now is the time to invest in infrastructure. Send America to school. Now is the time to invest in education.

If you are going to "spread the wealth around," don't cut people a check, spend the money on some sort of universal health care system. It doesn't have to be "like Canada's." In fact, the U.S. is so late to the party that we can learn from everybody else's mistakes. I like a system that provides people with a basic level of healthcare paid for with public funds, but allows people to use their own money to pay for better health care if they want to. The idea is that everybody gets a "Chevy," but you can pay more for a "Cadillac," if you want.

The biggest benefit for the country of universal health care is to free potential entrepeneurs from the burden of having to find health care for themselves and for their employees.

Modernizing our infrastructure, investing in education, and providing universal health care will provide the stimulus the economy needs while leaving us in better shape for the future. Tommorow's prosperity starts today.

— Jim, Columbia, SC

Recommend Recommended by 0 Readers 104.October 31, 2008 10:45 am
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The situation is not as bad as it looks, when one looks at the hard numbers. The USA has simply to augment the part of the State in the economy, to introduce more rationality in its economic activity. Last week, Mr. Greenspan discovered to his "shocked disbelief" that the financial markets are not self regulating. Well, neither is the economy. That's why we have governments: to direct the actors to do what we decide their parts will be. It's not to the actors to tell us. The State controls about 30% of GDP in the USA, but much more in all European States. It is 45% in France (and higher in Sweden). (The astute observer will notice that Japan, mired in waves of chronic recessions for 18 years, has a much smaller portion of its GDP from the State than the USA.)

The retrenchment of the US consumer, is just what the doctor should have ordered. The consumer was consumed by consumption ("consumption"used to be the old euphemism for tuberculosis). A lot of consumption was about buying lots of things made overseas, some of which (like cars) should rather be made at home: car making, plane making, or rocket making, or electronic chip making are strategic industries, they cannot go overseas too much without endangering the supremacy of the USA, and that later endangerment compromises world security (even leftist socialists with anti-American tendencies will recognize this, to their dismay). Ah, also: too much eating in restaurants is adverse to health: Americans have now an excellent occasion to learn to cook wholesome foods at home, as if they were fully grown up.

Most European countries run better economies, with the State spending more as a percentage of GDP. Some of the right wing will scream, because they made such good money in the old system. But they should address their whining to the old Roman republic, or even to the Athenian democracy, 25 centuries ago. Those first democracies invented massive public spending. And that reached new heights in the fascist Roman empire that followed. The Romans did not just build a giant infrastructure with public money (roads, ports, acquaducts, theaters, baths, public health spending, fortifications), but also invented food programs and wellfare. And nobody will accuse the Roman empire to have been too left wing. Public spending was extended to health in the European Middle Ages.

Clearly, the time for a new extension of the public economy has come. Just like financiers could not self regulate, the consumers could not self regulate. That's actually why consumers instituted government, 9,000 years ago, or so, in the first cities.

Half an hour after his inauguration, the next president should sign a decree instituting a tiny percentage tax on every single financial transaction (at the rate used in Europe, that would bring in at least 200 billion a year, more than is needed by Obama's health plan). And so on. Small (but expanding) taxes on energy will do wonders to introduce rationality in the US energy economy.

Funds could be directed to the green economy.
— Patrice Ayme, Hautes Alpes

Recommend Recommended by 0 Readers 105.October 31, 2008 10:45 am
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I suspect consumer spending is in for a long, long backward slide. It is not only the credit or income strapped consumer that is shutting down all but essential spending.

My spouse and I are among the fortunate - a secure retirement income and an adequate (albeit greatly reduced) savings and investment portfolio. But we are not spending on anything but essentials. In fact, we are trying to sell, giveaway or throwaway three storage bays of no longer used/needed items that represent a substantial portion of our contribution to consumer spending over the decades.

Judging from the number of new self-storage facilities near us that have sprung up in the past few years, one could speculate that the real message is that some consumers are tapped out on income and credit, but others, more fortunate, are also tapped out on needs and wants - are abandoning the materialism that has driven so much consumer spending in the past.

The only government programs, therefore, that will reverse the economy's slide are INVESTMENT programs like the "going to the moon" NASA program of the sixties - infrastructure renewal and energy independence cry out as candidates for such programs of national commitment.
— Downsizer, Reston, VA

Recommend Recommended by 0 Readers 106.October 31, 2008 10:45 am
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When I read about the administration bailing out the auto industry, and then as usual Bush meandering, changing the rules and considering a bail out of those who overextended themselves with credit card and mortgage debt, I wonder about the rest of us. This is everyone who has been responsible, lived within their means, paid their credit card bills and didn't grab a home equity loan. What about us? I don't take vacations or abuse the system. Is our reward supposed to be - nothing? This is not a good lesson, I say. The message is to lie, cheat and steal. It says that's it's OK to spend more than you have. I believe that people like us, who have been served our time with perfect behavior deserve a bonus too. Why doesn't Paulson reward the American people with $100 thousand dollars each? Do not bail out the auto manufacturers, and do not bail out those in default of payment. Just give everyone a tax free $100 thousand and say - live responsibly. And, as soon as Obama gets in, replace Paulson the plumber. He's flushing the 700 billion down the toilet. One more thing I'd lie to add, is that we need to get our eyes on the prize; jobs, infrastructure and investment in the US - not bail outs. Dear Mr. Obama, you have a wonderful opportunity here. Please don't mess it up.
— Brian Branigan, Catskill, NY

Recommend Recommended by 0 Readers 107.October 31, 2008 10:45 am
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Professor,

Agreed that "the stimulus should take the form of actual government spending". In particular, at least, it should include upgrading the infrastructure [bridges, roads] and spending to encourage energy independence. Agreed, encouraging more consumer debt at this point, is inappropriate and ineffective.

But how are we going to PAY for all of this? It could easily end up costing a trillion dollars of additional debt. I'd like to understand your thinking on the PAY for it side of the equation. It seems to me that there are four main ways to pay down this additional debt: 1) some return on investment in the bailouts; 2) Increased tax rates; 3) Increased economic activity resulting in increased tax revenue; 4) Inflation [a tax of a different sort]. But, I'm just an undergraduate level economics student from the '60's. What do you think? Politically the word "inflation" instills fear, and at my age, it isn't my favorite tax, but is it avoidable?

Thanks,

Peter Boswell

— Peter, Sarasota

Recommend Recommended by 0 Readers 108.October 31, 2008 10:45 am
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When all the "experts" tell the American consumer that the sky is falling and those consumers then stop going out to eat in order to strengthen their roof, we should not be surprised.

You all have been telling us for months how terrible the economy is and how lucky we are to have our jobs and how bad things are going to get. We have listened.

What makes me most skeptical of all this bad news is that, when I actually talk to people about how "they" are doing personally, their response is almost always that they are doing well. And when I ask my car dealer and my brother who is a loan officer if there is money available for a loan, they say "there is.:

I fear that, if Mr Obama is elected, the economy will magically and even before he has an opportunity to do a thing, get better.

Silly, you say? Well that is what an in the tank MSM will do for you.
— Ehillesum, Michigan

Recommend Recommended by 0 Readers 109.October 31, 2008 10:45 am
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Krugman's recommendation to apply Keynesian methods for stimulating the economy is well considered particularly in view of America´s often badly maintained, not to say, dilapidated infrastructures and the possibility to channel financial resources for such ends from unproductive,or counterproductive, foreign military engagements, thus eliminating or reducing needs for taxe-hikes or additional government borrowing.

Two more intriguing issues would be to (1) bring home to the Amercan people that it is not possible to live on tick forever, or put in a modern jagong that living on tick is not economically sustainable and (2) to device incentives for the restoration of the virtue of saving, resulting in a substantially increased national savings quote as a means to avoiding future financial and economic calamities.

-R.G.Lansler
— Rolf G. Lansler, Vaxjo, Sweden

Recommend Recommended by 0 Readers 110.October 31, 2008 10:45 am
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I wonder if we restructured our tax code temporarily to tax uninvested wealth reserves....

Everyone says infrastructure! infrastructure! here, but I don't think there's a one-off fixed. Let's say every state was the size of Georgia in terms of infrastructure requirements (most are significantly smaller; GA's the 9th most populous state): If we doubled the budgets of every state DOT, that would be $100 billion. The danger there, of course, being that if we overbuild our infrastructure, it becomes problematic to maintain and operate. Exactly the problem my state is experiencing, with over-built highway lanes. Quality over quantity, significant mass transit investment, to be sure, but that seems like a smaller issue than getting the $250+ billion credit fix through, anyway.

One needs to look little farther than the history of the Interstate Highway System to trace the downfall of inner-city urban neighborhoods, where urban connectivity was sold-off on the cheap to huge public works programs that subsidized commuting. I'm not saying that we don't need improvements to our system today, or even suggesting that the motives of most who want more infrastructure investment are a doubling repeat of the Interstate system. But history shadows the "throw money at it" model of infrastructure investment.
— Pierce, Atlanta

Recommend Recommended by 0 Readers 111.October 31, 2008 10:45 am
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I only hope that the fiscal stimulus chosen is not another war, as was done after 9/11. We're already doing that.

Come on, Paul, that's lame. As a mainstream economist I understand your role is to make recommendations within the context of the existing monetary system. Why not think outside the box, and redesign the monetary system to make it work properly. Have government issue notes without interest, nationalize the FED, spend directly on investment and social programs, stop financing the government by foreign borrowing, eliminate fractional reserve lending (which leads to these boom and bust cycles) etc.

Having a fractional reserve monetary system in which private institutions can issue credit at will (or not, at will) is what led us to where we are now. To fix the problem this must be addressed. And don't tell me why this change can't be done, tell me how it must be done to work.
— larry, hudson valley,ny

Recommend Recommended by 0 Readers 112.October 31, 2008 10:45 am
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The consumer needs to be refinanced. Supply side nonsense has run its course and we are all worse off for it. What we need is a demand driven economy. You get a demand driven economy from prosperous consumers.

Get money in the hands of the public and we will all prosper . Money does not trickle down, it flows up hill. By changing income tax schedules, restructuring the payroll tax, raising the minimum wage and making union membership easier, we can refinance the consumer and create a demand driven economy.

Since the consumer has no champions, it will probably take a few years of desperation before changes can be made. Supporters of the trickle down, voodoo economics are still in charge despite all the failures.
— c. perry, Florida

Recommend Recommended by 0 Readers 113.October 31, 2008 10:45 am
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What Mr. Krugman is suggesting is massive government spending; fat deficits and cheap money. Exactly the policy of the Bush Administration. Exactly the policy that brought us to this sorry state in the first place. Mr. Krugman is irresponsibly asking us to endorse a policy of pouring gasoline on a fire.
— FCL, Omaha, NE

Recommend Recommended by 0 Readers 114.October 31, 2008 10:45 am
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“The Paradox of Thrift!” -> paraphrased “Savings is bad for the economy???”

If we shouldn’t tighten our belts when the future of our income is bleak if not in total doubt, when should we tighten our belts? Certainly not when our future is bright!

Congratulations, Economics Nobel Laureate! Can we request you to help us (especially the free market freaks) with this conundrum?

— Anil Kumar, Alexandria, VA

Recommend Recommended by 0 Readers 115.October 31, 2008 10:45 am
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I don't have the brain power to fully envision how climate chaos will impact our near-term economic trajectory, but a year from now (or sooner) the business of getting on with rescuing our planet from the over-use of fossil fuels will be front and center to our politics and economics. Perhaps the mobilization required to meet the climate challenge will usher in a new economic order for the world. I don't see how we can continue to live as we did in the last century. The use of ever-growing consumerism as an economic foundation for capitalism cannot be sustained using a fossil-fuel driven infrastructure.
— Ed Cockrell, Chapel Hill, NC

Recommend Recommended by 0 Readers 116.October 31, 2008 10:45 am
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The government should quit dilly-dallying with Wall Street by trusting them to start spreading the bailout money and instead put the bucks where it will do the most good. That is, buy down every primary residence mortgage in America by 1/3. You will put money in the banks that hold the mortgages, put a floor to falling home prices and put some money in the consumers pocket. Call it the "Trickle Up" theory. Wall Street can no longer be trusted to police itself or America's financial system.
— Beyond Karma, Miami

Recommend Recommended by 0 Readers 117.October 31, 2008 10:45 am
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We need a massive public works program a la the WPA to rebuild our highways and bridges plus other projects such as alternative energy systems, high-speed Internet systems and high-speed rail lines to bring America up to speed with the other developed nations in these areas. Putting people to work as classroom aides to help our beleaguered education system and as health care aides to take care of our senior population wouldn't be a bad idea either.

To those who say we don't have the money to do it, I reply that the $10 BILLION A MONTH we are presently throwing away in Iraq would go a long way.

And in conclusion, I nominate Paul Krugman for treasury secretary in the coming Obama administration.
— HB, Bend, OR

Recommend Recommended by 0 Readers

76.October 31, 2008 10:10 am
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So our entire economic system rests on thwarting the virtues of the "consumer."

Great.
— Karen, Massachusetts

Recommend Recommended by 1 Reader 77.October 31, 2008 10:10 am
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My spending cuts have little to do with choice. My discretionary income has faded over the last number of years and completely disappeared in the last year. Even if I wanted to spend, I couldn't. Because of stagnating wages and increasing prices, every dollar that comes in, goes out to necessities. And I'm still luckier than most, because my debt is minimal and I'm still able to save. But any kind of emergency will end that. And my feeling is that all of this is only going to get worse and it's going to be a long time before it gets better.
— Blurkee, Wisconsin

Recommend Recommended by 0 Readers 78.October 31, 2008 10:10 am
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Paul: Could you please explain how the fiscal stimulus you propose would work differently from the Japanese failed one in the 90's? Thanks! Congras on the well deserved Nobel award.
— Pablo Alonso, Washington DC

Recommend Recommended by 0 Readers 79.October 31, 2008 10:10 am
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It could be that we've already bought everything we want.
— Rick Taft, Woodbury, MN

Recommend Recommended by 3 Readers 80.All Editors' Selections » EDITORS' SELECTIONS (what's this?) October 31, 2008 10:10 am
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Excellent article, as usual. If you are taking suggestions on where government can spend to stimulate the economy, then I would add scientific research to the list. Funding research at U.S. universities puts dollars in the hands of poorly paid graduate students (average stipend is $23,000/year), support staff, and local businesses. Most laboratory supplies are made in the U.S. Research funding quickly permeates the local economies and has the added benefit of leading to advances in knowledge, health care, and education.
— JFM, Syracuse, NY

Recommend Recommended by 15 Readers 81.October 31, 2008 10:10 am
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I wish someone would revisit the aftermath of 9/11 and recall the pronouncements by various pundits on how much that would change almost the air we breathe inside American culture. Remember how dearly the President, any President for that matter, wants us to experience "the moral equivalent of war" and even war itself. It is the desire for the Ghost of Calvinism past to resurrect the true grit of the American Spirit that was once alive in our great founding Fathers, but has since melted into the soft earth of tax and spend, socialistic complacency (and whatever insights DFW a la Infinite Jest could add to these insights) to bring us to the place we are now. An angry and vengeful God is shaking us over the open fire, Jonathan Edwards, intercede from where you are now, Heaven Please help us!

So, now Krugman is testing a similar theme, perhaps? Consumers repent for the the end of the Bargains is at hand? But we haven't even gotten past Thanksgiving yet, and the handwringing is beginning. In my opinion we should be assured that there are enough dissonant voices to any doom and gloom within our society to negate any trumpet blast of reformation. The US society of social spending and consumer debt is not going to change any more than 9/11 produced any remarkable transformation of US society. Individual instances sure. but Social trends away from where they were going , say last year? Not a chance, It will or would take repeated blows of this level to change the willfulness of our comfort seeking condition so that someone driving through anytown USA would notice any differences during the Christmas season of 2009 as a result of what is happening now.
— bahai&99, Japan

Recommend Recommended by 0 Readers 82.October 31, 2008 10:10 am
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Gloria - The markets have already priced in an overwhelming probability that Obama will win. The markets don't respond to events that everyone expected to occur.
— jkl, ny, ny

Recommend Recommended by 0 Readers 83.All Editors' Selections » EDITORS' SELECTIONS (what's this?) October 31, 2008 10:10 am
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Unfortunately there is no quick fix to these painful times. Yes, consumer spending creates jobs and stimulates the economy; however, too much of our GDP is based on consumer spending and past spending has been based on easy credit and people buying items they don't need with money they don't actually have, creating an artificial situation which could not be sustained. I fear that too much focus on increasing consumer spending at this juncture is am attempt to prop up an artificial economy. Would it not be better, as others have suggested, to focus on creating jobs that provide income and benefit the nation as a whole such as development of new energy sources and repairing infrastructure?
— mbb, nyc

Recommend Recommended by 12 Readers 84.October 31, 2008 10:10 am
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The plutes thought they had a grand strategy: maintain consumer spending by expanding easy credit in an economy that fails to reward all but the plutes. That strategy has now backfired. Now our economy can only be spared a very deep recession by getting cash, not credit, into the hands of consumers. Washington will do this, probably through a massive expansion of public works infrastructure programs, tax cuts and stimulus checks. The plutes can't long abide declining earnings and markets, and won't for long. So far, they've seemed willing to withdraw their wealth and hide it under the mattress while the middle class suffers the "adjustment", but their willingness to forego their return on capital won't last long. Welcome back, John Maynard Keynes.
— Bob, Valrico, FL

Recommend Recommended by 0 Readers 85.October 31, 2008 10:10 am
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While I agree with Brooks's column on nearly every point, I don't understand his dismissal of Obama's proposal to reward with tax credits U.S. companies that operate and hire domestically. At a time when unemployment is growing, and production declining, it seems like a reasonable measure.
— David Isenbergh, Washington, DC

Recommend Recommended by 1 Reader 86.October 31, 2008 10:10 am
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This is the moment to stop squandering our money and more importantly our environmental resources on unecessary consumer goods. Personal spending and governmental spending must both shift to those goods and services that will make us healthier, greener, and better educated. We've already seen where the gas guzzling SUVs we've been driving to the mall are really taking us. I am hopeful that a new Obama administration in Washington will lead the way with universal health care, infrastucture improvements including mass transport, improved public schools and support of green technologies. But it is also up to each of us as citizens to invest in a better future.
— Catherine, New York, NY

Recommend Recommended by 5 Readers 87.October 31, 2008 10:10 am
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Paul Krugman talks about reducing the interest rate from 1% to zero and it having minimal impact. I'm no economist, but it occurred to me that another way to stimulate consumer spending would be for the Fed to apply a ceiling cap to the interest rate charges that Credit Card companies apply. I'm sure a lot of people consider these charges, as I do, as little short of piracy.

Should you accidentally [or through financial constraints] miss a payment, a whopping 20-27% can be applied in some instances. Thereby further exacerbating the situation. How about applying a mandatory ceiling of inflation + 1% on the Credit Card companies?

That would surely ease the burden somewhat on consumers struggling with mountains of debt.

I'll now wait while the experts shoots my proposal down in flames. Don't be too cruel Mr Krugman.
— charlief, New York

Recommend Recommended by 2 Readers 88.October 31, 2008 10:10 am
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This so-called recession has been here or coming for several years. It must be understood by those who study economics that consumerism alone could not indefinitely sustain an economy. Where is our basic production? What do we actually truly produce other than Boeing's airplanes. Not ships, trains, tractors, plows, etc. I am not a trained economist (certainly not a Pulitzer Prize winner) but I cannot make myself believe that we can consume our way out of this. We need a Manhattan Project for energy creation, bridge and road repair and the reinstitution of good public transportation. That would put many to work and maybe some workers (oh, sorry, middle class) would begin to save a bit of money.
— edna moglewer, prescott, az

Recommend Recommended by 1 Reader 89.October 31, 2008 10:10 am
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The usa ought to look at the Australian banking system. No way do our banks give out loans to people that can't repay. The regulations were put in by the Howard government years ago. That's why we will not go into recession.
— Martyn, Australia

Recommend Recommended by 4 Readers 90.October 31, 2008 10:10 am
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Prof. Krugman:

Based on your exemplary and consistent body of work, which led to your being awarded the 2008 Nobel Memorial Prize in Economic Sciences I could not think of a better choice for U.S. Secretary of the Treasury under the new Obama Administation.

Good luck to you sir.

— Federico, NYC

Recommend Recommended by 5 Readers 91.October 31, 2008 10:10 am
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Not all government spending is equal. Pouring another trillion dollars on the war in Iraq will boost GDP as much as public investment into alternative energy infrastructure.

We need to make sure the Washington doeesn't get carried away with useless spending. The last thing we need is a bubble of government waste.
— Bill Mott, NY

Recommend Recommended by 3 Readers 92.October 31, 2008 10:30 am
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The Republicans (and some Democrats) were able to destroy this Country in only 8 years, loot the treasury in only 2 years and ruin this country's reputation in no time at all. Our educational system, for the majority of us, is a joke. Analytical thought is uncommon, and the reality is that this is a country that runs on credit and credit alone. We don't make anything that people want, except weapons and war, we have a "negative" savings rate and a large percentage of the population that thinks Sarah Palin is an excellent choice for Vice President.

Ever since the republicans, under Richard (I am not a crook) Nixon, decoupled the Dollar from the Gold Standard due to the increased runaway spending of the Vietnam War, we have been on a slippery slope towards economic ruin. The mad-dog , $10 Billion Dollars a month spending on the Iraq war is merely a repeat of the Vietnam War Economics. The crisis we are facing today is the result of a dollar that is not worth the paper it's printed on. The rest of the world is slowly coming to the same conclusion and if something isn't done post-haste, they will start dumping the toilet paper we call the U.S. Dollar and cutting their losses before we take them down with us. As to the $700 Billion Dollar bail-out, it's for the Chinese and other sovereign wealth funds that are demanding that their investments be made good or they will proceed to cash out while they can. Well I guess SOCIALISM is bad for the public but good for WALL STREET as it helps foreign banks recover their losses.

Good luck during the coming DEPRESSION, we are past the point of no return. There is nothing we can do to stop it.

— Vietnam Vet, Castro Valley, California

Recommend Recommended by 3 Readers 93.October 31, 2008 10:37 am
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When was the last time you and Brooks wrote the same column on the same day? An occasion worthy of note, I'd say.
— Johan Andersen, Gilford, NH

Recommend Recommended by 0 Readers 94.October 31, 2008 10:37 am
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Professor Krugman,

You say, "That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending"

So basically you're taking the view that running up the deficit is a good addition to the 700 billion we just gave to line the pockets of the crooks on Wall Street who have basically pocketed that money. Why not take that money back from them and fine and jail them and regulate them so this never happen again and slap on a one tenth of one percent transaction tax similar to our sales tax like we had under FDR and like Nader is proposing. And have the thieves pay for their own bailout. And LEAVE that money in the hands of the taxpayers so we can spend it in the marketplace. 700 billion is a pretty big stimulus package. What do you think?
— steve pesce, california

Recommend Recommended by 0 Readers 95.October 31, 2008 10:37 am
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Dave Brooks says today that what is needed is "A major infrastructure initiative [that] would create jobs for the less-educated workers who have been hit hardest by the transition to an information economy"

And Paul Krugman says today that "what the economy needs now is something to take the place of retrenching consumers. That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldn’t spend."

Those two ideas sound very similar to me, kind of like a new deal for our economic crisis. Now where have we heard of that before??

— Randy, Alaska

Recommend Recommended by 0 Readers 96.October 31, 2008 10:45 am
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— LAS, Redmond, WA wrote:

There is one thing the government can do:

Drastically cut the interest rate on all student loans, no matter how old they are, and stop charging interest during the time when a student loan is on deferment. A person suffers a layoff and gets a deferment, and the interest on the student loan still accumulates, so whatever balance was paid off just returns and the loan is like revolving credit that is never paid off. Right now there is no way a person can refinance an old student loan at a lower interest rate. Student loan interest is eating people's salaries. Where is all of this interest money going? Currently, any actions taken on interest rates have no effect on student loans. Our society needs to stop gouging people just because they went to college or medical school.

===============================================

Amen to that - I will be paying for my undergrad and graduate nursing programs for the next 30 years - and they will top out at over $800 before I pay them off.

It would be a huge boon to a large segment of the population to have those rates reduced. I have no problem paying back my loans but when what I pay back ends up being double what I borrowed, I do have a problem with that (and my rate is pretty decent compared to others I know!).
— Amanda, Virginia

Recommend Recommended by 0 Readers 97.October 31, 2008 10:45 am
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You are so right. I saw this coming 4 months ago and adjusted my meager investment portfolio. I agree that it is time to invest in our crumbling infrastructure, invest in alternative energy al a Tom Friedman, and to provide universal health insurance.
— ErnieK, Ohio

Recommend Recommended by 0 Readers 98.October 31, 2008 10:45 am
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It's about time both government and consumers stop using credit and use the "Pay-As-You-Go" method.

We've seen our national debt soar from $4.5 to $11-trillion with nothing to show for it: not one new bridge, road, power plant, levee, or anything that would have put Americans to work, or improved our quality of life. All that money went out in tax cuts, credits and subsidies to the wealthiest, or businesses that were profitable, and not in need of assistance. Most of it went to Iraq, where greedy no-bid contractors have gouged and fleeced us without helping our soldiers, much less the war effort, and to those who have had no accountability.

Individuals have stopped saving, and borrowing to buy things as well. Some borrowing is needed: for a home, college, or to buy a business, but those are investments in one's future. Buying flat-screen TV's, designer clothes, or other trivial items is not needed, and has mired people in debt, so they'll be enslaved to the bankers the rest of their lives.

In both cases, government and people have been living beyond their means, and will need to spend less, more wisely, and evaluate purchases, give-aways, and determine actual need v. "wishing and wanting." Many people, and government, are paying so much in interest only (without reducing principle), it'll be decades, if ever, the debt will be reduced to manageable levels.

What happened on Wall St. was a typical example of greed, not saving/investing, lacking capital reserves, and ultimate implosion and melt-down of the system.

Any further stimulus package from the government should be to invest in our infrastructure, which would create jobs. Many are out of work, and can't spend on anything more than food or rent, so another $300 check won't be spend at an electronics store, but on bare-bones necessities, or to pay off a bill. Once the millions of laid-off workers start getting paychecks, they'll be better, and our country will improve. Start with investments in wind, solar, biofuels, natural gas, nuclear energy sources to wean us off oil, so we don't keep sending billions annually to other countries, and keep the money here, to repair and rebuild our electrical grid, up-date our internet, improve safety, and improve efficiency.
— Tina, California

Recommend Recommended by 0 Readers 99.October 31, 2008 10:45 am
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We should learn from history. In the 30's the most succesful projects were public works projects that employed people and resulted in assets to our country that still exist. Such as WPA projects that are still visible in many of our parks, as well as bridges and infrastructure. This is productive welfare that benefits all society,compared to the corporate welfare that never seems to trickle down to the people that consume and power the economy. We need change !
— tom, pittsburgh

Recommend Recommended by 0 Readers 100.October 31, 2008 10:45 am
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The market forces will bring the economy out of the doldrums, not Congressional policy. The only thing that a Democratic Congress will do is impede recovery.

President Clinton alluded to Democratic Congressional ineffectiveness on Good Morning America in September when he remarked that it was the Democrats in Congress who failed to support Fannie Mae and Freddie Mac reforms during his presidency.

Bernanke is easy to criticize , but his monetarist approach to adding liquidity to the market is a better measure than others unless one believes in contracting the money supply through Keynesian-style public works programs coupled with higher corporate and capital gains taxes that simply suck up investment dollars.

— Christopher Fee, Uniontown, PA

Recommend Recommended by 0 Readers

51.October 31, 2008 10:02 am
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Dear Nobel Laureate,

I really hope that government heads your warnings and starts spending on something productive, not 600 dollar checks for Walmart, aka China. Maybe our populace learns this time around that each of us is member of a larger community, that if you buy cheap at Walmart, aka China, your jobs would go where production is, China; that the only investment worthwhile is in education, infrastructure and equity, not vacations, fancy homes and accessories.

By the way you are such an optimist, I don't think anyone is accounting for the 15 million plus undocumented worker jobs we lost that were lubricating our economy with cash (no credit cards or checks), if you factor that in we are in a deep hole.
— Jose, Hoboken, NJ

Recommend Recommended by 1 Reader 52.October 31, 2008 10:02 am
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Comment #10 is exactly right. The disparity between the top earners and those at the bottom has contributed significantly to our current credit crisis. People buy on credit when their wages do not keep pace with the cost of living.

Sure, one can argue that those at the top work hard and deserve a bigger piece of the pie but when the compensation ratio is 400:1 it doesn't take an ethics scholar to see that this is unsustainable nor fair.
— Walter, Ames, IA

Recommend Recommended by 2 Readers 53.October 31, 2008 10:02 am
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"...in practice, if consumers were to cut back, the Fed would respond by slashing interest rates, which would help the economy avoid recession and lead to a rise in investment."

