Saturday, 31 March 2012

An Ethical Financial Analyst

Financial analyst Neeraj Monga
Financial analyst Neeraj Monga’s reports have India Inc in a funk

The Canadian newspaper report, boldly headlined ‘Yellow Pages strikes back at analyst’, is framed and prominently displayed in a corner office of the Toronto-based firm Veritas Investment Research. The Financial Post article refers to a July 2006 report from Veritas, titled ‘The Count of Yellow Pages’, that was quite unambiguously bearish on the Yellow Pages Income Fund, even though at the time it was the second largest trust in Canada with a market capitalisation of over $8 billion. That didn’t prevent Veritas analysts Neeraj Monga and Chris Silvestre from arguing that “past performance is no indicator of future results. We believe that ypg is the poster child of this adage”.
The Bull Buster
Age 40
Place of Birth Udaipur
Work Executive vice-president and head of research at Toronto-based forensic accounting firm, Veritas, whose candid reports on prominent Indian firms are making headlines.
Hobbies Monga enjoys cooking, especially experimenting with recipes. He likes Bollywood films (Dil Chahta Hai is a favourite) and listens to old Hindi music (especially Mohd Rafi). Has most recently read the biography of Steve Jobs. Loves travelling to sunnier climes.
Family Wife Dimple is a homemaker. Children: Sanjana, 5, and Arjun, 1.

In the Financial Post article, Yellow Pages CEO Marc Tellier had fired back that 11 of 12 analysts had “buy” recommendations on the company. Now, almost six years later, the stock which was then trading at nearly $16 barely touches double digits—in pennies—on the Toronto Stock Exchange.

India-born Monga, executive vice-president and head of research at Veritas, has written a bunch of reports since then, and those involved in the inner machinery of BSE 100 stocks will certainly be paying serious attention to his work. After all, his reports on Reliance Industries and Reliance Communications (exactly five years from the day the Yellow Pages report was published), and then on UB Holdings and Kingfisher Airlines and, most recently, on DLF, have generated tremors—and headlines.

As Monga points out in an interview at his Toronto office, this isn’t about ulterior motives and targeting Indian companies: “Ultimately, it’s about two things, governance and vision. There are very few visionary people out there, mostly in North America, creating businesses from scratch. In India, some of the biggest companies are trying to rip other people off.” That’s just the sort of candid language that has roiled the usually placid waters of equity research aimed at Indian corporates. For instance, the DLF report summarised: “If your investment decision incorporates management integrity, then bypassing DLF will be an easy choice.”

There’s more to come: Veritas established a research unit focused on India this January. Led by Monga, the unit expects to deliver between 6-8 reports in 2012 itself. As a frequent visitor to India, Monga is aware of the terrain: “India, in general, as a nation, has been led by rhetoric rather than fact. So I decided perhaps we can inject some facts into the debate.” Clearly, he has forceful views and is unafraid about presenting them. “Generally information coming out of India and/or China has been pretty...” Monga pauses and contemplates the apt word, “untrustworthy.”
‘Brothers In Arms’: Jul ’11

What Veritas said
“We find no credible evidence of ‘values’ and ‘integrity’ in RCom’s financial statements or those of its former parent, RIL.”

RCom’s response
“A malicious and motivated report containing baseless allegations, masquerading as research.”

Monga’s Indian critics may well blame his father for preventing the son from taking on a career as the local cable guy, possibly in West Delhi’s Vikaspuri. His sister Parul, who works in Toronto as a trader with the Western Ontario Financing Authority, recalls that in the early ’90s, just as the Indian economy was being liberalised, Neeraj, still pursuing his BA at Delhi University’s Rajdhani College, launched a cable business. Running cables from their home vcr, he piped Bollywood films and music, children’s programmes and Pakistani serials into the residences of neighbours in that cluster of Delhi Development Authority flats. Within two years, the enterprise had gone from an initial 10 subscribers to over 500. “He was the very first guy to start the process. He had the vision, but Dad wanted him to focus on education so he sold the business,” she says.


“There are a lot of companies in India which are overvalued because people don’t really understand the numbers.”

Monga went on to secure an MBA from the University of Indore, worked briefly in India, before taking a loan from Dena Bank for an MBA at the Richard Ivey School of Business at the University of Western Ontario. Robert Fisher, who taught Monga here, remembers a student who was able to “analyse complex situations quickly”. Fisher, who now teaches at the University of Alberta’s business school, hired Monga for summer employment. That, though, wasn’t the sort of blue-chip internship his students coveted. Fisher says Monga did “incredibly well” to “overcome that barrier” and snagged “the best offer relative to any other student of his MBA class”. That was at Bain & Company, the same firm where Mitt Romney, now the frontrunner to become the Republican Party’s presidential nominee in the US, also worked before forming Bain Capital.
 Monga lasted about a year there. Fortunately for him, Michael Palmer, a veteran of Bay Street—Toronto’s equivalent of Wall Street—was planning to set up Veritas, which would concentrate on forensic accounting. Palmer, now president at Veritas, says, “The concept was started in 1999 at the peak of the dotcom bubble. We thought there was a lot of dishonest accounting going on out there.” Veritas came into being in 2000 and Neeraj Monga was its first employee. The research wing now has 17 staffers.
‘A Pie In The Sky’: Sep ’11

What Veritas said
“We believe that kair’s book equity has been wiped out although audited financials pretend otherwise.”

Kingfisher’s response
"Very surprisingly, we never got a copy...but they widely disseminated their report to the media which leads me to be suspicious."

The research into Indian equities was Neeraj Monga’s initiative. While Palmer supported the idea, several of Veritas’s partners were sceptical and a degree of persuasion was required before the project was green-lighted. Palmer believes this new venture for Veritas is a need: “I think the Indian markets are at about the same stage as the North American or world markets were when we started Veritas in the first place. There are a lot of companies in India which are overvalued because people don’t really understand the numbers.”
The kernel for the debut analysis, on Reliance, came much earlier. Monga, who had followed the telecom sector, was viewing a presentation on the spinout of Reliance Communications from Reliance Industries: one slide stuck out as anomalous, but he presumed someone in India would comment on that. But there was not a peep for five years. “Ultimately, when I said we can write about India, we went back to dig deeper into that presentation,” he says. The question was how the Ambani family shareholding had gone from 38 to 63 per cent in the change of Reliance Communications ownership, which as Monga saw it, defied logic.

The next report featured another “easy choice”. As Monga says, “Airlines are generally not good business. We just said we’ll look at the annual report of Kingfisher. As soon as we opened the first annual report, we knew something was not right. So we read five years’ worth of annual reports and we figured out this is an effectively insolvent organisation.” In fact, Monga argues that Kingfisher should be delisted from the BSE for flouting Indian accounting standards. For the most recent report, again the real estate sector was another easy choice with DLF the 800-pound gorilla therein. “Anybody who has any experience of India knows the Indian real estate market is rife with underhand dealings,” Monga explains.

Now obviously there’s been a blowback against Veritas’s analysis. A spokesperson for Reliance Communications described it as a “malicious and motivated report containing baseless allegations, masquerading as research”. Lawsuits have been threatened—though not served. Monga isn’t perturbed, though his wife Dimple is, somewhat. The couple is raising two young children, five-year-old Sanjana and one-year-old Arjun, at their house in midtown Toronto. As Dimple Monga says, “Sometimes I’m a little apprehensive that there might be a negative response. I feel these companies can take it very personally.” But she remains supportive of her husband’s crusade to reform accounting practices in India.
‘A Crumbling Edifice’: Mar ’12

What Veritas said
“Claims made by management about its ability to execute were fanciful.”

DLF’s response
“ presumptive and mischievous as the analysts have never contacted the company to seek any information or clarification.”

Monga, though, is frank that this is not “social service”, as some in India may deem it to be. That’s a reality Palmer underscores: “We’re not doing it out of the goodness of our hearts, we think it’s a legitimate business opportunity and a product which is really needed in India right now.” Veritas’s clients pay a steep rate for access to the firm’s reports, starting at $50,000 in the first year and climbing. The firm certainly wants to broaden its base of clients to India, where it still doesn’t have a footprint, other than working with a consultant.

