Friday, 27 November 2009

The dark side of the internet



In the 'deep web', Freenet software allows users complete anonymity as they share viruses, criminal contacts and child pornography.



The Principality of Sealand

Freenet means controversial information does not need to be stored in physical data havens such as this one, Sealand. Photograph: Kim Gilmour/Alamy


Fourteen years ago, a pasty Irish teenager with a flair for inventions arrived at Edinburgh University to study artificial intelligence and computer science. For his thesis project, Ian Clarke created "a Distributed, Decentralised Information Storage and Retrieval System", or, as a less precise person might put it, a revolutionary new way for people to use the internet without detection. By downloading Clarke's software, which he intended to distribute for free, anyone could chat online, or read or set up a website, or share files, with almost complete anonymity.

"It seemed so obvious that that was what the net was supposed to be about – freedom to communicate," Clarke says now. "But [back then] in the late 90s that simply wasn't the case. The internet could be monitored more quickly, more comprehensively, more cheaply than more old-fashioned communications systems like the mail." His pioneering software was intended to change that.
His tutors were not bowled over. "I would say the response was a bit lukewarm. They gave me a B. They thought the project was a bit wacky … they said, 'You didn't cite enough prior work.'"
Undaunted, in 2000 Clarke publicly released his software, now more appealingly called Freenet. Nine years on, he has lost count of how many people are using it: "At least 2m copies have been downloaded from the website, primarily in Europe and the US. The website is blocked in [authoritarian] countries like China so there, people tend to get Freenet from friends." Last year Clarke produced an improved version: it hides not only the identities of Freenet users but also, in any online environment, the fact that someone is using Freenet at all.
Installing the software takes barely a couple of minutes and requires minimal computer skills. You find the Freenet website, read a few terse instructions, and answer a few questions ("How much security do you need?" … "NORMAL: I live in a relatively free country" or "MAXIMUM: I intend to access information that could get me arrested, imprisoned, or worse"). Then you enter a previously hidden online world. In utilitarian type and bald capsule descriptions, an official Freenet index lists the hundreds of "freesites" available: "Iran News", "Horny Kate", "The Terrorist's Handbook: A practical guide to explosives and other things of interests to terrorists", "How To Spot A Pedophile [sic]", "Freenet Warez Portal: The source for pirate copies of books, games, movies, music, software, TV series and more", "Arson Around With Auntie: A how-to guide on arson attacks for animal rights activists". There is material written in Russian, Spanish, Dutch, Polish and Italian. There is English-language material from America and Thailand, from Argentina and Japan. There are disconcerting blogs ("Welcome to my first Freenet site. I'm not here because of kiddie porn … [but] I might post some images of naked women") and legally dubious political revelations. There is all the teeming life of the everyday internet, but rendered a little stranger and more intense. One of the Freenet bloggers sums up the difference: "If you're reading this now, then you're on the darkweb."
The modern internet is often thought of as a miracle of openness – its global reach, its outflanking of censors, its seemingly all-seeing search engines. "Many many users think that when they search on Google they're getting all the web pages," says Anand Rajaraman, co-founder of Kosmix, one of a new generation of post-Google search engine companies. But Rajaraman knows different. "I think it's a very small fraction of the deep web which search engines are bringing to the surface. I don't know, to be honest, what fraction. No one has a really good estimate of how big the deep web is. Five hundred times as big as the surface web is the only estimate I know."

Unfathomable and mysterious

"The darkweb"; "the deep web"; beneath "the surface web" – the metaphors alone make the internet feel suddenly more unfathomable and mysterious. Other terms circulate among those in the know: "darknet", "invisible web", "dark address space", "murky address space", "dirty address space". Not all these phrases mean the same thing. While a "darknet" is an online network such as Freenet that is concealed from non-users, with all the potential for transgressive behaviour that implies, much of "the deep web", spooky as it sounds, consists of unremarkable consumer and research data that is beyond the reach of search engines. "Dark address space" often refers to internet addresses that, for purely technical reasons, have simply stopped working.
And yet, in a sense, they are all part of the same picture: beyond the confines of most people's online lives, there is a vast other internet out there, used by millions but largely ignored by the media and properly understood by only a few computer scientists. How was it created? What exactly happens in it? And does it represent the future of life online or the past?
Michael K Bergman, an American academic and entrepreneur, is one of the foremost authorities on this other internet. In the late 90s he undertook research to try to gauge its scale. "I remember saying to my staff, 'It's probably two or three times bigger than the regular web,"' he remembers. "But the vastness of the deep web . . . completely took my breath away. We kept turning over rocks and discovering things."
In 2001 he published a paper on the deep web that is still regularly cited today. "The deep web is currently 400 to 550 times larger than the commonly defined world wide web," he wrote. "The deep web is the fastest growing category of new information on the internet … The value of deep web content is immeasurable … internet searches are searching only 0.03% … of the [total web] pages available."
In the eight years since, use of the internet has been utterly transformed in many ways, but improvements in search technology by Google, Kosmix and others have only begun to plumb the deep web. "A hidden web [search] engine that's going to have everything – that's not quite practical," says Professor Juliana Freire of the University of Utah, who is leading a deep web search project called Deep Peep. "It's not actually feasible to index the whole deep web. There's just too much data."
But sheer scale is not the only problem. "When we've crawled [searched] several sites, we've gotten blocked," says Freire. "You can actually come up with ways that make it impossible for anyone [searching] to grab all your data." Sometimes the motivation is commercial – "people have spent a lot of time and money building, say, a database of used cars for sale, and don't want you to be able to copy their site"; and sometimes privacy is sought for other reasons. "There's a well-known crime syndicate called the Russian Business Network (RBN)," says Craig Labovitz, chief scientist at Arbor Networks, a leading online security firm, "and they're always jumping around the internet, grabbing bits of [disused] address space, sending out millions of spam emails from there, and then quickly disconnecting."
The RBN also rents temporary websites to other criminals for online identity theft, child pornography and releasing computer viruses. The internet has been infamous for such activities for decades; what has been less understood until recently was how the increasingly complex geography of the internet has aided them. "In 2000 dark and murky address space was a bit of a novelty," says Labovitz. "This is now an entrenched part of the daily life of the internet." Defunct online companies; technical errors and failures; disputes between internet service providers; abandoned addresses once used by the US military in the earliest days of the internet – all these have left the online landscape scattered with derelict or forgotten properties, perfect for illicit exploitation, sometimes for only a few seconds before they are returned to disuse. How easy is it to take over a dark address? "I don't think my mother could do it," says Labovitz. "But it just takes a PC and a connection. The internet has been largely built on trust."

Open or closed?

In fact, the internet has always been driven as much by a desire for secrecy as a desire for transparency. The network was the joint creation of the US defence department and the American counterculture – the WELL, one of the first and most influential online communities, was a spinoff from hippy bible the Whole Earth Catalog – and both groups had reasons to build hidden or semi-hidden online environments as well as open ones. "Strong encryption [code-writing] developed in parallel with the internet," says
Danny O'Brien, an activist with the Electronic Frontier Foundation, a long-established pressure group for online privacy.
There are still secretive parts of the internet where this unlikely alliance between hairy libertarians and the cloak-and-dagger military endures. The Onion Router, or Tor, is an American volunteer-run project that offers free software to those seeking anonymous online communication, like a more respectable version of Freenet. Tor's users, according to its website, include US secret service "field agents" and "law enforcement officers . . . Tor allows officials to surf questionable websites and services without leaving tell-tale tracks," but also "activists and whistleblowers", for example "environmental groups [who] are increasingly falling under surveillance in the US under laws meant to protect against terrorism". Tor, in short, is used both by the American state and by some of its fiercest opponents. On the hidden internet, political life can be as labyrinthine as in a novel by Thomas Pynchon.

The hollow legs of Sealand

The often furtive, anarchic quality of life online struck some observers decades ago. In 1975, only half a dozen years after the internet was created, the science-fiction author John Brunner wrote of "so many worms and counter-worms loose in the data-net" in his influential novel The Shockwave Rider. By the 80s "data havens", at first physical then online locations where sensitive computerised information could be concealed, were established in discreet jurisdictions such as Caribbean tax havens. In 2000 an American internet startup called HavenCo set up a much more provocative data haven, in a former second world war sea fort just outside British territorial waters off the Suffolk coast, which since the 60s had housed an eccentric independent "principality" called Sealand. HavenCo announced that it would store any data unless it concerned terrorism or child pornography, on servers built into the hollow legs of Sealand as they extended beneath the waves. A better metaphor for the hidden depths of the internet was hard to imagine.