The Fed did start slashing rates over a year ago - target federal funds on 9/17/2007 was 5.25% - not exactly liquidity-trap level. The next day the drop in interest rates started and it continues now. At that time, inflation was a major concern, so many economists were opposed to cutting rates (they were kept high in Europe).

It's past time to face facts - monetary policy does not work the way Paul thinks it does.
— skeptonomist, Tennessee

Recommend Recommended by 0 Readers 54.October 31, 2008 10:02 am
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perhaps consumers will find a different kind of "cool" in their savings rates, or their in-home conservation projects, or community services. Where does it say that consumers must purchase stuff they don't need? If Madison ave. says home solar is cool, consumers will buy. That's a good thing.
— tuffy53, denver

Recommend Recommended by 1 Reader 55.October 31, 2008 10:02 am
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The credit card industry along with the home equity scam is what financed the last gasp of the seventeen year American consumer splurge. They started turning off the spigot second quarter. The public responded. Card rejected they had no other option.

The phrase overheard most frequently in our local Walmart? "No honey, put that back, mommy doesn't have the money."

The posters who point out that corporations preemptively laying off workers in anticipation of this downturn are magnifying the effect also make an excellent point. The stock market has regularly rewarded cost cutting (firing) and punished humanity (keeping a workforce in place). What to do to change this? Why is it that the bottom of the pyramid is the first to shrink? Because those at the top decide who is needed and the top of the pyramid is in contact with itself and its immediate clerical support staff.

Bridges and public transportation renewal will help the displaced construction industry, but that won't put the genie back in the bottle. The artificial inflation of the equity values of the nation's housing is now swinging in the opposite direction. Much of the new housing was poorly conceived - housing in the middle of deserts with no local water that is two hours of car commute from the local source of employment (it wasn't just Dubai) just doesn't make long term sense. But, housing in many inner city's where there are the supporting resources has been hit harder in many cases, often because housing bubbles are not driven by common sense (a golf course is not a necessity). The assertion of ecological thinking and rationality will be a bitterly contested battleground in the years to come ("Drill baby, Drill" and similarly idiotic mantras make this more than clear).
— jwp-nyc, New York City

Recommend Recommended by 1 Reader 56.October 31, 2008 10:02 am
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Is it just possible that our so-called leaders and the general population will eventually come to some sort of realization that our obscene military spending ($10 billion a month in Iraq and $4 billion a month in Afghanistan, as well as the billions it requires to maintain an empire of over 800 US military bases globally) cannot be sustained? As a start, why not cut half of the Pentagon's budget and use that money on job creation ("green-collar"), on rebuilding infrastructure, and programs of "social uplift" as Dr. King once said.
— Will Thomas, Auburn, NH

Recommend Recommended by 3 Readers 57.October 31, 2008 10:02 am
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On a recent episode of The McLaughlin Report, Pat Buchanan stated that the biggest mistake in the history of American economics was to create a credit system. To him, spending money we don't really have, which is not protected by any currency standard per se, and paying upwards of 25% interest on the balance created a debtor nation. Just like any other addiction, after a period of "putting off" the inevitable, we begin to dodge the inevitable. The balance soars, and we haven't paid the piper. Nor is consumer credit a system based on rational economics, as it stimulates abuse and creates a false sense of well-being, giving people a delusion that their income is actually much higher than it is. People get used to that idea very quickly and the credit card becomes the Golden Calf.

I remember back in the 60s I wanted to buy my mother a silk scarf for Christmas, and I went back to the store every week with $2 to pay on the "Lay-Away plan. I didn't get my purchase until the balance was paid in full. Somehow that principle has to be applied as the government revamps a decrepit, bleeding economy.
— Max, Centereach, NY

Recommend Recommended by 3 Readers 58.October 31, 2008 10:02 am
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"The Fed has been steadily cutting away, yet mortgage rates and the interest rates many businesses pay are higher than they were early this year."

Only in the last few weeks, and only for higher-risk loans. Until the Lehman Bros collapse, short-term rates had followed federal funds, as they usually do, to levels which were extremely low by historical standards.

— skeptonomist, Tennessee

Recommend Recommended by 0 Readers 59.October 31, 2008 10:02 am
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Your articles always help me understand what's happening. I hope Obama wants your advice after he's been elected and becomes our next President, whether or not you join in his administration. But if you're officially part of it, that would give me even more confidence that we'll get out of the current depression as quickly as is possible. At best, unfortunately, that won't be very fast. No one is advocating another WPA. And reforming education, starting with nursery schools, takes more than 20 years to have an effect on productivity. It would be helpful to your readers if you evaluated each of Obama's major economic stimulus programs in terms of the length of time it would take for them to have an effect on the current depression.
— BabsW, Massachusetts

Recommend Recommended by 1 Reader 60.October 31, 2008 10:02 am
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President Jimmy Carter asked American consumers to stop using credit cards in the 1979 credit crisis. The response, credit card outstandings continued to grow at an even faster pace.

This is very unusual behavior for US consumers.
— Scott Harrison, Austin, Texas

Recommend Recommended by 1 Reader 61.October 31, 2008 10:02 am
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Once again you are on the mark, Mr. Krugman. To thrive into the future, we must target those segments of the economy that form the infrastructure we depend upon for our survival. Roads, bridges and flood control are obvious examples of big "public works" infrastructure projects, but many of the systems that support our civilization are in need of repair and upgrades. Some have been in the news for years, such as primary and secondary schools, especially in our urban areas. Some are more recently in the news, such as our electric distribution system. There are aspects of our economy that can and will quickly produce wealth and jobs given incentives that provide confidence for investment and some R&D assistance. We don't need another invitation to shop for goods, transferring most of the benefit out of the country.

...and since you brought up "zero interest rates", what if we try what the Chinese did. They instituted a system that essentially produced NEGATIVE interest rates to promote business and job creation. While I would not agree with much of what the Chinese have done, manipulating their economy, they certainly provide an economic example of what it takes to go from moribund to dynamic.

We need to get out of the ditch, in repair, and back on the road with a new hand at the wheel. The current occupant has become much worse than a lame duck. The image I have is a flock of dead ducks, rotting and contaminating the whole pond.
— R Mayer, Cincinnati, OH

Recommend Recommended by 3 Readers 62.October 31, 2008 10:02 am
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So government spends more and puts people back to work. And does that mean that more will be saved or more will be spent. Saving it doesn't help a consumer-based economy and spending it won't help either because then there is nothing for the inevitable rainy day. Will inflating the currency help? Look at Germany in 1923 as an example and what followed. Frankly, I don't think anyone knows how the problems are going to be solved in the short or medium term. As for the long term, Augustine lived at the end of the Roman Empire and maybe we are living at the end of the American Empire.
— Stephen, Windsor, Ontario, Canada

Recommend Recommended by 1 Reader 63.October 31, 2008 10:02 am
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Of course we have capitulated, 4$ gas was just a month ago, food prices rising, health care cost out of control with insurance companies making excessive profits. $401k's in the toilet. I just hope the Obama get in and brings the troops home and uses that money to allow the States to award contracts to rebuild our infra structure, develop alternative energy, fuel efficient cars and trucks and build America wealth at home. Hopefully with the Obama tax cuts the middle class will be able to save for the future.
— ejm, Pensacola,fl.

Recommend Recommended by 0 Readers 64.October 31, 2008 10:02 am
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I doubt that the economy will rebound until consumers get their financial houses in order. It amazes me how so many people thought they could live on credit forever. The day has come to pay the piper. I don't feel any sympathy for people who went on spending sprees, wracked up credit while knowing they were buying what they could not afford. If they feel the pain, they might learn how to handle money.
— Debra Garson, NYS

Recommend Recommended by 3 Readers 65.October 31, 2008 10:02 am
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Luxuries exttras! I use my credit cards to buy food. No job, paying taxes on unemployment which I know I am happy to get. A small house that I am trying to keep. I guess I am the lucky one. I never thought I would retire anyway. My retirement plan is work, if only I could, and die. Save money--what's that?
— taigail, Pennsylvania

Recommend Recommended by 2 Readers 66.October 31, 2008 10:02 am
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As usual, a superb job of explaining the paradox of thrift, the relative impotence of monetary policy and the pressing need for fiscal policy (should we not all be Keynesians now?). The fiscal push should be for investments that will increase the efficiency and productive capacity of the country, as opposed to personal consumption of nonproductive items, else we will not be able to service the greater debt and eventually repay it.
— Peter Braun, M.D., Arlington, Mass.

Recommend Recommended by 1 Reader 67.October 31, 2008 10:02 am
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Not just any infrastructure, but energy efficiency improvements that will allow us to send less money overseas so that more remains here to be spent in our economy.
— Fred, Seattle

Recommend Recommended by 3 Readers 68.October 31, 2008 10:02 am
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This is the year there will be no Christmas. As a retailer, I'm already seeing it. Empty stores, people pinching pennies. The next big fall will be large box stores going under. They, too, were greedy with one built on every corner. How many do we need? And they all carry the same merchandise.
— Gary, Michigan

Recommend Recommended by 4 Readers 69.October 31, 2008 10:02 am
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As always the Professor is telling the truth as it is. The worrying thing is, that there is nothing you can do to stop it. At least not as long as you try to fix this old system. The solution lies in coming up with a different economic model, one that actually is just, provides for the general welfare and furthers the pursuit of happiness, in short on that actually implements the ideals of the American Revolution and finally delivers on those promises.

— Alexandra, Washington D.C.

Recommend Recommended by 1 Reader 70.October 31, 2008 10:03 am
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The optimum time for consumers to cut spending is the same as for planting a tree-- the best time was ten years ago, the second-best time is today. The reckoning will never be pleasant, but waiting won't make it easier. I've been joking that for Christmas this year, I'm giving two gifts--canned peaches and ammunition. It's barely a joke, but it's also barely not true.
— Adrian B., Madison, WI

Recommend Recommended by 0 Readers 71.October 31, 2008 10:03 am
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So let me get this straight: The economy needs someone to be spending to move the money around. But most consumers have stopped spending and taken to saving, which anyone with a modicum of personal-finance sense would tell you we need to do.

There is one segment of the population that doesn't need to really increase their savings: the rich. They've been "saving" by investing their money or loaning it out to the government. So how about us non-rich 95% start doing the saving, and the remaining 5% do the spending. Of course, they can't buy enough boats and Lexi (plural of Lexus?) to offset that TV that I'm not going to buy now, so let's help them out buy directing their money towards infrastructure. By that, I mean human (health, education), communications, energy (renewable, electric grid), civil (roads, bridges, rail network, water network), military (our men and women and materiel have taken a beating lately), and economic (paying down the debt). I'm sure we can re-establish some means by which the wealthy pay for these things. (Is it ironic that our biggest re-distribution of wealth happened during the Red-scare era of the 1950s?)

It's my turn to do the saving-part of the economy. Let the rich do the spending.
— GW, Indiana

Recommend Recommended by 1 Reader 72.October 31, 2008 10:10 am
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You're right and David Brooks is right and you are TOGETHER! Surely, someone in the Bush Administration will dane to read both your pieces in the despised "liberal press", today, and get new economic polices moving!
— Ellie Moller, RYDE, CA

Recommend Recommended by 1 Reader 73.October 31, 2008 10:10 am
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Dr. Krugman, you have always beem a Nobel Prize winner in my view but congratulations on the fact that the rest of the world noticed. And, as you offer, perhaps the most direct route out of this crisis is a works project (such as Senator Obama proposes and such as FDR imposed over the objections of those who took all the money) because, thanks to the Bush plan, we have a huge deficit with almost nothing to show for it - can we take on the quasi-economic notion of supply side policies, end the Iraq conflict (at least as Afghanistan looks now to be even trickier), and begin to use taxpayer dollars to help, well, taxpayers.
— alprufrock, Portland, Oregon

Recommend Recommended by 1 Reader 74.October 31, 2008 10:10 am
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Infrastructure: our children will thank us.

Healthcare: it's labor, thus jobs, intensive.

Green technology: let us take the lead in the

technologies of the future.
— epistemology, Media, PA

Recommend Recommended by 3 Readers 75.October 31, 2008 10:10 am
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Mr Krugman Why not spell out your suggestions for a stimulus package right now before the lame duck congress and administration return.Then we would have a baseline to work with. Previous actions by treasury and the fed, some of which you agreed with, have floundered because of continued greed by banks and without a sense of national unity or purpose. Lets see if this malaise can be changed.
— TEK, NY

Recommend Recommended by 1 Reader

26.October 31, 2008 9:49 am
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We need a stimulus package that doesn't involve a giveaway to consumers who will only save it.

But won't more spending just increase the deficit?

Here's my idea. Lets build the ultimate WPA project - a high speed rail line between NY and Chicago. A 700 mile trip at 200 mph (maybe 150 avg with stops), a business traveler could go from Union Station to Penn Station in 5 hours, faster than flying when overall trip length is considered. At $1 million per mile the money would flow for materials and labor, benefitting all segments of society.
— 10K walker, New York

Recommend Recommended by 5 Readers 27.October 31, 2008 9:49 am
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It is obvious that Americans can no longer rely on loans to make up for their meager incomes which have stagnated for decades. Instead, it would make quite a bit of sense to turn to their.... ACTUAL INCOMES, by demanding salaries that can be lived on. For 30 years, it has somehow been reprehensible for workers to demand what's rightfully theirs: a share in the incredibly rapidly climbing profits of their employers.

www.usparliament.blogspot.com
— Jacob Olsson, New York

Recommend Recommended by 10 Readers 28.October 31, 2008 9:49 am
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I suppose it would be political suicide to suggest that, instead of a "rebate" check, the government should give some extra money to those already on welfare or at poverty-level income.

They would certainly spend it. But they aren't "working class" and don't pay taxes, and therefore do not deserve any extra help.

That would be, oh no! even more socialism.
— maryann, Tacoma

Recommend Recommended by 5 Readers 29.October 31, 2008 9:50 am
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I wonder if the fact that the consumer has effectively already bailed (or started to) is actually a good thing rather than a bad one -- after all, such behavior, no matter what the path of the economy overall is over the longer term, will last a certain amount of time. With the downturn in consumer activity starting relatively earlier in the process, it would seem that by the time things begin to stabilize, the consumer would be ready to jump back in -- perhaps shortening the "bad times". Back in 1989, as the seeds of the last "normal" recession began (the events of 9/11 obviously had a profound effect on the most recent one, rendering it "not normal") I found myself running the old family business (a women's clothing shop in Brooklyn). After a rather promising Columbus day weekend (the beginning of the coat season -- the time of year that effectively determines how the year overall will look) all of a sudden things just died. It was palpable. You could almost smell it.
Maybe, just maybe, the early capitulation of the consumer (and I think we all have a pretty good idea of what the fourth quarter will look like) coming early will lead to a recession that will look more like a "V" than a "U". I'm hoping that as long as unemployment remains under say 7% or so, an appropriate new administration comes in and credit markets begin to stabilize, we'll be OK (of course, "OK" in this context would mean that things perk back up in late 2009 as opposed to 2011.
I guess we'll see -- at least with any luck at all.
— Artie Gold, Austin, TX

Recommend Recommended by 2 Readers 30.All Editors' Selections » EDITORS' SELECTIONS (what's this?) October 31, 2008 9:51 am
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I think you're confusing sobriety with an empty bottle, Paul. I'll go on another bender if you can spare a little change.
— K McNamara, Houston

Recommend Recommended by 7 Readers 31.October 31, 2008 9:51 am
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I don't know much about the economy. But I believe in supporting local farms and mom and pop stores. These hard working Americans are my neighbors and I hate seeing them getting swallowed up by corporate America. Sometimes I have to pay a little more, but mom and pop stores give the best service, sell quality products, and truly care about their costumers. I buy what I need and hope I'm making a difference. You can't build a house on a weak foundation.
— cluppins, nh

Recommend Recommended by 6 Readers 32.October 31, 2008 9:51 am
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What we need now is a fiscal stimulus like actual government spending. Exactly what John McCain thinks is a bad idea.

Yet another reason to vote for Barack Obama.
— mjb, Tucson

Recommend Recommended by 6 Readers 33.October 31, 2008 9:52 am
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For one, Mr Krugman, read up on your St.Augustine. He never prayed or pleaded anything like your quote. Two, why are you not worried about the burgeoning federal deficit? A fiscal stimulus sounds good, but the wells are dry. Nobody will be buying our federal debt anymore, after China and other emerging markets are caught in recession. Interest rates will rise, mortgage rates will rise, home values will fall further, and all the stimulus goes for naught
— klaus volpert, wayne, pa

Recommend Recommended by 0 Readers 34.October 31, 2008 9:57 am
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Problem - no jobs - no jobs, no paycheck - no paycheck, no money - no money, can't pay bills.

Solution - JOBS! If it takes another project like the WPA, then do it. Put the construction workers back to work building and repairing our infrastructure and working on alternative energy programs like solar and wind power. More engineers will be needed to plan these projects, more clerical workers for support.

Put the unemployed people from the auto industry to work finding a better battery for electric cars, better fuel efficient engines, better designs for alternative energy vehicles.

Use the medical grads and undergrads in areas such as the Native American reservations and community clinics. Use the newly graduated and soon to be graduated teachers in inner cities and also reservations. So many ways we can employ the unemployed and also help our own country at the same time.

More jobs means that grocery stores will not close, more restaurants will not close, more hospitals will not close, more rentals will not be vacant, more homes will be sold, more people could pay their mortgages, retail sales will go up. So many ancillary businesses will benefit.

If this be "socialism", then why not take the best ideas of socialism and make them work for our people?
— Utahreb, Fort Mohave, AZ

Recommend Recommended by 7 Readers 35.October 31, 2008 9:57 am
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It says something ominous about 'the economy' the second-largest item (after 'defense') in the federal budget is the amount of interest we paid last fiscal year on the public debt. As I understand it, interest is one of those expenses that absolutely cannot be (ahem) 'deferred' (politely, its 'Non-Discretionary').

— sandyg, austin,tx

Recommend Recommended by 1 Reader 36.October 31, 2008 9:57 am
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Actually, we are still spending the same amount of money; but all of it is spent for gas, groceries, utilities, ...

Non-essentials have gone by the wayside.
— jr, Ohio

Recommend Recommended by 5 Readers 37.October 31, 2008 9:57 am
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I think that #9 got it right, an increased money supply. Presumably, this will increase inflation rates which, I posit, is useful in this situation. The massive debt that we have accumulated needs to be reduced or eliminated in order to allow increased spending. There are two options to reduce debt. First, one could pay it back. In this case, that would imply either a radical cutback in US consumer spending or taking massive amounts of market share from producers in other countries. Second, inflation works wonders at reducing debt, since a 5% annual inflation rate reduces the value of debt by 5% per year. Inflation also reduces asset value, but since we are a debtor nation at this point, I think that increased inflation rates would be hugely beneficial in the long term (10-30 year window) for the US economy.
— Rob, Boulder

Recommend Recommended by 1 Reader 38.October 31, 2008 9:57 am
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Mr. Krugman's comments about the financial crisis have, from the beginning (particularly the one previous to this), been instructive lessons in the difference between intelligence and wisdom -- not to mention how private virtue can be a public vice. The almost gleeful way with which he has spelled out "doom" for all to read makes me almost understand why conservatives find liberals so distasteful. There is certainly no harm in providing good information about what is happening, but indulging in predictions (such predictions are something which any economists knows not to accept, particularly from other economists), as he has repeatedly done, and gloomy ones too, whose only possible result could be to heighten the irrational anxieties that are already gripping people, is irresponsible and stupid. Warren Buffett had the right idea: "it is time to invest". And if you're cash-strapped, well then, learn some lessons about savings and then maybe the next time this happens you'll have some cash ready and you can spend gobs of it intelligently, on under-valued equities -- and you won't have to read about how your private virtue is flushing the country down the toilet.

Mr Krugman's wisdom in short: You should be so scared you'll never want to spend again, but please don't save your money, even though saving money is a good thing. Let's start another bubble!!!
— Jon, China

Recommend Recommended by 0 Readers 39.October 31, 2008 9:57 am
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I believe your columns lately have been laced with excessive hyperbole and, at times, downright fear mongering. We must act now or we will all be penniless, homeless and hungry!!! Remember many qualified economists agree that the Great Depression was made worse by government action, not better

Similar to what GWB did back in 2001/2002 in the war on terror, you and others are pushing fear in an effort to obtain certain political goals. While I cannot be certain such goals are not worthy of consideration or action, I am sure that any agenda hastily pushed and passed based on fear is one that we will all regret in the years to come.
— Dave, NJ

Recommend Recommended by 1 Reader 40.October 31, 2008 9:57 am
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Throughout this recent fiscal crisis, much has been made in comparing this recession/downturn to prior recessions, particularly 1991, 1980, and even the Great Depression.

One very important difference between today and prior economic recessions is the Internet, with its vast resource of information and data (some valuable, some worthless) and the speed at which information is shared.

In the current environment, investors and consumers have access to immediate and widely broadcast information. And equally important is the lack of or “missing” information (lack of disclosure and transparency regarding mortgage backed securities, credit default swaps, how AIG has spent the bailout funds, etc.). These factors might impact the speed and degree at which consumers react to economic news and business cycles, from the start of the downturn, through the depth of the downturn, and the speed of recovery.

It would be very interesting study the impact of the Internet on the current crisis.

— M Bernier, Newburyport

Recommend Recommended by 0 Readers 41.October 31, 2008 9:57 am
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Yes. It's time for New Deal II. Though it will explode the budget deficit, it's time for major government investment in energy, health care, education, and infrastructure. For today at least, Paul Krugman and David Brooks are (sort of) on the same page. Let's revel in the harmony and put the spirit of bipartisanship to good use.
— Steve Blevins, Oklahoma City

Recommend Recommended by 5 Readers 42.October 31, 2008 9:57 am
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The government is printing money as fast as it can, but soon even it can not keep up with the bailout. And it too will need to be bailed out. Than we will call on GOD to bail us out. And what will GOD say, "This is a recorded message please leave you name and telephone number and I will get back to you as soon as I can".
— agittleman1, Arkansas

Recommend Recommended by 3 Readers 43.October 31, 2008 9:57 am
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Apparently companies slashing employees and keeping real wages down have forgotten that ultimately in order to be successful, people have to be able to afford their products. So, corporate America is also perpetuating the downward spiral.
— Mike, Mount Laurel, NJ

Recommend Recommended by 6 Readers 44.October 31, 2008 9:57 am
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So our economic well-being depends on ever-growing expenditures by consumers, using ever more of the finite resources of the planet (whether for any useful purpose seems irrelevant), and an ever-growing environmental footprint. There is something wrong with this picture! It makes one despair that so-called western civilization is capable of tackling the growing environmental pressures.

Jack
— Jack Johnson, Toronto, Canada

Recommend Recommended by 1 Reader 45.October 31, 2008 10:00 am
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tell me this, krugman. if the congress can afford to give wall street and the banks $700M, why cant it afford to give american citizens something other than the old $300 rebates?? wouldnt giving every american citizen, amn, woman and child, $100K help the economy even more. because that money would be put into circulation almost immediately. either as a spending spree or as a payment of some of the outstanding debt. also, some would probably invest it or, even better, hold onto it as savings (were already told that americans are the worst when it comes to saving for a rainy day).

why is it better to give the financial sector this huge bailout and not help the average joe (tinker, tailor, plumber or what-have-you) just a little? or a little more than what we usually get? sure, a lot of people would just waste it, but whos to say that the financial big dogs would use it any better?

you could put any stricture you want on the largesse: if 60-75% of the money doesnt go to pay down existing debt, then you cant declare bankruptcy for 10y. a lot of people would be helped, and a lot of money would exchange hands. and the point of an economy is the circulation of the currency, right? as for giving money to children (who, one would think, would have no debt), a generation of kids who would have a education fund ready made.

so the point of this comment is really, where is mine?? after all, it is my money, isnt it??
— milti, chicago

Recommend Recommended by 1 Reader 46.October 31, 2008 10:01 am
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For a President-Elect to propose policy before his inauguration may be virtually unheard of.

However, these are virtually unheard of times, and Barack Obama's win may prove large enough to give him the stature he'd need to offer policy to Congress in a matter of a couple of weeks after his victory.

Bush's stature is so low, his authority so utterly discredited, there would be little if anything he could do to undermine Obama ... at least not publicly.

Worth a try, for this special President-Elect?
— RWeber, Park Slope

Recommend Recommended by 1 Reader 47.October 31, 2008 10:01 am
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Mr. Krugman, why didn't you say:

Buy American!

To open so drastically and so fast the market from China & Co was the biggest mistake.

This is the main cause for the recession!
— janko1, Slovenia

Recommend Recommended by 2 Readers 48.October 31, 2008 10:02 am
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Paul, you are a Nobel prize winning economist.Surely if a working stiff like me can spot a neoliberal ploy at work in this current economic crisis. Talking about consumers seems almost a purposeful distration for the reality of the implementation of the neoliberal shock doctrine on America, in a late-term effort to massively redistribute wealth to the elitist plutocrats before they leave power. Yet you, dear sir, are tilting at windmills [though your quote from Augustine was very intesting]. Let's talk about the trillions of dollars that rich individuals and corporations have squirreled away in off-shore shelters. That is more the key to understanding - and solving - this crisis.
— Victor Edwards, Holland, Mich.

Recommend Recommended by 2 Readers 49.October 31, 2008 10:02 am
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Hooray! You're pinning our hopes on the Congressional Action Team! I feel better already. Given that consumer spending is the most significant leading economic indicator, this is the most depressing news I've heard in weeks. I doubt a good'ol temporary stimulus package-induced bump will do anything other than increase this year's hilariously large deficit. That is, of course, unless the GOP package, based on suspending capital gains taxes, gains traction. That's their answer to everything - "If only I didn't have to pay taxes on all those capital gains, I could invest in durable goods for my family." It's a moot point, since nobody will have any capital gains to tax this year anyway. Boehner's severe tunnel vision with respect to this issue is hysterical, but I digress.

The reality is that there is little the government can do to address a problem of this size and depth. We're going to have to ride it out until consumer spending thaws out, which, with any luck, will happen before xmas 2009. The best thing the new administration can do is set an example with a sober, consistent and calm temperament.
— Jaded, Brooklyn, NY

Recommend Recommended by 0 Readers 50.October 31, 2008 10:02 am
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so the fed is irrelevant;true but the key to the elite's control of americans remains the maintenance at all costs of consumer debt-credit.
only by renouncing debt at the personal level can the economy recover- pay cash for what can be afforded,or do without. yes there will be pain, but the credit vampires can be destroyed and people can take back control of their financial destinies; and proponents of the chicago school of economics should be dealt with by any means neccesary.
plus the usa should consider the repudiation of debt; imagine the panic in china.
— judah benjamin, portland,or.

Recommend Recommended by 0 Readers

1.October 31, 2008 7:19 am
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What kind of government fiscal spending? Fixing bridges and roads? Investing in our infrastructure?

I like it more than simply sending out checks - keep people working and they'll have that money to spend on necessities and we'll also get much needed work done.

And its time we stopped spending foolishly on designer clothes we didn't need (and couldn't afford), and on newer flashier cars each year and bigger unaffordable homes. I love nice clothes and cars and homes - but at some point you have to become aware how much of it is simply unnecessary and how much that kind of wasteful debt is harmful.
— Katy, NYC

Recommend Recommended by 69 Readers 2.October 31, 2008 7:19 am
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Yes! Thank you! Don't give me another credit voucher and tell me to go shopping.
I don't need anymore stuff. Build something -- a windmill, a bridge to somewhere -- I don't really care. Keep the gift certificate, make an investment and put people to work here in America.
— Bradley Towle, Tokyo, Japan

Recommend Recommended by 113 Readers 3.October 31, 2008 7:19 am
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There is one thing the government can do:

Drastically cut the interest rate on all student loans, no matter how old they are, and stop charging interest during the time when a student loan is on deferment. A person suffers a layoff and gets a deferment, and the interest on the student loan still accumulates, so whatever balance was paid off just returns and the loan is like revolving credit that is never paid off. Right now there is no way a person can refinance an old student loan at a lower interest rate. Student loan interest is eating people's salaries. Where is all of this interest money going? Currently, any actions taken on interest rates have no effect on student loans. Our society needs to stop gouging people just because they went to college or medical school.
— LAS, Redmond, WA

Recommend Recommended by 127 Readers 4.October 31, 2008 7:19 am
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I am willing to bet, and have been saying this for weeks, that a victory for Obama on November 4 will signal such a sea change in our economic confidence that the markets will respond in time to rescue a falling economy. It should take the form of calming fear itself just as the country experienced with the election of Franklin D. Roosevelt.
— Gloria Endres, Philadelphia

Recommend Recommended by 108 Readers 5.October 31, 2008 7:19 am
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I am aftraid that the consumer has finally seen the light and decided to opt out of the system. The economy is going downhill in a hurry and there are no brakes. I see a big crash ahead, and most likely a collapse will follow the crash. No matter what the government does now, short of funding a major war on the scale of WWII that bush has not yet managed to create, anything that is proposed/udertaken has the people not believing,trusting or wanting. They have been burned too often and they are wary of everyone and everything.