While its research is sold to institutional investors, some based in Singapore and Hong Kong, Veritas wants organisations like lic and Employee Provident Fund of India to subscribe. “They’re obviously the stewards of the savings of India’s small investors. They have a fiduciary duty to look out for their clients and if we can add value to the investment diligence process, then ignoring us is not in their interest.... It seems to me those managements are sleeping at the wheel,” observes Monga.

Nor is Monga daunted by rumours of the Indian market regulator, SEBI, imposing new regulations on independent equity research. Since Veritas doesn’t yet sell its research in India, it doesn’t need to be registered with SEBI. It is, however, registered with the Ontario Securities Commission and has a chief compliance officer. Still, he believes any such SEBI measure is a “good thing”. He also shrugs off accusations of being part of a bear cartel, retorting that those who are bullish aren’t taken to be “part of the bullshit cartel”. Coincidentally, his office, just off Bay Street, is also next to a bucolic sculpture of placid urban cows, called The Pasture, a counterpoint to the Raging Bull that defines New York’s Wall Street.


Monga shrugs off bear cartel accusations, retorting that those bullish aren’t seen as “part of the bullshit cartel”.

Clearly, Monga has figured out that Veritas’s research may just be pointing to a large, systemic disorder in India. That dire warning is delivered in Monga’s typically outspoken style: “After our telecom report, everyone said, ‘But the entire sector is in trouble.’ Then, after the Kingfisher report people said, ‘Ahh, but the airline sector is in difficulty, why single out a specific airline?’ After our DLF report, I am reading stories that the entire real estate sector is in a downtrend, and therefore DLF is no different. The power sector is also in trouble. Then how come ‘India is a dynamic and growing economy’?” He’s also clear about the “change” Veritas is targeting. “In India, dealings with ‘related parties’ are the norm, and most ‘related party’ dealings are a means to siphon funds from the publicly traded entity for the benefit of majority owners. We will highlight this.”
Unlike those of his ilk, Monga maintains a work-life balance, usually returning home by 6.30 pm. Cooking or watching Bollywood films are favourite forms of relaxation. The prospect of a slew of reports flowing from Veritas this year may just keep India’s corporate behemoths from relaxing though, unused as they are to any sort of intense scrutiny.

The Bradford Spring

This was Bradford's version of the riots

Bradford's peaceful democratic uprising that elected me comes from the wellspring of discontent that swept Britain last summer
George Galloway Bradford West
George Galloway addresses the media after winning the Bradford West byelection. Photograph: Andrew Yates/AFP/Getty Images
The Bradford spring. No matter how seemingly powerful, no corrupted, out-of-touch elite can last forever. The people of Bradford West have spoken, and politics in the city and in this country will never be the same again. Anyone who took part in this historic campaign, or who observed it dispassionately, knew by last weekend that something spectacular was going to take place.

A 5,000 Labour majority was transformed into a 10,000 majority for Respect – the same total vote for me as the outgoing MP had in a general election – winning across every ward in the constituency. It was the most spectacular byelection result in British political history.

The word revolution was on many lips in this deprived and hitherto disenfranchised city well before Friday morning's result. And, like the Arab revolutions, this is a movement, above all, of the young. Bradford has a young population. By 2020 half the population will be under 25. They have grown up in the years when Tony Blair and his successors murdered the real Labour tradition, taking for granted the loyalty of working people – nowhere more so than in this city, where the precursor to the Labour party, the Independent Labour party, was founded in 1893.

A rotten combination of complacency, incompetence, opportunism and rule by clique has presided over Bradford's decline. It was going down even during the 13 years of New Labour government, which included the richest decade in British history. Now it is in danger of sinking under the sado-monetarist austerity of the Con-Dem coalition.

Labour's opposition in parliament is feeble to the point of paralysis, because so many share so much of the grim orthodoxy that has plunged the world into the great recession.

This, and the continuing support of all three old parties for war and occupation abroad, has created a chasm between the political class and so many working people, especially the generation that faces a future of extortionate tuition fees, a privatised NHS, mass unemployment – and, for those who find work, an ever diminishing pension and a rising retirement age. So, while support came from all quarters in this election, it was young people who moved first and created a critical mass, which drew around it ever wider layers until it became unstoppable.

Many had never voted before, including in their 40s. As hundreds of them threw themselves into the campaign, those who remembered what a real party of labour should look like could see it forming before their eyes and they too moved. Among them were activists who had held the labour movement together through the dog years of Thatcherism.

Mass face-to-face campaigning was combined with the tools of this century – Facebook, YouTube, Twitter, mass texting, bespoke apps – all run by the generation for which they are as familiar as a printed political leaflet once was. Every night, and late into the night, hundreds gathered at our headquarters provided by Chambers solicitors to rally, plan and organise on and offline.

This peaceful, democratic uprising comes from the same wellspring of discontent and alienation that fuelled disturbances in British cities last summer. But it is a positive counterpoint – bringing forth a new generation of political leaders, not another cohort trapped in the criminal justice system. Every politician should take notice, as they did not last summer.

Labour, above all, should learn this rude lesson. It cannot continue on the disastrous path set by Tony Blair, of war and occupation abroad and inequality at home. That's what lay behind the loss of a "safe seat", held for 38 years, just as the party lost London's East End in 2005.

The real Labour values I stood for in this election swept the Tories and Lib Dems away, and swept into every part of the constituency – including those areas where some voters, only a few years ago, had succumbed to the siren calls of the racists and fascists.

The media, especially the London media, should also smell the coffee. Something is happening in this country outside of the echo chamber. The council elections take place in May in many parts of the country: prepare for more shocks to come as people find their voices at the ballot box and in mass, democratic opposition to an elite that is failing them.


George Galloway: The political rebel with a cause

Indefatigable in the pursuit of his causes, formidable in taking on his many opponents, he has ridden the political roller coaster for 25 years. And now he’s back as an MP after a sensational by-election victory
There is no one in politics who can whip up a crowd quite like George Galloway can. Nor are there many with his special talent for falling out with political allies. His is a long political biography, which had lurched from controversy to controversy, and has seen a series of setbacks any one of which would have finished off a less resilient character. Somehow whenever the world of politics thinks they have seen the last of "Gorgeous George", he bounces back.
Bradford West is now the fourth constituency to have George Galloway for its MP – itself an unusual record in modern politics. There is a cruel saying in Westminster that no one is more "ex" than an ex-MP. Galloway was expected to take on that unwanted status after being expelled from the Labour Party in 2003, but made an extraordinary comeback at the 2005 general election as MP for the hastily formed Respect party in Bethnal Green and Bow.

In 2010, Labour jubilantly saw him off when he ran against Jim Fitzpatrick in Poplar and Limehouse, and again expected him to vanish from the scene. Even on Thursday evening, after voting in Bradford West was almost over, Labour officials were quite sure that they had held the seat, though they acknowledged that Galloway had made an impact and expected him to come second.

Instead, after Easter, Galloway will return to Parliament, where he first made a mark 25 years ago. In the 1987 general election, he reclaimed Glasgow Hillhead, which the Labour Party had lost in a by-election in 1981 to Roy Jenkins, leader of the SDP. Most new MPs have to wait years before they make the front pages of the national press. Galloway achieved national fame straight away – but not in a good way.

As early as 1981, newspapers had started taking an interest in this political prodigy who described himself as having been "born in an attic in a slum tenement in the Irish quarter of Dundee, which is known as Tipperary". He had joined Labour's Young Socialists at 13, and was still in his teens when, remarkably, he was made secretary of the Dundee Labour Party. At 20, he was a member of the Scottish Labour Executive, and at 22 was Dundee's youngest councillor, despite being denounced by a local priest for "living in sin" with his future wife, Elaine. By 1981, he was one of the most articulate voices in Scotland of what was then known as the Bennite left, and before he was 30, he was general secretary of a major charity, War on Want.

At first, the charity thrived from having this dynamic, gifted, politically astute young boss. He improved its political connections and, when aid to the Horn of Africa increased dramatically in the wake of the Live Aid concert, he made War on Want the lead charity in channelling aid to the war-torn Eritrean and Tigris provinces of Ethiopia.

But towards the end of his time there, word began to spread that there was another, less attractive side to this charismatic figure. The Sunday Mirror carried damaging allegations of how Galloway had been conducting himself, written by Alastair Campbell. Just after his election to Parliament, Galloway called what was to be his last press conference as head of War on Want and, under persistent questioning from journalists, admitted that he had had sexual relations with two women during a conference in Athens in 1985 – a revelation that earned him the nickname "Gorgeous George".