In 2007 the highly successful Swedish filesharing website The Pirate Bay – the downloading of music and films for free being another booming darknet enterprise – announced its intention to buy Sealand. The plan has come to nothing so far, and last year it was reported that HavenCo had ceased operation, but in truth the need for physical data havens is probably diminishing. Services such as Tor and Freenet perform the same function electronically; and in a sense, even the "open" internet, as online privacy-seekers sometimes slightly contemptuously refer to it, has increasingly become a place for concealment: people posting and blogging under pseudonyms, people walling off their online lives from prying eyes on social networking websites.
"The more people do everything online, the more there's going to be bits of your life that you don't want to be part of your public online persona," says O'Brien. A spokesman for the Police Central e-crime Unit [PCeU] at the Metropolitan Police points out that many internet secrets hide in plain sight: "A lot of internet criminal activity is on online forums that are not hidden, you just have to know where to find them. Like paedophile websites: people who use them might go to an innocent-looking website with a picture of flowers, click on the 18th flower, arrive on another innocent-looking website, click something there, and so on." The paedophile ring convicted this autumn and currently awaiting sentence for offences involving Little Ted's nursery in Plymouth met on Facebook. Such secret criminal networks are not purely a product of the digital age: codes and slang and pathways known only to initiates were granting access to illicit worlds long before the internet.
To libertarians such as O'Brien and Clarke the hidden internet, however you define it, is constantly under threat from restrictive governments and corporations. Its freedoms, they say, must be defended absolutely. "Child pornography does exist on Freenet," says Clarke. "But it exists all over the web, in the post . . . At Freenet we could establish a virus to destroy any child pornography on Freenet – we could implement that technically. But then whoever has the key [to that filtering software] becomes a target. Suddenly we'd start getting served copyright notices; anything suspect on Freenet, we'd get pressure to shut it down. To modify Freenet would be the end of Freenet."

Always recorded

According to the police, for criminal users of services such as Freenet, the end is coming anyway. The PCeU spokesman says, "The anonymity things, there are ways to get round them, and we do get round them. When you use the internet, something's always recorded somewhere. It's a question of identifying who is holding that information." Don't the police find their investigations obstructed by the libertarian culture of so much life online? "No, people tend to be co-operative."
The internet, for all its anarchy, is becoming steadily more commercialised; as internet service providers, for example, become larger and more profit-driven, the spokesman suggests, it is increasingly in their interests to accept a degree of policing. "There has been an increasing centralisation," Ian Clarke acknowledges regretfully.
Meanwhile the search engine companies are restlessly looking for paths into the deep web and the other sections of the internet currently denied to them. "There's a deep implication for privacy," says Anand Rajaraman of Kosmix. "Tonnes and tonnes of stuff out there on the deep web has what I call security through obscurity. But security through obscurity is actually a false security. You [the average internet user] can't find something, but the bad guys can find it if they try hard enough."
As Kosmix and other search engines improve, he says, they will make the internet truly transparent: "You will be on the same level playing field as the bad guys." The internet as a sort of electronic panopticon, everything on it unforgivingly visible and retrievable – suddenly its current murky depths seem in some ways preferable.
Ten years ago Tim Berners-Lee, the British computer scientist credited with inventing the web, wrote: "I have a dream for the web in which computers become capable of analysing all the data on the web – the content, links, and transactions between people … A 'Semantic Web', which should make this possible, has yet to emerge, but when it does, the day-to-day mechanisms of trade, bureaucracy and our daily lives will be handled by machines talking to machines." Yet this "semantic web" remains the stuff of knotty computer science papers rather than a reality.
"It's really been the holy grail for 30 years," says Bergman. One obstacle, he continues, is that the internet continues to expand in unpredictable and messy surges. "The boundaries of what the web is have become much more blurred. Is Twitter part of the web or part of something else? Now the web, in a sense, is just everything. In 1998, the NEC laboratory at Princeton published a paper on the size of the internet. Who could get something like that published now? You can't talk about how big the internet is. Because what is the metric?"

Gold Rush

It seems likely that the internet will remain in its Gold Rush phase for some time yet. And in the crevices and corners of its slightly thrown-together structures, darknets and other private online environments will continue to flourish. They can be inspiring places to spend time in, full of dissidents and eccentrics and the internet's original freewheeling spirit. But a darknet is not always somewhere for the squeamish.
On Freenet, there is a currently a "freesite" which makes allegations against supposed paedophiles, complete with names, photographs, extensive details of their lives online, and partial home addresses. In much smaller type underneath runs the disclaimer: "The material contained in this freesite is hearsay . . . It is not admissable in court proceedings and would certainly not reach the burden of proof requirement of a criminal trial." For the time being, when I'm wandering around online, I may stick to Google.

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Eco-economics - Could Biology explain the recession?


Organic mechanics

By Clive Cookson, Gillian Tett and Chris Cook
Published: November 26 2009 21:43 | Last updated: November 26 2009 21:43

What do you call a financier in search of the iron laws of human behaviour? Answer: someone with a bad case of "physics envy".
That is the peculiar psychological disorder diagnosed by Andrew Lo, a professor of financial engineering, as afflicting bankers and economists. Symptoms include a desperate search for the predictive certainty that comes from the hard sciences.
At least since the 18th century, economists have been borrowing from physics, redeploying everything from thermodynamics and the "conservation of energy" principle to the understanding of macroeconomics and the generation of fancy derivatives. The global financial crisis has, however, seen financiers cast their scientific net further as they try to understand what went wrong and how to make the banking system more stable in future. As a result, they are developing "biology envy".
Bankers and financial economists are working with mathematical biologists to learn lessons about resilience from natural ecosystems – from fisheries to forests – and from the spread of disease. The exercise is certainly of more than academic interest. Andrew Haldane, executive director for financial stability at the Bank of England, says the regulatory structure for banking may be shaped by studies now in progress that treat global finance as a "complex adaptive system" like a living ecosystem.
The outcome could determine whether the system is robust enough to survive another financial storm without casualties on the scale of Lehman Brothers and without the need for governments to spend thousands of billions of taxpayer dollars to prevent a collapse.
Some policy conclusions are already clear. One is that the banking system has become at the same time too complex and too homogeneous. The problem is that over the past 20 years or so almost all the big globally active banks diversified their holdings and risk, moving into increasingly complex (and opaque) financial instruments. Unfortunately for the stability of the whole system, banks all diversified their business lines in a similar way and, in the process, became inextricably interdependent.
"From an individual firm's perspective, these strategies looked like sensible attempts to purge risk through diversification: more eggs are being placed in the basket," says Mr Haldane. "Viewed across the system as a whole, however, it is clear now that these strategies generated the opposite result: the greater the number of eggs, the greater the fragility of the basket – and the greater the probability of bad eggs."
That is what a mathematical ecologist would have predicted if he or she had known what was going on in the world of finance. The tropical rainforest, for example, has so many interdependent species that it is more vulnerable to an external shock than the simpler ecological diversity of savannahs and grasslands.

Organic finance

The chart shows the global financial ecosystem in 2005. It has become much more interconnected over the past two decades. Total external financial stocks held by the world's banking centres (nodes in the network) increased 14-fold since 1985 and the links between them were by then six times greater.
Financial products themselves meanwhile became fiendishly complex. An investor would in theory need to read as many as 1.125bn pages to understand the ingredients in the type of security known as a collateralised debt obligation squared, or CDO²,
which could contain portions of up to 93.75m mortgages.