The worse is yet to come. A new WPA might staunch the bleeding, but there is not much help for a severed juglar.
— Clifford, WA

Recommend Recommended by 23 Readers 6.October 31, 2008 7:19 am
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I largely agree with this view. However, this spending comes on top of an existing debt and existing large deficits. We have to finance all this. This is a large amount of Treasuries that could flood the market. What if not enough buyers show up to an auction. This is hardly ever discussed. It is just assumed someone will buy all this debt. What if they won't? What if they can't?!?!?

Won't interest rates shoot through the roof?

Possibilities of US default are being whispered about in the far reaches of the ether, just like the possibility of financial crisis was two years ago.

By the way, congrats on the Nobel. Nicely done.
— Roy S, Salt Lake City, UT

Recommend Recommended by 16 Readers 7.October 31, 2008 7:19 am
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It's a great time to spend massively on infrastructure and clean energy, both items are in Obama's agenda. Deficits really don't matter in the short term as only government can pick up the slack in consumer spending.
— rpa, Seattle

Recommend Recommended by 59 Readers 8.October 31, 2008 7:19 am
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It may be painful, for all of us, for the consuming public to retrench, but it is very short-term thinking to believe such behavior is unfortunate. The materialism of our culture is out of control, and the corporate structure that has encouraged it is bankrupt, literally and morally. There is little to no authentic joy to be had at the mall. It is the essence of neurosis to repeat what hasn't worked, in the vain hope that next time it will, yet the ever-unrequited lure of stuff has brought us to the mall repeatedly. What a ridiculous basis for a world economy!

How much better will we be if we invest our resources in strengthening and beautifying ourselves, country and world included. No, it is not too bad that consumers are shying from purchases now. This system is bust, and we have to bust it. May as well happen sooner than later.
— Shelley, Santa Barbara

Recommend Recommended by 95 Readers 9.October 31, 2008 7:22 am
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Interest rates are not the only tool the Federal Reserve controls. Watch the action in the Open Market Committee to buy securities and increase the money supply.
— Barbara Reader, New York

Recommend Recommended by 6 Readers 10.October 31, 2008 7:22 am
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It's pretty simple. People are not payed a living wage in the US anymore. The spread between what folks get paid and what they need to live has been made up by credit over the past 20 years. The wealthiest simply pocketed the difference plus all the interest on those loans.

The answer is simple, pay better wages and people will spend more.
— Don, Madrid

Recommend Recommended by 125 Readers 11.October 31, 2008 7:22 am
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You are channeling Lord Keynes quite nicely, sir! Now if President Obama can channel FDR, we might, just might, stimulate a recovery based on adding value to the nation's infrastructure as well as its psyche.
— Ken Rabin, Warsaw

Recommend Recommended by 47 Readers 12.October 31, 2008 7:22 am
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Save baby save, worked for us after WWII, the Japanese and the Koreans later on, so hopefully after we have stooped our addiction to easy credit it will work again. A little hardship always builds character and makes for a better future! Just like there are no atheist in a foxhole so there are no (fewer) moral voters in an economic crisis!
— Sparti, Orlando, FL

Recommend Recommended by 10 Readers 13.October 31, 2008 7:22 am
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Isnt the real problem that there is nothing in the forseeable future that will provide an increase in disposable income to enable consumers to go out and buy again? Wages are stagnant and we are producing fewer and fewer goods here at home. Can government spending be big enough to restart our economy in a significant way? Im not sure there is a clear way out of this crisis.

Perhaps we need to create a new sector in the economy.

Is the Green Economy the solution? Just as the introduction of the digital age created new jobs and economic activity? Consumer spending based on credit rather than real income has been tapped out to the maximum.

Unless a new economic sector can be established, I see little hope to offset the loss of exported jobs and income.
— Frederick, Studio City

Recommend Recommended by 42 Readers 14.October 31, 2008 7:22 am
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I'll admit it. I've reduced my spending. No more dinners out, no more new furniture, no new clothes etc.

My company just finished laying off several hundred people, so my response is rational. Why did my company have to slash jobs at this time? They still made money in the 3rd quarter. Our companies have sacrificed us on the altar of efficiency and leverage. It is their actions that are magnifying this financial crisis too. Businesses that cannot weather a 2 quarter recession without laying people are not well run. When they lay people off because they are over-leveraged, they just make that 2 quarter recession even worse. If shareholders demand efficiency and short-term focus on financial results, this is what they get when consumers stay home for a month or two.
— Paul, Kalamazoo, MI

Recommend Recommended by 81 Readers 15.October 31, 2008 7:22 am
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Is it really the American consumer who has capitulated, or is it the long chain of lenders and savers who fed his habit? And perhaps instead of monetary policy, we now need a fiscal policy that will prey on the desperation of the America's working (and unemployed) poor: let government give supplementary income to those in the bottom quarter of the income distribution. They will, of necessity, spend all of it.
— Pandit, SF Bay Area

Recommend Recommended by 14 Readers 16.October 31, 2008 7:22 am
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Temporarily Eliminate Sales Taxes: Paul Krugman points out that “what the economy needs now is something to take the place of retrenching consumers” and says that this “should take the form of actual government spending rather than rebate checks that consumers probably wouldn’t spend”. I suggest that we supplement actual government spending (infrastructure etc.) with temporary elimination of all sales taxes, with the federal government making up the loss to the budgets of individual states. This will give a direct incentive to consumers and will stimulate the economy.
— crt-nyc, New York, NY

Recommend Recommended by 10 Readers 17.October 31, 2008 7:22 am
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Invest in green technology and universal health care. Those two things would REALLY stimulate the economy by fostering innovation and freeing up many people to strike out on their own without fear of losing health care and with the knowledge that they could get going on a green job.

Universal health care would also have the side benefit of employing more people to supply the health care for the people that have been doing without for so many years and stopping about half the bankruptcies that are happening due to overwhelming medical bills, slowing down the foreclosure rates quite a bit.
— splashy, arkansas

Recommend Recommended by 117 Readers 18.October 31, 2008 7:22 am
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As usual, a very clear explanation and policy prescription from Krugman. But if we keep borrowing money to pay people in Pakistan and Afghanistan not to fight us, we will debase the dollar even more, and leave our kids with less to show for it.

If we're going to overpay Halliburton, we should make sure that what they build is going to our own infrastructure instead of Iraq's - and it's easier to keep an eye on them to make sure they follow the electrical codes, so that particular private vice becomes public virtue.
— Roger, Texas

Recommend Recommended by 43 Readers 19.October 31, 2008 7:22 am
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What will the impact on consumer confidence of lower gas and groceries that will be more pronounced in October?
— Luis Arenzana, Madrid, Spain

Recommend Recommended by 1 Reader 20.October 31, 2008 7:22 am
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Actually, I think the timing is particularly poor for yet another mundane but important reason:

People don't have the money to make this anything close to a successful Christmas season for retailers. The impact of this will be to drive some of them out of business and cause others to shrink--the effects of which will ripple through the economy. More people will be trapped in economic limbo or hell with very little opportunity to escape within a short period of time.

But my belief is that artificial stimulation and expansion of the world's economy through over-stimulation of American consumption was bound to produce a backlash or pendulum effect at some point. We've overspent to such an extent that the hangover and recovery periods are going to be extremely long--and extremely painful.
— MS, West Hollywood, CA

Recommend Recommended by 27 Readers 21.October 31, 2008 7:47 am
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Doesn't classical economics say that taxes and rates should be high and government spending low in 'good' times so that in 'bad' times taxes could be slashed and spending boosted to keep the economy going? Has this ever happened?
— JR Rudert, RI

Recommend Recommended by 17 Readers 22.October 31, 2008 7:47 am
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Unfortunately, this is so true. My husband, who always says that I can't go a week without buying something, hasn't said that in quite a while.
— jss, new york

Recommend Recommended by 14 Readers 23.October 31, 2008 7:47 am
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Infrastructure, infrastructure, infrastructure.
— Gerard Schaefer, Massachusetts

Recommend Recommended by 29 Readers 24.October 31, 2008 7:47 am
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As usual you are correct, the government is going to have to spend to take up the slack.

"That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldnt spend."

And that stimulus spending should be devoted to pulling this country from the old to a modern infrastructure of the 21st century; a wind powered electrical grid, modern seaports and a rail system equal or even better than the interstate road network.

Spend the money but have something of real value to show for it other than just red ink. Try to turn this sow's ear in to a silk purse and we can come out of this in better shape than before.
— tim, iowa city

Recommend Recommended by 50 Readers 25.October 31, 2008 9:47 am
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Having a long-overdue pay increase at work would greatly help too. Pay never seems to keep pace with the essentials, nevermind frivolities.
— Seymour Goode, MA

Recommend Recommended by 8 Readers

The fruit of hypocrisy

2008-10-31T19:25:00.001+05:30

Dishonesty in the finance sector dragged us here, and Washington looks ill-equipped to guide us out

Joseph Stiglitz
The Guardian, September 16 2008

Houses of cards, chickens coming home to roost - pick your cliche. The new low in the financial crisis, which has prompted comparisons with the 1929 Wall Street crash, is the fruit of a pattern of dishonesty on the part of financial institutions, and incompetence on the part of policymakers.

We had become accustomed to the hypocrisy. The banks reject any suggestion they should face regulation, rebuff any move towards anti-trust measures - yet when trouble strikes, all of a sudden they demand state intervention: they must be bailed out; they are too big, too important to be allowed to fail.

Eventually, however, we were always going to learn how big the safety net was. And a sign of the limits of the US Federal Reserve and treasury's willingness to rescue comes with the collapse of the investment bank Lehman Brothers, one of the most famous Wall Street names.

The big question always centres on systemic risk: to what extent does the collapse of an institution imperil the financial system as a whole? Wall Street has always been quick to overstate systemic risk - take, for example, the 1994 Mexican financial crisis - but loth to allow examination of their own dealings. Last week the US treasury secretary, Henry Paulson, judged there was sufficient systemic risk to warrant a government rescue of mortgage giants Fannie Mae and Freddie Mac; but there was not sufficient systemic risk seen in Lehman.

The present financial crisis springs from a catastrophic collapse in confidence. The banks were laying huge bets with each other over loans and assets. Complex transactions were designed to move risk and disguise the sliding value of assets. In this game there are winners and losers. And it's not a zero-sum game, it's a negative-sum game: as people wake up to the smoke and mirrors in the financial system, as people grow averse to risk, losses occur; the market as a whole plummets and everyone loses.

Financial markets hinge on trust, and that trust has eroded. Lehman's collapse marks at the very least a powerful symbol of a new low in confidence, and the reverberations will continue.

The crisis in trust extends beyond banks. In the global context, there is dwindling confidence in US policymakers. At July's G8 meeting in Hokkaido the US delivered assurances that things were turning around at last. The weeks since have done nothing but confirm any global mistrust of government experts.

How seriously, then, should we take comparisons with the crash of 1929? Most economists believe we have the monetary and fiscal instruments and understanding to avoid collapse on that scale. And yet the IMF and the US treasury, together with central banks and finance ministers from many other countries, are capable of supporting the sort of "rescue" policies that led Indonesia to economic disaster in 1998. Moreover, it is difficult to have faith in the policy wherewithal of a government that oversaw the utter mismanagement of the war in Iraq and the response to Hurricane Katrina. If any administration can turn this crisis into another depression, it is the Bush administration.

America's financial system failed in its two crucial responsibilities: managing risk and allocating capital. The industry as a whole has not been doing what it should be doing - for instance creating products that help Americans manage critical risks, such as staying in their homes when interest rates rise or house prices fall - and it must now face change in its regulatory structures. Regrettably, many of the worst elements of the US financial system - toxic mortgages and the practices that led to them - were exported to the rest of the world.

It was all done in the name of innovation, and any regulatory initiative was fought away with claims that it would suppress that innovation. They were innovating, all right, but not in ways that made the economy stronger. Some of America's best and brightest were devoting their talents to getting around standards and regulations designed to ensure the efficiency of the economy and the safety of the banking system. Unfortunately, they were far too successful, and we are all - homeowners, workers, investors, taxpayers - paying the price.

Joseph E Stiglitz is university professor at Columbia University and recipient of the 2001 Nobel prize in economics josephstiglitz.com

Growth and Welfare: Rising Income And Declining Satisfaction

2008-10-31T19:19:00.003+05:30

Bharat Dogra
The Statesman, 31 october 08

In recent years whenever our ruling politicians have been told about increasing problems and discontent of the people, they have responded in various ways. They never forget to draw attention to the high rate of economic growth. “Look at the 9 per cent growth rate, things can’t be bad”. But what politicians forget is that there is an increasing disconnect between the growth rate and GNP figures on the one hand and the real well-being of people on the other. This leads to growing disenchantment with existing economic indicators like the GNP. So much so that the French government, responding to people’s changing perceptions, has now launched efforts to find other indicators which can be a better reflection of the real condition of the people.

Even the 23 high-income OECD countries, which are supposed to be the biggest achievers and beneficiaries of the existing path of development, are discontented.

The Human Development Report states: “Although per capita incomes in the OECD countries now average $20,000, surveys reveal growing insecurity and considerable dissatisfaction.” In Britain, a study by the New Economics Foundation which prepared an index of ‘Sustainable Economic Welfare’ revealed that during 1975-1990, the GNP rose by about 33 per cent but sustainable economic welfare fell by about 50 per cent.

Quality down

In a survey on the changes in the quality of life by the British Social Science Research Council covering a five-year period, the people who were interviewed almost unanimously said that their level of consumption had gone up yet the quality of life had gone down during the last five years. They feared that this trend of increased consumption and a decline in the quality of life would continue over the next five years.

Most countries have registered an increase in life expectancy in recent decades; but this has been accompanied generally by an increase in chronic health problems, physical as well as mental. The Director-General of WHO said recently, “Increased longevity without quality of life is an empty prize.” The state of the World Health Report 1997 (WHR) prepared by WHO went a step further when it added, “Longer life can be a penalty as well as a prize. A large part of the price to be paid is in the currency of chronic disease.”

In Britain, for instance, General Household Surveys after a 16-year gap revealed a 50 per cent increase in ‘long standing illness’ and a 75 per cent increase in acute illness during the preceding two weeks. Walter Yellowlees, a highly experienced doctor of this country said in a paper presented at the Royal College of General Practitioners : “I believe it is true to say that in those countries which have achieved unparalleled advance in technological skill in medicine and in what is called standard of living, we are witnessing the decay of man ~ the decay of his teeth, his arteries, his bowels and his joints on a colossal and unprecedented scale.”

Suicide rates are known to be quite high among some of the most economically prosperous countries, raising disturbing questions. In Australia (what appears to be a land of fun and fortune), suicide rates are reported to be among the highest in the world. As many as ten per cent of Australians commit some form of self-harm.

China is supposed to have the most impressive record of economic growth in recent years. However, a recent study by WHO, Harvard University and the World Bank noted that China also has one of the highest suicide rates in the world ~ about thrice the world average.

In India, the price rise is disconnecting the common people from the widely publicised data of high economic growth. The impact is worse than what is indicated by official statistics of inflation. In recent interviews with weaker section families, this writer found that people would time and again come back to talking of the impact of inflation regardless of what question was being asked.

However, even before the present phase of inflation, middle class families were also complaining of a sense of deception ~ of seeing their cash gains being lost in the middle of other, frequently bigger changes.

Many people complain bitterly about the steep hike in educational and medical expenses. With the increasing privatisation of education, people have more diverse options for their children’s education and careers, but for many of them this gain has come at too heavy a price. There is increasing economic tension as limited income gains are more than wiped out by sharply rising educational expenses from early school to the university level. At the same time, there has been a decline in the standard of government schools and closer career linkages with expensive educational institutions so that few options may be left for the people to opt out of the expensive system.

The lack of options is becoming even more difficult in the case of medical treatment. In most parts of the country, the standards of government hospitals and public health centres have been allowed to deteriorate. Simultaneously, there has been a proliferation of private hospitals and nursing homes, including several in the ‘five-star’ category. People are torn between the desire to avail the treatment here and the prohibitive expenses. A single serious illness or accident in a family can eat up all savings, perhaps also lead to indebtedness. Close family ties push people to seek better and convenient medical treatment at all costs, leaving behind a legacy of debt and economic stress even in the middle of rising cash earnings. Steeply escalating expenses of medicare and medicine cause tension and uncertainty among people regarding how to cope with a medical emergency.

Lopsided growth

Although India has been known for its closely-knit families, the trend towards a breakdown of ties has increased. This is partly because of the same factors that promise a rise in monetary gain. The disruption of family life leads to stress and depression, above all for children, and increasing economic problems as well.

Growing inequalities in the wake of fast but lopsided growth leads to social tension and a feeling of being left out among many people. In the middle of all the glitter and glamour of fast economic growth, many may feel squeezed out or alienated compared to those who can join in the celebrations. Thus in a situation of rising inequalities, in terms of relative gain and loss even many of those who have not lost in real terms may nevertheless feel like losers. Such feelings get aggravated in times of inflation when the majority suffer a huge pinch even as the party goes on uninterrupted for a select few.

There needs to be a wider and deeper realisation of these factors which matter a lot for the well-being of people beyond the statistics and rhetoric of growth and GNP. A better realisation of the real basis of people’s well-being will make it possible for economics and governance to become more involved in the true welfare of people.

The writer is a social activist

REFORMS GONE HAYWIRE - A wholesale repudiation of progressive taxation

2008-10-30T19:58:00.000+05:30

Ashok Mitra
The Telegraph
November 29, 2004

The word, ?comprador?, of 16th-century vintage, has its roots in the Portuguese language. It has, however, travelled far and wide since. It originally meant a native house-steward, at least so suggest the dictionaries. Gradually, in the heady colonial days, comprador came to connote a native servant employed as head of the native staff, and as agent, by European commercial and business houses. In the course of the past century, particularly in the context of Latin America, the expression has assumed a more pointed significance. A comprador is now an individual who not only acts as agent representing foreign interests, but who, in addition, almost as a matter of principle, places the interests of foreigners above those of his native country.

Political economy in Latin America is full of rich debates concerning traits and symptoms of compradorism as well as stages and phases of the comprador epoch. The reverberation of these debates has not quite reached India. This is understandable, for Indian scholars have greater respect for pucca Western strands of thought. That does not mean though that the practice of compradorism has lagged behind here. The decade of the Nineties is for India about as important, one is almost tempted to say, as the final decades of the 18th century were for the advent of the Romantic era in Europe. Indians have learnt in the course of this decade that to be gracious to foreigners is the quintessence of economics; that is to say, the interest of foreigners must precede national interests. Which is why in 1994 the American consultancy group, Enron, was allowed to float a power-plant company in Maharashtra whose equity was to vest one hundred per cent with the Americans, while the bulk of the investible funds needed for it were to be provided by Indians.

The Indian authorities also agreed to sign a power purchase agreement which accepted as commonplace the notion that the Enron corporation would sell power to the natives at a price much, much higher than the price paid for per unit of power produced by plants installed by Bhopal?s Bharat Heavy Electricals in several places in the country. Intense debate took place in parliament over the wisdom of the deal struck with Enron, but all questions raised by doubters were brushed aside.

Foreigners, the nation was informed, know better; foreigners are ipso facto efficiency personified, and we must, for efficiency?s sake, pay them through the nose. There was some gossip that, to facilitate the adoption of such a stance by the ministry of finance and the ministry of power in New Delhi and the state government of Maharashtra, some money had passed hands. Even if the gossip had some basis, that was, however, an integral part of comprador culture. Native agents are ? foreigners take it for granted ? entitled to some bucksheesh for services they render, services that most of the time go against the native country?s interests. It is a different matter that Enron was soon found out to be, in the United States of America itself, a crooks? opera, and the projected power plant at Dabhol came to an ignominious end.

The recent hullabaloo over the legitimacy or otherwise of subsidies for oil and gas supplied to domestic consumers tells a story which has a grotesque overlap with the Enron incident. The terms of the power purchase agreement signed with Enron amounted to offering a hefty subsidy to the foreign firm. Such a subsidy was then considered to be a noble act. A different tune is now being sung over the persistent public demand that the domestic price of oil and gas supplied to domestic consumers be subsidized through a reduction in import and excise duties. Such slashing of duties is akin to subsidy, which the public is being told, is sin; one must not charge for a product a price lower than its cost, such practice allegedly retards economic efficiency.

It is all great fun. Those in authority are aghast at the suggestion to subsidize domestic consumers. There could be greater sins. Forget Enron. Barely a couple of years ago, exactly such a sin was committed by the government of India when, following directives from the World Trade Organization, it lowered import tariffs on 500-odd farm products, including wheat, cotton, tobacco, copra and rubber. In effect, by lowering the tariffs, the Indian authorities offered subsidies to foreign producers and exporters so as to enable them to lower their prices and thereby eject the home produces from the Indian market. In consequence, hundreds of Indian farmers experienced indescribable hardship; some of them were driven to commit suicide. Tariffs were lowered and subsidy offered to foreigners at the cost of Indian farmers; the government was not at all concerned if, in the process, domestic interests were adversely affected; comprador ethos was in uninhibited flow: sin is no sin if committed to further foreign interests.

The dictum has gradually attained respectability. Subsidies are all right if they promote foreign interests; they are otherwise if they promote a domestic cause. Lowering excise duties on oil and natural gas is resisted by the authorities because such a reduction will offer relief to domestic consumers. This, according to the authorities, is impermissible; domestic consumers are not foreigners.

Come to think of it, the country?s taxation policy, already incorrigibly pro-rich, has gradually undergone a comprador tilt as well. This is only natural, since taxes and subsidies are aspects of the same phenomenon: a tax is a negative subsidy, a subsidy is negative taxation. Since 1991, while direct taxes have been continuously lowered for companies, including foreign companies and upper income groups, indirect taxes have been raised. Lowering direct taxes is equivalent to offering subsidies to affluent citizens and foreigners. On the other hand, a stiffening of indirect taxes, the incidence of which falls mostly on the relatively poor, is akin to lowering subsidies for the poor.

Indian economic policy has therefore evolved into a compound of two principal objectives: first, promoting the interests of foreigners against those of the native crowd, and second, furthering the interests of the rich by putting an increasing squeeze on the poor. This is economics made easy, and is being religiously put into practice by the craftsmen at work in New Delhi.

Examples of how far the government has proceeded in the pursuit of these twin goal are indeed galore. Consider, for instance, the Central Electricity Act 2003. Subsidy, the act echoes, is sin; cross-subsidy is equally so. The state electricity boards have been enjoined by the act not to charge affluent consumers at rates higher than costs and use the proceeds of such higher charges to offer lower rates to poorer consumers. Cross-subsidy of this nature is supposed to be bad economics. The act, passed last year, has the vociferous support of the government of India and its various institutions, including the Planning Commission.

Nobody seemingly bothers to consider that abolition of the principle of cross-subsidy is really a wholesale repudiation of the structure of progressive taxation, the centrepiece of public finance in the Western world since the middle of the 19th century. According to the doctrine of progressive taxation, the rich have the ability to bear a higher rate of taxation compared to the poor, and therefore deserve to be taxed at a higher rate. Receipts from tax-payers in upper-income ranges, taxed at higher rates, have, over the past 150 years, provided the funds in country after country for essential social services specifically aimed at ameliorating the conditions of the poorer classes. The Central Electricity Act 2003 and its proponents have gone on record defying this basic canon of public finance. And we are supposed to accept all this in the name of economic reforms.

REVERIES OF EQUILIBRIUM - It is time for an alternative economics

2008-10-25T19:51:00.002+05:30

Ashok Mitra
The Telegraph
February 20, 2006

Walras showed through his mathematical exercise that if all these conditions, which define a perfect market, were satisfied, the market would reach a state of equilibrium at the end of the day, yielding maximum possible satisfaction to all buyers and all sellers. His exercise became known as general equilibrium analysis; the conclusion was drawn that, under conditions of perfect competition, the market, any market anywhere, all markets in the country would reach a situation where welfare would be optimized for all participants in the market transaction. Walras was succeeded in the chair at Lausanne by another engineer-turned-economist. Vilfredo Federico Damaso Pareto, who spelt out the Walrasian exercise in the form of a theorem, which was formally described as the Pareto Optimum: equilibrium is that state of affairs where nobody in society can be better off without making somebody else worse off, and vice versa.

This idyllic system set rivers of enthusiasm on amongst economists in the generations that followed. A dream, a beautiful dream, where welfare is maximized for each and all, but only if conditions of perfect competition obtained. Economic analysis proceeded at breakneck speed to unravel the different facets of general equilibrium. The fulfilment of the dream was contingent upon perfect competition being the market reality. Over-zealous economists, however, performed a neat reversal trick. The assumption, they pretended, was the reality, and markets everywhere were taken to be as perfect as the conditionalities of the Walrasian equilibrium required them to be.

This was nothing short of outrageous. The perfect market, where all sellers and buyers have the same economic clout and are imbued with the same stock of knowledge and communicability, is a rarity. On the contrary, conditions of monopoly (domination of one seller over others) and monopsony (domination of one buyer over others) tend to be the rule. The best text in English on general economic analysis is John Hicks?s classic, Value and Capital. Having explored the nooks and corners of general equilibrium analysis in severe detail, Hicks suddenly has an attack of conscience. He cannot deny the reality that the typical firm often exercises a major influence over the prices at which it sells its products and is therefore, to some extent, a monopolist, which means that market conditions deviate from the conditions of perfect competition.

He follows up this admission by the somewhat apologetic observation: ?it has to be recognized that a general abandonment of the assumption of perfect competition, a universal adoption of the assumption of monopoly, must have very destructive consequences for economic theory. Under monopoly, the stability conditions become indeterminate; and the basis on which economic laws can be constructed is therefore shorn away.? This, he admits, will make a ?wreck? of economic theory. So what is to be done?

Please listen to what he says: ?It is, I believe, only possible to save anything from this wreck ? and it must be remembered that the threatened wreckage is that of the greater part of general equilibrium theory ? if we can assume that the markets confronting most of the firms with which we shall be dealing do not differ very greatly from perfectly competitive markets.?

Does it not sound like a version of the rake?s progress? What was a dream is converted into a hypothesis. The hypothesis is establishable only on the basis of an assumption. Since the assumption is at variance with market realities, the armchair economist is overtaken by panic: what is going to happen to his pet economic theory if this fact is candidly acknowledged? Saving the theory, the conclusion is reached, is the more important task. The final recourse, therefore, is in pretending that the world is not what it is, but what the sophisticate set of economists wish it to be.

It would not have mattered much if such economists were left to their devices in the confines of the lecture rooms. Unfortunately, the fudging done by them has become the dogma of those who control the international economic system. The tenets based on the general equilibrium analysis, it is now being insisted, must be observed by all, including the weakest economies of the world. Existing global conditions however hardly reflect those of the perfect market. Countries entering international trade differ widely in their economic strength. They differ widely in their political and military prowess as well; the economic divergences consequently grow even wider. The World Trade Organization nonetheless proceeds as if all countries have the same economic capability and the same resource endowment. Even if, for historical and other reasons, some countries lag behind, they must, the WTO ordains, take measures ignoring the existence of such inequalities of status and conditions.

Would it not be sin though to give in to the monstrous conspiracy that is on? Perhaps social scientists in countries at the receiving end of the inequities resulting from the distorted use of the general equilibrium system should form core groups of their own and return economics to its ancient pledges. Economics in its early phases, was intended to further the wealth and welfare of people. Classical political economy ? as developed by Adam Smith, and then by David Ricardo and, in the final round, by Karl Marx ? did not deviate from the objective. Adam Smith directed his ire against those masters who exploited their employees; that is why he favoured free competition which, he hoped, would restrain the monopolists.

Ricardo?s principal campaign was against the landlords whose precepts and policies retarded economic growth and thereby stifled the welfare of citizens at large. Marx, of course, travelled the furthest and strove to prove that whatever production takes place in society is the exclusive contribution of labour, both direct and ?embodied? in capital; the fruits of such production should therefore belong in entirety to the working class.

It is time for an alternative economics, an economics which would be much more faithful to its classical roots than what is preached by the vandals at large, blabbering about general equilibrium.

STOP RADIOACTIVE CONTAMINATION OF NAGARJUNASAGAR

2008-07-11T10:58:00.002+05:30

Dear Friends...

The first temple of Modern India, NagarjunaSagar, World's Largest Masonry Dam, which provides drinking and irrigation water to over 200million people in five districts of Andhra Pradesh is under threat from Radioactive Contamination.