"My wife won't leave me," he predicted. Actually, the relationship was soon over. Four years later, Galloway met the Palestinian-born biologist Amineh Abu-Zayyad. They married in a civil ceremony in 2000, but she divorced him in January 2009, citing his relations with other women. By then Galloway had a one-year-old son by his Lebanese researcher Rima Husseini.

Galloway's commitment to the Arab cause dates back at least 30 years, when he was instrumental in the unusual decision to "twin" Dundee with the Palestinian town of Nablus. After the first Gulf war, he began a campaign to end British sanctions against Iraq, which would bring him further attention. In 1994, he visited Baghdad and was filmed telling Saddam Hussein: "Sir, I salute your courage, your strength, your indefatigability."

Four years later, he set up the Mariam Appeal, named after a four-year-old Iraqi girl, Mariam Hamza, whom Galloway arranged to bring to Glasgow to be treated for leukaemia. The appeal, which paid for a number of Galloway's overseas trips, was never registered as a charity. Nonetheless, the Charities Commission looked into it after it was wound up in 2003, and again in 2007.

The second time around, the commission alleged that £230,000 out of the £1.4m raised by the appeal came from "improper" sources, via Iraq's food for oil programme. Galloway, who has never been coy in his own defence, described the commission's findings as "palpably false".

The Daily Telegraph thought it had Galloway bang to rights when, in the ruins of Baghdad's foreign ministry building, it found a document that referred to what were alleged to be payments to the MP, measured in barrels of oil. It has never been disputed that the document itself was genuine. However, the Telegraph read too much into its find, and ran an editorial implicitly accused Galloway of treason, for which he was later awarded £150,000 in libel damages.

Though he was by no means the only Labour MP to be opposed to the Iraq war, nor the most important, Galloway was the only one expelled from the Labour Party. With his usual love of a resounding phrase, he described George Bush and Tony Blair as "wolves" and, in Labour's views, had incited foreign armies to fight against British troops.

After his expulsion, he remained an independent MP for Glasgow Kelvin and joined forces with the Socialist Workers Party and others to create the Respect Party.

When Galloway took Bethnal Green and Bow by 823 votes, in an abrasive, bad-tempered race against Labour's Oona King, it was the first time since 1951 that a party avowedly left of the Labour Party had won a seat in the Commons. The east London seat, like Bradford West, had a high proportion of young Muslims who admired Galloway's opposition to the Iraq war.

His five years as a Respect MP were marked by two highly publicised appearances in places where British MPs are not normally to be found. In May 2005, he went to Washington to confront a Senate sub committee which had accused him of profiting from Iraqi oil. The senators were accustomed to dealing with witnesses who treated Congress with reverence, and were completely at a loss in the face of Galloway's abrasive way of using attack as the best form of defence.

In 2006, Galloway went on Celebrity Big Brother, under the illusion that it would allow him to relay his political views to the show's vast audience. Actually, most of his political remarks were cut out, and all that most viewers recalled was his bizarre impersonation of a cat.

Another high-profile appearance was his public debates with the writer Christopher Hitchens, who said of Galloway: "He looks so much like what he is: a thug and a demagogue, the type of working-class-wideboy-and-proud-of-it who is too used to the expenses account, the cars and the hotels – all cigars and back-slapping. He is a very cheap character and a short-arse." Galloway was equally insulting in return.

The Respect Party split apart when Galloway fell out with the SWP. When Galloway failed to be re-elected to the Commons in 2010, it looked as if Respect was heading for terminal decline, and that there was no future for George Galloway except as a star of the Iranian-owned Press TV and one of the last people in the UK to offer a qualified defence of the regime in Syria.

When he announced that he was running in Bradford West, it appeared to be a desperate attempt by a half-forgotten man to draw attention to himself. Almost the only people to spot what was actually happening were punters who bet so heavily on a Galloway victory that the bookies are saying the result is costing them £100,000. George Galloway is back on the scene.

A life in brief
Born: 16 August 1954, Dundee.
Family: His father was a Scottish trade unionist. Twice divorced, since 2006, Galloway has been married to Rima Husseini with whom has a son. Has a daughter from his first marriage.
Education: Harris Academy, Dundee.
Career: Elected MP for Glasgow Hillhead in 1987. Expelled from the Labour Party in 2003 over his stance on Iraq, and the following year co-founded the Respect Party. Won Bethnal Green in 2005 election, but at the 2010 election lost out in Poplar and Limehouse. This week he won Bradford West.
He says: “By the grace of God we have won the most sensational victory in British political history.”
They say: “He looks so much like what he is: a thug and a demagogue.” Christopher Hitchens


by Tariq Ali

George Galloway's stunning electoral triumph in the Bradford by-election has shaken the petrified world of English politics. It was unexpected, and for that reason the Respect campaign was treated by much of the media (Helen Pidd of the Guardian being an honourable exception) as a loony fringe show. A BBC toady, an obviously partisan compere on a local TV election show, who tried to mock and insult Galloway, should be made to eat his excremental words. The Bradford seat, a Labour fiefdom since 1973, was considered safe and the Labour leader, Ed Miliband, had been planning a celebratory visit to the city till the news seeped through at 2 am. He is now once again focused on his own future. Labour has paid the price for its failure to act as an opposition, having imagined that all it had to do was wait and the prize would come its way. Scottish politics should have forced a rethink. Perhaps the latest development in English politics now will, though I doubt it. Galloway has effectively urinated on all three parties. The Lib Dems and Tories explain their decline by the fact that too many people voted!

Thousands of young people infected with apathy, contempt, despair and a disgust with mainstream politics were dynamised by the Respect campaign. Galloway is tireless on these occasions. Nobody else in the political field comes even close to competing with him – not simply because he is an effective orator, though this skill should not be underestimated. It comes almost as a shock these days to a generation used to the bland untruths that are mouthed every day by government and opposition politicians. It was the political content of the campaign that galvanised the youth: Respect campaigners and their candidate stressed the disasters of Iraq and Afghanistan. Galloway demanded that Blair be tried as a war criminal, and that British troops be withdrawn from Afghanistan without further delay. He lambasted the Government and the Labour party for the austerity measures targeting the less well off, the poor and the infirm, and the new privatisations of education, health and the Post Office. It was all this that gave him a majority of 10,000.

How did we get here? Following the collapse of communism in 1991, Edmund Burke's notion that "In all societies, consisting of different classes, certain classes must necessarily be uppermost," and that "The apostles of equality only change and pervert the natural order of things," became the commonsense wisdom of the age. Money corrupted politics, and big money corrupted it absolutely. Throughout the heartlands of capital, we witnessed the emergence of effective coalitions: as ever, the Republicans and Democrats in the United States; New Labour and Tories in the vassal state of Britain; socialists and conservatives in France; the German coalitions of one variety or another, with the greens differentiating themselves largely as ultra-Atlanticists; and the Scandinavian centre-right and centre-left with few differences, competing in cravenness before the empire. In virtually every case the two- or three-party system morphed into an effective national government. A new market extremism came into play. The entry of capital into the most hallowed domains of social provision was regarded as a necessary reform. Private financial initiatives that punished the public sector became the norm and countries (such as France and Germany) that were seen as not proceeding fast enough in the direction of the neoliberal paradise were regularly denounced in the Economist and the Financial Times.

To question this turn, to defend the public sector, to argue in favour of state ownership of utilities or to challenge the fire sale of public housing was to be regarded as a dinosaur.

British politics has been governed by the consensus established by Margaret Thatcher during the locust decades of the 80s and 90s, since New Labour accepted the basic tenets of Thatcherism (its model was the New Democrats' embrace of Reaganism). Those were the roots of the extreme centre, which encompasses both centre-left and centre-right and exercises power, promoting austerity measures that privilege the wealthy, and backing wars and occupations abroad. President Obama is far from isolated within the Euro-American political sphere. New movements are now springing up at home, challenging political orthodoxies without offering one of their own. They're little more than a scream for help.

Respect is different. It puts forward a leftist social-democratic programme that challenges the status quo and is loud in its condemnation of imperial misdeeds. In other words, it is not frightened by politics. Its triumph in Bradford should force some to rethink their passivity and others to realise that there are ways in which the Occupiers of yesteryear can help to break the political impasse.