Mathematical biology also helps to explain in retrospect why hedge funds, the institutions once thought to be at greatest risk of financial collapse, have survived the crisis in a healthy state. Compared with banking, the hedge fund sector is populated with relatively small, specialised players – the robust structure of a diverse ecosystem.
One distinguished mathematical biologist who is delving deep into the financial ecosystem is Lord Robert May, zoology professor at Oxford university and former president of Britain's Royal Society. The financial theorists have a lot of ground to make up, he says:
"The more I hear about financial economics, the more I am struck by its similarity to ecology in the 1960s."
Economists talking about "efficient" or "perfect" markets remind Lord May of ecologists talking about "the balance of nature" 40 years ago, when ecosystems with a rich web of interactions were thought to be the most stable. Subsequent analysis has shown the opposite to be the case: the most robust systems can be decoupled into discrete components without collapsing.
Some were becoming concerned about systemic risk before the financial crisis erupted. The Bank of England started experimenting about five years ago with computer models of the banking system as an ecological network. The US National Academy of Sciences and the Federal Reserve Bank of New York launched a joint study in 2006 that brought together 100 experts to explore parallels between systemic risk in the financial sector and various fields of science and technology, from ecology to engineering. But the financial storm had set in by the time its conclusions were published.
Fisheries management has interesting parallels with financial regulation, says Lord May. For the past 50 years fish stocks have been managed on a species-by-species basis that aims to maximise the "sustainable yield" of individual fish such as cod or herring – an approach analogous to regulatory risk analysis that focuses on individual banks. But with the collapse of some important fishing grounds, marine scientists are coming to recognise that what really matters is the wider ecosystem and environmental context. You cannot protect cod, for example, without considering the sand eels, whiting, haddock, squid and other species on which cod feed.
Medical epidemiology is another fruitful borrowing ground for financial analysis. Just as epidemiologists trying to stem an outbreak of disease want to focus on identifying and vaccinating the most dangerous "super-spreaders" of infection, regulators need to control the damaging consequences for the whole banking network of the failure of large, interconnected institutions.
International banking rules such as Basel II have had the perverse effect of imposing the greatest capital restrictions on the smaller and less diversified banks that posed the least risk to the system, while the large "super-spreader" institutions were given more leeway. Borrowing an analogy from sexually transmitted disease, Mr Haldane says: "Basel vaccinated the naturally immune at the expense of the contagious; the celibate were inoculated, the promiscuous intoxicated."
Further insights are emerging from a collaboration between David Rand at Harvard university's programme for evolutionary dynamics and Nicholas Beale, who runs Sciteb, a London consultancy. "The fundamental requirement for the regulator is to ensure that the banks do not all diversify in the same way but rather we have 'diverse diversification'," Mr Beale says.
Their approach, rooted in mathematical models from evolutionary biology, "gives the real prospect of regulators being able to prevent dangerous 'herding', based on some simple, deep and new properties of financial networks", he adds. A key element of the new system would be to provide banks with a "systemic risk rating" for each asset class, in a way that would induce them to diversify in different directions.
There is scope, too, for borrowing from epidemiology when it comes to gathering, analysing and communicating data. The World Health Organisation is constantly monitoring the globe for early signs of an epidemic of infectious disease – and if one breaks out, as Sars did in 2003 or swine flu this year, it provides vital information to governments, medical professionals and the general public. The banking world could do with an equivalent of the WHO, says Mr Haldane.
At the Massachusetts Institute of Technology, Prof Lo himself proposes that the US should set up a capital markets safety board to manage systemic risk, modelled on America's National Transportation Safety Board.
While the analysis of ecosystems is the latest attempt to harness mathematical biology to finance, such systems analysis is not
confined to biology. Experts have also seen useful lessons for banking stability in the way engineers protect electric power grids from collapse. Some others Some fancy a move back to physics, on a more sophisticated level. Theories that have dominated finance are drawn from research that took place in academia many years earlier – and was often reworked at around the same time as the concepts were permeating finance.
The crude forms of the "efficient market hypothesis" developed in the 1970s began to refashion the banking world in the 1990s, by which time the academic branch of economics was moving towards more subtle forms of behavioural finance. Similarly, the forms of classical physics that have driven financial engineering have long been superseded by more complex theories, such as refinements of relativity and quantum theory.
If biology does not do the trick, some of the more subtle and advanced concepts in physics might yet be able to shed light on economics. Or so some of the disenchanted quantitative analysts hope.
Changing the hypothesis: why 'adaptive' trumps 'efficient'
Economists have always been keen to borrow principles from the hard sciences. In the 19th century Léon Walras and William Stanley Jevons both started their work with a view to importing the insights of physics into the economic sphere. Irving Fisher, the great neoclassical economist whose 1930s work has been rediscovered during this crisis, even wrote his doctoral thesis at the turn of the 20th century under the supervision of a physicist.
This tendency was given renewed impetus in the mid-20th century by Paul Samuelson's application to economics of mathematical principles derived from thermodynamics. The development of computers able rapidly to analyse data made the development of mathematically elegant economic models particularly desirable, driving the acceptance of concepts such as American economist Eugene Fama's efficient market hypothesis.
Most of the "quants" – financial mathematicians – who used such concepts to build financial models always knew that this project had serious flaws.
Emanuel Derman, for example, a physicist turned financier who formerly worked at Goldman Sachs, is credited with playing a central role in the development of models for derivatives. Yet more than a decade ago, he was warning Goldman Sachs clients of the limitations of derivatives models – he compared their relationship to reality to that between a child's toy car and an actual automobile.
Mr Derman remains, to say the least, wary of the idea that efficient markets hypothesis can provide a "complete" guide to finance. "Unfortunately, absolute value theories don't work very well in economics," he wrote recently. "It's difficult or well-nigh impossible to systematically predict what's going to happen. You may think you know you're in a bubble, but you still can't tell whether things are going up or down the next day."
Such scepticism has not often been expressed quite so frankly. On the contrary, some quants have furtively revelled in the power that their apparently elite knowledge gave them. "The dirty secret of banking is that lots of bankers have always felt a bit insecure because they did not really understand how this stuff worked – so those who understood it were in a strong position," observes one banker.
However now that the crisis has exposed their shortcomings, the EMH and the entire model-based approach to finance are facing a radical rethink. A growing chorus of financiers, quants and economists argues that it is wrong to apply simplistic assumptions that underpin the physics-like models to people, since – unlike atoms, say – they can learn from each other and change in response to events. Changes may not happen in a neat, linear fashion.
Donald MacKenzie of Edinburgh university says the real problem with models is that bankers tend to view them as "cameras" that capture how the world works, like the camera that might photograph a physics experiment. Instead, he argues, they should be viewed as "engines" – since the presence of a model tends to change and drive market behaviour in a way that makes it impossible to assume that the past can predict the future.

Nevertheless, no alternative intellectual model – or source of inspiration – has emerged to offer a truly coherent alternative. George Soros (pictured), the former hedge fund manager, for example, argues that market participants need to embrace the idea of "reflexivity", to recognise that markets change in response to participants, and to accept that models are an "engine, not camera". However, turning this reflexivity theory into any investment manual or strategy has proved difficult.
Hence the move to look at branches of science beyond physics – and at biology in particular. Professor Andrew Lo of MIT has developed the adaptive market hypothesis, attempting to introduce the principles of evolution – competition, adaptation and natural selection – to his financial models.
Prof Lo believes that some of the features of human behaviour – such as loss aversion, overconfidence, overreaction and other behavioural biases – that are underappreciated by simpler models are, in fact, rational. These aspects of human behaviour, while not conforming to the caricature of homo economicus, may be optimal strategies for human behaviour that have been honed by millennia of evolutionary pressure.
Indeed, he takes this evolutionary process seriously: he is fond of pointing out to his audiences that they have both "mammalian" and "reptilian" brains that can be employed at different moments. Prof Lo believes that prices reflect not just information in the market place, but also deep-seated and slowly evolved human biases.

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Thursday, 26 November 2009

Making Profits From Poverty


By Devinder Sharma

25 November, 2009
Devinder Sharma Blog


Poverty has literally become a big and organised business. If you are educated, and looking for a profitable business enterprise, and more so if you are a non-resident Indian and want to translocate to India and still make millions, micro-finance offers you the right avenue.


There can be no better business opportunity than starting a micro-finance institution with assured returns and 100 per cent loan recovery. You can even think of trading on the stock exchange after a couple of years. And still more importantly, you can hold your head high and claim that you are helping the poor to come out of the poverty trap. You don't have to feel ashamed and morally guilty. The elite in the society have knowingly (or unknowingly) given you a license to loot.


The unprecedented growth in micro-finance tells us that modern-day Shylocks are everywhere, looking at every possible opportunity to make profits from poverty. Rich countries become rich at the cost of the poor countries. Rich people in any society also (of course there are exceptions) follow the same path. Micro-finance is a classic example.

I am sure if Shakespeare were alive today, he would have easily penned down a sequel to his great classic Merchant of Venice.


Anyway, coming back to micro-finance. What prompted me to write this today is an edit page article in The Hindustan Times under an apt title The game changer (you can read the article at:


We agree that micro-finance institutions are the game changers. They have shifted the game from the hands of the villains of the story, the sahukars or money-lenders, to a sophisticatedly organised class of neomoney-lenders. These are not the usual banias but a highly educated class of people who use all sophisticated skills to rob the poor. And they have done it remarkably well.


It is all in the name of empowering the poor. I have often asked academicians how you justify the exorbitant rate of interest the micro-finance institutions extract from the poorest of the poor. The answer I get is that at least it empowers the poor. At 24 per cent rate of interest if the micro-finance can empower the poorest of the poor I wonder why do we have to keep the rate of interest for the urbanites, whether it is for housing, for car, or for any other business activity, as low as 6 to 8 per cent.


If the poor can be empowered with a 24 per cent rate of interest, how come the resourceful people in the cities/towns need a much lower interest rate to get empowered? If the poor in the villages can make a business enterprise even after paying a 20-24 per cent rate of interest, why do people in the cities find it difficult to do so? Or is it that we need a different yardstick (and in this case it happens to be the interest rate on your borrowing) to empower the poor and the not-so-poor? In other words, since the poor have no voice, some of us (and that includes banks) have joined hands to exploit the poor in the name of development.


I think these are difficult questions that we in the cities simply try to ignore or brush aside for the simple reason that we are in a way or so the real beneficiary of this criminal exploitation.


Isn't it shocking that a poorest of the poor woman in a village, who may be only surviving on the NREGA promise of 100 days assured employment (not getting more than Rs 60 a day), has to pay a 24 per cent rate of interest if she borrows money to buy a goat, and we in the cities can get interest-free loans or loans with a minimal rate of interest for buying a nano car?


I am sure if that poorest of the poor woman were to also get a loan for buying a goat at a minimal rate of interest (say 4 per cent or even 7 per cent that we give to farmers) she would be driving a nano car at the end of the year. Also, I don't understand the logic of providing micro-finance to the poorest of the poor women with a high rate of interest of 20 to 24 per cent (on an average) whereas her husband (if he happens to be a farmers) gets crop loan at 7 per cent.


If the farmers cannot survive (and there are 600 million farmers in India, including their families) with a higher rate of interest, I wonder how do we expect his wife (who is part of the self-help groups) to pay out at the rate of 24 per cent?


Neverthess, the micro-finance business has grown manifold. India Microfinance Report 2009 tells us that the portfolio of the micro-finance institutions has grown by 97 per cent, and number of beneficiaries have also gone up by 60 per cent. More than 150 million are already borrowing from Micro-finance institutions. What the report however does not tell us but is quite apparent is that this organised group of money-lenders is now beginning to take over the unorganised villains of the game -- the sahukars or the traditional money lenders.