Please sign this online petition to Stop The Nuclear Radioactive Contamination of Nagarjunasagar Reservoir:

http://www.Petition Online.com/ ANTINUKE/ petition.html

HISTORY OF THE CASE: Uranium Corporation of India Limited (UCIL) after having wrecked havoc with the lives of people of Jharkhand with its Uranium Mining there: children born with deformiities, genetically mutated fruits, animals and humans, still births, women with multiple abortions or loosing children, cancers etc...due to the radioactive wastes floating around the region and filling up the Subernarekha river; has now decided to wreck havoc with the lives of the people in A.P.

So, in 2003, they declared that they will be mining for Uranium in Peddagattu and Lambapur villages (tribal villages) - with the mining site just about one kilometer away from the Nagarjuna sagar Reservoir. Most of the water supplied to Hyderabad comes from here...in addition to five districts which get their irrigation supplied from here. .

They called for two Environmental Public Hearings where people vociferously opposed the project.

But the Ministry of Environemnt and forests gave the licences to the UCIL for mining at Peddagattu and Lambapur saying it is "site specific"

The Movement Against Uranium Projects (MAUP) has filed a petition asking for suspension of the licenses granted to UCIL.

As on date the case is pending with the National Environment Appellate Authority.

But our good old UCIL is trying its tricks once again...they are going to the villages of Peddagattu and Lambapur and trying to coerce the villagers to accept the project somehow or the other. The villagers are cut off from the mainstream. They are strongly opposing the project. But under the coercive tactics of the UCIL like bring the CRPF police when they come to speak to the people etc...creating fear among the innocent tribal people, we cannot say, how long these people can withstand the pressure from the Powers That Be.

So, it is time we all pitch and stand by the courageous people who are fighting the mighty UCIL...for our own health, our children and the safety of our PLANET.

Do sign the petition online:

http://www.Petition Online.com/ ANTINUKE/ petition.html
Regards
saraswati kavula
Movement Against Uranium Projects
Hyderabad

Deepening Cycle of Job Loss Seen Lasting Into ’09

2008-07-04T15:09:00.001+05:30

NYT, July 2, 2008
PETER S. GOODMAN

As automakers dropped their latest batch of awful sales numbers on the market on Tuesday, reinforcing the gloom spreading across the economy, the troubles confronting American workers seemed to intensify.

Plummeting home prices have in recent months eliminated jobs for hundreds of thousands of people, from bankers and real estate agents to construction workers and furniture manufacturers. Tighter lending standards imposed by banks in the wake of huge mortgage losses have made it hard for many Americans to secure credit — the lifeblood of expansion in recent years — crimping the appetite of consumers, whose spending amounts to 70 percent of the economy.

Joblessness has accelerated, and employers have slashed working hours even for those on their payrolls, shrinking the size of paychecks just as workers need them the most.

Now, add to that unsavory mix the word from automakers that sales plunged in June — by 28 percent for Ford, 21 percent for Toyota and 18 percent for General Motors — a sharp sign that consumers are pulling back, making manufacturers more likely to cut production and impose more layoffs. Until recently, the weak labor market has been marked more by the reluctance of employers to create new jobs than by mass layoffs.

Among economists, the sense is broadening that the troubles dogging the economy will be stubborn, leaving in place an uncomfortable combination of tight credit and scant job opportunities perhaps well into next year.

“It’s a slow-motion recession,” said Ethan Harris, chief United States economist for Lehman Brothers. “In a normal recession, things kind of collapse and get so weak that you have nowhere to go but up. But we’re not getting the classic two or three negative quarters. Instead, we’re expecting two years of sub-par growth. Growth that’s not enough to generate jobs. It’s kind of a chronic rather than an acute pain.”

Mr. Harris expects tepid economic growth and a shrinking labor market to persist through the fall of 2009.

The national unemployment rate climbed a full percentage point over the last year to 5.5 percent in May, according to the Labor Department. That does not include people who are jobless and have given up looking for work, or people who have been bumped to part-time jobs from full-time. Add in those people and the so-called underemployment rate rises to 9.7 percent, up from 8.3 percent in May 2007, according to the Labor Department.

Goldman Sachs forecasts that the unemployment rate will peak at 6.4 percent late in 2009 before the picture improves, meaning that the painful process of shedding jobs may be only half-way complete.

“The labor market is clearly deteriorating, and it’s highly likely to keep deteriorating,” said Andrew Tilton, an economist at Goldman Sachs. “It’s clear that the housing downturn and credit crunch are still very much under way. Clearly, there are more jobs to be lost in housing, finance and construction — hundreds of thousands of more jobs to be lost collectively.”

On Thursday, the Labor Department will release its snapshot of the job market for June. Economists generally expect the report to show 60,000 more jobs lost, marking the sixth consecutive month of decline.

But many anticipate the unemployment rate will nudge down a little bit, swinging back from an abrupt climb that could have been exaggerated by survey glitches in the previous month, when the rate jumped by half a percentage point — the sharpest one-month spike in 22 years.

If the unemployment rate were to hold steady or rise, that would likely spook markets, underscoring the impact of the economic slowdown.

“Slowing wage growth and falling employment is absolutely toxic if your business is selling anything to consumers,” said Ian Shepherdson, chief United States economist for High Frequency Economics.

Recent indications lend credence to the view that the job market is in the grip of a sustained downturn. Three weeks in a row, new unemployment claims have exceeded 380,000, a level generally associated with recession. Construction spending fell in May. The University of Michigan Consumer Sentiment Survey, which tracks attitudes about business and personal finance, has dropped to a depth last seen in 1980.

On the factory floor, a weak dollar has been fanning export sales. The I.S.M. Manufacturing Index — a widely watched gauge of factory activity — nudged up in June to 50.2 from 49.6 in May, entering barely positive territory, which indicates a slight expansion.

But that mostly reflected a buildup of inventories and higher prices for raw materials, and not an improvement in orders for factory goods, said Stuart G. Hoffman, chief economist at PNC Financial Service Group in a note to clients. If business stays weak and orders do not materialize, factory layoffs could accelerate. Indeed, the employment component of the index declined to its lowest level in five years.

The slide in the labor market has become both symptom and cause of a weak economy, pulling many families into a downward spiral. Back when housing prices were still rising, Americans borrowed exuberantly against the value of their homes to finance renovations, vacations and shopping sprees. But that artery of finance has constricted considerably along with access to credit cards, forcing a reversion to the traditional limits of household finance. Millions of American families must now confine their spending to what they can bring home from work.

With job losses growing and working hours shrinking, many paychecks are eroding, prompting millions of families to cut their spending. Soaring prices for food and gasoline are overwhelming modest wage gains for most workers, leaving households with even less money to spend. All of which deprives struggling businesses of sales, prompting them to shed more workers, sending the cycle down another turn. Starbucks announced on Tuesday that it would close stores and eliminate up to 12,000 jobs, about 7 percent of its work force.

The fear of a downward spiral prompted the Bush administration to unleash $100 billion worth of tax rebates in the hopes that recipients would spend money and spur sales. The Treasury has already dispensed more than $78 billion, and the money appears to be finding its way into cash registers, with consumer spending climbing by 0.8 percent in May, according to the Commerce Department.

Economists expect the rebates will continue to help retail sales through the summer, fueling modest economic growth that spares some jobs and prevents an outright contraction.

But few expect these rebate-laced sales to expand the job market, because businesses understand that the one-time surge of money will wear off later this summer.

Many experts expect the economy to then be pulled back into the weeds by the same forces that have led the downturn — declining home prices, tighter credit and leaner paychecks.

“It’s going to be very hard to overcome those headwinds,” said Mr. Harris, the Lehman economist.

Service Sector Data Adds to Inflation Anxiety

2008-07-04T15:08:00.000+05:30

NYT, July 4, 2008
REUTERS

The United States service sector shrank unexpectedly in June, according to a closely watched survey released on Thursday, while inflation pressures soared to a record high for the survey’s 11-year history.

The Institute for Supply Management’s measure of employment in the vital service sector hit a record low, which could fan fears of a return to low growth and high inflation, known as stagflation, that was last seen in the late 1970s and early 1980s.

The data also points up the quandary facing the Federal Reserve, which cut benchmark interest rates to support the weak economy at the risk of adding to price pressures. It is now expected to keep rates steady while waiting to see if inflation becomes a bigger problem.

The institute’s nonmanufacturing index was down to 48.2 for June, from 51.7 in May. A reading below 50 signals contraction.

“The nonmanufacturing results were decisively weak in a survey that typically does not show decisive movements,” said Pierre Ellis, senior economist at Decision Economics in New York.

Economists had expected a reading of 51.0, according to the median of 76 forecasts in a poll by Reuters.

The service sector represents about 80 percent of American economic activity, including businesses like banks, airlines, hotels and restaurants.

On Tuesday, the institute released results of another survey that showed manufacturing expanded in June for the first time in five months, helped by a weak dollar. That report also showed that inflation pressures soared to their highest since the stagflation-ravaged 1970s.

If there was any good news for the Fed, it was the suggestion that price rises in the service sector were not being passed on to consumers completely.

“Yes, prices are higher, but it’s not a total pass-through to the end consumer,” said Anthony S. Nieves, chairman of the institute’s nonmanufacturing business survey committee. “It’s more about eroding profit margins.”

Outlook Darker as Jobs Are Lost

2008-07-04T15:04:00.001+05:30

NYT, July 4, 2008
LOUIS UCHITELLE

The nation’s employers eliminated tens of thousands of jobs in June for the sixth consecutive month in a steady chipping away of the work force that seems likely to leave the economy very weak through Election Day.

Responding quickly to the government employment report, issued Thursday, the presidential candidates called for action, beyond the recent stimulus package, to reverse the deterioration. In past downturns, the Federal Reserve saved the day, or tried to, by cutting interest rates. This time, however, with the Fed having already cut rates drastically, appeals are increasingly going to the White House and Congress.

“The numbers are telling us that there is an ongoing deterioration in the labor market at a relatively rapid clip,” said Jan Hatzius, chief domestic economist at Goldman Sachs. “It is a sign that the fiscal stimulus, the tax rebates, are failing to lift the broader economy.”

Apart from the 62,000 jobs eliminated in June — and 438,000 since January — most workers lost ground to inflation last month, the Bureau of Labor Statistics reported. While the average weekly wage of most ordinary workers was up 2.8 percent in the 12 months through June, the Consumer Price Index was up more than 4 percent.

“Workers just don’t have the bargaining power to fend off this erosion,” said Jared Bernstein, senior economist at the Economic Policy Institute.

The erosion of purchasing power, in turn, helps to explain the dismally low consumer confidence numbers in recent weeks. The housing market continues to sag, with little hope of improvement soon.

Adding to the gloom, stock prices plunged this week, pushing a crucial market gauge officially into bear territory, or 20 percent off its peak. And the unemployment rate, which had jumped half a percentage point in May, stayed at 5.5 percent in June, dashing hopes that a horde of young people hunting for jobs would find them and unemployment would fall back.

Few teenagers and new college graduates found work, the bureau reported. What’s more, the percentage of unemployed adult workers, 25 and over, ticked up for the second straight month, and various forecasters said that by Election Day, the unemployment rate would probably be 6 percent or more — a level last seen in the early 1990s, in the aftermath of a recession.

During the last 50 years, each time the economy has lost jobs for six straight months, a recession was ultimately declared.

The last two recessions, in 1990-1 and in 2001, started in the very month that employment began to shrink. That might turn out to be the case this time, too, once all the data is finally revised. But with jobs disappearing, the economy managed to expand in the first quarter by a weak 1 percent and probably dodged a contraction in the second quarter as well, in the view of Nigel Gault, chief domestic economist at Global Insight, a forecasting and consulting firm.

“We have not really had a downturn quite like this one in which we lose jobs month after month but the economy somehow manages to grow,” Mr. Gault said.

He and Ian Shepherdson, chief domestic economist for High Frequency Economics, see a recession starting in the fall, just in time for the election. By then, the monthly job losses are likely to have accelerated.

As consumers lose buying power because of weakened wages and high gasoline prices, companies will respond, Mr. Shepherdson said, with bigger layoffs, like those announced this week by Starbucks and American Airlines.

“Right now, the economy is not shrinking because of the tax rebates,” he said, referring to the $107 billion in checks being mailed by the federal government to millions of Americans over three months.

As a supplement, Senator Barack Obama, the presumptive Democratic candidate, called on Congress and President Bush to enact “energy rebates” to offset the surge in fuel prices, create a fund to help families avoid foreclosure, extend unemployment insurance benefits beyond the present 26 weeks and channel money to states suffering the most in the current downturn.

Senator John McCain, the Republican candidate, asked Congress to help families facing foreclosure and to enact “a jobs-first economic plan,” as well as to lower health costs.

Responding to the jobs report, Dana Perino, the White House press spokeswoman, acknowledged that the nation was “in a period of slow growth,” which was having “an impact on employment.” So far, she said, 105 million rebate checks have gone out, totaling over $86 billion.

The job cuts were greatest in a category called professional and business services, which lost 51,000 jobs, most of them held by temporary workers. Construction, devastated by the collapse in home prices, was next on the list.

For the 12th straight month, employment in that sector shrank, this time by 43,000 workers. Manufacturing, in constant decline, lost 33,000 jobs in June. And there were job losses in a number of other areas, the Bureau of Labor Statistics reported.

Indeed, the only notable increases in the private sector were in health care, restaurant work and other food services, and in each of these areas the rise was at only half the pace of a year ago, the Bureau said.

Donald Davis, a 35-year-old truck driver in Birmingham, Ala., certainly feels the pain. He was laid off on Easter as a driver for a concrete company, and has regularly thumbed through postings at a job placement center ever since, without luck. “Everything is at a standstill,” Mr. Davis said. “Nobody wants to hire anybody right now.”

State and local governments, on the other hand, continued to hire, adding 29,000 jobs last month, and more than 100,000 over the last six months. But most of these governments were operating on budgets enacted for the fiscal year that ended last Monday. The new budgets are expected to contain sharp cost cuts and payroll reductions as the states and municipalities adjust to shrinking tax revenues because of the housing crisis and the weak economy.

“My guess,” said Mr. Hatzius of Goldman Sachs, “is that the job declines across the economy are greater than the monthly numbers we are now seeing, and that will be evident when revisions are published later this year.”

Michael M. Grynbaum contributed reporting.

SAVE OUR COASTS

2008-06-21T14:43:00.002+05:30

To: Prime Minister of India and To: Secretary, Ministry of Environment and Forests, Government of India

WE REJECT THE PROPOSED CMZ NOTIFICATION

On 1 May 2008 the Government of India has published the draft Coastal Management Zone (CMZ) Notification, with the ostensible purpose of seeking from the public objections or suggestions, to be sent in within 60 days of the aforementioned date.

The CMZ notification, in terms of its character and contents, in the nature and course of its preparation and in the way it is being thrust upon us, is the perfect embodiment of callousness, injustice and assault on environment and livelihood.

THE BACKDROP TO CMZ

With some 8000 Km of coastline, India possesses an unbelievable wealth of coastal biodiversity, important for its own sake and for ensuring the livelihood security of tens of millions of fishworkers and nutrition security of hundreds of millions of Indiaâ€™s citizens.

One would have expected the Government to take the greatest pains to protect this incredible asset. But the most it did was to promulgate, in February 1991, the Coastal Regulation Zone (CRZ) Notification. Please note, not an Act, nor even a set of Rules, but only a Notification; something that by its nature is not sufficient for dealing with a multi-disciplinary matter involving multiple existing statutes and something that may be amended without consulting the Legislature. But notwithstanding this and other important limitations, the original CRZ notification, had it been properly implemented, would have been considerably effective in protecting coastal environments and resources from depredations.

But that was not to be. Amendments came in droves, the great bulk of them directed towards diluting the intent and scope of the CRZ. And the tragedy is that the CRZ today, even in its grossly diluted form, remains unimplemented along long stretches of the Indian coastline.

What is the reason for this non-implementation? It is administrative lethargy, myopia and yielding to the pressures of lobbies having an unhealthy appetite for coastal land and resources.

But with astonishing temerity, the same governmental setup that is guilty of not implementing CRZ has proclaimed this non-implementation as the reason for a new and atrociously permissive notification, the CMZ!

And what is this CMZ? Notwithstanding repeated demands from coastal fishworkers, environmental activists and the civil society, the government has not come up with a comprehensive legislation (Act). What it has proposed instead is another Notification to replace the CRZ Notification. This proposed Notification, to put it in brief, regularizes the violations to CRZ and opens the way to further depredations of our coastal ecology and environment. And as it is just another notification, it can easily be made still more permissive through a new set of administrative amendments.

WHY WE REJECT THE CMZ NOTIFICATION

I. Conservation of coastal resources and protection of lives and livelihood options of communities dependent thereon is a multidisciplinary exercise involving multiple existing statutes. Therefore only a comprehensive Act and not a Notification can provide the legal framework for the same.
II. The contents of the draft CMZ notification were decided without consultation with fishworkersâ€™ (the main stakeholders) organisations or with citizens groups directly involved with coastal environmental issues.
III. The publication of this draft, inviting â€œobjections or suggestionsâ€, was confined to the Gazette of India and to a site on the Net, and is in English, so as to keep the bulk of concerned citizens unaware of its contents.
IV. The CMZ condones and regularizes all violations of CRZ Notification 1991.
V. Its implementation has been left on the same CZMAs (Coastal Zone Management Authorities) that have so shamefully failed in implementing CRZ norms.
VI. It replaces clearly delineated restrictions with yet to be prepared ICZMPs (Integrated Coastal Zone Management Plans) having vague and inappropriate guidelines, thus removing the restrictions on damaging activities.
VII. Moreover, the aforesaid guidelines, as opposed to the far clearer CRZ restrictions, are incomprehensible to common coastal and fisher people â€“ largest stakeholders and custodians of our coastal resources â€“ making it more difficult for them to intervene.
VIII. While for CMZ-I areas the main concern appears to be conservation, for areas under other categories (CMZ II to IV) the only concern appears to be vulnerability. Thus the â€˜set back lineâ€™ has no conservation parameter attached to it. This is dangerous for large tracts of the coast.
IX. The area indicators of CMZ categories are confusing and contradictory; this will make implementation and enforcement impossible.
X. The CMZ Notification fails to indicate basic parameters of integration in the suggested ICZMPs, thus divesting it of any significance and turning it into a misnomer that can be used by powerful interest groups.
XI. It indicates no regulation with regard to fishing and fishery related activities and this is ominous for both coastal ecology and traditional fishers. It welcomes unbridled exploitation of coastal water life through use of aggressive and destructive gears.
XII. The Management Methodology given in the draft CMZ Notification confines itself exclusively to technical criteria of management. There is not even a word regarding the human resources of management. It describes (inadequately) how to manage without indicating who is to manage.
XIII. It has continued with the main negative aspect of CRZ â€“ shutting out the main stakeholders, the traditional fishworkers, from management and monitoring.

OUR DEMANDS

In view of the above we demand the following:

- Scrap the draft CMZ Notification, 2008

- Prepare and enact, through democratic consultation with all stakeholders, especially fishworkers, a Comprehensive Legislation (Act) that will ensure conservation of coastal environment, ecology and natural resources and protect traditional livelihood options dependent on those

- Invoke the Original CRZ Notification 1991 pending the enactment of the Comprehensive Legislation,

- Bring all violators of CRZ norms to book, and immediately

Sincerely,

The Undersigned

Click HERE to signe the petition

Deals With Iraq Are Set to Bring Oil Giants Back

2008-06-20T11:30:00.001+05:30

ANDREW E. KRAMER
NYT, June 19, 2008

BAGHDAD — Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power.

Exxon Mobil, Shell, Total and BP — the original partners in the Iraq Petroleum Company — along with Chevron and a number of smaller oil companies, are in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields, according to ministry officials, oil company officials and an American diplomat.

The deals, expected to be announced on June 30, will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations.

The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production.

There was suspicion among many in the Arab world and among parts of the American public that the United States had gone to war in Iraq precisely to secure the oil wealth these contracts seek to extract. The Bush administration has said that the war was necessary to combat terrorism. It is not clear what role the United States played in awarding the contracts; there are still American advisers to Iraq’s Oil Ministry.

Sensitive to the appearance that they were profiting from the war and already under pressure because of record high oil prices, senior officials of two of the companies, speaking only on the condition that they not be identified, said they were helping Iraq rebuild its decrepit oil industry.

For an industry being frozen out of new ventures in the world’s dominant oil-producing countries, from Russia to Venezuela, Iraq offers a rare and prized opportunity.

While enriched by $140 per barrel oil, the oil majors are also struggling to replace their reserves as ever more of the world’s oil patch becomes off limits. Governments in countries like Bolivia and Venezuela are nationalizing their oil industries or seeking a larger share of the record profits for their national budgets. Russia and Kazakhstan have forced the major companies to renegotiate contracts.

The Iraqi government’s stated goal in inviting back the major companies is to increase oil production by half a million barrels per day by attracting modern technology and expertise to oil fields now desperately short of both. The revenue would be used for reconstruction, although the Iraqi government has had trouble spending the oil revenues it now has, in part because of bureaucratic inefficiency.

For the American government, increasing output in Iraq, as elsewhere, serves the foreign policy goal of increasing oil production globally to alleviate the exceptionally tight supply that is a cause of soaring prices.

The Iraqi Oil Ministry, through a spokesman, said the no-bid contracts were a stop-gap measure to bring modern skills into the fields while the oil law was pending in Parliament.

It said the companies had been chosen because they had been advising the ministry without charge for two years before being awarded the contracts, and because these companies had the needed technology.

A Shell spokeswoman hinted at the kind of work the companies might be engaged in. “We can confirm that we have submitted a conceptual proposal to the Iraqi authorities to minimize current and future gas flaring in the south through gas gathering and utilization,” said the spokeswoman, Marnie Funk. “The contents of the proposal are confidential.”

While small, the deals hold great promise for the companies.

“The bigger prize everybody is waiting for is development of the giant new fields,” Leila Benali, an authority on Middle East oil at Cambridge Energy Research Associates, said in a telephone interview from the firm’s Paris office. The current contracts, she said, are a “foothold” in Iraq for companies striving for these longer-term deals.

Any Western oil official who comes to Iraq would require heavy security, exposing the companies to all the same logistical nightmares that have hampered previous attempts, often undertaken at huge cost, to rebuild Iraq’s oil infrastructure.

And work in the deserts and swamps that contain much of Iraq’s oil reserves would be virtually impossible unless carried out solely by Iraqi subcontractors, who would likely be threatened by insurgents for cooperating with Western companies.

Yet at today’s oil prices, there is no shortage of companies coveting a contract in Iraq. It is not only one of the few countries where oil reserves are up for grabs, but also one of the few that is viewed within the industry as having considerable potential to rapidly increase production.

David Fyfe, a Middle East analyst at the International Energy Agency, a Paris-based group that monitors oil production for the developed countries, said he believed that Iraq’s output could increase to about 3 million barrels a day from its current 2.5 million, though it would probably take longer than the six months the Oil Ministry estimated.

Mr. Fyfe’s organization estimated that repair work on existing fields could bring Iraq’s output up to roughly four million barrels per day within several years. After new fields are tapped, Iraq is expected to reach a plateau of about six million barrels per day, Mr. Fyfe said, which could suppress current world oil prices.

The contracts, the two oil company officials said, are a continuation of work the companies had been conducting here to assist the Oil Ministry under two-year-old memorandums of understanding. The companies provided free advice and training to the Iraqis. This relationship with the ministry, said company officials and an American diplomat, was a reason the contracts were not opened to competitive bidding.

A total of 46 companies, including the leading oil companies of China, India and Russia, had memorandums of understanding with the Oil Ministry, yet were not awarded contracts.

The no-bid deals are structured as service contracts. The companies will be paid for their work, rather than offered a license to the oil deposits. As such, they do not require the passage of an oil law setting out terms for competitive bidding. The legislation has been stalled by disputes among Shiite, Sunni and Kurdish parties over revenue sharing and other conditions.

The first oil contracts for the majors in Iraq are exceptional for the oil industry.

They include a provision that could allow the companies to reap large profits at today’s prices: the ministry and companies are negotiating payment in oil rather than cash.

“These are not actually service contracts,” Ms. Benali said. “They were designed to circumvent the legislative stalemate” and bring Western companies with experience managing large projects into Iraq before the passage of the oil law.

A clause in the draft contracts would allow the companies to match bids from competing companies to retain the work once it is opened to bidding, according to the Iraq country manager for a major oil company who did not consent to be cited publicly discussing the terms.

Assem Jihad, the Oil Ministry spokesman, said the ministry chose companies it was comfortable working with under the charitable memorandum of understanding agreements, and for their technical prowess. “Because of that, they got the priority,” he said.

In all cases but one, the same company that had provided free advice to the ministry for work on a specific field was offered the technical support contract for that field, one of the companies’ officials said.

The exception is the West Qurna field in southern Iraq, outside Basra. There, the Russian company Lukoil, which claims a Hussein-era contract for the field, had been providing free training to Iraqi engineers, but a consortium of Chevron and Total, a French company, was offered the contract. A spokesman for Lukoil declined to comment.

Charles Ries, the chief economic official in the American Embassy in Baghdad, described the no-bid contracts as a bridging mechanism to bring modern technology into the fields before the oil law was passed, and as an extension of the earlier work without charge.

To be sure, these are not the first foreign oil contracts in Iraq, and all have proved contentious.

The Kurdistan regional government, which in many respects functions as an independent entity in northern Iraq, has concluded a number of deals. Hunt Oil Company of Dallas, for example, signed a production-sharing agreement with the regional government last fall, though its legality is questioned by the central Iraqi government. The technical support agreements, however, are the first commercial work by the major oil companies in Iraq.

The impact, experts say, could be remarkable increases in Iraqi oil output.

While the current contracts are unrelated to the companies’ previous work in Iraq, in a twist of corporate history for some of the world’s largest companies, all four oil majors that had lost their concessions in Iraq are now back.

But a spokesman for Exxon said the company’s approach to Iraq was no different from its work elsewhere.

“Consistent with our longstanding, global business strategy, ExxonMobil would pursue business opportunities as they arise in Iraq, just as we would in other countries in which we are permitted to operate,” the spokesman, Len D’Eramo, said in an e-mailed statement.

But the company is clearly aware of the history. In an interview with Newsweek last fall, the former chief executive of Exxon, Lee Raymond, praised Iraq’s potential as an oil-producing country and added that Exxon was in a position to know. “There is an enormous amount of oil in Iraq,” Mr. Raymond said. “We were part of the consortium, the four companies that were there when Saddam Hussein threw us out, and we basically had the whole country.”

James Glanz and Jad Mouawad contributed reporting from New York.

Advertisements: a literary estimate

2008-06-19T10:57:00.001+05:30

----Gargi

A gaze blank and pitiless as the sun,

Is moving its slow thighs, while all about it

Reel shadows of the indignant desert birds. (Palgrave 424)

Yeats seems to have expressed very aptly the condition of the contemporary world in ‘The Second Coming’, with multiple human desires for some unknown bliss, hovering around the Utopian state of existence promised by the bulk of advertisements. As the world has moved on through the labyrinthine route of various ‘ism’s, each generating ‘enlightenment’ for the human species in its own right, this era of advertisements seems to be giving rise to a different sort of ‘enlightenment’ – by creating an unquenchable thirst for a material sense of existence, enriched by the craze to possess and parade.

To say that the advertisements, all under a universal heading, have simply misdirected people would be quite unfair, since some of them like those on epidemics, public health and hygiene and literacy mission, have indeed generated awareness about certain crucial issues related to the masses. As for example, Buladi needs no introduction and along with her the fact that AIDS need not be feared as contagious and can be prevented. Yet, a study of the majority of commercial ads tossed at the people in the third-world countries, more specifically India, would reveal the profitably political use of language, both verbal and non-verbal – mainly utopian and sexist in nature – flourishing parasitically upon the beliefs blindly registered in the name of ‘tradition’ and ‘culture’; those which need to be reviewed and rethought, and indeed are being reanalyzed in the age of intellectual globalization, but at the ground levels, on the contrary, are being reinforced more strongly than ever, for the purpose of bringing in maximum returns.

Let us go then, you and I,

When the evening is spread out against the sky

Like a patient etherized upon a table… (Eliot 13)

Eliot scarcely knew while penning these lines of ‘The Love Song of J.Alfred Prufrock’, that they would form such a perfect invitation sometime down in the twenty first century to make a survey of the advertisements – those that haunt the mind and lure the human beings, the magic of ‘Temptation’ recreated for both the sexes alike, this time. To continue in the words of the poet,

Oh, do not ask, ‘What is it?’

Let us go and make our visit. (13)

The first aspect of the language of contemporary advertisements is the utopian vision they generate in the minds of the consumers. Each ad aims at creating the illusion that just the purchase of that particular commodity would make life complete – in every sense of the term. The problem lies not in blowing one’s own trumpet, since that is the prerequisite for an ad to become so, but rather in the exploitation of human emotions and capabilities, especially the tendency to dream, which is used by the ads today as the principle instrument to achieve their purpose, for Romanticism was not just a literary movement restricted to a particular phase of history, it forms till date the basic pattern of human lives.