The rise and rise of solo living

I want to be alone: the rise and rise of solo living

The number of people living alone has skyrocketed. What is driving the phenomenon? And solo dwellers Colm Tóibín, Alex Zane, Carmen Calli and others reflect on life as a singleton
Solo living detail View larger picture
The one and only: Why do more and more of us now live alone? Photograph: detail from image in the forthcoming book Out My Window, by Gail Albert Halaban
Human societies, at all times and places, have organised themselves around the will to live with others, not alone. But not any more. During the past half-century, our species has embarked on a remarkable social experiment. For the first time in human history, great numbers of people – at all ages, in all places, of every political persuasion – have begun settling down as singletons. Until the second half of the last century, most of us married young and parted only at death. If death came early, we remarried quickly; if late, we moved in with family, or they with us. Now we marry later. We divorce, and stay single for years or decades. We survive our spouses, and do everything we can to avoid moving in with others – including our children. We cycle in and out of different living arrangements: alone, together, together, alone.

Numbers never tell the whole story, but in this case the statistics are startling. According to the market research firm Euromonitor International, the number of people living alone globally is skyrocketing, rising from about 153 million in 1996 to 277 million in 2011 – a 55% increase in 15 years. In the UK, 34% of households have one person living in them and in the US it's 27% – roughly one in every seven adults.

Contemporary solo dwellers in the US are primarily women: about 18 million, compared with 14 million men. The majority, more than 16 million, are middle-aged adults between the ages of 35 and 64. The elderly account for about 11 million of the total. Young adults between 18 and 34 number more than 5 million, compared with 500,000 in 1950, making them the fastest-growing segment of the solo-dwelling population. Unlike their predecessors, people who live alone today cluster together in metropolitan areas.

Sweden has more solo dwellers than anywhere else in the world, with 47% of households having one resident; followed by Norway at 40%. In Scandinavian countries their welfare states protect most citizens from the more difficult aspects of living alone. In Japan, where social life has historically been organised around the family, about 30% of all households have a single dweller, and the rate is far higher in urban areas. The Netherlands and Germany share a greater proportion of one-person households than the UK. And the nations with the fastest growth in one-person households? China, India and Brazil.

But despite the worldwide prevalence, living alone isn't really discussed, or understood. We aspire to get our own places as young adults, but fret about whether it's all right to stay that way, even if we enjoy it. We worry about friends and family members who haven't found the right match, even if they insist that they're OK on their own. We struggle to support elderly parents and grandparents who find themselves living alone after losing a spouse, but we are puzzled if they tell us they prefer to remain alone.

In all of these situations, living alone is something that each person, or family, experiences as the most private of matters, when in fact it is an increasingly common condition.

When there is a public debate about the rise of living alone, commentators present it as a sign of fragmentation. In fact, the reality of this great social experiment is far more interesting – and far less isolating – than these conversations would have us believe. The rise of living alone has been a transformative social experience. It changes the way we understand ourselves and our most intimate relationships. It shapes the way we build our cities and develop our economies.

So what is driving it? The wealth generated by economic development and the social security provided by modern welfare states have enabled the spike. One reason that more people live alone than ever before is that they can afford to. Yet there are a great many things that we can afford to do but choose not to, which means the economic explanation is just one piece of the puzzle.

In addition to economic prosperity, the rise stems from the cultural change that Émile Durkheim, a founding figure in sociology in the late 19th century, called the cult of the individual. According to Durkheim, this cult grew out of the transition from traditional rural communities to modern industrial cities. Now the cult of the individual has intensified far beyond what Durkheim envisioned. Not long ago, someone who was dissatisfied with their spouse and wanted a divorce had to justify that decision. Today if someone is not fulfilled by their marriage, they have to justify staying in it,
because there is cultural pressure to be good to one's self.

Another driving force is the communications revolution, which has allowed people to experience the pleasures of social life even when they're living alone. And people are living longer than ever before – or, more specifically, because women often outlive their spouses by decades, rather than years – and so ageing alone has become an increasingly common experience.

Although each person who develops the capacity to live alone finds it an intensely personal experience, my research suggests that some elements are widely shared. Today, young solitaires actively reframe living alone as a mark of distinction and success. They use it as a way to invest time in their personal and professional growth. Such investments in the self are necessary, they say, because contemporary families are fragile, as are most jobs, and in the end each of us must be able to depend on ourselves. On the one hand, strengthening the self means undertaking solitary projects and learning to enjoy one's own company. But on the other it means making great efforts to be social: building up a strong network of friends and work contacts.

Living alone and being alone are hardly the same, yet the two are routinely conflated. In fact, there's little evidence that the rise of living alone is responsible for making us lonely. Research shows that it's the quality, not the quantity of social interactions that best predicts loneliness. What matters is not whether we live alone, but whether we feel alone. There's ample support for this conclusion outside the laboratory. As divorced or separated people often say, there's nothing lonelier than living with the wrong person.

There is also good evidence that people who never marry are no less content than those who do. According to research, they are significantly happier and less lonely than people who are widowed or divorced.

In theory, the rise of living alone could lead to any number of outcomes, from the decline of community to a more socially active citizenry, from rampant isolation to a more robust public life. I began my exploration of singleton societies with an eye for their most dangerous and disturbing features, including selfishness, loneliness and the horrors of getting sick or dying alone. I found some measure of all of these things. On balance, however, I came away convinced that the problems related to living alone should not define the condition, because the great majority of those who go solo have a more rich and varied experience.

Sometimes they feel lonely, anxious and uncertain about whether they would be happier in another arrangement. But so do those who are married or live with others. The rise of living alone has produced significant social benefits, too. Young and middle-aged solos have helped to revitalise cities, because they are more likely to spend money, socialise and participate in public life.

Despite fears that living alone may be environmentally unsustainable, solos tend to live in apartments rather than in big houses, and in relatively green cities rather than in car-dependent suburbs. There's good reason to believe that people who live alone in cities consume less energy than if they coupled up and decamped to pursue a single-family home.

Ultimately, it's too early to say how any particular society will respond to either the problems or the opportunities generated by this extraordinary social transformation. After all, our experiment with living alone is still in its earliest stages, and we are just beginning to understand how it affects our own lives, as well as those of our families, communities and cities.

• Going Solo: The Extraordinary Rise And Surprising Appeal Of Living Alone, by Eric Kinenberg, is published by Penguin Press at £21.

Colm Toibin, 56

Colm Toibin Colm Tóibín: 'No one told me that I would be most happy in my life when I modelled myself on a nun who runs her own cloister and is alone in it.' Photograph: Eamonn McCabe
No one told me when I was small that I could live like this. No one told me that by the age of 56 I would know all of the gay bars in New York city, most of the Irish ones and a good number of other bars, such as they are, in between. And that I would be content on a Friday and Saturday night at around 10 o'clock merely to feel that those bars were all still there, still full of people calling for more, while all I wanted was to be alone in bed with a book.

No one ever told me that I would be most happy in my life when I modelled myself on a nun who runs her own cloister and is alone in it, not bothered by the chatter of other nuns, or by the demands of reverend mother.

On Saturday I wake at six and relishing the day ahead. I teach on Mondays and Tuesdays; I have to reread a novel for each class and take notes on it. Nothing makes me happier than the thought of this. I often lie there until the seven o'clock news comes on, grinning at the thought of the day ahead.
All day I will read and take notes. The worst-case scenario is that I might need another book, and this involves lot of decision-making and self-consultation. It might end in a five-minute walk to the university library. But normally I go nowhere except to the fridge if I am hungry to see what's there, or to the sofa to lie down if my back is tired, or to the rocking chair if I feel a need to rock.
Normally there's not much in the fridge. In the kitchen there is an oven I have never opened. And there are pots and pans whose purpose may be decorative for all I know. But I know where all my notebooks are. They are all over the apartment. That is the best part. I can leave them where I like and no one touches them or wants to put them away anywhere. No one sighs about books and notebooks piled up. All of the notebooks have stories half-written in them, or stray sentences in search of a home, or musings that are none of anyone's business. If I like, I can go to one of them and add some paragraphs. I don't have to excuse myself, explain myself, or put on a distracted writer's look in order to get down to work. Or worry that someone has, in my absence, opened one of my notebooks and found that they don't like the tone of what is written there.

No one told me when I was small that there would come a time in my life where people would be judged by the quantity and quality of take-out menus for local restaurants. And that I could, without consulting anyone, at any time, make a phone call, order some food, and it would soon arrive at my door.