Another news report tells us that SKS Micro-finance is charging approximately 24 per cent rate of interest in Orissa, Karnataka and Andhra Pradesh; in southern India, Equitas Micro-finance is seeking 21-28 per cent interest rate and Basix Microfinance is providing small loans at 18-24 per cent interest rate. There are numerous other players, and they all rake in money. Sewa in Gujarat and the Grameen Bank in Bangladesh too thrive on a similarly high rate of interest.


It is time we put all of them under a scanner. The society cannot turn a blind eye to this organised loot.


We often hear success stories of women who borrowed and the transformation it has brought to their lives. I don't deny this. But perhaps what we don't want to know is that even when the private money lenders (the class we hate) were lending at 60 per cent or more, there were success stories. The business of money lending wouldn't have succeeded all these decades and centuries if it was not helping those who borrowed.


People went on borrowing from the money lenders or sahukars because they needed the money (even if it came with a very high interest rate), and it must have and still is making a difference to them otherwise the entire business of moneylending would have collapsed and become unsustainable. All that micro-finance institutions are doing now is to replace that class of moneylenders. Micro-finance institutions are also extracting their pound of flesh. The sahukars were using their own capital for lending and therefore charging a very high interest of 60 per cent or above. The micro-fianance use the bank finances (or donors money) and therefore charge a little less at 20-24 per cent.


The sahukars or money lenders were lending individually and therefore charged a higher rate of interest to cover up the risk. The micro-finance institutions go in for group lending, and that too to women, the most vulnerable section of the society, and therefore have their risk covered, and still charge 24 per rate of interest. In the process the banks (no wonder, they find it the most lucrative business) and the micro-finance institutions literally make a killing from robbing the poorest of the poor.

If the sahukars are guilty of a crime, so are the micro-finance institutions.

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Sunday, 22 November 2009

John Pilger’s 2009 Sydney Peace Award speech: Breaking the Australian silence

18 November 2009

The following speech by renowned journalist and film-maker John Pilger was delivered on November 5 as he accepted the 2009 Sydney Peace Prize. To read more of John Pilger's work, visit

* * *

Thank you all for coming tonight, and my thanks to the City of Sydney and especially to the Sydney Peace Foundation for awarding me the Peace Prize. It's an honour I cherish, because it comes from where I come from.

I am a seventh generation Australian. My great-great grandfather landed not far from here, on November 8th, 1821. He wore leg irons, each weighing four pounds. His name was Francis McCarty. He was an Irishman, convicted of the crime of insurrection and "uttering unlawful oaths".

In October of the same year, an 18-year-old girl called Mary Palmer stood in the dock at Middlesex Gaol and was sentenced to be transported to New South Wales for the term of her natural life. Her crime was stealing in order to live. Only the fact that she was pregnant saved her from the gallows.

She was my great-great grandmother. She was sent from the ship to the Female Factory at Parramatta, a notorious prison where every third Monday, male convicts were brought for a "courting day" — a rather desperate measure of social engineering.

Mary and Francis met that way and were married on October 21, 1823.

Growing up in Sydney, I knew nothing about this. My mother's eight siblings used the word "stock" a great deal. You either came from "good stock" or "bad stock". It was unmentionable that we came from bad stock — that we had what was called "the stain".

One Christmas Day, with all of her family assembled, my mother broached the subject of our criminal origins, and one of my aunts almost swallowed her teeth. "Leave them dead and buried, Elsie!" she said. And we did — until many years later and my own research in Dublin and London led to a television film that revealed the full horror of our "bad stock".

There was outrage.

"Your son", my aunt Vera wrote to Elsie, "is no better than a damn communist". She promised never to speak to us again.

The Australian silence has unique features.

Growing up, I would make illicit trips to La Perouse and stand on the sandhills and look at people who were said to have died off. I would gape at the children of my age, who were said to be dirty, and feckless.

At high school, I read a textbook by the celebrated historian, Russel Ward, who wrote: "We are civilized today and they are not." "They", of course, were the Aboriginal people.

My real Australian education began at the end of the 1960s when Charlie Perkins and his mother, Hetti, took me to the Aboriginal compound at Jay Creek in the Northern Territory. We had to smash down the gate to get in.

The shock at what I saw is unforgettable. The poverty. The sickness. The despair. The quiet anger. I began to recognise and understand the Australian silence.

Tonight, I would like to talk about this silence: about how it affects our national life, the way we see the world, and the way we are manipulated by great power, which speaks through an invisible government of propaganda that subdues and limits our political imagination and ensures we are always at war — against our own first people and those seeking refuge, or in someone else's country.

Last July, Prime Minister Kevin Rudd said this, and I quote: "It's important for us all to remember here in Australia that Afghanistan has been a training ground for terrorists worldwide, a training ground also for terrorists in South-East-Asia, reminding us of the reasons that we are in the field of combat and reaffirming our resolve to remain committed to that cause."

There is no truth in this statement. It is the equivalent of his predecessor John Howard's lie that Saddam Hussein had weapons of mass destruction.

Bombing Afghanistan

Shortly before Kevin Rudd made that statement, American planes bombed a wedding party in Afghanistan. At least 60 people were blown to bits, including the bride and groom and many children. That was the fifth wedding party attacked, in our name.

The prime minister was standing outside a church on a Sunday morning when he made his statement. No reporter challenged him. No one said the war was a fraud: that it began as an American vendetta following 9/11, in which not a single Afghan was involved.

No one put it to Kevin Rudd that our perceived enemy in Afghanistan were introverted tribesmen who had no quarrel with Australia and didn't give a damn about south-east Asia and just wanted the foreign soldiers out of their country.

Above all, no one said: "Prime Minister, there is no war on terror. It's a hoax. But there is a war of terror waged by governments, including the Australian government, in our name."

That wedding party, prime minister, was blown to bits by one of the latest smart weapons, such as the Hellfire bomb that sucks the air out of the lungs. In our name.

During the First World War, the British prime minister David Lloyd George confided to the editor of the Manchester Guardian: "If people really knew [the truth], the war would be stopped tomorrow. But of course they don't know and they can't know."

What has changed? Quite a lot actually. As people have become more aware, propaganda has become more sophisticated.

One of the founders of modern propaganda was Edward Bernays, an American who believed that people in free societies could be lied to and regimented without them realising. He invented a euphemism for propaganda — "public relations", or PR.

"What matters", he said, "is the illusion." Like Kevin Rudd's stage-managed press conferences outside his church, what matters is the illusion. The symbols of Anzac are constantly manipulated in this way. Marches. Medals. Flags. The pain of a fallen soldier's family.

Serving in the military, says the prime minister, is Australia's highest calling. The squalor of war, the killing of civilians has no reference. What matters is the illusion.

Ensuring complicity

The aim is to ensure our silent complicity in a war of terror and in a massive increase in Australia's military arsenal. Long-range cruise missiles are to be targeted at our neighbours. The Rudd government and the Pentagon have launched a competition to build military robots which, it is said, will do the "army's dirty work" in "urban combat zones".

What urban combat zones? What dirty work?


"I confess", wrote Lord Curzon, viceroy of India, over a century ago, "that countries are pieces on a chessboard upon which is being played out a great game for the domination of the world."

We Australians have been in the service of the Great Game for a very long time. Do the young people who wrap themselves in the flag at Gallipoli every April understand that only the lies have changed — that sanctifying bloody sacrifice in colonial invasions is meant to prepare us for the next one?

When [former] prime minister Robert Menzies sent Australian soldiers to Vietnam in the 1960s, he described them as a "training team", requested by a beleaguered government in Saigon. It was a lie.

A senior official of the Department of External Affairs wrote this secret truth: "Although we have stressed the fact publicly that our assistance was given in response to an invitation by the government of South Vietnam, our offer was in fact made following a request from the United States government."

Two versions. One for us, one for them.

Menzies spoke incessantly about "the downward thrust of Chinese communism". What has changed? Outside the church, Kevin Rudd said we were in Afghanistan to stop another downward thrust. Both were lies.

During the Vietnam War, the Department of Foreign Affairs made a rare complaint to Washington. They complained that the British knew more about America's objectives than its committed Australian ally. An assistant secretary of state replied. "We have to inform the British to keep them on side", he said. "You are with us, come what may."

How many more wars are we to be suckered into before we break our silence?

How many more distractions must we, as a people, endure before we begin the job of righting the wrongs in our own country?

"It's time we sang from the world's rooftops", said Kevin Rudd in opposition, "[that] despite Iraq, America is an overwhelming force for good in the world [and] I look forward to working with the great American democracy, the arsenal of freedom."

Since the Second World War, the arsenal of freedom has overthrown 50 governments, including democracies, and crushed some 30 liberation movements. Millions of people all over the world have been driven out of their homes and subjected to crippling embargos. Bombing is as American as apple pie.

In his acceptance of the 2005 Nobel Prize for Literature, Harold Pinter asked this question: "Why is the systematic brutality, the widespread atrocities, the ruthless suppression of independent thought of Stalinist Russia well known in the West while American criminal actions never happened.

"Nothing ever happened. Even while it was happening it never happened. It didn't matter. It was of no interest."