The utopian nature of the advertisements today is perhaps best exemplified by the automobile ads. As the Santro or Indica or Chevrolet speeds down the splendid streets, smooth and most importantly, unbroken, surrounded by greenery, under the blue sky, every innocent aspiring heart is filled with the desire to own one someday; the dream-colored impact of the visual recreating the magic of Shelley’s ‘To A Skylark’:

All the earth and air

With thy voice is loud,

As, when the night is bare,

From one lonely cloud

The moon rains out her beams, and heaven is overflowed. (Palgrave 244)

The ‘willing suspension of disbelief’ hardly allows the doubt to creep in that it’s no longer ‘one lonely cloud’ but rather, a smog, and the ‘voice’ is in fact, the noise around, both encapsulated within a term better known as ‘pollution’. Incidentally, the advertisement of the latest little one toddling into the big field, better known as Nano, declares its entry as the one ‘to end all speculation, debate and talk’ – a line, though probably unintentionally, nevertheless quite explicitly, silencing the dialogic tradition and denying heterodoxy. One would, however, be reminded of Amartya Sen as he writes in The Argumentative Indian:

A defeated argument that refuses to be obliterated can remain very alive. (Sen 06)

Amidst the joyous celebration of the birth of the little one, there’s always an apprehension about the future, in this case in the minds of the target audience, who rarely are able to forget, after all’s done and said, the exclusively street-made jams and jellies which earn frowns and dissatisfaction at the work-place, even now, when the roads are free of the millions of new toddlers. But nevertheless, initially, the mesmerizing impact of the rose-colored dream is absolute.

The advertisements of the motorbikes would reveal more clearly the second aspect of the language of contemporary ads, i.e., sexism. As the gallant young man in his macho leather jacket rides the brand, say for instance, Pulsar, the beautiful ladies of the neighborhood lose their hearts and long for a chivalrous lift to come their way. The promised prize is not just a dream-ride, but a dream companion, as well. In fact, the man rides on with his beloved clinging onto him like a nail to a magnet, as if living the lines of Robert Browning’s ‘The Last Ride Together’:

What need to strive with a life awry?

Had I said that, had I done this,

So might I gain, so might I miss.

Might she have loved me? just as well

She might have hated, who can tell!

Where had I been now if the worst befell?

And here we are riding, she and I. (Loucks 152)

It would be worthwhile, indeed, to examine the Indian advertisements through the looking glass of gender, for if the advertisements have revolutionized the global economic scenario, then the women modeling for the various products, ranging from washing powder to shaving cream, diaper to automobile, have served as the perfect depiction of gateways to pleasure, thereby enhancing demand and increasing sale. Though it might be argued that ads opened up new employment opportunities for women, which is very true, nevertheless they also led to the complete commodification of the second sex, to the extent that a hoarding advertising sanitary ware at the bypass, near Salt Lake Stadium, showed a woman with bare shoulders wearing a string around her neck with a basin-shaped locket dangling from it, till a few days back. Horrendous exceptions apart, even the normal traditional representation of women as daughters, mothers and wives in these ads tend to strengthen the stereotypes. Though there is a serious subversion in such ads, in treating the things considered as holy and auspicious essentials defining the woman in the society, such as sindoor, mangalsutra and the like, as sheer make-up ingredients, yet this subversion is detectable only to the people offering a serious afterthought to the interpretation of these mesmerizing moments – a number comprising, perhaps, the smallest minority in the contemporary world.

The ads of cosmetics, soaps and shampoos invariably remind one of Byron’s famous proclamation:

She walks in beauty, like the night

Of cloudless climes and starry skies;

And all that’s best of dark and bright

Meet in her aspect and her eyes. (Palgrave 177)

There can perhaps, be no better example to illustrate this than the famous brand ‘fair and lovely’, which assures a girl success in every field hitherto out of reach, be it marriage, job or recognition in the ‘feminine’ fields of glamour, by virtue of fair skin. The fact that ‘fair’ is a visual quality and ‘lovely’, a natural attribute, is completely obliterated, as if ushering in the colonial idea of ‘memsahib’, implying that fair is lovely. Though half the world turns vegetarian, flesh will continue to make a difference. The devastating dream of Toni Morrison’s ‘The Bluest Eye’ is reinforced with added colors and hues; while Melville’s memorable warning is altogether forgotten:

…there yet lurks an elusive something in the innermost idea of this hue, which

strikes more of panic to the soul than that redness which affrights in blood.

(Melville 160)

and further:

Bethink thee of the albatross: whence come those clouds of spiritual wonderment

and pale dread in which that white phantom sails in all imaginations? Not

Coleridge first threw that spell; but God’s great, unflattering laureate,

Nature. (160)

However, leaving the so-called ‘women’s utilities’ apart, the smoothness of a Gillette shave also requires a most economically dressed woman stroking the cheek of the smart dude, as testimony. Even the deodorants for men, logically offering solution to one of the gravest problems faced by humankind, with a flesh and blood body and sweat glands, require women, fair, slim and beautiful, to sniff. It would be worthwhile in this context to remember the happening brand in today’s market, Set Wet, with its lucrative slogan: ‘very very sexy’. Employing rationale beyond the magic of the audio-visual would, however, puzzle the mind in looking for a relationship between the two, the adjective and the noun, suggesting a severe case of malapropism.

It is indeed remarkable to notice how the ads today re-emphasize the socially constructed ‘masculine’ and ‘feminine’ domains of work, representing them as more natural than biological sex. The baby-products, for instance, Johnson’s baby soap or cream or oil or shampoo, will always show the mother toying with the child, recreating the ever-enchanting myth of motherhood; while fathers only appear when the ad deals with something more serious, say an insurance policy or better still, marriage. A glaring example in his context is provided by the advertisement of Vicks Vaporub, which came on screen sometime back, wherein the terribly befuddled father asks his son, who is suffering from a severe cold, what his mother, who has apparently gone somewhere, would have given him had she been at home. Such ads invariably bring to the sensible mind a feeling of awe and an urgency to re-read the books of science, since asexual reproduction in human beings went completely unrecorded until this ad hinted at it. Moreover, such ads are extremely unfair in their representation of the fathers as such terribly unaware and ignorant creatures, when today a large number of men, as fathers, actually take interest in the well-being of their children, even within the domestic space, and are aware of their regular needs too, apart from education, home and marriage loans. This sort of misrepresentation tends to politicize the domestic space to a larger degree, making the divide between ‘masculine’ and ‘feminine’ sharper and stronger.

Incidentally, the children too are males, unless the advertisement specifically requires a female child to serve its purpose, in say for instance, the advertisement of Mediker, probably trying to suggest that Sons and Lovers never have such ignoble problems as lice. But otherwise, be it chyavanprash or health drink, toothpaste or cough syrup, the child in question, is invariably, a male child. Even when the ads seem to be gender-sensitive in the depiction of young boys and girls, advocating the abilities of girls as in case of TVS Scooty, where the girls are shown are riders, a man is always brought in to show how he’s been outsmarted by the girl riding the Scooty. The attitude adopted, immediately reminds one of Alexander Pope’s age of the ‘battle of sexes’, and the issues tend to lose their seriousness under the impact of mockery.

Interestingly, when much is being spoken on the intellectual front, about the ‘family’ as an important social unit, specially in the context of gender, since it has the most significant contribution in the acculturation of an individual, the depiction of ‘families’ in the contemporary advertisements point out how the conventional ideas related to this unit can be kept intact and reinforced as ideal, even in the twenty first century. Apart from the role-identification of ‘mother’ and ‘father’, as discussed above, the ads also try to recreate the magic of certain ‘comic’ experiences within the domestic space. ‘Comic’ remains within quotes, however, since nothing is quite ‘comic’ until it is politically constructed and recognized to be so, in as far as institutions – social, commercial or political – are concerned, at the expense of certain other things, and therefore, need to be examined for their comicality.

The recent ad of Britannia Mariegold biscuit shows a homemaker blissfully sipping her tea while questions are asked to her about how she manages to run such a heavy routine everyday with such perfection, to which she replies: ‘Why! I’m given this fifteen-minutes holiday, each day’, and just as she completes the statement, her mother-in-law’s voice calls her off-screen, to which she replies promptly, exclaims and rushes leaving her tea behind. This is just one instance; however, there are several such ads which tend to keep intact the hilarious ‘monster-in-law’ image to bring in humor and strengthen hegemony. The codes of patriarchy are kept intact, since the poor mother-in-law, is nonetheless, a powerful patriarchal construct, either to be feared or ridiculed; the success of the formula, is tested and confirmed.

A recent exception, and a happy one at that, has been the ad of Canara Bank, which shows a mother-in-law belonging to a southern state of India, learning Punjabi willingly, in order to make her daughter-in-law belonging to Punjab, feel at home and a part of the family, on her arrival, away from her dear ones. Similarly, the ad of Havell’s cables makes one feel hopeful when the son leaves aside his book to find a bit of cable, which he twists into a holder and brings to his mother ,who’s a daily-wager and was almost burning her hands while making chapattis for him over the naked flame. Such ads, however, transform commercial realities into poetic expression through their profound understanding of human feelings, reminding one of Sidney’s declaration:

Nature never set forth the earth in so rich tapestry as divers poets have done;

neither with pleasant rivers, fruitful trees, sweet-smelling flowers, nor

whatsoever else may make the too-much-loved earth more lovely; her

world is brazen, the poets only deliver a golden.(Enright 08)

But such expressions are rare. Most of the ads retain their characteristic superficiality trying to reap the most out of what the masses of a developing country with massive illiteracy have been used to, thoughtlessly, in the name of legacy. Quite ironically, having attained its climax in Marx, the term ‘revolution’ acquired a dramatic shape and form in the mould of Information Technology – which today by the virtue of ads – has become the largest force which the ‘proletariat’ (in every aspect of the term – class as well as gender) has to combat. But when the exceptions, as cited above, are placed next to the mainstream, one cannot help regretting the gross misuse of such enormous potential, since human beings are driven day in day out in their lives by the impact of these advertisements. On a concluding note, it would be significant to recall Mark Twain, who in puts the blame of the defeat of the Southerners in the American Civil War of 1864 on Sir Walter Scott, saying that:

…for it is not conceivable that this little sham castle would ever have

been built if he had not run the people mad, a couple of generations ago,

with his mediaeval romances. The South has not yet recovered from the

debilitating influence of his books. (Twain 268)

Contemporary advertisements play no less a role in making the global South what it is, giving to the people grossly misdirected dreams and vision, far away from the plane of reality which needs to be acknowledged and introspected, in order to move forward.

If Yeats began the discussion, let Christina Rossetti conclude it with her resonating lines:

Morning and evening

Maids heard the goblins cry:

‘Come buy our orchard fruits,

Come buy, come buy…’ (Ricks 460)

Perhaps, Rossetti would have been astonished to learn that the ‘Goblin Market’ can now seduce both the sexes alike, and probably, this entire phenomenon, i.e. the silver-screen with its portrayal of ‘Lemons and oranges’, ‘Melons and raspberries’ would have found a deserving expression from her pen, for she traced the link between literature and ‘market’ way back in the nineteenth century. Though her motive was largely to examine the condition of the women in nineteenth century England, and to spread the notion of sisterhood, nevertheless, the commercial concepts of ‘value’ and ‘exchange’ attained a literary status in her creation, as she suggested their role and impact on human lives. The turn of the twenty first century with ‘Come buy’ as its all-engulfing slogan, certainly adds a new edge to Rossetti’s reflection, and laments the absence of an updated sequel.

Reference

Palgrave, Francis Turner. Palgrave’s Golden Treasury. Calcutta: Oxford University Press.1992.
Eliot, T.S. Collected Poems 1909-1962. London: Faber and Faber. 1974.
Sen, Amartya. The Argumentative Indian. London: Penguin Books Ltd. 2005.
Loucks, James F. Robert Browning’s Poetry. New York: W.W.Norton & Company. 1979.
Melville, Herman. Moby Dick. New York: W.W.Norton & Company. 2002.
Enright,D.J. English Critical Texts. London: Oxford University Press. 1983.
Twain, Mark. Life on the Mississippi. USA: Penguin Group. 1988.
Ricks, Christopher. The Oxford Book of English Verse. New York: Oxford University Press. 1999.

Tibet: tremor on the roof of the world

2008-04-11T13:34:00.002+05:30

Demonstrations unsure of goals or tactics

Mathieu Vernerey
Le Monde Diplomatique, April 2008

China is worried that the recent resentment and resistance among the Tibetans could spread to other major minorities whose traditional territories have been colonised and exploited by the majority Han Chinese. The Tibetans clearly want some form of autonomy, which they will not get.

The repression of the recent demonstrations in Tibet has shocked international public opinion. Thousands of Tibetans took to the streets, first in Lhasa, then in other towns, waving the Tibetan flag and chanting slogans demanding independence. They represent a clear rejection of 60 years of Chinese domination.

However, the presence of monks among the movement’s leaders has prompted questions about the real nature of the uprising, often described as a “Buddhist revolt”. Despite the brutality of police counter-measures, the unusual violence of many demonstrators has also blurred the image of a reputedly non-violent struggle. Rioters have targeted Han Chinese and Hui Muslim (1) civilians, suggesting the revolt may have ethnic or religious motives.

Symbolically the demonstrations started on 10 March, the anniversary of the 1959 uprising in Lhasa against Chinese intervention. The repression of this popular movement precipitated the flight of the Dalai Lama and his government to India. Thousands of refugees followed their example. However, although prime minister Jawaharlal Nehru welcomed the government of Tibet, he did not recognise it. Nor did the United Nations.

Historical questions

The invasion of Tibet in 1950 – or its “peaceful liberation” as the Chinese prefer to put it – raises historical questions that have yet to be resolved. It is emblematic of the recurrent difficulties encountered by the Chinese in their attempts to occupy and settle the region, and of the Tibetans’ failure to convince the modern world that their claims to independence have a historical basis.

China first claimed Tibet in the 13th century under the (Mongol) Yuan dynasty (1279-1368), then again in the 17th century under the (Manchu) Qing dynasty (1644-1911). During these two periods the Chinese empire reached its furthest extent westwards, thanks to successful military campaigns waged by the Yuan, who built on the remains of the Mongol empire that once dominated Asia, China and Tibet.

During the interim period, on the sidelines of China’s Ming dynasty (1368-1644), which was more interested in maritime conquest, Mongol princes left a lasting mark on Tibetan politics. Intervening in a domestic religious conflict in 1578, Altan Khan backed the Gelugpa lineage, bestowing on its head the title of Dalai Lama (ocean of wisdom). In 1642 Gushi Khan confirmed the political authority of the fifth Dalai Lama, strengthening existing links between Tibet and Mongolia, based on the choyon (guide and protector) relationship in which both parties are considered equals. The Mongol prince protected Tibet with his armies and in exchange Tibet’s spiritual leader offered guidance to Mongolia. This type of relationship also worked with Manchu China and, depending on the alliances in force, other neighbouring kingdoms.

Tibet has a long history of foreign interference, more often Mongol than Chinese, which explains its vulnerability. In 1720 it appealed to Manchu China for help driving out the Mongols. It resorted to the same expedient in 1792 to rid itself of the Nepalese. During this period the Chinese strove to reorganise the Tibetan system of government, but without establishing a permanent foothold. After the collapse of the Manchu Qing dynasty, the Chinese political leader Sun Yat-sen established the Nanking republic in 1912. Tibet proclaimed its independence a year later.

In 1914 envoys from the United Kingdom, China and Tibet signed a tripartite agreement at Shimla, in northern India, recognising a form of Chinese sovereignty. But the Chinese refused to treat the Tibetans as equals at the signing ceremony.

De facto independence

Tibet enjoyed de facto independence from then till 1949. China lapsed into internal disorder – conflict between warlords, followed by civil war between nationalists and communists – and foreign invasion by the French, British, Russians and Japanese.

Only a few months after proclaiming the People’s Republic of China Mao Zedong ordered the invasion of Tibet in 1950. At the recently formed United Nations the representatives of Nationalist China (Formosa, now known as Taiwan) convinced the Security Council that this was a domestic Chinese matter (2).

In 1951 Mao used the threat of military action to obtain Tibetan approval of a 17-point plan. It stipulated that “the Tibetan people shall return to the big family of the motherland”. In exchange the plan granted autonomous status providing for the continuation of the “existing political system... and the established status, functions and powers of the Dalai Lama.” But for the Tibetans he remained the country’s spiritual and temporal leader, contradicting the agreement. Moreover the Chinese failed to uphold any of their commitments.

When the Dalai Lama went into exile in 1959 he formally repudiated the agreement. He reinstated a government, set up a parliament and organised the refugee community, which remained determined to continue the struggle for independence. At the same time the Dalai Lama made it clear that he sought “the creation of a favourable climate by the immediate adoption of the essential measures as a condition precedent to negotiations for a peaceful settlement” (3). In 1979 China’s new leader, Deng Xiaoping, made it known that “apart from independence, all issues can be discussed” (4). Between then and 1985 four Tibetan delegations were allowed to visit their home country, which became an autonomous region (5) in 1965, to observe the progress that had been achieved. They returned unconvinced.

In the 1988 Strasbourg Proposal the Dalai Lama officially renounced independence, falling back on self-government and union with China. But in March 1989 the brutal repression of one of the largest demonstrations against the Chinese authorities since 1959 ended all dialogue. In repeated attempts to reopen negotiations the Dalai Lama proposed genuine self-government within the framework of Chinese sovereignty. Between 2002 and 2007 Chinese and Tibetan envoys met on six occasions, but the recent demonstrations and the authorities’ response suggest that history is repeating itself.

Hostility to China

The Buddhist religion is an integral part of Tibet’s identity but hostility to China now dominates nationalist sentiment. Though the majority of the population seems resigned, hatred of China is finding violent outlets. Beijing may accuse the Dalai Lama of being the main troublemaker, but a new generation is emerging over which the nation’s spiritual leader has less influence.

As China has strengthened its hold on the country, with a steadily increasing influx of settlers, Tibetans have been gradually sidelined. Development has not delivered its promised benefits and economic investment, largely colonialist in its aims, has failed to appease discontent exacerbated by persistent nationalism.

The violence that disfigured the Chinese quarter of Lhasa is not typical of the independence movement as a whole. Protests have brought together secular and religious elements, the latter brandishing portraits of the Dalai Lama as well as the Tibetan flag. Seen by his supporters as an exiled head of state, the spiritual guide has lost none of his authority, enjoying widespread recognition in and outside Tibet, even if some militants are advocating more direct action. He is still the cement of national unity. In their way even the Chinese authorities acknowledge his importance. As the Tibet Communist Party leader, Zhang Qingli, put it: “We are in the midst of a life-and-death struggle with the Dalai clique.”

The attitude of Tibetans living abroad to the Dalai Lama and the issue of independence is more complex. Independence has been a taboo ever since their leader officially abandoned the idea and confirmed his policy of openness and dialogue with Beijing. In October 2002 he explicitly appealed to militants to refrain from any form of anti-Chinese demonstration in public all over the world, in order to create a propitious atmosphere for dialogue. The call for restraint left many militants confused and discouraged.

Unsure what to do next

Until the outbreak of the recent unrest, China seemed to have achieved its ends, no longer the target of public criticism and credited with new respectability on account of its “goodwill”. Meanwhile, in the political arena, it arrogantly dismissed demands for self-government. The Tibetan independence movement has played on this behaviour, though it seems in some doubt as to what to do next.

Among those in exile there is no unified movement pulling together the various organisations advocating independence. None of them has managed to set out new proposals, replacing or complementing the line adopted by the government in exile. Most pro-independence campaigning inside Tibet is the work of isolated individuals or spontaneous, unpredictable gatherings without any clearly formulated strategy or goal.

The media build-up to the Olympic Games in Beijing offered a unique opportunity to denounce Chinese hegemony to the world. In India the five main pro-independence organisations joined forces to organise a march back into Tibet, setting out on 10 March. The Indian authorities promptly banned the operation, triggering the departure of another wave of marchers. Demonstrations started in Lhasa at the same time, gathering strength and spreading to other towns in Tibet and other provinces once occupied by Tibetans, which has not happened before. But though the movement has achieved a certain popular and militant synergy, it lacks political direction and visibility, raising the larger question of how Tibetans are represented and what means are available for them to express demands.

Most Tibetans still living in their home country see the government in exile as a legitimate entity, because it is consistent with the principle of the Dalai Lama’s sovereignty and rule. But they are wary of the government, blamed for not finding a solution to their present predicament and giving up the goal of independence. This disaffection spares the Dalai Lama himself.

However a distinction needs to be made between the government’s diplomatic efforts and the work of the Tibetan parliament in exile as a representative body. The parliament is supposed to represent the Tibetan people in its entirety, at home and abroad, if only symbolically due to the impossibility of organising a vote in Tibet.

Its only real electorate is the exiled community in India and Nepal, organised according to the three regions that traditionally formed Tibet. The five Buddhist schools also have their representatives, as do expatriates living in Europe and North America. The complex overlapping of constituencies does not make it any easier to determine quite what the parliament stands for.

Unvoiced split

The root problem is the Tibetans’ inability to institute proper political debate. The parliament operates without parties. The draft constitution does not condemn this. It simply does not refer to it, despite reforms on the separation of executive, legislative and judicial powers, voting rights, and the election of MPs and the prime minister by universal suffrage. But setting up democratic institutions is not enough to achieve democracy, particularly without parties to defend contrasting political ideals or goals. It is immediately obvious that there is no way of voicing the underlying split between advocates of independence, and those in favour of self-government. At the last general election, in exile, in March 2006, some MPs backed independence, but they have made no attempt since to put their commitment into practice. Of course it is difficult to oppose openly the views of the Dalai Lama.

There is little chance of political parties being formed in the near future, even if an increasing number of MPs now support independence, with talk of a pressure group on the sidelines of the parliament. The present situation — the precarious condition of refugees, the limited tolerance India can afford as their host, pressure from foreign governments not to upset the status quo, and Chinese reprisals targeting Tibetans at home — leaves the pro-independence faction very little room for manoeuvre.

The country may be on the brink of an uprising but it lacks the political direction without which the Lhasa spring will never bear fruit. Current events must bring back memories to the Chinese president, Hu Jintao, who was the Chinese Communist party leader in Tibet at the time of the 1989 demonstrations. He ordered out the troops and imposed martial law. He knows that a tremor on the roof of the world may be the precursor of a quake in Tiananmen Square.

The troubles are in danger of spilling over into other regions with separatist inclinations, particularly Xinjiang, with its Uighur population, and Inner Mongolia. Beijing must decide how best to reconcile its international image with measures to quell the domestic unrest that threatens its stability.

Translated by
Harry Forster

Mathieu Vernerey is a journalist

(1) China defines itself as a multi-ethnic country with 56 ethnic groups, Han Chinese making up 92% of the population. The People’s Republic established various autonomous regions for Tibetans, Hui, Uighurs and Mongols: Tibet, Ningxia, Xinjiang and Inner Mongolia.
(2) Following the Lhasa uprising the UN passed three resolutions, in 1959, 1961 and 1965. The 1961 resolution called for “the cessation of practices which deprive the Tibetan people of their fundamental human rights and freedoms, including their right to self-determination.”
(3) Statement by the Dalai Lama in India on 20 June 1959.
(4) Message sent by Deng Xiaoping to the Dalai Lama’s elder brother, Gyalo Thondup, in Beijing in March 1979.
(5) The autonomous region covers the central part (U-tsang) of historical Tibet. The other two provinces (Kham and Amdo), traditionally considered part of the country, have become part of the Chinese province of Qinghai or the western extremities of Gansu, Sichuan and Yunnan.

Dateline Tibet

2008-04-11T13:30:00.001+05:30

Le Monde Diplomatique, April 2008

1642 – The Dalai Lama comes to power thanks to Mongol support.

1720-1792 – Tibetan rulers call on China to expel the Mongols, then the Nepalese.
1904 – The United Kingdom, which occupied part of China, recognises Tibet’s sovereignty.

1914 – The Chinese fail to activate the accord signed by them, the British and the Tibetans.

October 1950 – Chinese troops enter Lhasa.

10 March 1959 – Start of an uprising against Chinese occupation with thousands of victims. The Dalai Lama flees to Dharamsala in India.

1965 – Beijing creates the Autonomous Region of Tibet.

1966-76 – Cultural revolution: the monasteries are destroyed and monks persecuted. Beijing restores the right to practice religion only in 1980.

1979-84 – The Dalai Lama is permitted to send four investigative missions to Tibet. Tibetan political delegations visit Beijing in 1982 and 1984.

8 March 1989 – Beijing imposes martial law in Lhasa after three days of anti-Chinese riots causing dozens of deaths. In October the Dalai Lama is awarded the Nobel Peace Prize.

1996 – The Dalai Lama suggests unconditional negotiations on the future of Tibet, whose recognition China rejects.

2002-03 – Informal dialogue takes place.

2004 – Beijing publishes a White Book on the ‘modernisation of Tibet’ which denounces the ‘Dalai Lama and his clique’.

Caste Discrimination Translated into Ethnic Cleansing in this Divided Bleeding Geopolitics

2008-03-28T14:39:00.001+05:30

Palash Biswas

Caste Discrimination is translated into ethnic cleansing in this divided geopolitics!

Kolkata Intelligentsia delebratly defends CPIM as they brand the Dandakaranya Refugees landed in Marichjhanpi as tresspasser Bangladeshi Nationals in a protected Forest Zone, Tiger Project. Mind you, Marichjhanpi never have been under protected Forest or Tiger project. Suman Mukhopaddhay of Teesta parer Britanto(play) and Herbert (film,written by Nabarun bhattacharya), refuses to consider Marichjhanpi a case of Ethnic Cleansing. I have seen his elitist subversion of the protagonist Bgaharu of the Debesh Roy Novel. Bengali Caste Hindu media and Intelligentsia call Nandigram killings a Genocide as caste Hindu Politics of Power Dominance as well as Resistance involved.Though, the victims happen to be either ST SC or OBC and Muslims! But Marichjahanpi was, all in all, a case of Political Betrayal by the communists who got them ousted of Dandyakarany Refugee colonies and Camps to constitute a favourable Vote bank to capture power. Communist Movement in Bengal got momentum with Refugee vote Bank. Thus, the Communists never spoke against continuous presecution of Minorities in East Bengal nor did try to stop the Refugee Influx at any point of time. Not only this, Communist leaders including Basu, have been claiming to fight for Rehabilitation of refugees. They protested Bidhan Roy`s initiative to send bengali refugees out of Bengal . Samar Mukherjee and jyoti Basu had been writing to the Centre and State governments to rehbiliatate the East Bengal refugees in Sundarvanas from the very beginning! They never mentioned Forest area or Tiger Project at that time! More over,Jyoti Basu, Ram Chatterjee and Kiranmoy Nanda with other prominent leaders visietd country wide with an appeal, West Benagl with a five coroer population with ten coroer hands would welcome the dalit Bengali refugees and they will be rehabiliated in West Bengal. As Basu took over in 1977, Ram Chatterjee and Nanda with other leaders visited Mana Camp and Malakan Giri to call the refugees to settle in Sundarva. They went there with messages from the Chief Minister! Earlier Basu himself addressed refugee leaders including satish Mandal in Bhilai.

My father Pulin Babu, with his experience as a communist refugee leader in West bengal and Orissa and Peasant Leader in Dhimri Block peasants Insurrection in nainital, as a rescuer in Assam and North East understood the betrayal game and some how convinced the North India Refugees of UP, Bihar, Assam and Rajsthan that dangers ahead and the communists would betray. As the communists never helped the refugeees in these states and they are in better status, they could not be trapped. Not a single refugee landed in Marichjhanpi from North India excluding MP.
At that time , I was a student in DSB college in naninital and have been involved with Chipko Movement. I quoted forest laws and explained Environment significance of Sundarvana as my father decided to oppose the campaign actively. I talked face to face Satish Mand , the man behind Marichjhanpi movementright in the Mana Camp, Chhattish Garghwhere the Marichjhanpi refugees retuned back empty handed losing near and dear ones in Marichjhanpi. Satish Mandal said that my father would have been killed in Mana camp as he spoke against such a campaign and communists. security forces saved his life. He and his associates regretted and accepted that it was a blunder. They explained how the communists mobilised the Marichjhanpi movement centred in and around all the major five refugee camps in MP and entire Dandakarany resettlement spanning four states MP (united), Orissa, Andhra and maharashtra!