And then there is music when night falls. I can put on whatever I like, follow dark obsessions without worrying about depressing anyone else, or cheering them up for that matter. There is no one to question my sanity, my taste in music, or say: "That again? Not that again. Did we not hear that yesterday?"

And then there is the small question of alcohol. No one told me when I was a teenager that there would come a time when I would not bother drinking. No one told me that when Saturday night came, I would long to talk to no one and wish to go to bed early, and that my only moment of pure and capricious pleasure would be taking a book to bed that was not for class the next week. Otherwise, my life as a nun is a lesson to others, a pure example of good example. It has its rewards in the morning when I wake in silence with a clear head, ready for more.

Colm Tóibín is an author.

Carmen Callil, 73

Carmen Callil Carmen Callil: 'Living alone means freedom, never being bored, going to bed at eight if I feel like it.' Photograph: Felix Clay I have never given much thought to living alone, because it wasn't something I decided upon, it happened to me naturally. What with a childhood amid a vast family, then the convent, I was rarely alone. I shared a bedroom with my sister, life with my brothers and mother. One set of grandparents lived next door, the others across the road. Many aunts, uncles and cousins were only a yell away. The convent was black with nuns, its dormitories and classrooms packed with other girls. I left home when I was 21.
Almost immediately, I fell in love with a man who was, vaguely, married. An open marriage, it would be called today. For a decade or so, I wanted to be available for him, so I moved into a bedsit above a salt beef bar in St John's Wood. That was 1964. I was 26, and I have lived alone since.
I very much liked being in love and repeated it all too frequently. But I also hated it. I have a photograph of myself aged two, in a pram outside Melbourne zoo. My chubby legs are battling to get out: the look of struggle on my baby face is tremendous. That is how I felt each time I fell in love and spent extended periods with the beloved object. Often it was boredom: hours spent doing what the beloved object wanted, rather than pursuing the thousand things juggling in my own head. When I was in love and thought of marriage, I always came to feel like that child in the pram.
Tussling with this incapacity came to an abrupt end once I started to work. I had been raised to think of work as a prelude to husband, children, home. Once I started Virago, in 1972, and then, from 1982, working at Chatto, too, boredom vanished, and the days and years fled by.
What do I like about living alone? The greatest blessing is the number of friendships you can indulge in, the number of people you can love. I love to hear their stories, follow their lives. This can become frenetic but you can always cross through a night in the diary with BED in capital letters and there is no one to say nay to that. I wouldn't have minded having the children I could have had, but I have insufficient self-esteem to need any duplication of myself in the world. In truth, I have fretted more about my friends, my work and about understanding what is going on in the world than I ever have about failing to "wax fat and multiply", as the Catholic marriage service instructs.
Living alone means freedom, never being bored, going to bed at eight if I feel like it, feeding myself as I like, thinking, pottering and yelling at the radio without feeling a fool. I am never lonely as long as I am at home. I can decorate my house to suit my eccentricities – not everyone wants to live with 200 jugs and thousands of books. Every object in my home reminds me of one loved person or another. Knowing all my friends are dotted around, going about their business but available at the end of a phone is enough.
There are, and have been, great tediums. Men – Auberon Waugh and Lord Longford spring to mind – have occasionally insisted to my face that I was lesbian. I felt this to be an insult to women who are lesbians as well as to myself. I hate getting invitations addressed to "Carmen Callil & Friend" and am often tempted to bring my dog.
But there is so much to do, and to think about, and so many friends to love. They are my rock. If I am in trouble, they help me, and I don't – and never have – worried about dying alone, because everyone does.
Carmen Callil is a publisher and author, and founder of Virago Press.

Alex Zane, 33

Alex Zane Alex Zane: 'It's not about selfishness, just knowing what you like and doing what you want without having to take another person into account.' Photograph: Rex Having lived alone for the past six years, sharing my home with anything bigger than a cat is not something I enjoy.
This doesn't make me an oddball. I'm not Norman Bates, wandering around my flat dressed as my mother – I just like the fact that if I wanted to, I could.
Living alone provides me with the time I need to recharge, and to let loose the aspects of my personality best labelled "Not For Public Consumption". When Superman needs a break from saving the planet, some time to himself, where does he go? His Fortress of Solitude in the Arctic Circle. I have what I like to call my Flat of Solitude in north London. I'm not comparing my average day to the conquests of the last son of Krypton, but he has a public image to keep up, and that I can relate to.
"Me" is the very best part of living alone. It's not about selfishness, just knowing what you like and doing what you want without having to take another person into account. OK, that sounds selfish, but if you're going to be selfish, it's probably best to do it on your own, so no one knows.
My solitude is not total. I have a girlfriend, and we've been together for a length of time that makes people wonder why we don't share a home. The truth is, she stays with me often. She has a drawer. She knows where I keep the sugar. I know to put the toilet seat down. She knows which of the three remotes actually turns on the TV. I know she checks my internet history.
It's a well-oiled machine. And although it has yet to be spoken out loud, I'm aware eventually a change will come. A change that will involve me no longer eating packets of microwavable rice and soy sauce for every meal. The spectre of co-habitation is looming on the horizon.
There are, of course, some things that I won't miss about solo living. There are moments of melancholy, the silence can be quite over-powering, and if I've spent three days holed up in my flat, when I finally emerge the first conversation I have with another human can be an awkward affair, like learning to speak all over again: "I… OK… you, yourself, well?"
But there's one thing that dwarfs all the other downsides to living by myself, one thing I'll be happy to leave behind. It's to do with my Wii. I try to shake the feeling, but I can't. Ultimately, there is no more tragic image than a man standing in the middle of his living room, alone, in his boxer shorts, pretending to ski jump.
Alex Zane is a DJ and television presenter.

Esther Rantzen, 71

Esther Rantzen Esther Rantzen: 'Although I'm getting used to living on my own, I still think it's not natural.' Photograph: Karen Robinson I am living alone for the first time at the age of 71. Until now, most of the changes that arrived with age were mercifully gradual – the need to turn the television volume a bit higher, say, and the first few grey hairs – but this change has been huge, sudden and, for me, cataclysmic.
All my life I have been surrounded by people. As a child, I grew up in an extended family. At college, I lived and worked in a lively and energetic community. Moving into a flat with a flatmate, starting a family, having a bath or going to bed at night, I had company and conversation. Now, for the first time, I come home to an empty, silent flat, nobody to shout a cheerful hello to, no one to listen to the stories of my day. It's been nine months on my own and a difficult adjustment. But I'm getting there.
My life has followed a pattern familiar to most of us as we grow older. You lose a partner; in my case my beloved husband Desmond Wilcox died. Children leave home and create their own lives; my older daughter, Emily is taking a mature student's degree; Joshua, the doctor, works in the West Country; Rebecca, the TV reporter, lives with her husband and they are expecting their first baby.
I mustn't nag them to spend more time with me. So instead I have found ways of making aloneness feel less lonely. Downsizing from my family home to a flat was a help. Not only are there no more empty bedrooms, but given far less space, the pictures and ornaments that mean the most to me are always in my eyeline. The print my mother gave me is on my bedroom wall, instead of downstairs in my old study, so it greets me as soon as I wake. The vase my best friend gave me is on my table instead of being stashed away in a cupboard.
Getting to sleep by yourself is a problem, but I decided not to have a bedroom television. I tried it for a while and although Newsnight was the perfect cure for insomnia, I loathed waking up at dawn with the screen blaring at me. So I fall asleep to Classic radio, which accompanies my dreams with decent music.
I understand why an American survey of more than 300,000 old people found that loneliness is as bad for your health as smoking. You may have spent a lifetime looking after your family; now that they don't need you, it seems pointless to look after yourself. Cooking for one seems too much effort – I can't muster the energy or enthusiasm to make hot food for myself. Cheese and biscuits and fruit fill the gaps.
Although I am getting used to living on my own, I still think it's not natural. We humans are herd animals. If it were left to me, I'd make us all live in longhouses, like the ones in Nepal, with all the generations packed in together. We've evolved to depend upon each other, we need each other, especially the old. If I were a stone age woman aged 70, I'd never survive on my own. Without the warmth and protection of the tribe around me, the first cold winter would finish me off. But then, if I were a stone age woman, I'd be without the flu jabs and dental bridgework that enable me to boast that 70 is the new 50.
There are mornings when I potter around contentedly at my own pace, watching the sunrise as I sip my orange juice, happy not to have anyone else cluttering up the flat, using up the last tea bag or loo roll without replacing it. Pretty soon there'll be another cataclysm in my life, the arrival of a grandchild. Some claim that then I'll look back on these days alone with nostalgia. Rubbish. I can't wait.
Esther Rantzen is planning to create a helpline for older people, The Silver Line, to combat the effects of isolation and loneliness.