In Australia, we are trained to respect this censorship by omission. An invasion is not an invasion if "we" do it. Terror is not terror if "we" do it. A crime is not a crime if "we" commit it. It didn't happen. Even while it was happening it didn't happen. It didn't matter. It was of no interest.

In the arsenal of freedom, we have two categories of victims. The innocent people killed in the Twin Towers were worthy victims. The innocent people killed by NATO bombers in Afghanistan are unworthy victims.

Israelis are worthy. Palestinians are unworthy. It gets complicated. Kurds who rose against Saddam Hussein were worthy. But Kurds who rise against the Turkish regime are unworthy. Turkey is a member of NATO. They're in the arsenal of freedom.

The Rudd government justifies its proposals to spend billions on weapons by referring to what the Pentagon calls an "arc of instability" that stretches across the world. Our enemies are apparently everywhere — from China to the Horn of Africa.

In fact, an arc of instability does indeed stretch across the world and is maintained by the United States. The US Air Force calls this "full spectrum dominance". More than 800 American bases are ready for war.

These bases protect a system that allows 1% of humanity to control 40% of wealth: a system that bails out just one bank with $180 billion — that's enough to eliminate malnutrition in the world, and provide education for every child, and water and sanitation for all, and to reverse the spread of malaria.

On September 11, 2001, the United Nations reported that, on that day, 36,615 children had died from poverty. But that was not news.

Journalists and politicians like to say the world changed as a result of the September 11 attacks. In fact, for those countries under attack by the arsenal of freedom, nothing has changed.

What has changed is not news.

According to the great whistleblower Daniel Ellsberg, a military coup has taken place in the United States, with the Pentagon now ascendant in every aspect of foreign policy.

It doesn't matter who is president — George Bush or Barack Obama. Indeed, Obama has stepped up Bush's wars and started his own war in Pakistan. Like Bush, he is threatening Iran, a country Hillary Clinton said she was prepared to "annihilate".

Iran's crime is its independence. Having thrown out America's favourite dictator, the Shah, Iran is the only resource-rich Muslim country beyond American control.

It doesn't occupy anyone else's land and hasn't attacked any country — unlike Israel, which is nuclear-armed and dominates and divides the Middle East on America's behalf.

In Australia, we are not told this. It's taboo. Instead, we dutifully celebrate the illusion of Obama, the global celebrity, the marketing dream. Like Calvin Klein, brand Obama offers the thrill of a new image attractive to liberal sensibilities, if not to the Afghan children he bombs.

This is modern propaganda in action, using a kind of reverse racism — the same way it deploys gender and class as seductive tools. In Barack Obama's case, what matters is not his race or his fine words, but the power he serves.

In an essay for The Monthly entitled "Faith in Politics", Kevin Rudd wrote this about refugees: "The biblical injunction to care for the stranger in our midst is clear. The parable of the Good Samaritan is but one of many which deal with the matter of how we should respond to a vulnerable stranger in our midst.

"We should never forget that the reason we have a UN convention on the protection of refugees is in large part because of the horror of the Holocaust when the West (including Australia) turned its back on the Jewish people of occupied Europe who sought asylum."

Compare that with Rudd's words the other day. "I make absolutely no apology whatsoever", he said, "for taking a hard line on illegal immigration to Australia … a tough line on asylum seekers."

Are we not fed up with this kind of hypocrisy? The use of the term "illegal immigrants" is both false and cowardly. The few people struggling to reach our shores are not illegal. International law is clear — they are legal.

And yet Rudd, like Howard, sends the navy against them and runs what is effectively a concentration camp on Christmas Island. How shaming. Imagine a shipload of white people fleeing a catastrophe being treated like this.

The people in those leaking boats demonstrate the kind of guts Australians are said to admire. But that's not enough for the Good Samaritan in Canberra, as he plays to the same bigotry which, as he wrote in his essay, "turned its back on the Jewish people of occupied Europe".

Why isn't this spelled out? Why have weasel words like "border protection" become the currency of a media crusade against fellow human beings we are told to fear, mostly Muslim people? Why have journalists, whose job is to keep the record straight, become complicit in this campaign?

After all, Australia has had some of the most outspoken and courageous newspapers in the world. Their editors were agents of people, not power. The Sydney Monitor under Edward Smith Hall exposed the dictatorial rule of Governor Darling and helped bring freedom of speech to the colony.

Today, most of the Australian media speaks for power, not people. Turn the pages of the major newspapers; look at the news on TV. Like border protection, we have mind protection.

There's a consensus on what we read, see and hear — on how we should define our politics and view the rest of the world. Invisible boundaries keep out facts and opinions that are unacceptable.

This is actually a brilliant system, requiring no instructions, no self-censorship. Journalists know not what to do. Of course, now and then the censorship is direct and crude.

SBS has banned its journalists from using the phrase "Palestinian land" to describe illegally occupied Palestine. They must describe these territories as "the subject of negotiation". That is the equivalent of somebody taking over your home at the point of a gun and the SBS newsreader describing it as "the subject of negotiation".

In no other democratic country is public discussion of the brutal occupation of Palestine as limited as in Australia. Are we aware of the sheer scale of the crime against humanity in Gaza? Twenty-nine members of one family — babies, grannies — are gunned down, blown up, buried alive, their home bulldozed. Read the United Nations report, written by an eminent Jewish judge, Richard Goldstone.

Those who speak for the arsenal of freedom are working hard to bury the UN report. For only one nation, Israel, has a "right to exist" in the Middle East — only one nation has a right to attack others.

Only one nation has the impunity to run a racist apartheid regime with the approval of the Western world, and with the prime minister and the deputy prime minister of Australia fawning over its leaders.

In Australia, any diversion from this unspoken impunity attracts a campaign of craven personal abuse and intimidation usually associated with dictatorships. But we are not a dictatorship. We are a democracy.

Are we? Or are we a Murdochracy?

Rupert Murdoch set the media war agenda shortly before the invasion of Iraq when he said, "There's going to be collateral damage. And if you really want to be brutal about it, better get it done now."

More than a million people have been killed in Iraq as a result of that invasion — "an episode", according to one study, "more deadly than the Rwandan genocide". In our name.
Are we aware of this in Australia?

I once walked along Mutanabi Street in Baghdad. The atmosphere was wonderful. People sat in cafes, reading. Musicians played. Poets recited. Painters painted. This was the cultural heart of Mesopotamia, the great civilisation to which we in the West owe a great deal, including the written word.

The people I spoke to were both Sunni and Shia, but they called themselves Iraqis. They were cultured and proud.

Today, they are fled or dead. Mutanabi Street has been blown to bits. In Baghdad, the great museums and libraries are looted. The universities are sacked. And people who once took coffee with each other, and married each other, have been turned into enemies.

"Building democracy", said Howard and Bush and Blair.

One of my favourite Harold Pinter plays is Party Time. It's set in an apartment in a city like Sydney. A party is in progress. People are drinking good wine and eating canapes. They seem happy. They are chatting and affirming and smiling. They are stylish and very self aware.

But something is happening outside in the street, something terrible and oppressive and unjust, for which the people at the party share responsibility.

There's a fleeting sense of discomfort, a silence, before the chatting and laughing resumes.

How many of us live in that apartment?

Let me put it another way. I know a very fine Israeli journalist called Amira Hass. She went to live in and report from Gaza. I asked her why she did that.

She explained how her mother, Hannah, was being marched from a cattle train to the Nazi concentration camp at Bergen-Belsen when she saw a group of German women looking at the prisoners, just looking, saying nothing, silent. Her mother never forgot what she called this despicable "looking from the side".

I believe that if we apply justice and courage to human affairs, we begin to make sense of our world. Then, and only then, can we make progress.

However, if we apply justice in Australia, it's tricky, isn't it? Because we are then obliged to break our greatest silence — to no longer "look from the side" in our own country.

In the 1960s, when I first went to South Africa to report apartheid, I was welcomed by decent, liberal people whose complicit silence was the underpinning of that tyranny. They told me that Australians and white South Africans had much in common, and they were right.

The good people of Johannesburg could live within a few kilometres of a community called Alexandra, which lacked the most basic services, the children stricken with disease. But they looked from the side and did nothing.

In Australia, our indifference is different. We have become highly competent at divide and rule: at promoting those black Australians who tell us what we want to hear. At professional conferences their keynote speeches are applauded, especially when they blame their own people and provide the excuses we need.

We create boards and commissions on which sit nice, decent liberal people like the prime minister's wife. And nothing changes.

We certainly don't like comparisons with apartheid South Africa. That breaks the Australian silence.

Near the end of apartheid, black South Africans were being jailed at the rate of 851 per 100,000 of the population. Today, black Australians are being jailed at a national rate that is more than five times higher.

Western Australia jails Aboriginal men at eight times the apartheid figure.

In 1983, Eddie Murray was killed in a police cell in Wee Waa in New South Wales by "a person or persons unknown". That's how the coroner described it. Eddie was a rising rugby league star. But he was black and had to be cut down to size.

Eddie's parents, Arthur and Leila Murray, launched one of the most tenacious and courageous campaigns for justice I've known anywhere. They stood up to authority. They showed grace and patience and knowledge. And they never gave in.