Another fact remains, only,yes only Dandakarany resetlled Refugees from Malkan GiRi of Orissa, Andhra and Maharashtra with refugees stranded in Five Major camps of United MP landed in Marichjhanpi. Resetlled refugees lived in those colonies since fifties while the refugees form all those five camps crosed the border during and befrore Riots of 1964 in East Bengal. They were not Bangladeshi nationals, as the Ruling Hegemony with its media and intellegentsia have been claiming all these years.Branding the refugess as Bangladeshi Nationals or escaped masses from refugee camps justify the Eviction drive and translate the Genocide as a political blunder only. This is syastematic subvertion freinds!

I am amazed why a writer like Amitabh Ghosh could not care to cross check his information as he described Marichjhanpi under tiger project! He, though unlike other Caste Hindu intellectuals described it a Genocide. Utpal Dutta wrote a drama at that time to justify the genocide- Chakranta. Media flashed this Plot theory with branding the bonafied Indian citizens as bangladeshi Nationals. Different stories were afloat like extrmest camp and armed training and popular CPIM concept of CIA and foreign hand to dislodge the communist Government. Left Front partner RSP held the base in that area and local panchayats were captured by them. RSP activists helped the refugees. Basu called them in the Writers and directed them to detach with the refugees and the Party Machinery led by late Pramod Dasgupta hatched the eviction plan. before blocked Subhash chakrabarti visited Marichjhanpi and offered the refugees CPIM umbrella. But satish mandal refuged considering RSP and Janata dal cooperation. Janata Dal was the ruling party in the centre.JD MP Kashikanta Moitra was with them. Had the refugees joined CPIM, it would have been a different story as it has always been in thousands of refugee colonies. You may see the RSP leaders speaking out as Eye witness in Tortured Humanity, the Rights alert film!

Mind you, before partition all the three interim governments were headed by Muslims- Fazlul haq, Najibullah and Sohrawardi.Only Shyama Prasad Mukherjee was a member in Haq ministery . Otherwise Jogendra Nath mandal or Kumud Bihari Mallick were the personalities on centrestage. Muslims in East Bengal were dead against partition. They wanted undivided Bengal.And bengal was the centrestage of national dalit Movement with mandal in helms. Shyama Prasasd Mukherjee had said, if not India, Bengal must be divided as Caste Hindus were wary of Muslim dalit Combination . This combnitation was broken with partition. The dalit base devasted and dalit movement sabotaged. Dalits were evicted out of their home in East bengal and scattered countrywide. marichjhanpi revived the danger of Dalit Population concentration in Bengal once agian and ruling brahminical Marxists aborted it mercilessly with Marichjhanpi Genocide. thus, the Ruling Caste Hindus with all the bogus Marxism, secularism and progressive posture kept mum on Marichjhanpi!

Anu jalais told me that the problem all along this subcontinent roots in Caste Discrimination and the Hegemony system. She agrred with my contention that it was a demographic readjustmant case and said this interesting. Even the then Police Super of North 24 parganas, the officer in chareg of the marichjhanpi genocide discuses the role played by Ram Chatterjee and other left leaders. Just see the film, HUMANITY TORTURED! Now samanat is also iconised like runu Guha Niyogi. Niyogi justified the Repression and killings during seventies in his book, AAmi Sada Aami Kalo. Samanto writes column in the Satesman as well as Paschim Banga, a WB GOV mag. The ex DGP writes on topics spanning police reforms to revolutionary activities in colonial India. Even Amiya samanta, accepts, had the Marichjhanpi refugees not been Dalits they would not be evicted so mercilessly. He also acceptes the facts of Food Blocked. All Eye Witnesses and all evidences are there! Who would stand for justice? Human Rights? For the deprived, persecuted, marginaliged, totured and killed Dalit Refugees?

All the Dalit Leaders and intellectuals shed tears on Marichjhanpi genocide! They oppose Citizenship act. They are associated with refugee Movement and different Dalit orgs. But they could not bring the War criminals to justice! They could not launch a Political or non Political movement. They claim to know everything! What they did all these thirty years? Just tried their best to get maximum favour of the ruling Hegamony or simply a stautus in Prliament , assembly or pachayat or a reserved post, promotion! They licked the Bottom of the Ruling Hegemony! My foot!
The partition victim Dalit East Bengal refugees- evicted from homeland to accomodate Caste Hindu Brahminical Hegemony with transfer of Power from apartheid generator British clonial rulers, deprived of human and civil rights, mother tongue and citizenship, targeted nationwide as branded as bangladeshi foriegn national thanks to Citizenship Amendment Act passed by Indian Ruling Class represented by all kinds of left, centrist and Right ideologies and parties and finally facing nationwide deportation drive thanks to brahmins of Bengal led by Defacto Prime Minister Pranab Mukherjee and Hindutva forces led by Sangh Pariwar and shiv sena -should thank Mr Prabhu Chawla , the editor- in - chief of India Today to publish a special report in India Today Bengali on Marichjhanpi Genocide, coinciding with 30th year of the first dress rehearsal of Genocide culture launched by the Regemented so called marxist ruling hegemony in West Bengal.

It might sound something very amusing to welcome a gesture so insignificant in these days of Electronic channels, media boom and information explosion. Well, in North as well as south India, the resettled Dalit East Bengal refugees enjoy the support of local population. In Orissa, while Naveen Patnaik BJP plus BJD ruling combination tried to deport the Noakhali Partition victims resttled in Ram Nagar, Mahakal Para area near Paradip port, Oria speaking local residents constituted an Utkal Bangiya Suraksha committee to defend the helpless people. Local residents, Media and political parties jointly stalled the deportation move there. Though the struggle is going on as the Refugges resettled there in early fifties find their names missing in Voters` List. Ration cards are also stand cancelled.

In United Uttar Pradesh,where I originally belong as I was born in a refugee colony in Udham Singh Nagar (Nainital), the local population always stood by dalit Bengali Refugees. My father late Pulin kumar Biswas worked for the refugees lifelong. He was the President of All India Udvastu ( Refugee) committee. He as a Communist Leader led the Dhimri Block Peasants` Revolt in 1958 in the Terai of Nainital. The insurrection was repressed brutally by joint forces of third jat Regiment, Police and PAC. CH Charan singh was the Home Minister in UP then. Communist Party of India with General secretary Comrade PC Joshi disowned the movement as they betrayed Telengana. In UP, no one could a single instance of confrontation between bengali refugees and other communities. In Terai of Nainital, Pilbhit, Bareilly and Rampur a few corore partion victims Sikh and Punjabies as well as Bengalies live side by side with a bond of unbreakable fraternity and cooperation for six decades. My father was elected un opposed the Vice President Of Terai Cooperative Commitee in mid sixties with local SDM as President by virtue of his post. I want to emphasise that at that point, sikhs and punjabies were more powerful, more dominent and majority in number. bengali Dalit refugees were minority plus economically very weak. But the chemistry of Unity is working since the first day. The spirit of peasant movement works even after the deaths of all the leaders including my father and his comrades. We always enjoyed excellent relations with Hills. ND Tiwari and KC Pant became National Leaders with our help only.

In 2001, as UP was divided and BJP took over as the ruling party in the new state Uttaranchal. Chief Minister Nityanand Swami and His government branded all Bengali dalit refugees living there since 1952 as foreign nationals. Bengali refugees launched an unprecedented movement supported by all opposition political parties, communities, markets and media. This is the only occassion while West Bengal, its government, ruling front, media and people supported us. Because, we could convince Buddhadev Bhattacharya, the new Chief Minister that provided the dalit refugees were evicted out of Uttaranchal as planned by Sangh pariwar, they would come to West Bengal without any notice and Left Front had to face similar crisis as Marichjhanpi. Contrary to dandakaranya People the uttarakhandi Bengalies are more united and they might not repeat marichjhanpi genocide once again.
Finally, Uttaranchal BJP government had to give in.

This is all India scenerio barring spordiac clashes between tribals of Chhattish Gargh and Orissa. Of course, entire North East, particularly Assam, Tripura and Manipur showcase a different equation. And it is due to the identity crisis of natinalities there. In mainland , all Dalit Bengali refugees supported the nationality movement as in Uttarakhand, Jharkhand and Chhattish gargh. Only Maharashtra and Mumbai are different cases where all North Indians are branded unwanted and the dominent Sangh Pariwar target all Bengali speaking people branding them as bangladeshi Nationals.

Here you are! In West Bengal, the Caste Hindu Ruling Hegemony never allows any space for dalit Bengali Refugees in any sphere of life. The irony is that a refugee, Dr man Mohan singh becomes prime Minister, another refugee Lal Krishna Adwani Deputy Prime Minister while another refugee Jyoti Basu ruled Bengal for two decades and a half while all dalit partition victims of east Bengal are branded as foreign nationals.

Mind you, it is India Today of Non bengali origin published the story. Not even any revolutionary little mag or sanhati.com or so called different, progressive and secular Bengali Intelligentsia highlighted the Genocide for long thirty years. For example, Mahashweta Devi had been active as a creative writer for so long. She wrote so many things on Insurrections of all kind and on also Naxalbari. She is writing daily on nandigram and singur. She writes on Rizwanur and Taslima so frequently! Why she could not take over the marichjhanpi issue in past thirty years? Sunil Gangopadhyaya, the Ruling Hegemony cultural head at present and the Shikhandi President of sahitya academy of India never had been a Marxist in the days of Tebhaga and food movement. Sunil along with Sandipan and Shakti ruled Kolkata in sixties with anarchist posture. Sunil visited USA during that period and befriended with Ginsberg. Sunil did the excellent work lifetime during Marichjahnpi blocked . He reported exclusively for Anand bazaer as Niranjan Haldar did. But, Sunil became a Marxist very soon and kept MUM all these years. rights Alert India could not get him face camera for its documentary on Marichjhanpi. Mr jagadish Chandra Mandal, worthy son of Maha Pran Jogendra Nath Mandal, wrote a Book, marichjahnpi in Bengali. Ananda Bazar published the review with lacs of circulation. But Bengal could not find a single voice to represent the massacred indigenous people and the plight of partition victims all these days.

An eminent Activist, a former associate of Sunil gango, the vice President of Bhasha Shaheed Smarak Committee, Ratan Basu Majumdar claimed that Bengali Intelligentsia did not know about the massacre! Is it so? Even after Anu Jalius`s EPW article, a few books on marichjhanpi, so much matterial available on net thanks to reasearchers lake Anu and Ross Mallick, a very significant novel like Hungry Tide by an eminent writer like Amitabh Ghosh, Sunil`s writings before three decades and the documentary, Humanity Tortured by Rights Alert India? Ratanda told me mahasheta devi would certainly write! has she written? I have been a keen reader of Mahashwetya Sahitya for almost three decades. I have been associated with his Mag Bhasha Bandhan, in which I could not get any space for those five corore Dalit bangali refugees scattered all over India!

While the Citizenship Amendment Bill was published on net, I passed personally the copies to top CPIM leaders. All of them assured they would oppose. While the bill was passed undebated in both houses of Parliament as only Dr Manmohan Singh,then a Rajya Shabha memebr fro Assam and general Shankar Roy Chowdahury urgued theat the refugees form east bengal should get Indian Citizenship. Dr Singh forgot that. NDA Home minister lK adwani presented the Bill. Pranab Mukherjee was the chairman of the standing committee on the Bill. All refugee orgs and individuals and activists opposed and communicated to Mukherjee. Mukherjee did not call any of us. Rather he boasted before a Refugee deputation that had he been the Home Minister he would have got deported all foreign National bengali refugees. So, he is executing his plan nowadays. Kanti Biswas, then a cabinet minister and Upen kisku a ST minister claimed on phone that CPIM opposed the Bill. We all know the reality.

Forget Marichjhanpi! More than Twenty Lac people in west bengal got their names deleted from voters`s List as they have been branded as Bangladeshi Nationals. Thousands have been dumped in jail in Krishnanagar, Burdwan, katoa, Nadia and Howrah. Thosand and thousand absconding. No news appeared in Kolkata Media. No intellectual protested.

I myself gave Mahashwetadi personally all relevent documents on Citizenship and Refugee Problems. She just told that she could not take over all the issues. She commented, Palash, you have to launch this movement!

In such a background, ANshuman Bhowmic has done a marvellous job as a jounalist.

Administrative Crackdown on BESU Students

2008-03-27T13:22:00.007+05:30

Bengal Engineering And Science University (BESU), Shibpur, Howrah-711 103

FACTSHEET in chronological order:

07.09.2007:
A notice ( memo no. RDO-2/1387) had been issued by the registrar where it was notified that four final year students (UG) and six 3rd year students (UG) were suspended and instructed to vacate their respective hostels with immediate effect for an indefinite period of time. But in the aforementioned notice, lots of irregularities have been found, which are mentioned below:

· It is clearly mentioned in the notice that inquiries against the students alleged to have committed misdemeanors, were pending. Then, we would like to know, how, without proper inquiry, were the 10 students slapped with such harsh punishment?

· We have found that one of the accused students viz. Tanmoy Chatterjee (3rd yr. Metallurgy) was not present in the university campus on the date on which alleged incident took place. He had in fact, gone to visit his friend’s ailing mother, at Peerless Hospital. Then how did his name crop up in the notice?

So it is explicit that the accused 10 students had been wrongly framed and suspended on the basis of some fabricated allegations. We are amazed and upset at this sort of bias on the part of the authority.

12.12. 2007:
" A second year student (U.G) named Afaz-Uddin Ahmed of the Dept. of Information Technology is fomenting trouble & violence in the University campus for the last one year. He, with the help of some of his batch mates is explicitly trying to disturb the peace & harmony of the University campus by infusing dirty politics in the affairs related to the students & inciting violence in the University campus, thus denting the integrity among the students. It had been reported to the concerned authority that he was found to behave in the most unacceptable manner and even has the audacity to manhandle some of his seniors. Presently he has taken his grudge to such an extent that he is threatening his own batch mates of dire consequences if they do not pay their “allegiance” to him. Now he has become so desperate that he is even trying to scare them by threatening that he will take “revenge” by waging his animosity against their families. It has been heard that a guardian of his batch mate has received threatening calls from an anonymous phone number, which is unprecedented in the history of this 150 year old institution. There is no denying the fact that his activities are unbecoming of a student of such a reputed institution.

We had lodged several complaints against him to the concerned authority, but unfortunately all have gone unheeded. If he is testing our patience, we would like to make it clear that we will no longer remain as silent victims of his inhuman acts. It is unfortunate to inform you that his motive of gaining narrow political mileage is explicitly getting the patronage of some of the office bearers of BESU, as found in yesterday night’s incident at hostel 9.But unfortunately the University authority is trying to overlook his heinous activities because of his outside political support. " (From a mass petition by the students)
When we drew the attention of our faculty members to this matter and submitted a mass petition to the Dean of Students (PICSA) on 12.12.2007, the authority came under pressure to act and constituted a disciplinary committee. But on the very day (13th December, 2007), Students’ Federation of India staged a rally and intentionally fomented panic among the students. And the result was imposition of section 144 in the campus, a black day for us. The “Afaaz” issue, thus, died down.

19.3.2008:
Three 2nd year students returning to their hostels at around 10 p.m. were ragged and racially abused by few boarders of “Wolfenden Hall”, as they were natives from outside West Bengal. They were physically assaulted and two 2nd year students sustained head injuries. Police forces were called in to control the situation. However, the boarders of “Wolfenden Hall” continued to resort to violent means in spite of the presence of police and faculty members. Two of the Wolfenden boarders were caught red handed with hockey sticks (it is to be noted that there is no hockey team in our university) by the faculty members. But, on insistence of Prof. Bhawani Prasad Mukhopadhay, the two were released with no charges being levied against them.

20.3.2008:
In the evening, party cadres brutally assaulted few students at the first gate of the university in front of R.A.F. SFI supporters helped them by pointing out the targets. When the students appealed to the R.A.F to take action, they resorted to indiscriminate “lathicharge” on the students. They even entered Richardson Hall without the permission of the hostel superintendent and assaulted the boarders, including a physically handicapped student. More than twenty students were seriously injured. The same act was repeated in Sengupta as well as Sen Halls. The dual policy adopted by the R.A.F. was apparent from the ease with which cadres were roaming freely and threatening us in the presence of R.A.F. In the mean time SFI supporters attacked 2nd year hostels. The 2nd year students were so terrified that they sought our help. We took them to our hostels, called our University doctors and provided them with First Aid. Strangely, the authority’s idea of assistance was an order to vacate the hostels near midnight. Buses were provided to transport us to the Howrah station. We narrated the ordeal of the 2nd year students to police. They assured us that the 2nd year students would be able to reach their hostels. So we boarded the bus provided by the authority. But unfortunately when we reached Howrah Station we came to know that the hapless 2nd year students were arrested by police charging them of loitering in the campus after 10-30 pm.

You can surely understand that we, the students have become victims of SFI-Authority-Police nexus whose sole motive is to de-stabilize our esteemed Institution. Our very existence in the University campus is at stake. We would like to vehemently protest against the barbaric treatment given to the ordinary students.

24.03.2008:
Students were put under virtual house arrest, and their free movement was restricted by the police. They even threatened students of dire consequences, which included threatening them with initiation of legal proceedings and disrupting their careers, for no valid reason.

The press was not allowed to enter the campus and report the incidents occurring inside. Even the students were not allowed to go near the press and express their views. This constitutes a gross violation of human rights.

We would like to appeal to you to bring this to the attention of the nation at large and help us to bring the offenders to justice.

With warm regards,
Students (U.G)
BESU,Shibpur

SIBPUR BESU UPDATE

1. The Sibpur BESU students are continuing their sit-in at Metro Channel, Esplanade. Almost everybody has submitted a blank sheet in the examinations. Many have again written "Save BESU from becoming a Nandigram".

On Thursday, March 27, they are calling for solidarity from students, teachers, engineers and other intellectuals. They have obtained formal police permission for a structure from 4-8 pm at Metro Channel, Esplanade.

2. The authorities at BESU have opened the sealed packets containing scripts, before delivery to the examiners, with the motivation of picking out victims. Because the confidentiality of the examination process has been compromised, the teachers at BESU, after a council meeting, declared the examinations to be null and void.

Some samples of what happened :

Moloy (name changed), after being assaulted reached the Registrar to complain against the assailants. He was still covered with blood. The Registrar handed him a copy of a complaint against himself, filed by the assailants to the effect that Moloy had assaulted them.

Subir, Pankaj, Joy and others (names changed) complained to the VC when he came to their hostel that they had been cruelly assaulted. The VS smiled sweetly and said , "Why are you making up stories? Nobody assaulted you."

Both of these characters have been tireless in telling students and guardians that the students should join the SFI (students' outfit of the ruling communists of West Bengal) and all trouble would stop.

There should be a Citizens' Enquiry into these alleged misdemeanors of the Vice Chancellor and the Registrar of BESU.

Five Years In Iraq:Iraqis and Americans Offer Perspectives on the War

2008-03-21T13:34:00.001+05:30

Karen DeYoung
Washington Post ,Wednesday, March 19, 2008

For a majority of Americans, today marks the fifth anniversary of the start of an Iraq war that was not worth fighting, one that has cost thousands of lives and more than half a trillion dollars. For the Bush administration, however, it is the first anniversary of an Iraq strategy that it believes has finally started to succeed.

It has been about a year since Army Gen. David H. Petraeus arrived to command U.S. forces in Iraq, Ambassador Ryan C. Crocker took over as the chief U.S. diplomat, and the military deployed 30,000 more troops to protect and rebuild neighborhoods.

Officials now running the U.S. effort express frustration that the gains wrought by their new political, security and economic policies -- in particular, sharply reduced violence -- are continually weighed against the first four years of the war, when Iraq unraveled in insurgency and sectarian strife.

"I came to Washington to describe what we're doing," Charles P. Ries, Crocker's senior deputy in charge of reconstruction and the Iraqi economy, said during a visit last week. "At almost every meeting, somebody wants me to describe what we used to do. . . . I know why people raise these questions, but I don't feel it's something I can speak to. The times were different then."

Today's policy is fundamentally different from the impatient mind-set of 2003, in both lowered U.S. expectations and a less imperious approach to dealing with Iraqi authorities. "In those days," Ries said, "we decided what [the Iraqis] needed, and we built it." Today, he said, Iraqis are asked what they want, and then told that while the United States will help, they will have to pay for most of it themselves.

Yet as the administration requests additional war funding and calls for a pause in promised troop withdrawals, some question its right to a second chance. "Like a tourniquet," the troop increase "has stopped the bleeding," Sen. Jack Reed (D-R.I.), a former Army Ranger and senior member of the Armed Services Committee, reported last week after his 11th trip to Iraq. What he has not seen, Reed said, are the surgery and recovery that would begin to heal the wound that Iraq has become. And even U.S. officials acknowledge that the "surge" has not led to the political reconciliation the administration had hoped for.

Others see the past year's successes as fragile and reversible, and less consequential than the pain that preceded them. "I think they have it righter than they ever have before," Daniel P. Serwer, an Iraq expert with the U.S. Institute of Peace, said of the administration. "But the fact is that those four other years did exist, and they condition a lot of what can and cannot happen now. There's a history here, there's a lot of blood and guts on the floor -- literally."

The White House tends to dismiss such longer memories. While it recognizes the inclination to "relitigate the past" when a milestone such as the fifth anniversary is reached, National Security Council spokesman Gordon Johndroe said, "our focus is on the way ahead and making sure that the current situation and the future situation gets better."

In addition to new directions on the ground in Iraq, officials point to a newly effective structure designed to avoid the kind of ad hoc decision-making that led to early bureaucratic gridlock and mistakes, such as decrees dissolving the Iraqi army and banning Baath Party members from government jobs. President Bush's appointment last spring of Lt. Gen. Douglas E. Lute as deputy national security adviser for Iraq and Afghanistan has "helped streamline the process and made sure that there is . . . a senior-level official who can devote his full, undivided attention" to the subject, Johndroe said.

The once-bickering State Department and Pentagon are reporting new levels of cooperation. Diplomats who recall Donald H. Rumsfeld's insistence that the Defense Department control all aspects of early postwar policy note approvingly that it was his successor as defense secretary, Robert M. Gates, who recently called on Congress to increase the State Department's budget.

Many U.S. officials participating in the new efforts talk about those years as though they belonged to another administration. "We weren't here five years ago," said one who, like several interviewed for this article, spoke on the condition of anonymity about past policy on the grounds that it would undermine the present.

"In the early days, they had an idea of something, a plan, of how it was going to be," the official said. "They would remove Saddam, and democracy would flower. They took this plan and rammed it down into the reality of Iraq, which nobody understood. What did they know about Iraq? Who were they listening to?" In the past year, the official said, "there has been a coming to grips across the board with Iraqi reality."

One of the more troublesome realities is that Iraqi leaders have been slow to take advantage of the "breathing space" that the troop increase was supposed to create. The administration has often noted that Washington and Baghdad operate on different clocks, with the U.S. timetable for demonstrable progress running far faster than its Iraqi counterpart. In an interview last week, Petraeus, the U.S. military commander, acknowledged that "no one" in the U.S. and Iraqi governments "feels that there has been sufficient progress by any means in the area of national reconciliation" or in the provision of basic public services.

In congressional testimony scheduled for early next month, both Petraeus and Crocker are expected to make the case that enough forward movement has been made to justify continuing the current strategy, and to warn that an abrupt withdrawal of U.S. troops could jeopardize the gains of the past year.

But while a strong congressional appearance by the two men last September quieted talk of funding cutoffs and brought a brief rise in public attention, their upcoming testimony appears to have sparked little anticipation.

As the administration struggles to focus on Iraq's future, it is competing with a presidential race locked in debate about how the war began and how to end it, a Democratic Congress determined to fight over every additional dollar, and a weary, distracted public.

Indeed, once a top public concern, Iraq has been muscled aside by the economy and the political campaigns. In a survey released last week by the Pew Research Center, more people knew the names of the head of the Federal Reserve Board and the president of Venezuela than knew the approximate number of U.S. casualties in Iraq.

Some public views about the situation in Iraq have eased over the past year. But others, including baseline judgments about the war itself, have hardly budged. In the latest Washington Post-ABC News poll, nearly two-thirds said the war was not worth waging. Less than half, 43 percent, think the United States is making significant progress, and majorities continue to judge the war's benefits as not worth its costs.

Polling director Jon Cohen contributed to this report.

Cities of the past and the future

2008-03-07T19:11:00.000+05:30

Le Monde diplomatique
-----------------------------------------------------

March 2008

THIRD GOLDEN AGE FOR IZMIR

Cities of the past and the future
___________________________________________________________

What would it mean if Turkey became the first country in the
region to host an expo? And how did the expo begin? Marina Da
Silva asked Vicente Gonzales Loscertales

by Marina Da Silva
___________________________________________________________

There are two kinds of expo: world and international. World
expos run for six months, are held every five years,
concentrate on a general theme and transform a large part of
the host city. The 350-hectare site requires massive urban
reconstruction to improve its design; participating countries
can build their own pavilions which, according to the rules,
must then be demolished, unless their architectural value
leads the host country to negotiate their preservation.

International expos - held between world expos - are much
less expensive. They cover only 25 hectares and last a
maximum of three months. The pavilions are built by the host
city, and smaller scale construction and infrastructure is
required. What is produced can be recycled, allowing host
cities to recover part of their investment quickly and
acquire development assets in line with their own strategic
plans. These exhibitions have specialised themes. The first
expo of the 21st century will be held in Shanghai in 2010 on
the theme "Better City, Better Life".

The concept of expos grew out of the expansion of
industrialisation: empire-building nations wanted to show
that they were at the forefront of modernity and material
progress, capable of transforming nature and controlling the
world. The first "world expo" was London's Great Exhibition
in 1851. From then on they evolved in parallel with political
and social developments. Initially, they were meetings where
states could parade their industrial products, innovations
and power. After the second world war a new idea developed
and the aim became more general, encompassing social and
cultural achievements.

Rivalry between France and Britain in the 19th century led to
an increase in the number of expos. The first expo in Paris
was in 1855, and then again in 1867, 1878, 1889 and 1900,
with the last large one in 1937. The appearance of modern
Paris owes much to them - the Eiffel Tower was built for the
exhibition commemorating the centenary of the French
Revolution, the Grand and Petit Palais were built for the
1900 exhibition, and the Palais de Chaillot and the Palais de
Tokyo for that of 1937.

Historical context can have a significant impact on the
exhibitions. As Vicente Gonzales Loscertales, secretary
general of the International Exhibitions Bureau, explains:
"The 1937 exhibition was marked by the extreme political
tension of the period - German and Italian fascism versus
Soviet communism. This was a real pre-war exhibition and a
very militant one; in the throes of civil war, Spain's
pavilion mobilised many anti-fascist intellectuals and
included Picasso's Guernica. But the exhibitions are prepared
far in advance. In the early stages there is always an
impression of normality and then all of a sudden a crisis
blows up."

At the Seville expo in 1992 the scheduled pavilion for the
USSR became the Russian Federation pavilion, and then that of
the Commonwealth of Independent States. The Yugoslav
Federation pavilion disintegrated like the country. Germany
started with two pavilions and ended with one.

Popular acclaim

In the 1990s the concept went through a crisis. Some began to
wonder whether these events still had a purpose; others asked
whether the idea remained valid when globalisation proposed a
united world dominated by capitalism and multinational
corporations.

But the number of applicants wanting to organise exhibitions
kept growing and the public attended in ever greater numbers.
The Seville exhibition in 1992 had 41 million visitors in six
months, four times more than Disneyland Paris that year. The
expo in Hanover in 2000 had 19 million visitors in five
months - almost double the number visiting the Millennium
Dome in London that year.

Loscertales accepts that the concept had to adapt. To give it
modern political value, millions of visitors had to be
attracted by large themes: food, health, sustainable
development. The applicant country chooses the theme, a major
factor in deciding whether an application is accepted: themes
high on the international agenda are in favour. The
exhibition in Hanover took up the issues of the Rio
conference on the environment and the UN's Agenda 21. And the
themes promoted at Aichi in Japan in 2005 (nature's wisdom)
and Saragossa in 2008 (water and the sustainable development
of cities) were taken from the UN's millennium objectives.

The expos went beyond government to include NGOs, companies
and cities. Loscertales argues that these exhibitions have
become a powerful forum for dialogue, giving people access to
important international debates. Their perspective is not
only political in power but also in the way that they take
into consideration the cultural development of each country,
respecting civilisations, identities and religions. They are
a dialogue between civilisations, not a clash.

States, not cities, apply to be hosts, as part of their
development priorities. Although investment by host cities
might be disproportionate, Loscertales says the exhibitions
encourage economic activity and generate revenue. Investment
is not wasted. When they are well designed, they transform
and modernise a country. Lisbon hosted the 1998 exhibition
because Portugal had decided to modernise its capital - the
exhibition was just a pretext. The city was extended
eastwards, its transport system improved and the urban area
increased, as did tourist revenue. The operation cost the
state /-500m ($729m) but it has provided much more in return.
Loscertales claims expos improve infrastructure and generate
considerable money, which can be invested in the social
sector.