Sloane Crosley, 33

Sloane Crosley Sloane Crosley: 'I like being able to come home late and collapse into bed without worrying about waking anyone with my drunken shoe removal.' Photograph: Corbis Good friends, a couple, are being kicked out of their apartment this month. Decent apartments can be hard to come by in Manhattan, so it's all hands on deck, trying to help with the search.
"I might know of something," I emailed the male contingent of the pair. "What's your budget?"
"We're paying $4,400 now," he shot back.
What a pad one could get for that price!
I sat back from my computer and bristled. Ah, the power of two. There's nothing quite like it. Especially when it comes to paying utility bills, parenting, cooking elaborate meals, purchasing a grown-up bed, jumping rope and lifting heavy machinery. The world favours pairs. Who wants to waste the wood building an ark for singletons? Even the word "singleton", to the American ear at least, reads as particularly insulting. We never use it and thus it sticks out in conversation. Perhaps it's bothersome due to its resemblance to the word "simpleton", which we do use.
I live alone. I have also lived with significant (and sometimes not-so-significant) others for brief periods of time. Truth be told, I was fine either way. There are profound perks and drawbacks to both, too numerous on both sides to list in earnest.
I hope to one day co-sign a lease with another person but, well, it doesn't plague me that I have yet to do so. Put it this way: I've never had to violently tug at my own pillow at 2am to get myself to stop snoring.
In the past, I have not seen the state of my habitation and the state of my love life as connected. This is the nature of being relatively young and living in an urban environment where expensive rental fees can make or break relationships. Cohabitation seems a greater leap in cities because it's all the harder to extract oneself if things turn sour. It's what keeps otherwise functional adults living with their mothers.
The thing is, I am newly single this. For this week (and several more after it, I suspect), living alone feels freshly related to being alone. On top of which, I own a cat. On top of which, I like to eat spoonfuls of almond butter over my sink, put this gross Swedish hair balm in my hair before bed and sleep in old cocktail dresses. None of this was any different when I was romantically teamed with another human, yet suddenly these micro-activities bode poorly as an advertisement for my life.
When I was coupled socially, no one seemed to notice that I was unattached residentially. Two people go out to dinner together, meet each other at shows, take vacations, and suddenly living across town from each other isn't such a big deal. But the building blocks of our daily existence were always separate. He never paid my rent and I never paid his. He was never subject to awkward conversations with my superintendent regarding clogged drains. I was never subject to the etiquette question of tipping his doorman around the holidays. Though most of my friends, attached and not, are in the exact same living situation, society still quietly damns the single-household dweller to one of two diagnoses:
1) Hyper control: I live alone because I am inflexible, intolerant, likely a mysophobic glove-wearer and so stringent about my own schedule that I leave no room for a roommate, lover or a mysterious Italian boarder who happens to moonlight as a DJ.
2) Complete lack of control: with no one to bounce off, my weird behaviours have gone unchecked and my body unshowered. I am socially awkward out in the world while my home is infested with vermin and the crackling sound of broken dreams.
Who among us has not experienced elements of both states? And what does that mean for the future? I wouldn't mind if things were different, but they're not and, truly, I have always enjoyed my space. I love turning the key in the door at the end of the day, being able to decompress, knowing where I left the remote control to the television. I am partial to hot water. I like being able to come home late and collapse into bed without worrying about waking anyone with my drunken shoe removal.
This is not a matter of statistics or trends; it's my life. There is no advertisement for it. Funnily, that's one of the better selling points imaginable: once you realise you're not obligated to persuade others about your existence, it becomes a lot easier to exist.
Sloane Crosley is an author.

Peter Hobbs, 38

Peter Hobbs Peter Hobbs: 'The mind roams more freely in empty rooms, and the days can spill into evening, and then night, without interruption.' Photograph: David Rose Even when I've lived with others, I have always been protective of my solitude. I have always needed time to retreat to my own company, and to be alone with my thoughts. It takes me a long while to adjust to sharing living space, to become accustomed to different patterns of noise and movement and sleep.
My first prolonged experience of living alone came in my 20s, when I was suffering from a long illness. As soon as I was able to cope, I moved to live by myself. It was terribly isolating in many ways – I was unable to work or go out – but I wasn't comfortable with company. Illness is a foreign land, and you go always alone. Sometimes I'd go for days or weeks without speaking to anyone, except for brief interactions at supermarket checkouts (in recent years, of course, I would even have been able to find automated checkouts).
It's not an accident that it was during this time I began to write. Gradually, the emptiness of the afternoons began to fill with ideas, and the most pleasurable part of those unhappy days was when I sat down with my thoughts and formed stories, giving myself over to my imagination. Since then, I've always written better when I've lived alone. The mind roams more freely in empty rooms, and the days can spill into evening, and then night, without interruption. Even now I find it hard to write if I know there's someone else in the same building, no matter if they're sitting quietly behind a distant closed door, minding their own business.
Of course the solitude of those years was largely enforced, rather than having been chosen, and though it may have suited my nature, it was a devastatingly lonely time. Something of the pattern of those days has stayed with me, but I try now to monitor my tendencies towards solitude. I'm careful to protect a degree of isolation in my life, but I do not think I will always want to live alone.
I have friends who will live alone for the rest of their lives. They live alone because of choice, or because a partner has died, or because they're so accustomed to solitary living that they're no longer willing to make the compromises necessary for sharing with others. Most of them are content, or at least reconciled to it, but it's clear to me that the happiest of them are those who have arranged their lives so they can spend a great deal of time with as many people as possible.
We're social animals. I think of the way families and friends gather round at times of grief. The way many of us live today can cause the threaded connections of kith and kin to separate and thin, almost to disappear. Yet they reassert themselves in crises. For those who desire it, living alone is a tremendous luxury. But it is a luxury enabled by an existence within technologically advanced, relatively wealthy societies, which insulate us even from the need for others.
Eric Klinenberg is convincing about the hows and whys of the rise in solitary living. The set of circumstances he describes has provided many of us with an extraordinary freedom. I just wonder how fragile they are, and what it might take for us to rediscover how much we need other people.

Thursday, 29 March 2012

A short history of privatisation in the UK: 1979-2012

 From the first experiments with British Aerospace through British Telecom, water and electricity to the NHS and Royal Mail


Richard Seymour, Thursday 29 March 2012 11.03 BST larger

Royal Mail is being auctioned, and not necessarily to the highest bidder (and stamp prices are going up). The London fire brigade is outsourcing 999 calls to a firm called Capita, at the behest of the oleaginous chair of the capital's fire authority, Brian Coleman. Multinationals are circling hungrily around NHS hospitals. Schools are already beginning to turn a profit. In the technocratic nomenclature of the IMF, this would be called a "structural adjustment programme", but that doesn't really capture the sweeping scale of the transformation. We can see this through a potted history of privatisation in the UK.

• 1979-81: Experimentation


The Tories had long been committed to some policy of de-nationalisation. In response to the prolonged crisis of the 1970s, in which the Tories had struggled to maintain their parliamentary dominance, the Ridley report devised for the Thatcher shadow cabinet recommended a policy of breaking up the public sector and dismembering unions. Privatisation was at first subordinate to other policy themes, above all wage suppression to control inflation. But the first Thatcher administration did successfully introduce a degree of privatisation in some large public sector companies, above all British Aerospace and Cable & Wireless. At this stage, however, the focus was on privatising already profitable entities to raise revenues and thus reduce public-sector borrowing.

1982-86: Lift-off

Amid the early 80s recession, the Tories had begun to propose privatisation as a potential panacea. Conservative MP Geoffrey Howe extolled the "discipline" of the marketplace. The emerging doctrine was that privatisation would make the large utilities more efficient and productive, and thus make British capitalism competitive relative to its continental rivals. In this period, the government sold off Jaguar, British Telecom, the remainder of Cable & Wireless and British Aerospace, Britoil and British Gas. The focus had shifted to privatising core utilities.