When Leila died in 2003, I wrote a tribute for her funeral. I described her as an Australian hero. Arthur is still fighting for justice. He's in his 60s. He's a respected elder, a hero.

A few months ago, the police in Narrabri offered Arthur a lift home and instead took him for a violent ride in their bullwagon. He ended up in hospital, bruised and battered. That is how Australian heroes are treated.

In the same week the police did this — as they do to black Australians, almost every day — Kevin Rudd said that his government, and I quote, "doesn't have a clear idea of what's happening on the ground" in Aboriginal Australia.

How much information does the prime minister need? How many ideas? How many reports? How many royal commissions? How many inquests? How many funerals? Is he not aware that Australia appears on an international "shame list" for having failed to eradicate trachoma, a preventable disease of poverty that blinds Aboriginal children?

In August this year, the United Nations once again distinguished Australia with the kind of shaming once associated with South Africa. We discriminate on the basis of race. That's it in a nutshell.

This time the UN blew a whistle on the so-called intervention, which began with the Howard government smearing Aboriginal communities in the Northern Territory with allegations of sex slavery and paedophile rings in "unthinkable numbers", according to the minister for indigenous affairs.

In May last year, official figures were released and barely reported.

Out of 7433 Aboriginal children examined by doctors, 39 had been referred to the authorities for suspected abuse. Of those, a maximum of four possible cases were identified. So much for the "unthinkable numbers".

Of course, child abuse does exist, in black Australia and white Australia. The difference is that no soldiers invaded the North Shore; no white parents were swept aside; no white welfare has been "quarantined".

What the doctors found they already knew: that Aboriginal children are at risk — from the effects of extreme poverty and the denial of resources in one of the world's richest countries.

Billions of dollars have been spent — not on paving roads and building houses, but on a war of legal attrition waged against black communities.

I interviewed an Aboriginal leader called Puggy Hunter. He carried a bulging briefcase and he sat in the West Australian heat with his head in his hands.
I said, "You're exhausted".

He replied, "Look, I spend most of my life in meetings, fighting lawyers, pleading for our birthright. I'm just tired to death, mate." He died soon afterwards, in his 40s.

Kevin Rudd has made a formal apology to the First Australians. He spoke fine words. For many Aboriginal people, who value healing, the apology was very important.

However, the Sydney Morning Herald published a remarkably honest editorial. It described the apology as "a piece of political wreckage" that "the Rudd government has moved quickly to clear away … in a way that responds to some of its supporters' emotional needs".

Since the apology, Aboriginal poverty has got worse. The promised housing program is a grim joke. No gap has even begun to be bridged. Instead, the federal government has threatened communities in the Northern Territory that if they don't hand over their precious freehold leases, they will be denied the basic services that we, in white Australia, take for granted.

In the 1970s, Aboriginal communities were granted comprehensive land rights in the Northern Territory, and John Howard set about clawing back these rights with bribery and bullying.

The Labor government is doing the same. You see, there are deals to be done. The Territory contains extraordinary mineral wealth, especially uranium. And Aboriginal land is wanted as a radioactive waste dump. This is very big business, and foreign companies want a piece of the action.

It is a continuation of the darkest side of our colonial history: a land grab.

Where are the influential voices raised against this? Where are the peak legal bodies? Where are those in the media who tell us endlessly how fair-minded we are? Silence.

But let us not listen to their silence. Let us pay tribute to those Australians who are not silent, who don't look from the side — those like Barbara Shaw and Larissa Behrendt, and the Mutitjulu community leaders and their tenacious lawyer George Newhouse, and Chris Graham, the fearless editor of the National Indigenous Times.

And Michael Mansell, Lyle Munro, Gary Foley, Vince Forrester and Pat Dodson, and Arthur Murray.

And let us celebrate Australia's historian of courage and truth, Henry Reynolds, who stood against white supremacists posing as academics and journalists.

And the young people who closed down Woomera detention camp, then stood up to the political thugs who took over Sydney during APEC two years ago.

And good for Ian Thorpe, the great swimmer, whose voice raised against the intervention has yet to find an echo among the pampered sporting heroes in a country where the gap between white and black sporting facilities and opportunity has closed hardly at all.

Silences can be broken, if we will it. In one of the greatest poems of the English language, Percy Shelley wrote this:

"Rise like lions after slumber
In unvanquishable number.
Shake your chains to earth like dew.
Which in sleep has fallen on you.
Ye are many – they are few."

But we need to make haste. An historic shift is taking place. The major Western democracies are moving towards a corporatism.

Democracy has become a business plan, with a bottom line for every human activity, every dream, every decency, every hope. The main parliamentary parties are now devoted to the same economic policies — socialism for the rich, capitalism for the poor — and the same foreign policy of servility to endless war.

This is not democracy. It is to politics what McDonalds is to food.

How do we change this? We start by looking beyond the stereotypes and cliches that are fed to us as news. Tom Paine warned long ago that if we were denied critical knowledge, we should storm what he called the Bastille of words. Tom Paine did not have the internet, but the internet on its own is not enough.

We need an Australian glasnost, the Russian word from the Gorbachev era, which broadly means awakening, transparency, diversity, justice, disobedience. It was Edmund Burke who spoke of the press as a Fourth Estate.

I propose a people's Fifth Estate that monitors, deconstructs and counters the official news. In every news room, in every media college, teachers of journalism and journalists themselves need to be challenged about the part they play in the bloodshed, inequity and silence that is so often presented as normal.

The public are not the problem. It's true some people don't give a damn — but millions do, as I know from the responses to my own films. What people want is to be engaged — a sense that things matter, that nothing is immutable, that unemployment among the young and poverty among the old are both uncivilised and wrong.

What terrifies the agents of power is the awakening of people — of public consciousness.
This is already happening in countries in Latin America, where ordinary people have discovered a confidence in themselves they did not know existed. We should join them before our own freedom of speech is quietly withdrawn and real dissent is outlawed as the powers of the police are expanded.

"The struggle of people against power", wrote Milan Kundera, "is the struggle of memory against forgetting."

In Australia, we have much to be proud of — if only we knew about it and celebrated it.

Since Francis McCarty and Mary Palmer landed here, we've progressed only because people have spoken out, only because the suffragettes stood up, only because the miners of Broken Hill won the world's first 35-hour week, only because pensions and a basic wage and child endowment were pioneered in New South Wales.

In my lifetime, we have become one of the most culturally diverse places on Earth, and it has happened peacefully, by and large. That is a remarkable achievement — until we look for those whose Australian civilisation has seldom been acknowledged, whose genius for survival and generosity and forgiving have rarely been a source of pride.

And yet, they remain, as Henry Reynolds wrote, the whispering in our hearts. For they are what is unique about us.

I believe the key to our self-respect — and our legacy to the next generation — is the inclusion and reparation of the First Australians. In other words, justice.

There's no mystery about what has to be done. The first step is a treaty that guarantees universal land rights and a proper share of the resources of this country.

Only then can we solve, together, issues of health, poverty, housing, education, employment. Only then can we feel a pride that comes not from flags and war. Only then can we become a truly independent nation able to speak out for sanity and justice in the world, and be heard.

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Wednesday, 18 November 2009

Climate Rage


By Naomi Klein

17 November, 2009
Rolling Stone


One last chance to save the world — for months, that's how the United Nations summit on climate change in Copenhagen, which starts in early December, was being hyped. Officials from 192 countries were finally going to make a deal to keep global temperatures below catastrophic levels. The summit called for "that old comic-book sensibility of uniting in the face of a common danger threatening the Earth," said Todd Stern, President Obama's chief envoy on climate issues. "It's not a meteor or a space invader, but the damage to our planet, to our community, to our children and their children will be just as great."


That was back in March. Since then, the endless battle over health care reform has robbed much of the president's momentum on climate change. With Copenhagen now likely to begin before Congress has passed even a weak-ass climate bill co-authored by the coal lobby, U.S. politicians have dropped the superhero metaphors and are scrambling to lower expectations for achieving a serious deal at the climate summit. It's just one meeting, says U.S. Energy Secretary Steven Chu, not "the be-all and end-all."

As faith in government action dwindles, however, climate activists are treating Copenhagen as an opportunity of a different kind. On track to be the largest environmental gathering in history, the summit represents a chance to seize the political terrain back from business-friendly half-measures, such as carbon offsets and emissions trading, and introduce some effective, common-sense proposals — ideas that have less to do with creating complex new markets for pollution and more to do with keeping coal and oil in the ground.


Among the smartest and most promising — not to mention controversial — proposals is "climate debt," the idea that rich countries should pay reparations to poor countries for the climate crisis. In the world of climate-change activism, this marks a dramatic shift in both tone and content. American environmentalism tends to treat global warming as a force that transcends difference: We all share this fragile blue planet, so we all need to work together to save it. But the coalition of Latin American and African governments making the case for climate debt actually stresses difference, zeroing in on the cruel contrast between those who caused the climate crisis (the developed world) and those who are suffering its worst effects (the developing world). Justin Lin, chief economist at the World Bank, puts the equation bluntly: "About 75 to 80 percent" of the damages caused by global warming "will be suffered by developing countries, although they only contribute about one-third of greenhouse gases."