The two candidate cities for the 2015 world expo, Izmir
(formerly Smyrna) and Milan, are proposing important themes:
health for Izmir and food for Milan. In Turkey's case, an
enormous effort is under way to improve public health and so
the theme is health for all. "Milan is a large, developed
western European city and a centre for design and Italian
industry. Izmir is a modern and dynamic Mediterranean, almost
Middle Eastern, city with a great historical tradition, and
is a centre of Hellenic and Byzantine culture, creating a
very open city... it borders a turbulent region," says
Loscertales.

There is great dynamism in the Turkish economy, along with
both modernisation and a rise in religious feeling. Turkey is
a member of both Nato and the Organisation of the Islamic
Conference. It is also an EU candidate country, a moderate
political partner with a liberal economy and a vast market.
If the exhibition is held there, Turkey will be the first
country in the region to host such an event. For Loscertales,
Milan is the safe bet but Izmir is a gamble on the future,
opening the door to a country that should be made welcome.
Visitors from across the world would be attracted to an
exhibition at the crossroads of civilisations and cultures.

The decision will be taken by the 140 member states of the
International Exhibitions Bureau after a secret ballot and
the result announced on 31 March.
________________________________________________________

Marina Da Silva is a journalist

Translated by Morag Young

________________________________________________________

ALL RIGHTS RESERVED © 1997-2008 Le Monde diplomatique

High rise, low spirits

2008-03-07T19:04:00.003+05:30

Le Monde diplomatique
-----------------------------------------------------

March 2008

NO LIFE OF THEIR OWN AND NO LIFE TO GIVE

High rise, low spirits
___________________________________________________________

How did the tower block come to dominate the imaginations first
of the moneyed, then of architects and planners, and then the
skylines of cities worldwide?

by Thierry Paquot
___________________________________________________________

Tower blocks came in with the new construction techniques of
the later 19th century - metal frames, reliable lifts,
telephones - and with the desire of wealthy firms for
symbolic edifices to attract the envy of all. The world's
first proper high-rise building, at 40 metres, was erected in
New York in 1868, the second in Minneapolis, and the third in
Chicago.

The tower was capitalism on the rise made visible, a symbol
constantly outdated as more powerful enterprises commanded
ever-higher towers to appease the appetites of captains of
industry and high finance; they wanted their tower, their
seat of power, their commercial and public image. There's
something childish in this insatiable one-upmanship, although
there are architects who still see the 19th century tower as
the 21st century future.

But today's real challenge lies in developing an architecture
that moves with the times as the city evolves, and can deal
with people's expectations of wellbeing and environmental
quality. The first urgent steps must be towards housing for
all - those sleeping under bridges, families now poorly
housed. We need new standards and a new urban geography for
social housing. This calls for courageous new approaches in
funding, allocating housing and planning. Why not involve
future tenants in the construction of their homes?

High-rise buildings won't help. Their rents are high so they
remain in the luxury range. They offer no public space: life
revolves around lifts and the need for home deliveries. They
are vertical impasses such as those described by Paul
Virilio (1). They don't offer better office space either
(their air-conditioned universe is statistically proven to
provoke certain illnesses). After 9/11, World Trade Centre
businesses found offices in smaller units chiefly in New
Jersey; apart from occasional nostalgia for the Manhattan
scene, everybody was happier.

Still many prominent architects, with the real estate lobby
behind them, believe without proof that high-rise buildings
can resolve the land problem (which might be true in part),
improve densities (not proven), reduce energy needs (the data
is contradictory) and contribute to the community (how is not
clear).

At Mipim, the 2007 international real estate fair in Cannes,
visitors admired the proposals for Moscow's Federation Tower
(448m, delivery in 2010), Warsaw's Zlota 44 (54 floors), and
New York's Liberty Tower (541m) and New York Times Building
(228m). There were others for Dubai (over 800m) and Paris,
Nexity's Granite tower by Christian de Portzamparc, the
Generali by Valode and Pistre, and Thom Mayne's 300-metre
Unibail. And in London there was Renzo Piano's 300-metre
London Bridge Tower. All of this can only be explained by
corporate arrogance. As far back as 1936 Le Corbusier evoked
the possibility of a 2,000-metre tower for Paris. Only the
Japanese have gone that far to date, with a 4,000-metre tower
on the drawing board, and a 2,004-metre pyramid designed to
accommodate 700,000 residents and 800,000 office workers.

No life to give

The American architect Frank Lloyd Wright condemned the tower
phenomenon in 1930; skyscrapers, he said, had no life of
their own and no life to give, having received none at their
conception. They rise above a landscape without regard for
their surroundings or for others: "The skyscraper envelope is
not ethical, beautiful or permanent. It is a commercial
exploit or a mere expedient. It has no higher ideal of unity
than commercial success" (2). But then he couldn't have
imagined the impact of today's commercial shopping malls and
their decors, the complacent ersatz communities overshadowed
by towers.

Guy Debord, the radical French writer, attacked Le Corbusier
in 1954 for seeking to do away with the street and confine
people to towers. Debord thought architecture should be a
positive force in the community, intimately engaging with our
capacities for play and for knowledge (3). He went on to
develop the concepts of psycho-geography and unitary
urbanism, and criticised the cold geometry underlying modern
monumental urbanism and its towers and blocks.

The Chinese urban planner Zhuo Jian has counted 7,000
high-rise buildings in Shanghai; 20 of them exceed 200
metres. He has warned of ground subsidence of several
centimetres a year. Other experts have shown that tower
blocks are energy-intensive to construct (the manufacture of
sophisticated glass and steel demands enormous resources).
Nor are they cheap to maintain, with air conditioning, lifts
and central floorplate lighting - though alternative
techniques have been proposed, such as Jacques Ferrier's
energy-generating Hypergreen model. Critics point to the
short 20-year lifespan of a product that is costly and ill
suited to multi-functional requirements - how can
universities, libraries, luxury apartments and 5-star hotels
lodge under the same roof, given the disparities of activity
and clientele?

In Paris, the Seine embankment, the skyscraper residences in
the Olympiades and Flandres tower blocks, the Italie 2
shopping complex and the Montparnasse tower (1973, 209m)
don't encourage high-rise construction and platform urbanism.
In 2003 63% of Parisians didn't like high-rise buildings. In
1977 the authorities had set a 37-metre limit on the height
of new projects, but in June 2006 architects identified 17
sites in Paris suitable for towers of up to 150 metres or
17-storey residential blocks. The city council chose three
for further study in January 2007 (Porte de La Chapelle,
Bercy-Poniatowski and Masséna-Bruneseau) and 12 teams entered
proposals for towers on inhospitable terrain surrounded by
noisy and polluting infrastructure. Most were careful in
their design of green and public spaces, and paid attention
to neighbourhoods and public transport. Even so, they
neglected the impact of the towers on wind speed, light and
social nuisance; and the energy costs of construction.

The debate over aesthetics has barely started. There are many
splendid creations that beautify the skyline and grace their
location - who has not been impressed by the vertical beauty
of New York or Chicago? Yet no tower, however impressive,
should be imposed on a landscape without regard for its
environment - the network of streets and open spaces, public
transport, the impact of its scale on the buildings around
it, and its interplay with the facades and green spaces
below. Towers are anti-social - no wonder they are the
location for disaster movies.

If architects were to focus their skills on the pursuit of
more intelligent and sustainable urban environments, the
results would be less alienating: there is a need for
existential quality. Urban architecture is about people,
place and city features that affect the people who live there
(for example, street lighting). We should be cultivating much
more diversity in our urban landscapes.
________________________________________________________

Thierry Paquot is a philosopher and lecturer on urban issues,
author of Petit manifeste pour une écologie existentielle,
Bourin Éditeur, Paris, 2007, and editor of the journal
Urbanisme

(1) Paul Virilio, City of Panic, Berg, Oxford, 2004.

(2) Frank Lloyd Wright, "The Tyranny of the Skyscraper" in
Modern Architecture, Princeton University Press, Princeton,
1931.

(3) Debord in Potlatch, no 5, 20 July 1954.

Translated by Robert Corner

The imperative as an alternative

2008-03-07T18:24:00.000+05:30

Amit Bhaduri
Seminar, February 2008

ARE SEZs necessary to ensure that the Indian economy stays on a high growth path, generating economic development in the process as well? This essay argues that such is not the case at all.

Developing countries are today confronted by a serious dilemma. In the current phase, the emerging rules of globalization are increasingly occupying the policy space of the nation-state. And yet, the global rules of the game are flawed, and biased in favour of the richer countries, especially the United States. The dilemma arises because the developing countries tend to feel that there is no alternative to accepting globalization in its present form, the so-called TINA syndrome of a unipolar world dominated by the United States (US). They do not realize that they can hardly rely on the national interests of this superpower to further their own developmental objectives. A couple of well-known examples illustrate this point.

To start with, consider world trade. Fairer global trade in agricultural commodities, without open or hidden subsidies to farmers in richer countries, is required not merely for a freer trade regime; it also affects the poorest one billion people in the world as most of them are connected directly or indirectly to agricultural activities in the rural areas of developing countries. There is hardly any other trade-related example with greater compatibility between a more efficient international price mechanism operating through freer trade, and greater global equality and economic justice. And yet, international negotiations governed by the corporate interests in the richer nations reduced global rule-making recently to a ‘tit-for-tat’ strategy that led to a breakdown in negotiations, and the tendency to impose policies decided by the richer and more powerful nations.

There are other examples of imposed rather than negotiated policies. Both the Bretton-Woods institutions, namely the International Monetary Fund (IMF) and the World Bank, manipulate economic policy in the developing countries through their standard pro-market loan ‘conditionalities’. In defence of imposing pro-market conditionalities on developing countries, both these institutions place a great deal of emphasis on the principle of accountability to the market. Ironically, however, they themselves remain totally unaccountable for their performance and recommendations, no matter whether an economic collapse occurs in Argentina under their guidance, or an acute financial crisis erupts in East Asia (the only country to escape largely its adverse consequences was Malaysia, which went openly against the IMF prescriptions), or years of stagnation continue despite their recommended large-scale IMF-World Bank sponsored liberalization in sub-Saharan Africa. More blatantly, the presidents of the World Bank are chosen from the US, by the US, for the US, in the name of global development.

The power of imposing rules, which the rich nations have over the poor nations, arises to a large extent from several historically inherited structural asymmetries underlying the present world capitalist system on which is premised the current process of globalization. Without identifying them clearly, it would appear that this process of globalization led by the interests of the rich is a natural phenomenon, somewhat like an earthquake or a drought, consequences that have to be accepted because they cannot be controlled. We would be in a better position to integrate strategically with the global economy to our advantage, instead of meekly submitting to it, if we understand these structural asymmetries.

To begin with, the most fundamental asymmetry in the world economy arises today from the freedom of movement of capital, especially financial capital on one hand, and the restrictions on the movement of labour on the other, especially unskilled labour from developing countries. Despite vast improvements in travel and communications technology, available estimates suggest that labour migration as a proportion of the total world population has been lower in the current phase (approximately 1973 to date) compared to the earlier phase of globalization (approximately 1870-1913).

On a rough reckoning, about one in six persons crossed national borders for employment or livelihood between 1860 and 1900. They went as indentured labour from China and India, as colonial settlers from Europe to North, Central and South America, and to Australia. Over a comparable period of nearly five decades of the current phase of globalization, not more than one in seven persons migrated. Contrast this relatively sluggish movement of labour with the movements of capital, especially financial capital during the current phase of globalization. Rough estimates available from the Bank of International Settlements suggest that the annual volume of private trade in foreign exchange is about 450 trillion dollars, almost nine times the volume of world GDP. Of this, less than two per cent is accounted for by trade in goods and services, and even if one adds all direct foreign investment it would still be well below four per cent. So, purely financial transactions account annually for over eight times the world GDP. (By contrast, in the era of regulated finance in the early 1970s, only about 10% of all international transactions were financial.)

A few days of hostile private trade in the foreign exchange market can wipe out the entire foreign reserve of all the central banks in the world. The defining characteristic of the current phase of globalization has become this overwhelming dominance of private trade in finance. The world has not seen anything like this before.

The rise to ascendancy of international finance started with successive waves of liberalization of the major capital markets of the advanced capitalist countries starting around mid-1970s, and assumed irresistible momentum by early 1980s. The entire process was further stimulated by the internet boom of the 1990s and by rapid advances in telecommunications technology. Although little explicit note is taken of its implications in public discussions and government pronouncements, its imprint has been deep on the pace and pattern of world development in general, and Indian development in particular.

Economic policies are increasingly formulated by the Indian government with a view to appease the sentiments of financial markets. The English language media, especially the electronic media that shape Indian middle-class opinion, tend to behave as if the daily fluctuations of the stock market provide a barometer of the health of the real economy. However, the Indian stock market is minuscule in relation to the vast size of global private trade in foreign exchange mentioned earlier. The rupee and Indian stocks can easily be set into an uncontrollable downward spiral by a few large international players speculating against some Indian stocks or the rupee.

This is not at all fanciful. Recall how Dalal Street nosedived immediately after the 2004 general election results, because a few large, mostly foreign institutional investors, began to withdraw from the Indian capital market fearing that a coalition government supported by the left will be unfriendly towards private businesses. However, as soon as the UPA government named its top economic team, a trio of the prime minister, the finance minister and the deputy chairman of the planning commission, all known for their extreme pro-market and corporate-friendly outlook, the stock markets began to stabilize in no time.

Nothing had changed about ground realities of the Indian economy in those few weeks, except that international finance capital needed political assurances. In the process, the future course of economic policies of the country was set, and the left sufficiently tamed as its subsequent economic policies are showing.

This story would remain incomplete for India, as for other developing countries, if we miss the critical role of the IMF and the World Bank. Since those two institutions are in a pivotal position to influence the perception of private foreign investors like multinational corporations, banks and other financial institutions about a country’s investment climate, they exert a significant influence on financial markets. If the economic policies of a government are favourable to the corporations, it generally gets a good chit from the IMF and the World Bank, encouraging capital to flow in to stimulate the stock market. With an unfavourable signal from those institutions, the government runs the risk of capital flying out in a destabilizing manner.

This, not merely free trade, is the name of the financial game under globalization. The IMF, the World Bank and all those suffering from the TINA syndrome would like us to believe this is indeed the only game in town! Under pressure from the Bretton-Woods institutions, India passed a Fiscal Responsibility and Budget Management Act (FRBM) in 2003 which prevents the government from spending more in areas like elementary education, expanding rural employment guarantee or making it effective by strengthening decentralization of the panchayat system through adequate fiscal autonomy. Tribals and peasants are evicted from lands with little compensation and their livelihoods destroyed to improve the ‘investment climate’.

It is becoming increasingly apparent that in the name of development policies of developmental terrorism on the poor are being pursued. It might deliver high growth in the short term, but it is growth without a democratic content. It does not reach the poor citizens of India who need to benefit most from the process of growth. This is why each and every government that has been following this sort of policy gets showered with the approval of the corporate sector, the IMF and the World Bank, and even the upper middle class, but loses the general election.

The Congress government under the then Prime Minister Narasimha Rao with Manmohan Singh as its finance minister spearheading economic reforms lost the general election. Manmohan Singh personally failed to win a seat. The BJP-led coalition crashed in the 2004 general election with its ‘Shining India’ slogan; it did especially badly in Andhra which was shining under the glow of IT industries. There is no reason to believe that things would be any different next time. However, this would require going against the hidden script of globalization by upsetting the alliance between large domestic industrial houses, multinational corporations and banks including the IMF and the WB, and a pliable domestic government irrespective of its political label.

The second important asymmetry in the current phase of globalization arises from the increasingly freer flow of trade in goods and services on the one hand, and the growing restriction on the transfer of knowledge and technology embodied in the production of those goods and services on the other. In the emerging regime of Trade Related Intellectual Property Rights (TRIPS), all developing countries, including India, find it increasingly difficult to learn and adopt the production technology involved in the goods and services they import. The asymmetry of the emerging trade regime has been characterized by freer trade in goods and services coupled with greater restrictions on the flow of productive knowledge.

Thus, the more ‘liberalized’ trade regime of the World Trade Organization (WTO) puts India under increasing pressure to import goods and services rather than produce them at home. It is conveniently forgotten that international trade has been the vehicle for learning the technology embodied in the traded goods and new products throughout history. This learning process involved through international trade may well be the most important dynamic gains from freer trade, far outweighing the static gains of existing comparative advantage.

By treating knowledge more and more as simply a privately tradable commodity, the current trade regime shows its bias towards corporations as the generator of knowledge who should be handsomely rewarded, but forgets the importance of other sources of knowledge like traditional community-based knowledge to the detriment of many indigenous communities. This, however, does not stop globally powerful drug giants from engaging in biopiracy by relying precisely on the knowledge of herbs held by tribal communities of this country!

It is in this context of freer trade in goods and services that the economic consequence of globalization in terms of the increased relative importance of the external vis-à-vis the internal or domestic market needs to be examined. It has influenced thinking on macroeconomic policy in a way which is seldom highlighted. It emphasizes the importance of reducing the costs of production through more efficient supply-side policies for increasing the international competitiveness of the national economy, but ignores the problem of creating adequate purchasing power and aggregate demand through relative neglect of the domestic market.

This shift of emphasis from domestic demand to international cost competitiveness raises concerns about labour market ‘flexibility’ and various forms of wage restraint. Lower wages tend to depress the unit cost of production, but also the consumption demand from wage income. Consequently, unless either higher luxury consumption, investment or increased export surplus makes up for that reduction in consumption demand in a regime of investment or export-led growth, insufficient aggregate demand at home would become the binding constraint on development.

Similarly, the emphasis on increasing output (value added) per worker or labour productivity (to reduce labour cost of business) and using this as a tool for enhancing international competitiveness has its downside. Attention focused only on labour productivity separates it from the level of employment in the economy. Thus total output would decrease despite an increase in productivity, if the percentage decrease in the level of employment exceeds the increase in labour productivity. Consequently, the corporate strategy of ‘downsizing’ the labour force to create a ‘lean and efficient corporation’ for increasing market share might turn out to be good for a particular corporation, but macro-economically counterproductive if many corporations do it simultaneously with shrinking of total supply, and of the size of the domestic market.

Such policies of reducing unit cost in search of greater efficiency are effective on the microeconomic scale of a single corporation, but counterproductive on the macroeconomic scale due to their effect of depressing aggregate demand. The blurring of this distinction between micro-level and macro-level efficiency, typical of the corporate ideology, gives rise to many ‘fallacies of composition’ in macroeconomic policy by assuming that the individual microeconomic ‘parts’ have the same properties as the ‘whole’ macroeconomic system. In actual fact, the whole is different from the sum of the parts.

The third asymmetry arises in the current phase of globalization from the role assigned to the state in monitoring and regulating economic activities. The market-oriented neo-liberal philosophy intends to curb the role of the state as an economic actor, but gives rise to an almost schizophrenic view of the capabilities of the state. It is usually claimed that the state cannot be trusted with expansionary monetary and fiscal policies (e.g. FRBM Act of 2003 mentioned earlier) because it has an inbuilt tendency to be financially irresponsible. At the same time, however, the same state is relied upon to undertake far more complex financial tasks like extending the scope of the market though privatization without corruption, regulating the stock exchange, etc. This schizophrenic view about its capabilities is rooted in denying the state its developmental and distributive role, but using it to promote the reach of the multinational corporations through measures like privatization.

This also poses the most serious challenge to our democratic form of government. It leads in the case of India to the most fundamental asymmetry in the relation between our political democracy and the market mechanism. In neo-liberal philosophy, the free market and democracy are considered mutually reinforcing, as both extend the scope of individual choice. And yet, the types of freedom granted by the market economy and political democracy are often in conflict in developing countries. The democratic principle of ‘one-adult-one-vote’ coexists rather uneasily with the free market philosophy that the rich, with greater purchasing power, would have more ‘votes’ than the poor in the marketplace.

This asymmetry becomes even more acute when with greater inequality in the distribution of income a larger proportion of the poor have political voting rights, but are economically without a ‘voice’ in the market. In these circumstances, the democratic form of government comes under increasing strain if too much freedom is granted to the market. Yet, the process of globalization relentlessly generates a situation in which national governments (having already succumbed) end up having little control over the free play of global market forces as they impinge on their own country.

As a matter of fact the history of the relation between economic development and democracy has been far more complex than the currently fashionable ‘political correctness’ would have us believe. Historically, the per capita income of the western countries had to reach a minimum of 2000 dollar per capita per year before anything close to universal suffrage was granted. This was a high level compared to India’s 200-250 dollars around the time of our first general election in 1952 (measured in 1999 at Purchasing Power Parity or PPP calculation).

It is an unparalleled achievement in recorded history that political democracy in India has been sustained at that level of poverty despite the tremendous diversity of the country. This also poses the most serious challenge to our democratic form of government. It must control the excesses of globalization and domination by corporations of our economy. Our democracy has to ensure that the process of growth is not corporate-driven, but is decentralized and led by rural employment, in order to allow for the widest participation of our citizens. Only then will the wealth created by growth be fairly shared, and growth itself will have a democratic content. It will be growth of wealth created by the people, for the people. This compulsion of our time can neither be met by globalization, nor by corporate-led growth supported by the government. Unfortunately neither the right nor the left seem to have woken up to this challenge for a pattern of development that gives dignity to all citizens.

If multiparty parliamentary democracy means giving people a wide range of political choices, we have it in plenty in India. However, if we have to also choose the content in critical areas of economic policy there is hardly any choice left. A marked convergence among political parties is taking place, less apparent in their rhetoric, but unmistakably clear in their actions. One could have believed that this is the result of the compromises of coalition politics at the centre. But when the same thing happens at the level of states, and political parties of different labels follow with equal vengeance the same economic course, no room is left even for illusions.

Grand terms like ‘growth’, ‘industrialization’, and ‘development’ are used by politicians with abandon these days to hide the poverty of their economics and politics. But the central question remains unanswered. If a high rate of growth of a particular sort necessarily entails a certain type of industrialization, is this industrialization synonymous with development?

The type of industrialization India is experiencing with recent high growth has three characteristics that are unmistakably neo-liberal. First, it is led by corporations. Second, they are mostly private corporations. Third, the role that the government plays at the central and at the state level is that of a promoter, an agent of private corporations, not one of a regulator. All parliamentary political parties seem to agree. We are repeatedly told that sacrifice is needed for this industrialization, but it is conveniently left untold that the sacrifice must be borne by those who are least capable of bearing it, the poor and the most marginalized sections of society. The rich corporations need not sacrifice. Instead, they are subsidized by the governments. The estimated subsidy for the Tatas in Singur, West Bengal is over Rs 850 crore for an investment of Rs 1000 crore. Similar deals are said to have been cut by the other big industrialists for SEZs and other projects.

The traditional political differences have been homogenized into a neo-liberal consensus. Insofar as the traditional left is concerned, first Singur and then Nandigram drove home the point that many of the left politicians are not that different from the ‘dream team’ of economic policy-makers at the Centre who favour the World Bank, the IMF and the Asian Development Bank. The cultural nationalists of the Hindutva variety violently uphold their culture when it comes to Ram Mandir and ‘Vande Mataram’, but surrender willingly to foreign multinationals. The political doubletalk everywhere is amazing.

Congress has a remarkably short memory about the Sikh massacre of 1984. The left parties rightly breathe fire about the Gujarat massacre of 2002, while BJP covers it up with false propaganda and manipulation of the state machinery. When Nandigram massacres happened in 2007 and Advani compared it with Jallianwala Bagh, conveniently forgetting Gujarat, CPM leaders and some of the supportive intellectuals called it an unfortunate incident that happened accidentally. The unwarranted shooting of 13 tribals in Kalinganagar in 2006 by the police bears an uncanny parallel. The tribals were refusing to hand over their land to the same Tatas in Kalinganagar, just as in Singur and Nandigram the peasants have been resisting. Should we be erecting a defence of empty words to say how different Navin Patnaik is from Buddhadeb Bhattacharya only because they go by different political labels? It is evident from a chronological survey of field reports from Kalinganagar and Nandigram that these were premeditated actions by the state authorities to test the waters and see how far they can go in the service of large corporations.

In this world of neo-liberal harmony, parties of different shades insist that corporate-style industrialization with the state as its agent is our only option. At the same time, the Indian polity with an increasingly inequitable economy thrives in the name of high growth, industrialization and ‘development’, working ruthlessly against the poor majority. A spectre of despair and popular anger haunts all corners of the country now. Farmers are committing suicide in thousands, especially in Maharashtra, Andhra Pradesh and Punjab because the government wants to usher in a new type of commercial, industrialized agriculture under WTO, with expensive inputs supplied by multinationals, but without any subsidy or an appropriate price for their produce.

In Chhattisgarh, in the name of fighting extremism, tribals are being forcibly evacuated in thousands from their villages under Salwa Judum, to be huddled in Vietnam-style concentration camps while the corporations eye greedily their land, rich in mineral resources. The poorest, though richest in natural resources, are kept down by denying them what belongs to them by birth.

Since land is a state subject according to the Constitution of India, the question of land acquisition, and the degree of coercion used thereby, is largely the prerogative of the state government. This is where the political hypocrisy is particularly evident, and the rhetoric about centre-state division of power cannot hide it. Land is being acquired by various state governments in a competitive race-to-the-bottom in order to win the favour of the big corporations. The argument goes, ‘If we in West Bengal do not do it, Uttarakhand will do it’ or, ‘We can be more ferocious than Orissa in pleasing the Tatas or the Jindals or whoever else.’ This has legal and moral encouragement from the central government, but the state government has full constitutional power not to oblige.

Land is being acquired in different guises for mining, industry, power projects, large estates and IT parks and, most recently for special economic zones (SEZ) under the ‘eminent domain’ clause of the Land Acquisition Act (1894), which allows the state to override private property right in land in the ‘public interest’. Land, the primary source of livelihood in the agrarian economy, includes as per the act, ‘everything’ attached to land – water, minerals. Therefore, it becomes the most obvious case of coercive transfer of resources from common people (for whom land and the resource base is not mere property but livelihood) to private corporations. Using the same old act since the British days, amended in 1984, land acquisition is carried out to serve corporate interest, destroy livelihoods, and displace people.

It is often said there are invariably gainers and losers in such economic processes, which the economist Jospeh Schumpeter had long ago captured with the phrase ‘creative destruction’. However, in the present context this is a misleading half-truth. If such creative destruction was just a part of the normal process of capitalistic development, it would have been unnecessary for the state to intervene in the guise of ‘public interest’ on behalf of private corporations. It involves a transaction between two private parties, namely the corporation and the landowning peasants, without a level-playing field. The function of the state should be to at least ensure that this transaction is voluntary, particularly because one party in the transaction is economically far weaker. This would mean that the corporations would acquire land at a price at which the peasants are willing to part voluntarily with their land, either individually or through collective decisions, the latter being especially relevant in the case of tribal land.

Instead, what has been happening is that the state is using force and violence under a cloak of secrecy despite the Right to Information Act. Although the SEZ scheme has the most pronounced pro-corporate bias, the difference between acquiring SEZ land in Nandigram, and the land for the Tata-Fiat joint venture in Singur is one of legal nicety, not of relevance insofar as those who derive livelihood from that land are concerned. And, even after Nandigram, what most parties, including the CPM have to recommend is not the scrapping of SEZ altogether, but restricting its maximum size and other minor changes!

Although land is the most visible symbol of transfer of resources to the corporations, the problem goes deeper. The bias against the poor in policy-making is both direct and indirect. The direct bias is visible in plan allocation. Despite 60% or more of our working population depending on agriculture, all the recent five year plans under different governments have allocated less than five per cent of planned investment to agriculture. The indirect bias operates pervasively through a pattern of consumption and production promoted by the state. Mammoth projects create the impression of urban gloss, with fancy express-ways, underground metros, flyovers etc. at public cost.

We take it for granted that many of these public utilities are essential for efficiency, saving time in travelling, improving the quality of life, even for attracting investment. These arguments are not false, but one-sided. We need, even more desperately, higher efficiency and better quality of life in rural India where the majority lives. In the metropolitan area, we need infrastructure to ensure basic amenities to the most needy. Manhattan-like world-class cities are set as our goals, when 25% to 60% of the urban population lives a subhuman existence in slums. So why this bias, and whom does it benefit? It certainly benefits the urban elite population, and leads to uncontrolled urbanization and mega cities with growing hunger for energy, water and other resources. Slums are cleared without providing resettlement options, poverty banished only from sight. Millions suffer.

This large-scale destruction of livelihoods of both urban and rural communities is only the surface phenomenon. The modes of transport we are creating with more flyovers for cars (including Tatas’ people’s car), the type of shopping or housing complexes we are promoting are not merely iniquitous. They are far more polluting and resource and energy-intensive, and the majority of our ordinary citizens who do not consume them also have to pay directly or indirectly for this pattern of consumption. This is why farmers get less water, are starved of electricity in critical periods and clean drinking water or proper sanitation is a luxury in villages.