This policy did not emerge out of nowhere; it was fully embedded in the Hayekian ideas that had guided Thatcher and her cohort in opposition. But it did develop in relation to specific policy objectives. It was not just a question of stimulating private sector investment, but also of culture war intended to re-engineer the electorate along the lines of the "popular capitalism" vaunted by Thatcher, and announced in the infamous "Tell Sid" campaign.

• 1987-91: Leaps and bounds

Following the Tories' third election victory, they were sufficiently confident to roll out their most aggressive privatisation programme yet. British Steel, British Petroleum, Rolls Royce, British Airways, water and electricity were among the major utilities for sale. These privatisations provoked serious opposition, perhaps sufficient to curb any tendency toward privatisation in the NHS. Nonetheless, market-driven measures continued to be imposed in the public sector, from the "internal market" in the health service to Major's ill-fated citizen's charter.

• 1992-96: Weakness and retreat

The fourth consecutive Tory administration was weak, and quickly divided over a range of policies, above all European monetary union. But the neoliberal premises of policy embedded by Thatcher remained intact, and the government continued to push privatisations in those areas where it felt able to. Inflicting a second defeat on the miners, the government proceeded with the final sell-off of British Coal, as well as electricity generating companies Powergen and National Power, and British Rail. Michael Heseltine's attempt to privatise the Post Office was abandoned, however, due to public opposition and resistance from a backbench fearful of electoral wipeout.

• 1997-2001: New Labour's compromise

New Labour had made electoral capital out of the Tories' unpopularity over privatisation, but only pledged to stop the sell-off of air traffic control. Even this minor promise was betrayed. For, if Thatcherism had not won the argument on public services, it had so comprehensively demolished the militant left and trade unions that there was nothing to prevent Labour from adapting to neoliberalism. The major privatisation policy introduced in this period was thus an awkward compromise between a managerial leadership and Labour's electoral base, known as the Private Finance Initiative (PFI) – a fudge originally pioneered by Norman Lamont. Introduced into the London Underground, the NHS and schools, these policies raised money in the short-term without the need for higher taxes. But there was also a streak of pro-market evangelising involved. Both Peter Mandelson and his successor at the department of trade and industry believed it was the role of government to foster entrepreneurial culture.

• 2002-8: Aggressive PFI


The second and third New Labour administrations pressed aggressively for further state down-sizing and privatisation. Blair had based his 2001 re-election campaign on the extremely unpopular PFI. The calculation was that even if the measure wasn't popular, his victory would prove that there was no realistic alternative. Though there were few major sell-offs, the government's policies on the Royal Mail and the NHS had, as their logical conclusion, the privatisation of these services. Even the fiscal crisis in the NHS, resulting from the high costs of PFI initiatives, did not dampen the ardour. It was not until the credit crunch and the ensuing crisis that the pendulum began to swing, if only temporarily, in the opposite direction when Brown was forced to belatedly nationalise a string of failing banks. But even then, it was clear that the intention was to restore these companies to private ownership as quickly as possible.

• 2009-: Thatcherism Mark II?

The Tories took office without a mandate, but with no lack of confidence. Their agenda, which had emerged since 2008, was to represent the crisis of global capitalism as a crisis of public sector spending. Having already privatised the Tote and announced the sell-off of Northern Rock, with other nationalised banks to follow, they have indicated that Royal Mail will be sold off, along with probation services, roads, large sectors of education and the NHS. Even sections of the police, traditionally an ally of the right, will be privatised. Outsourcing will be extended into every possible area.

But, as in the 1980s, the aim is not primarily to reduce public-sector borrowing. The Tories know that ongoing economic crisis is not just a fiscal or financial problem. The private sector is utterly stagnant. Globally, there are trillions of pounds being retained by corporations who see no viable avenue for profitable investment. US companies are holding on to $1.7 trillion, eurozone firms sit on 2 trillion euros, and British firms have £750bn doing nothing. Accumulation-by-dispossession is one way to get that money into circulation as capital. And while the Conservatives are not as ideologically confident as in the 1980s, the scale of their proposed privatisations suggests they expect to over-ride any opposition.

In historical context, privatisation seems to answer a number of dilemmas for the Tories. By spreading market incentives, it erodes the public sector basis for Labourist politics. By opening the public sector to profit, it gets a lot of capital into circulation. And by reducing the power of public sector workers, it suppresses wage pressures, thus in theory making investment more appealing. Above all, perhaps, in shifting the democratic to market-based principles of allocation, it favours those who are strongest in their control of the market, and who also happen to represent the social basis of Conservatism.

Tuesday, 27 March 2012

How we fell out of love with Keynes

The same intellectual retreat can be seen all over the western world and it shows that noble intentions and half-decent ideas don't get you very far
A man holds a placard bearing the Greek
The Greek crisis acted as a parable of what happens when countries borrow too much. Photograph: Anne-Christine Poujoulat/AFP/Getty Images
Remember all that talk about never letting a crisis go to waste? All those frontbenchers – from across the political spectrum – who swore that the banking crash would change economic policy for good? Vince Cable and Alistair Darling traded their favourite bits of Keynes and state intervention was firmly back in fashion. Well, you can rip up those fine, fevered promises and stick them in the bin. That at least is the big message out of last week's budget.

Oh, we all know what the papers reported: the granny tax, the kid gloves for the super-rich, and George Osborne's tin ear. But just as notable was what they didn't pick up: any meaningful dispute over the big picture. Labour's two Eds concentrated their attack on the chancellor for the fairness of his individual measures and kept schtum about the overall cuts strategy, of which they are only a small part.

The business lobby applauded the drop in corporation tax and the bungs for Grand Theft Auto and Richard Curtis (or, as they're officially known, relief for the British video games and film industries), but let the coalition off the hook on its promises to rebalance the economy.

How very different from Osborne's previous budgets. Over its first couple of years, Lib Dem wobbles and the European meltdown forced the coalition's austerity programme front and centre in political debate.

As for reform of Britain's listing economy, the strapline for last year's budget was that it would start "the march of the makers". Yet with the euro crisis temporarily on simmer, and the chancellor still clinging to his Plan A, the argument of ideas has gone all-but-silent.

Going by last week's squalls, what has replaced it is a giant scrap about who should lose most: OAPs or the young, the super-rich or welfare claimants.

As the cuts go deeper and further, and living standards remain depressed, this visceral battle of sectional interests will surely only escalate. Meanwhile, the political classes are busy getting back to business as usual. Last week's announcement of infrastructure privatisation suggests the new orthodoxy for Cameron and Osborne: when in doubt, Thatcherise it. As for the banks, where all this began, they are firmly back in charge. You know all about the bonuses, but even more telling is this underreported Treasury announcement from last week: the banks' miserliness with credit has forced Osborne to take £20bn of taxpayers' cash and use it for loans to small businesses. But wait for it: this money – your money – will be given to the same big banks to lend, with the minimum of public oversight. Take it from me: those last two sentences do not improve on rereading.

Blame Tory ideology, if you like, or Labour's failure to offer an alternative, but this is what those fervent avowals from MPs between 2008 and 2010 have given way to. As Old Whiskers might have said: all that is solid melts into hot air.

The same intellectual retreat can be seen throughout the Western world. John Quiggin, author of Zombie Economics, and political scientist Henry Farrell, have just published a fascinating paper charting how governments, central bankers and economists changed in the four years after Lehman's collapse from being "Keynesians in the fox hole" (as one Chicago academic put it) to merchants of austerity.

The tale Farrell and Quiggin tell is a simple, but compelling one. In autumn 2008, the policy-making establishment was in deep panic. The world they had constructed was collapsing around their ears, and ministers and economists had no idea how to respond. Amid this confusion, the long-marginalised followers of Keynes were able to win panicked international support for their economic-stimulus packages and reform of the financial sector. But no sooner had the global economy stabilised than governments and central bankers (led by Jean-Claude Trichet in the eurozone) returned to their old ways. They were urged on by the now-rescued and boisterous finance sector. And of course there was then the Greek crisis, offering a seemingly irresistible parable of what happened to countries that borrowed too much.