Climate debt is about who will pick up the bill. The grass-roots movement behind the proposal argues that all the costs associated with adapting to a more hostile ecology — everything from building stronger sea walls to switching to cleaner, more expensive technologies — are the responsibility of the countries that created the crisis. "What we need is not something we should be begging for but something that is owed to us, because we are dealing with a crisis not of our making," says Lidy Nacpil, one of the coordinators of Jubilee South, an international organization that has staged demonstrations to promote climate reparations. "Climate debt is not a matter of charity."


Sharon Looremeta, an advocate for Maasai tribespeople in Kenya who have lost at least 5 million cattle to drought in recent years, puts it in even sharper terms. "The Maasai community does not drive 4x4s or fly off on holidays in airplanes," she says. "We have not caused climate change, yet we are the ones suffering. This is an injustice and should be stopped right now."

The case for climate debt begins like most discussions of climate change: with the science. Before the Industrial Revolution, the density of carbon dioxide in the atmosphere — the key cause of global warming — was about 280 parts per million. Today, it has reached 387 ppm — far above safe limits — and it's still rising. Developed countries, which represent less than 20 percent of the world's population, have emitted almost 75 percent of all greenhouse-gas pollution that is now destabilizing the climate. (The U.S. alone, which comprises barely five percent of the global population, contributes 25 percent of all carbon emissions.) And while developing countries like China and India have also begun to spew large amounts of carbon dioxide, the reasoning goes, they are not equally responsible for the cost of the cleanup, because they have contributed only a small fraction of the 200 years of cumulative pollution that has caused the crisis.


In Latin America, left-wing economists have long argued that Western powers owe a vaguely defined "ecological debt" to the continent for centuries of colonial land-grabs and resource extraction. But the emerging argument for climate debt is far more concrete, thanks to a relatively new body of research putting precise figures on who emitted what and when. "What is exciting," says Antonio Hill, senior climate adviser at Oxfam, "is you can really put numbers on it. We can measure it in tons of CO₂ and come up with a cost."


Equally important, the idea is supported by the United Nations Framework Convention on Climate Change — ratified by 192 countries, including the United States. The framework not only asserts that "the largest share of historical and current global emissions of greenhouse gases has originated in developed countries," it clearly states that actions taken to fix the problem should be made "on the basis of equity and in accordance with their common but differentiated responsibilities."


The reparations movement has brought together a diverse coalition of big international organizations, from Friends of the Earth to the World Council of Churches, that have joined up with climate scientists and political economists, many of them linked to the influential Third World Network, which has been leading the call. Until recently, however, there was no government pushing for climate debt to be included in the Copenhagen agreement. That changed in June, when Angelica Navarro, the chief climate negotiator for Bolivia, took the podium at a U.N. climate negotiation in Bonn, Germany. Only 36 and dressed casually in a black sweater, Navarro looked more like the hippies outside than the bureaucrats and civil servants inside the session. Mixing the latest emissions science with accounts of how melting glaciers were threatening the water supply in two major Bolivian cities, Navarro made the case for why developing countries are owed massive compensation for the climate crisis.


"Millions of people — in small islands, least-developed countries, landlocked countries as well as vulnerable communities in Brazil, India and China, and all around the world — are suffering from the effects of a problem to which they did not contribute," Navarro told the packed room. In addition to facing an increasingly hostile climate, she added, countries like Bolivia cannot fuel economic growth with cheap and dirty energy, as the rich countries did, since that would only add to the climate crisis — yet they cannot afford the heavy upfront costs of switching to renewable energies like wind and solar.


The solution, Navarro argued, is three-fold. Rich countries need to pay the costs associated with adapting to a changing climate, make deep cuts to their own emission levels "to make atmospheric space available" for the developing world, and pay Third World countries to leapfrog over fossil fuels and go straight to cleaner alternatives. "We cannot and will not give up our rightful claim to a fair share of atmospheric space on the promise that, at some future stage, technology will be provided to us," she said.

The speech galvanized activists across the world. In recent months, the governments of Sri Lanka, Venezuela, Paraguay and Malaysia have endorsed the concept of climate debt. More than 240 environmental and development organizations have signed a statement calling for wealthy nations to pay their climate debt, and 49 of the world's least-developed countries will take the demand to Copenhagen as a negotiating bloc.


"If we are to curb emissions in the next decade, we need a massive mobilization larger than any in history," Navarro declared at the end of her talk. "We need a Marshall Plan for the Earth. This plan must mobilize financing and technology transfer on scales never seen before. It must get technology onto the ground in every country to ensure we reduce emissions while raising people's quality of life. We have only a decade."


A very expensive decade. The World Bank puts the cost that developing countries face from climate change — everything from crops destroyed by drought and floods to malaria spread by mosquito-infested waters — as high as $100 billion a year. And shifting to renewable energy, according to a team of United Nations researchers, will raise the cost far more: to as much as $600 billion a year over the next decade.


Unlike the recent bank bailouts, however, which simply transferred public wealth to the world's richest financial institutions, the money spent on climate debt would fuel a global environmental transformation essential to saving the entire planet. The most exciting example of what could be accomplished is the ongoing effort to protect Ecuador's Yasuní National Park. This extraordinary swath of Amazonian rainforest, which is home to several indigenous tribes and a surreal number of rare and exotic animals, contains nearly as many species of trees in 2.5 acres as exist in all of North America. The catch is that underneath that riot of life sits an estimated 850 million barrels of crude oil, worth about $7 billion. Burning that oil — and logging the rainforest to get it — would add another 547 million tons of carbon dioxide to the atmosphere.


Two years ago, Ecuador's center-left president, Rafael Correa, said something very rare for the leader of an oil-exporting nation: He wanted to leave the oil in the ground. But, he argued, wealthy countries should pay Ecuador — where half the population lives in poverty — not to release that carbon into the atmosphere, as "compensation for the damages caused by the out-of-proportion amount of historical and current emissions of greenhouse gases." He didn't ask for the entire amount; just half. And he committed to spending much of the money to move Ecuador to alternative energy sources like solar and geothermal.

Largely because of the beauty of the Yasuní, the plan has generated widespread international support. Germany has already offered $70 million a year for 13 years, and several other European governments have expressed interest in participating. If Yasuní is saved, it will demonstrate that climate debt isn't just a disguised ploy for more aid — it's a far more credible solution to the climate crisis than the ones we have now. "This initiative needs to succeed," says Atossa Soltani, executive director of Amazon Watch. "I think we can set a model for other countries."


Activists point to a huge range of other green initiatives that would become possible if wealthy countries paid their climate debts. In India, mini power plants that run on biomass and solar power could bring low-carbon electricity to many of the 400 million Indians currently living without a light bulb. In cities from Cairo to Manila, financial support could be given to the armies of impoverished "trash pickers" who save as much as 80 percent of municipal waste in some areas from winding up in garbage dumps and trash incinerators that release planet-warming pollution. And on a much larger scale, coal-fired power plants across the developing world could be converted into more efficient facilities using existing technology, cutting their emissions by more than a third.

But to ensure that climate reparations are real, advocates insist, they must be independent of the current system of international aid. Climate money cannot simply be diverted from existing aid programs, such as primary education or HIV prevention. What's more, the funds must be provided as grants, not loans, since the last thing developing countries need is more debt. Furthermore, the money should not be administered by the usual suspects like the World Bank and USAID, which too often push pet projects based on Western agendas, but must be controlled by the United Nations climate convention, where developing countries would have a direct say in how the money is spent.


Without such guarantees, reparations will be meaningless — and without reparations, the climate talks in Copenhagen will likely collapse. As it stands, the U.S. and other Western nations are engaged in a lose-lose game of chicken with developing nations like India and China: We refuse to lower our emissions unless they cut theirs and submit to international monitoring, and they refuse to budge unless wealthy nations cut first and cough up serious funding to help them adapt to climate change and switch to clean energy. "No money, no deal," is how one of South Africa's top environmental officials put it. "If need be," says Ethiopian Prime Minister Meles Zenawi, speaking on behalf of the African Union, "we are prepared to walk out."


In the past, President Obama has recognized the principle on which climate debt rests. "Yes, the developed nations that caused much of the damage to our climate over the last century still have a responsibility to lead," he acknowledged in his September speech at the United Nations. "We have a responsibility to provide the financial and technical assistance needed to help these [developing] nations adapt to the impacts of climate change and pursue low-carbon development."


Yet as Copenhagen draws near, the U.S. negotiating position appears to be to pretend that 200 years of over-emissions never happened. Todd Stern, the chief U.S. climate negotiator, has scoffed at a Chinese and African proposal that developed countries pay as much as $400 billion a year in climate financing as "wildly unrealistic" and "untethered to reality." Yet he put no alternative number on the table — unlike the European Union, which has offered to kick in up to $22 billion. U.S. negotiators have even suggested that countries could fund climate debt by holding periodic "pledge parties," making it clear that they see covering the costs of climate change as a matter of whimsy, not duty.


But shunning the high price of climate change carries a cost of its own. U.S. military and intelligence agencies now consider global warming a leading threat to national security. As sea levels rise and droughts spread, competition for food and water will only increase in many of the world's poorest nations. These regions will become "breeding grounds for instability, for insurgencies, for warlords," according to a 2007 study for the Center for Naval Analyses led by Gen. Anthony Zinni, the former Centcom commander. To keep out millions of climate refugees fleeing hunger and conflict, a report commissioned by the Pentagon in 2003 predicted that the U.S. and other rich nations would likely decide to "build defensive fortresses around their countries."