The idea that industry is more efficient than agriculture is largely because of this pronounced bias against agriculture and the poor. With almost two-thirds of our work force in agriculture producing under one-fourth of national output, output per worker in agriculture is about 40 per cent of national average. In contrast, industry and services have a labour productivity double the national average. This is also an old game of attributing ‘values’ to selected products and services, so that higher growth is achieved by transferring more and more resources to the high productivity sector, and by favouring large corporations which organize this pattern of production for privileged India. The other (much larger) India watches in despair and anger, while many have no choice but to commit suicide. Must we not strive for an economic alternative on the basis of a new politics?

An economic alternative stimulating another kind of development is feasible. Elements of it exist even in the present political-economic system. Very briefly, it has to be based on three basic premises. First, we must learn to rely far more on the internal rather than the external market. The biggest driving force of the internal market is the purchasing power of the ordinary people derived from employment growth. India’s record on this score has been dismal in recent years. An eight per cent growth in output has been accompanied by barely one per cent growth in regular employment, and increase in irregular or ancillary employment is marked by flexible contracts loaded against the worker, with insecurity and overcrowding of infrastructure.

It is foolish to expect that corporate-led growth can do better on the employment front, because corporations are in the game of making profit by cutting costs, including labour costs. And the more we accept globalization unconditionally, the stronger would be the relative importance of the external over the internal market. This means cutting labour costs in order to increase exports will become even more pressing. Primacy to exports also means priorities in production going against the needs of the population here. Growth of the internal market through rapid employment growth, therefore, requires a far more selective approach to globalization.

Second, economic growth must be the outcome of employment growth, not the other way round and the former should never be at the cost of the latter. Employment growth in the 1980s was twice of what it is now, even though the growth rate of GDP was a little more than half of what it is today. Our benchmark should be a time-bound programme for full employment. How much the growth in employment contributes to growth in output depends naturally on how productively labour can be employed. India has performed poorly in this respect. The main reason is a bureaucratized system of central control which kills local initiative. We have to start at the opposite end of socialist orthodoxy, not by accepting neo-liberalism, but by forging a new combination altogether.

On the one hand, we have to get out of the grip of corporate-led industrialization by making agriculture and the rural economy the centre of economic dynamism; on the other, we have to break the grip of current centralized bureaucratic decision-making. This can be done by extending the present national employment guarantee scheme to an ambitious time-bound full employment programme. It will involve delegating much of the decision-making power to the panchayats and local bodies to identify, formulate and execute local employment-generating productive projects.

A precondition for this is local control over local resources related to land, and maximum fiscal autonomy for the panchayats. Even the Constitution, through Article 243, provided for a Finance Commission to support and ensure that village/ward-level local bodies become financially viable. It was to be appointed in 1993. No government, central or state, followed this up seriously. The record of Kerala has been the best while that of West Bengal government has been among the worst.

Acknowledging that the Left Front played a role in getting NREGA enacted, it is shocking that only 14 per cent of the money allotted in the poorest Bengal district of Purulia for employment guarantee was spent until December 2006, more than half the money of employment guarantee provided by the Centre remaining unspent in the state. Not more than 16 days of employment was provided, while the legal and financial provision allows for 100 days. (Reports from other states too show a similar situation with an exception in certain areas). If the governments had shown the same zeal in making a success of employment guarantee as they have shown in acquiring land from the unwilling peasants, we would have taken at least the first step towards a genuine process of development. The irony is that such an approach would be a political success at the polls. Yet, the path is not being followed!

Finally, there is the question of finance. Where would the money come from for such an ambitious employment programme, and how to make sure it is spent effectively? The Fiscal Responsibility and Budget Management Act (2003) which ties the hands of the government in spending money for most pressing needs like employment guarantee must be scrapped. With this act the Centre pushes privatization to raise money, denies basic health and educational expenditure, and restricts the role of public policy in the name of financial discipline. This suits well the IMF, the World Bank, and the corporations who want the state to promote, not regulate them.

This is where the left should have its biggest battle, and insist that money that is needed for employment, basic education, health and social security of the unorganized workers must be found within our means, if necessary by revising this law. Its own policy imagination failing, it went along instead with the neo-liberal economic ideology with only a whimper of initial protest, ultimately succumbing to corporate-led industrialization. A recent statement by a veteran left leader regarding the inevitability of capitalism is a case in point.

To ensure fiscal autonomy for local bodies, their budget can be kept in a separate account in nationalized banks with a credit line extended to panchayats. This would avoid duplication of institutions, while a system of mutual check and balance between the panchayats and the local branch of nationalized banks can be devised based on their performance as borrowers and lenders. Banks would lend the next round only if the previous project succeeds, and panchayats can borrow the next round only if the money is well-spent. It is this mutuality of interest which has to be strengthened over time in creating the new form of sustained financing for development.

Regardless of whether the growth is 8 or 10 per cent, these measures would initiate a process that empowers the poor, imparting a genuine democratic and participatory content to India’s development. If our political parties, policy-makers and bureaucrats can reach a consensus and display the same collective commitment to the participatory approach outlined in this essay that they have hitherto shown in order to achieve corporate-led high ‘growth at any cost’, at least five desirable goals of development in the country can be attained.

First, easy as it might sound, unemployment and poverty can be eliminated within the foreseeable future. Second, by putting purchasing power in the hands of the hitherto destitute, the domestic market for industrial products and basic needs can be developed, creating a fresh source of healthy growth for industry and the macroeconomy. Third, through the public works programmes that the rural poor will execute, infrastructure (like roads, irrigation, etc.) can be strengthened and expanded. Fourth, priority environmental projects (such as watershed development, afforestation, groundwater recharge and soil conservation) can be undertaken to stem and reverse the worsening ecological crisis the country will face in the approaching future. Finally, by generating employment in the countryside the policy will reverse the flow of distress migrants to the cities (saddled as they already are with burdened infrastructure).

SEZs are not needed to find such a growth-and-development path. In fact, it is difficult to conceive of a single policy which can meet so many desirable goals at one stroke. There are times in history when what is desirable is also necessary and imperative. The alternative to destructive, socially and environmentally destabilizing growth stares us in the face. Unless the reforms inaugurated in 1991 are radically reformed and humanized by a fresh approach, we may be entering a period of great political and social turmoil, courting environmental disasters in the process. The question is: can we as a citizenry commit ourselves to the urgent task at hand?

Predatory Growth

2008-02-18T19:00:00.004+05:30

Amit Bhaduri

Over the last two decades or so, the two most populous, large countries in the world, China and India, have been growing at rates considerably higher than the world average. In recent years the growth rate of national product of China has been about three times, and that of India approximately two times that of the world average. This has led to a clever defence of globalisation by a former chief economist of IMF (Fisher, 2003). Although China and India feature as only two among some 150 countries for which data are available, he reminded us that together they account for the majority of the poor in the world. This means that, even if the rich and the poor countries of the world are not converging in terms of per capita income, the well above the average world rate of growth rate of these two large countries implies that the current phase of globalisation is reducing global inequality and poverty at a rate as never before.

Statistical half truths can be more misleading at times than untruths. And this might be one of them, in so far as the experiences of ordinary Indians contradict such statistical artefact. Since citizens in India can express reasonably freely their views at least at the time of elections, their electoral verdicts on the regime of high growth should be indicative. They have invariably been negative. Not only did the ‘shining India’ image crashed badly in the last general election, even the present prime minister, widely presented as the ‘guru’ of India’s economic liberalisation in the media, could never personally win an election in his life. As a result, come election time, and all parties talk not of economic reform, liberalisation and globalisation, but of greater welfare measures to be initiated by the state. Gone election times, and the reform agenda is back. Something clearly needs to be deciphered from such predictable swings in political pronouncement.

Politicians know that ordinary people are not persuaded by statistical mirages and numbers, but by their daily experiences. They do not accept high growth on its face value as unambiguously beneficial. If the distribution of income turns viciously against them, if the opportunities for reasonable employment and livelihood do not expand with high growth, the purpose of higher growth would be widely questioned in a democracy. This is indeed what is happening, and it might even appear to some as paradoxical. The festive mood generated by high growth is marinated in popular dissent and despair, turning often into repressed anger. Like a malignant malaise, a sense of political unease is spreading insidiously along with the near double digit growth. And, no major political party, irrespective of their right or left label, is escaping it because they all subscribe to an ideology of growth at any cost.

What exactly is the nature of this paradoxical growth that increases output and popular anger at the same time? India has long been accustomed to extensive poverty coexisting with growth, with or without its ‘socialist pattern’. It continues to have anywhere between one-third and one- fourth of its population living in sub-human, absolute poverty. The number of people condemned to absolute poverty declined very slowly in India over the last two decades, leaving some 303 million people still in utter misery. In contrast China did better with the number of absolutely poor declining from 53 per cent to 8 percent, i.e. a reduction of some 45 percentage points, quite an achievement compared to India’s 17 percentage points. However, while China grew faster, inequality or relative poverty also grew faster in China than in India. Some claim that the increasing gap between the richer and the poorer sections in the Chinese society during the recent period has been one of the worst in recorded economic history, perhaps with the exception of some former socialist countries immediately after the collapse of the Soviet Union. The share in national income of the poorest 20 per cent of the population in contemporary China is 5.9 percent, compared to 8.2 per cent in India. This implies that the lowest 20 per cent income group in China and in India receives about 30 and 40 percent of the per capita average income of their respective countries. However, since China has over two times the average per capita income of India in terms of both purchasing power parity, and dollar income, the poorest 20 percent in India are better off in relative terms, but worse off in absolute terms. The Gini coefficient, lying between 0 and 1, measures inequality, and increases in value with the degree of inequality. In China, it had a value close to 0.50 in 2006, one of the highest in the world. Inequality has grown also in India, but less sharply. Between1993-94 and 2004-5, the coefficient rose from 0.25 to 0.27 in urban, and 0.31 to 0.35 in rural areas. Every dimension of inequality, among the regions, among the professions and sectors, and in particular between urban rural areas has also grown rapidly in both counties, even faster in China than in India. In short, China has done better than India in reducing absolute poverty, but worse in allowing the gap to grow rapidly between the rich and the poorduring the recent period of high growth.

A central fact stands out. Despite vast differences in the political systems of the two countries, the common factor has been increasing inequality accompanying higher growth. What is not usually realized is that, the growth in output and, in inequality are not two isolated phenomena. One frequently comes across the platitude that high growth will soon be trickling down to the poor, or that, redistributive action by the state through fiscal measures could decrease inequality while keeping up the growth rate. These statements are comfortable but unworkable, because they miss the main characteristic of the growth process underway. This pattern of growth is propelled by a powerful reinforcing mechanism, which the economist Gunner Myrdal had once described as ‘cumulative causation’. The mechanism by which growing inequality drives growth, and growth fuels further inequality has its origin in two different factors, both related to some extent to globalisation.

First, in contrast to earlier times when less than 4 per cent growth on an average was associated with 2 percent growth in employment, India is experiencing a growth rate of some 7-8 per cent in recent years, but the growth in regular employment has hardly exceeded 1 percent. This means most of the growth, some 5-6 percent of the GDP, is the result not of employment expansion, but of higher output per worker. This high growth of output has its source in the growth of labour productivity. According to official statistics, between 1991 and 2004 employment fell in the organised public sector, and the organised private sector hardly compensated for it. In the corporate sector, and in some organized industries productivity growth comes from mechanization and longer hours of work. Edward Luce of Financial Times (London) reported that the Jamshedpur steel plant of the Tatas employed 85000workers in 1991 to produce1million tons of steel worth 0.8million U.S. dollars. In 2005, the production rose to 5 million tons, worth about 5 million U.S dollars, while employment fell to 44,000. In short output increased approximately by a factor of five, employment dropped by a factor of half , implying an increase in labour productivity by a factor of ten. Similarly, Tata Motors in Pune reduced the number of workers from 35 to 21 thousand but increased the production of vehicles from 129,000 to311,500 between 1999 and 2004, implying labour productivity increase by a factor of 4. Stephen Roach, chief economist of Morgan Stanley reports similar cases of Bajaj motor cycle factory in Pune. In mid-1990s the factory employed 24000 workers to produce 1 million units of two wheelers. Aided by Japanese robotics and Indian information technology, in 2004, 10500 workers turned out 2.4 million units, i.e. more than double the output with less than half the labour force, an increase in labour productivity by a factor of nearly 6. (Data collected by Aseem Srivastava, ´Why this growth can never trickle down´, aseem62@yahoo.com). One could multiply such examples, but this is broadly the name of the game everywhere in the private corporate sector.

The manifold increase in labour productivity, without a corresponding increase in wages and salaries becomes an enormous source of profit, and also a source of international price competitiveness in a globalizing world. Nevertheless, this is not the entire story, perhaps not even the most important part of the story. The whole organized sector to which the corporate sector belongs, accounts for less than one-tenth of the labour force. Simply by the arithmetic of weighted average, a 5-6 per cent annual growth in labour productivity in the entire economy is possible only if the unorganized sector accounting for the remaining 90 per cent of the labour force also contributes to the growth in labour productivity. Direct information is not available on this count, but several micro studies and surveys show the broad pattern. Growth of labour productivity the unorganized, which includes most of agriculture, comes from lengthening the hours of work to a significant extent, as this sector has no labour laws worth the name, or social security to protect workers. Sub-contracting to the unorganized sector along with casualisation of labour on a large scale become convenient devices to ensure longer hours of work without higher pay. Self-employed workers, totaling 260 million, expanded fastest during the high growth regime, providing an invisible source of labour productivity growth. Ruthless self-exploitation by many of these workers in a desperate attempt to survive by doing long hours of work with very little extra earning adds both to productivity growth, often augmenting corporate profit, and to human misery.

However inequality is increasing for another reason. Its ideology often described as neo-liberalism, is easily visible at one level; but the underlying deeper reason is seldom discussed. The increasing openness of the Indian economy to international finance and capital flows, rather than to trade in goods and services, has had the consequence of paralysing many pro-poor public policies. Despite the fact that we continue to import more than we export (unlike China), India´s comfortable foreign reserves position, crossing 230 billion U.S dollars in 2008, is mostly the result of accumulated portfolio investments and short term capital inflows from various financial institutions. To keep the show going in this way, the fiscal and the monetary policies of the government need to comply with the interests of the financial markets. That is the reason why successive Indian governments have willingly accepted the Financial Responsibility and Budget Management Act (2003) restricting deficit spending. Similarly, the idea has gained support that the government should raise resources through privatisation and so-called public private partnership, but not through raising fiscal deficit, or not imposing a significant turn over tax on transactions of securities. These measures rattle the ‘sentiment’ of the financial markets, so governments remain wary of them. The hidden agenda, vigorously pursued by governments of all colour has been to keep the large private players in the financial markets in a happy mood. Since the private banks and financial institutions usually take their lead from the IMF and the World Bank, this bestows on these multilateral agencies considerable power over the formulation of government policies. However, the burden of such policies is borne largely by the poor of this country. This has had a crippling effect on policies for expanding public expenditure for the poor in the social sector.Inequality and distress grows as the state rolls back of public expenditure in social services like basic health, education, and public distribution and neglects the poor, while the ‘discipline’ imposed by the financial markets serves the rich and the corporations,. This process of high growth traps roughly one in three citizens of India in extreme poverty with no possibility of escape through either regular employment growth or relief through state expenditure on social services. The high growth scene of India appears to them like a wasteland leading to the Hell described by the great Italian poet Dante. On the gate of his imagined Hell is written, “This is the land you enter after abandoning all hopes”.
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Extremely slow growth in employment and feeble public action exacerbates inequality, as a disproportionately large share of the increasing output and income from growth goes to the richer section of the population, not more than say the top 20 per cent of the income receivers in India. At the extreme ends of income distribution the picture that emerges in one of striking contrasts. According to the Fobres magazine list for 2007, the number of Indian billionares rose from 9 in 2004 to 40 in 2007, much richer counties like Japan had only 24, France 14 and Italy14. Even China, despite its sharply increasing inequality, had only 17 billionares. The combined wealth of Indian billionares increased from US dollars106 to 170 in the single year, 2006-7. This 60 per cent increase in wealth would not have been possible, except through transfer on land from the state and central governments to the private corporations in the name of ‘public purpose’, for mining, industrialisation and special economic zones(SEZ). Estimates based on corporate profits suggest that, since 2000-01 to date, each additional per cent growth of GDP has led on an average to some 2.5 per cent growth in corporate profits. India’s high growth has certainly benefited the corporations more than anyone else.

After several years of high growth along these lines, India of the twenty first century has the distinction of being only second to the United States in terms of the combined total wealth of its corporate billionares coexisting with the largest number of homeless, ill-fed, illiterates in the world. Not surprisingly, for ordinary Indians at the receiving end, this growth process is devoid of all hope for escape. Nearly half of Indian children under 6 years suffer from under-weight and malnutrition, nearly 80 per cent from anaemia, while some 40 per cent of Indian adults suffer from chronic energy deficit. Destitution, chronic hunger and poverty kill and cripple silently thousands picking on systematically the more vulnerable. The problem is more acute in rural India, among small children, pregnant females, Dalits and Adivasis, especially in the poorer states, while market oriented policies and reforms continue to widen the gap between the rich and the poor, as well as among regions.

The growth dynamics in operation is being fed continuously by growing inequality. With their income rapidly growing, the richer group of Indians demand a set of goods, which lie outside the reach of the rest in the society (think of air conditioned malls, luxury hotels, restaurants and apartments, private cars, world class cities where the poor would be made invisible). The market for these good expands rapidly. For instance, we are told that more than 3 in 4 Indians do not have a daily income of 2 U.S dollars. They can hardly be a part of this growing market. However, the logic of the market now takes over, as the market is dictated by purchasing power. Its logic is to produce those goods for which there is enough demand backed by money, so that high prices can be charged and handsome profits can be made. As the income of the privileged grows rapidly, the market for the luxury goods they demand grows even faster through the operation of the ‘income elasticities of demand’. These elasticities roughly measure the per cent growth in the demand for particular goods due to one per cent growth in income (at unchanged prices). Typically, goods consumed by the rich have income elasticities greater than unity, implying that the demand for a whole range of luxury goods consumed by the rich expands even faster than the growth in their income. Thus, the pattern of production is dictated by this process of growth through raising both the income of the rich faster than that of the rest of the society, and also because the income elasticities operate to increase even faster than income the demand for luxuries.

The production structure resulting from this market driven high growth is heavily biased against the poor. While demand expands rapidly for various up-market goods, demand for the basic necessities of life hardly expands. Not only there is little growth in the purchasing power of the poor, but the reduction in welfare expenditures by the state stunts the growth in demand for necessities. The rapid shift in the output composition in favour of services might be indicative of this process at the macro level. But specific examples abound. We have state-of-the-art corporate run expensive hospitals, nursing homes and spas for the rich, but not enough money to control malaria and T.B. which require inexpensive treatment. So they continue to kill the largest numbers. Lack of sanitation and clean drinking water transmit deadly diseases especially to small children which could be prevented at little cost, while bottled water of various brands multiply for those who can afford. Private schools for rich kids often have monthly fees that are higher than the annual income of an average unskilled Indian worker, while the poor often have to be satisfied with schools without teachers, or class rooms.

Over time an increasingly irreversible production structure in favour of the rich begins to consolidates itself. Because the investments embodied in the specific capital goods created to produce luxuries cannot easily be converted to producing basic necessities ( the luxury hotel or spa cannot be converted easily to a primary health centre in a village etc). And yet, it is the logic of the market to direct investments towards the most productive and profitable sectors for ‘the efficient allocation of resources’. The price mechanism sends signals to guide this allocation, but the prices that rule are largely a consequence of the growing unequal distribution of income in the society. The market becomes a bad master when the distribution of income is bad.

There are insidious consequences of such a composition of output biased in favour of the rich that our liberalised market system produces. It is highly energy, water and other non- reproducible resources intensive, and often does unacceptable violence to the environment. We only have to think of the energy and material content of air-conditioned malls, luxury hotels and apartments, air travels, or private cars as means of transport. These are no doubt symbols of ‘world class’ cities in a poor country, by diverting resources from the country side where most live. It creates a black hole of urbanization with a giant appetite for primary non-reproducible resources. Many are forced to migrate to cities as fertile land is diverted to non- agricultural use, water and electricity are taken away from farms in critical agricultural seasons to supply cities, and developmental projects displaces thousands. Hydroelectric power from the big dams is transmitted mostly to corporate industries, and a few posh urban localities, while the nearby villages are left in darkness. Peasants even close to the cities do not get electricity or water to irrigate their land as urban India increasingly gobbles up these resources. Take the pattern of water use. According to the Comptroller and Auditor General report released to the public on 30th Marth 2007, Gujrat increased the allocation of Narmada waters to industry fivefold during 2006, eating into the share of drought affected villages. Despite many promises made to villagers, water allocation stagnated at 0.86 MAF (million acres feet), and even this is being cut. Water companies and soft drink giants like Coca Cola sink deeper to take out pure ground water as free raw material for their products. Peasants in surrounding areas pay, because they cannot match the technology or capital cost. Iron ore is mined out in Jharkhand, Chattisgarh and Orissa leaving tribals without home or livelihood. Common lands which traditionally provided supplementary income to the poor in villages are encroached upon systematically by the local rich and the corporations with active connivance of the government. The manifest crisis engulfing Indian agriculture with more than a hundred thousand suicides by farmers over the last decade according to official statistics is a pointer to this process of pampering the rich who use their growing economic power to dominate increasingly the multitude of poor.

The composition of output demanded by the rich is hardly producible by village artisans or the small producers. They find no place either as producers or as consumers; instead, economic activities catering to the rich have to be handed over to large corporations who can now enter in a big way into the scene. The combination of accelerating growth and rising inequality begins to work in unison. The corporations are needed to produce goods for the rich, and in the process they make their high profits and provide well-paid employment for the rich in a poor country who provide a part of the growing market. It becomes a process of destructive creation of corporate wealth, with a new coalition cutting across traditional Right and Left political division formed in the course of this road to high growth. The signboard of this road is ‘progress through industrialisation’. The middle class opinion makers and the media persons unite, and occasionally offer palliatives of ‘fair compensation’ to the dispossessed. Yet, they are at a loss as to how to create alternative dignified livelihood caused by large scale displacement and destruction in the name of industrialisation. Talks of compensation tends to be one sided, as they focus usually on ownership and, at best use rights to landed However, the multitude of the poor who eke out a living without any ownership or use right to landed property, like agricultural labourers, fishermen, or cart-drivers in rural areas, or illegal squatters and small hawkers in cities, seldom figure in this discussion about compensation. And yet, they are usually the poorest of the poor, outnumbering by far, perhaps in the ratio of 3 to 1, those who have some title to landed property. Ignoring them altogether, the state acquires with single minded devotion land, water and resources for the private corporations for mining, industrialisation or Special Economic Zones in the name of public interest. With some tribal land that can be acquired according to the PESA(1996) act only through the consent of the community(Gram Sabha), consent is frequently manufactured at gun point by the law and order machinery of the state, if the money power of the corporations to bribe and intimidate prove insufficient. The vocal supporters of industrialisation never stop to ask, why the very poor who are least able, should bear the burden of ‘economic progress’ of the rich.

It amounts to a process of internal colonisation of the poor, mostly dalits and adivasis and of other marginalised groups, through forcible dispossession and subjugation. It has set in motion a social process not altogether unknown between the imperialist ‘master race’ and the colonised ‘natives’. As the privileged thin layer of the society distance themselves from the poor, the speed at which the secession takes place comes to be celebrated as a measure of the rapid growth of the country. Thus, India is said to be poised to become a global power in the twenty first century, with the largest number of homeless, undernourished, illiterate children coexisting with the billionares created by this rapid growth. An unbridled market whose rules are fixed by the corporations aided by state power shapes this process. The ideology of progress through dispossession of the poor, preached relentlessly by the united power of the rich, the middle class and the corporations colonise directly the poor, and indirectly it has begun to colonise our minds. The result is a sort of uniform industrialisation of the mind, a standardisation of thoughts which sees no other alternative. And yet, there is a fatal flaw. No matter how powerful this united campaign by the rich corporations, the media, and the politicians is, even their combined power remains defenceless against the actual life experiences of the poor.

If this process of growth continues for long, it would produce its own demons. No society, not even our mal-functioning democratic system, can withstand beyond a point the increasing inequality that nurtures this high growth. The rising dissent of the poor must either be suppressed with increasing state violence flouting every norm of democracy, and violence will be met with counter-violence to engulf the whole society. Or, an alternative path to development that depends on deepening our democracy with popular participation has to be found. Neither the rulers nor the ruled can escape for long this challenge thrown up by the recent high growth of India.

References for sources of data and other information.

India Development Report, edited by R. Radhakrishna, Oxford University Press,2008.

Alternative Economic Survey, India 2006-2007, by Alternative Survey Group, New Delhi,Dannish Books, 2007.

Government of India,Economic Survey, 2006-2007,New Delhi, Ministry of Finance, 2007.
‘Revisiting employment and growth’ by C.Rangarajan, Padma Kaul and Seema, Money and Finance, September, 2007.

‘Service-led growth’ by Mihir Rakshit, Money and Finance, February, 2007.
Inclusive Growth in India, by S. Mahendra Dev, New Delhi, Oxford University Press,2008.

Green Left Weekly issue no.710, May, 2007.

Information from Fobres quoted in ‘Globalisation:the Indian experience’ by Anil Kumar Jain and Parul Gupta, Mainstream, Delhi, February 8-14,2008..

Why this growth can never trickle down

2008-02-18T18:12:00.000+05:30

ASEEM SHRIVASTAVA
The Hindu, 20 May, 2007

`Development must be equitable if it is to be sustainable'

HISTORICALLY UNPRECEDENTED economic growth in India during the last decade of reforms will continue to remain exclusive, leave poverty and malnutrition unaffected and lead to growing social tensions unless reshaped by democratic political processes.

For growth to be inclusive, it must, minimally, "trickle down" to the poor. One of the following conditions must be met for the poor to find purchasing power in their hands: (1) new employment must be generated in the organised sector; (2) the indirect employment effects (in the informal sector) of growth in the organised sector are substantial and make up for the failure of the latter to create adequate employment; (3) if the gains of growth accrue largely to the rich, the government is able and willing to redistribute a fraction of them to the poor, through an appropriate fiscal policy.

On recent evidence we may safely rule out the last possibility. Not only does the government continue to offer endless tax sops to the rich (SEZs being only the latest instance of it), bound by commitments to the IMF it is unwilling to increase allocations for such redistributive development programmes as the NREGS (whose allocation remains stagnant at a measly Rs.12,000 crores this year), or the ICDS (whose allocation remains miserly at Rs. 4,800 crores).

Let us consider the other two possibilities under which growth might trickle down to the poor.

According to the government's Economic Survey (2006-07), between 1991 (when the reforms began) and 2004 (the last year for which data is available), the number of people employed in the organised private sector grew by a meagre 0.6 million (all of it accruing in the service sector, while manufacturing employment remained unchanged!) from 7.7 million in 1991 to 8.3 million in 2004. The number of people employed in the organised sector as a whole (including the public sector) fell from 26.7 to 26.4 million!

Are state policies to blame for this failure to create jobs? To some extent.

The rest of the blame has to be shouldered by the processes of globalisation — which have meant that Indian companies have to compete with those in the outside world. This means that they must use the most efficient, capital-intensive methods of production, developed in labour-scare Western economies. This has had a striking outcome in India.

While employment stagnated over the first decade and a half since the reforms began, the real output of the non-agricultural part of the economy (which is expected to provide new jobs) grew by a factor of four: the same number of workers produced four times as much output, thanks to automation of production processes!

Success is failure

This aggregate picture is corroborated by some evidence from the shop-floor.

Edward Luce of London's Financial Times reports that in 1991 the Tata steel plant in Jamshedpur — India's largest private sector steel company — employed 85,000 workers to produce one million tonnes of steel worth $ 800 million. In 2005, it churned out five million tonnes worth $ 4 billion, employing only 44,000 people. While the output multiplied five times, the employment got halved.

Stephen Roach, the Chief Economist of Morgan Stanley, visited India a few years ago and collected similar stories. The examples are legion. The picture is summarised by the story told about a Kirloskar plant near Pune, where one worker mans 27 machines!

Has employment been generated in the informal sector to make up for this? Even if 10 times the number of jobs created in the organised sector was generated in the former, at most six million new jobs were created over a decade and a half. The annual accretion to India's workforce alone is 8-14 million!

If it is any consolation, a recent ILO study concludes that even China has experienced "employment-hostile growth" since the mid-1990s. And for further consolation we might look to the West, where the complaint of jobless and job-destroying growth has been loud and persistent for at least two decades.

The ILO report concludes: "Development must be equitable if it is to be sustainable." The time has come to distinguish development sharply from exclusive growth.

aseem62@yahoo.com