Setting aside the morality of building high-tech fortresses to protect ourselves from a crisis we inflicted on the world, those enclaves and resource wars won't come cheap. And unless we pay our climate debt, and quickly, we may well find ourselves living in a world of climate rage. "Privately, we already hear the simmering resentment of diplomats whose countries bear the costs of our emissions," Sen. John Kerry observed recently. "I can tell you from my own experience: It is real, and it is prevalent. It's not hard to see how this could crystallize into a virulent, dangerous, public anti-Americanism. That's a threat too. Remember: The very places least responsible for climate change — and least equipped to deal with its impacts — will be among the very worst affected."


That, in a nutshell, is the argument for climate debt. The developing world has always had plenty of reasons to be pissed off with their northern neighbors, with our tendency to overthrow their governments, invade their countries and pillage their natural resources. But never before has there been an issue so politically inflammatory as the refusal of people living in the rich world to make even small sacrifices to avert a potential climate catastrophe. In Bangladesh, the Maldives, Bolivia, the Arctic, our climate pollution is directly responsible for destroying entire ways of life — yet we keep doing it.


From outside our borders, the climate crisis doesn't look anything like the meteors or space invaders that Todd Stern imagined hurtling toward Earth. It looks, instead, like a long and silent war waged by the rich against the poor. And for that, regardless of what happens in Copenhagen, the poor will continue to demand their rightful reparations. "This is about the rich world taking responsibility for the damage done," says Ilana Solomon, policy analyst for ActionAid USA, one of the groups recently converted to the cause. "This money belongs to poor communities affected by climate change. It is their compensation."

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Tuesday, 17 November 2009

You can put a price on happiness, and new study says it's a bargain

November 17, 2009
By Peter Popham
Money can't buy me love, The Beatles sang, and the best things in life are free - but according to new research, they couldn't have been more wrong. Not only is the happiness of falling in love indistinguishable from that of winning the pools but, says a leading Australian economist, it's worth a lot less.
In exhaustive research involving nearly 10,000 people and taking eight years to complete, Professor Paul Frijters claims to have established that happiness is really quite cheap. And the monetary value of events such as marriage, moving house and bereavement is dramatically different depending on whether you are a man or a woman.
Men, his research finds, are both far more exalted and more depressed by changes in their lives. To an Australian man marriage is worth about £17,000, but to a woman it is worth only half that. Likewise, men are far more affected by divorce.
Mr Frijters' team tracked the major life events of his subjects over a period of years and asked them to assign a number between 0 and 10 to their state of mind after important life events and sudden changes in income. This enabled him to put a money value on what he called the "psychic costs" and "psychic benefits" of these changes.
Sad events have a much bigger impact than happy ones, Professor Frijters says, dramatically so for men: the death of a partner or a child is like the loss of £350,000 to a man, but only £73,000 to a woman.
"Losing a loved one has a much bigger effect than gaining a loved one," Professor Frijters told the Sydney Morning Herald. "There's a real asymmetry between life and death. This shouldn't surprise us. Human beings seem primed to notice losses more than gains."
And some events are experienced as gains by one sex but losses by the other: moving house, for example, which is the equivalent of losing around £9,000 to a man; for a woman it's like a present of about £1,500.
The cost of living: How emotions add up
Women: +£8,726 Men: +£17,675
*Birth of child
Women: +£4,867 Men: +£18,236
Women: -£4,977 Men: -£61,116
*Death of loved one
women: -£73,205 Men: -£350,830
*Moving house
Women: +£1,454 Men: -£8,947
Source: Paul Frijters' study

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Saturday, 14 November 2009

The "Gusher Up" Theory Of Economics

By Jeff Berg
13 November, 2009

During the Reagan era the government put in place policies that guaranteed that the wealth that naturally accumulates at the top end of the income ladder stayed there. In order to accomplish this bit of social engineering the top taxation bracket was significantly reduced. The policies of this time succeeded to the extent that the wealthy did in fact get much wealthier.

Where they failed was in the second part of the "trickle down" theories that justified this policy to the public. The theory such as it was stated that if the rich were allowed to get richer this would allow the society at large to become wealthier as a whole. This extra wealth would then "trickle down" thereby resulting in everyone become wealthier than they had been previously and would have been otherwise. To no great surprise to the critics of this policy what happened instead is exactly what the critics projected. I.e. The gap between the rich and everyone else increased dramatically.

Simultaneously the Reaganites embarked on a massive increase in military spending which resulted in two major economic effects. First it massively accelerated America's debt and deficits. Second it acted as a further transfer of wealth from the middle class to the wealthiest classes. An aspect of military spending that is seldom publicly discussed but has been fully understood for centuries if not millennia.

Today we have a new variant on this economic theory that I would like to call the "Gusher Up" theory. In this economic model the government sprays massive amounts of money directly upwards into the pockets of the investor class. This is justified by declaring that a state of emergency exists and to do anything else would result in a complete collapse of the entire financial system. It is further justified by claiming that the end result of this massive geyser of money will be - in the long run - to make everyone wealthier. (As many of you know Keynes had a different view of this long run) This time around no one is saying out loud that this wealth will then "trickle down". No doubt afraid that the terminology might create negative associations for what is already a hard sell. It is nonetheless relentlessly implied.

Once again the critics of this policy have a different take. They are projecting that the net result of this policy will instead be a monumental transfer of money to the richest classes while leaving the entire country burdened with an unprecedented level of debt. The effects of massive debt on a county's economy and its citizens standard of living being at least as well understood as the effects of massive military spending on the pockets of the rich.

This debate could not be said to be raging in the mainstream media as the only critics of the current policies of the U.S. Federal Reserve given major media attention come from the deranged end of the "laissez-faire" libertarian fringe. Folks who would have had all governments do nothing after the collapse of Bear Sterns and Lehman. These "invisible handers" insist that the market like mother knows best. It is now clear in retrospect that what would have happened instead is a cascading failure of all derivative bets that would have taken down the entire economy. A situation that would have led to most of us being unable to access our funds from our banks and a subsequent run on the banks. The resulting panic, pandemonium and street level unrest would have led to an international credit seizure that would have stopped the global economy in its tracks. The net effect may well have put 1929 in the shade. This would have been to no one's advantage.

Those making an informed and balanced critique of these policies are as usual shunted off to the margins. Though they did have a few moments in the sun when it turned out that their projections about the housing bubble were exactly right. Dean Baker comes to mind.

Another critic whose projections have been exceptionally accurate for the last four years is Mike Whitney. In his latest article he refers to a recent study that shows that the critics of the "Gusher Up" theory are proving to be as prescient as those that predicted the effects of the earlier "Trickle down" variant.

"The Fed's meddlesome interventions (now in-excess of $11.4 trillion) represent the largest transfer of wealth in history.

Berkeley economics professor Emmanuel Saez, recently released a report which just confirms that income inequality in the United States is at an all-time high, surpassing even levels seen during the Great Depression. The report shows that
1--Income inequality is worse than it has been since at least 1917
2--"The top 1 percent incomes captured half of the overall economic growth over the period 1993-2007"
3--"In the economic expansion of 2002-2007, the top 1 percent captured two thirds of income growth." ~

Along with these facts are the current facts about the productive economy in the U.S. today. The true jobless rate is at 17.5% and shows every sign of increasing. The number of people "upside down" on their mortgages and being tossed out of their home continues to grow at an alarming rate. Worse yet there is another round of resetting beginning in the Adjustable Rate Mortgage market which will only exacerbate this already drastic situation. Simultaneously commercial real estate is giving off every sign that it too is a bubble ready to burst. This is the picture for the working and non-working stiff for the next few years at least. To call this a depression for the non-investor class is no exaggeration.

Meanwhile the asset and equities bubbles are being reflated with the Fed's money. It's as if the Fed has decided that the only way markets will be allowed to go is up. No matter how much public money this takes. What Whitney and people like Marc Faber, Peter Schiff and Jim Rogers rightly call "lunacy".

When we finally get around to tabulating the numbers for the period of 2008 to 2010; the gap between those few at the top and what is now being referred to as the "bottom 90%" will have become the widest chasm ever seen in the U.S. What this will mean for the social fabric of the country is not hard to guess. The only upside that I can glean is that this time, surely, the U.S. will not turn to a massive increase in military spending to pump-prime its economy. If only because they have no foreign creditors to bankroll the effort.

Who knows maybe this will leave the energy, transportation and housing retrofit sectors as the only places large enough to turn to in order to kick-start the U.S. and global economy. If this turns out to be the case, and the U.S. meets its domestic challenges and international obligations in these areas, then there is a good chance that all else will be pretty much forgotten if not forgiven. "The War on Terror" like the "Domino Theory" fading into well deserved obscurity. Horrific episodes that ultimately meant little to those not directly affected and not permanently fatal to the human project. Meaning there is at least something to be hoped for if not to be counted on.

Ton confrere,
Jeff Berg
Jeff is a founding member of Post Carbon Toronto. His writing focuses on Energy & Emissions and their micro and macro implications ecologically, economically and socially. He can be reached at

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