Never mind that the Greece story doesn't tell you much about any other country apart from Greece. Never mind that the principal argument of the Keynesians that you don't cut public spending amid a slump is as true now as in 2008. The conclusion one takes away from the past four years is that it wasn't the free-marketeers who were on the wrong side of history – it was all those good-hearted people punching the air and proclaiming the arrival of some progressive moment. The conclusion one takes away from Farrell and Quiggin's paper is that noble intentions and half-decent ideas don't take you very far. You need an adequate political vehicle, which Labour has plainly failed to provide, and some hard-headed analysis too.

Still, there's always the next crisis. And the failure to reform the economy pretty much guarantees that another one will come along.

Sunday, 25 March 2012

Indian Government's Poverty Line: Rs. 28 per day

Trying—and failing—to live on the govt’s definition of ‘not poor’

Dietetics Of Poverty
  • Three cups of tea, adding up to about 150 calories
  • Two slices of bread (100 calories)
  • Two pieces of kulcha with chhole (about 425 calories)
  • Bread and tea hardly contain any nutrients. Milk may provide some calcium.
  • Near-starvation diets, with hardly any vitamins or minerals, can lead to a breakdown of muscles and weight loss over a period of time.
It is 10 am now and the dust-haze tormenting Delhi for the last couple of days seems to have lifted to reveal a bright, sunny day. I am thinking food. I have never starved for food, but I’m trying. The extraordinary change proposed by the Planning Commission in terms of what constitutes the poverty line has prodded me into living on Rs 28.65 for a day. (Looking at it from a monthly point of view—Rs 859.60 for one individual—doesn’t really make it look any less scarier.)

How far will this take me in the urban sprawl of Delhi? Besides being hungry, I am angry. Just the day before, on March 20, the Planning Commission had startled every right-thinking person by coming up with some astounding figures on how poverty levels had actually reduced in the last five years, attributing this miracle to the economic policies of the UPA government, which has always scored high on rhetoric about concern for the aam aadmi.

I set out to fend for myself on the limits of destitution that defines the poor, according to our venerable Planning Commission. This poverty line is often a lifeline for the poor as it determines who is entitled to a house, toilet, and rice and wheat from the neighbourhood fair price shop.
I am certainly not poor. I am just trying to survive on a few rupees for one day. I live in Indirapuram, Ghaziabad, in what is called the National Capital Region. My home is 31 km from my office in Safdarjung Enclave. Someone who lives on that amount would probably live on the streets close to their place of work, perhaps a begging corner.

In the throes of a real estate boom, Indirapuram is host to a huge migrant population from the neighbouring states of Uttar Pradesh, Rajasthan and Bihar. These people, labourers mostly, have made their home on the streets, in the shadow of the glitzy malls and shiny condominiums that dot the place. I discover that labourers living in makeshift homes, cooking their food out in the open, are too rich to qualify as poor. For they earn close to Rs 100 a day, more than three times over the limit.
Angry and hungry, on the morning of March 21, I set off after having a breakfast of two slices of bread (Rs 2) with pickle paste slapped on. This is a luxury, the neighbourhood chaiwala tells me. He is always grumbling about the rising prices of milk (Rs 29 a litre) and sugar (Rs 40 per kg), and charges Rs 5 for one plastic cup of tea. The day has just begun. I decide to walk 2 km to the nearest bus-stand to save on rupees.


Those earning Rs 100 per day, such as masons, plumbers, construction workers, are too rich to be counted as poor.

I discover that in the suburbs, getting the right bus is nothing short of a miracle, as everyone drives cars and there’s hardly any public transport. But before I take off on generalities, back to my predicament. Some rickshawalas try to tempt me to take a Rs 5 ride for two kilometres. They say that on a good day, they may make Rs 150. I realise that they are far too rich compared to me. 

I have to take the bus, as it’s the cheapest option. I walk those kilometres to the stand. Bus No. 543 will take me close to my office. The ticket from Ghazipur to the All India Institute of Medical Sciences, where I disembark, costs Rs 15. I have already spent Rs 22.

My fellow traveller, Pilana, who describes himself as a nomad and who makes Rs 70 a day selling rings, is going to Gurgaon in search of new markets and superstitious people looking for a change in fortune. He has spent Rs 60 for the bus tickets of his family of four. I realise with a tinge of sadness that this guy’s rings haven’t changed his luck.

Hunger by now is gnawing, overriding thought, emotion and sentiment. What can I eat for Rs 7? The Outlook office serves free tea. The dhabas near the office provide meals for Rs 20. At 1.30 pm, I finally decide to have chhole-kulche—a plate costs Rs 15, up from Rs 12 some six months ago. My decision is made easy by the fact that it is the cheapest option. I borrow from a photographer colleague and eat my princely meal. Still quite hungry, tired and fed up, I sit down to write this story. I barely survived half a day to tell this tale. Even the poorest among the poor cannot survive on this figure. That would leave the destitute of India permanently hungry.
In all, my total calorific consumption was 677, and nutritionist Veena Shatrugna from the National Institute of Nutrition says that a 63 kg adult female like me needs a minimum of 1,285 calories provided she doesn’t work. That’s the bare minimum required to keep the body together and survive without collapsing. I could have stayed at home and cooked lunch, but the poor hardly have the luxury of not working—even to survive.

The only thought that comes to mind is that a human being can only starve on that new “poverty line” figure. If someone has children, they will be severely malnourished, with retarded mental and physical development. I also know that beggars earn more than this amount. The migrant labourers who leave their homes and families do not qualify. So who really are India’s poor? Are there some bonded labourers in some corner who are forced to work and given this amount that then entitles them to some benefits from the government? How bad does the human condition have to be before the government condescends to help you?

Swaminathan Aiyar defends Rs 28 as the right figure for poverty in the Times of India

The government is corrupt and incompetent. People are, quite rightly, sceptical of its integrity. But it has not fudged the poverty data to exaggerate the fall in poverty, as alleged by innumerable politicians and TV anchors.

I have long criticized government statistics as too often being misleading or plain wrong. But those critics of Montek Singh Ahluwalia, deputy chairman of the Planning Commission, who claim he has “rigged” the poverty line downward, are more wrong than any statistical department.

The commission is surely guilty of gross incompetence. It said in an affidavit to the Supreme Court last year that the poverty line for 2009-10 was Rs 32 per day in urban and Rs 26 in rural areas. Barely six months later, it now says those were merely back-of-the-envelope estimates, and that detailed state-wise data on inflation now show that the poverty line was actually Rs 28.65 in urban and Rs 22.40 per day in rural areas. The Commission may think it’s okay to release provisional data and later revise them, but it was truly daft to submit a figure to the Supreme Court which it knew could be wide off the mark. If it was unsure of its figures, why did it not tell the Supreme Court to wait for the hard data?

When the initial poverty line estimate of Rs 32/day in urban areas came out last year, TV anchors and politicians screamed that nobody could live on so little. Last week’s downward revision of the poverty line rural areas has produced an even greater howl of outrage. The outrage is entirely justified on the ground of Planning Commission incompetence. But it is quite unjustified on the ground of fudging. Abhijit Sen, the Planning Commission’s left-wing member-economist, would never tolerate fudging to exaggerate the fall in poverty, and he has certified the accuracy of the new poverty line.
Let’s do a reality check on what the standard dal-roti diet costs the poor. Opposition politicians, NGOs ,and TV anchors have challenged Montek to show one can live on Rs 28.65 per day, at a time when a litre of milk costs Rs 37 and six bananas may cost up to Rs 30. They have castigated Montek for sitting in an ivory tower, totally out of touch with ordinary folk and reality.

Sorry, but the facts show otherwise. Those out of touch with reality and prices are the critics, not Montek. Politicians and TV anchors are well-off, and consume tandoori chicken and fried fish plus milk and fruit. But poor folk live essentially on dal-roti.

Any housewife will tell you that wheat costs up to Rs 20 per kilo and chana dal up to Rs 45 per kilo. A standard daily calorie intake of 2,000 calories can be met by 400 gm of wheat (1,600 calories, cost Rs 8) and 100 gm of chana dal (400 calories, cost Rs 4.50). The total cost comes to just Rs 12.50.
Labourers doing hard physical work may need 3,000 calories/day, but even that implies just Rs 18.75 worth of dal-roti, well below official poverty lines.

The World Bank has a global poverty line of $1.25 terms, adjusted for low prices in poor countries through purchasing power parity (PPP). The leftist star of Jawaharlal Nehru University, Prof Himanshu, estimated last year that the PPP dollar was worth Rs 19. So, the World Bank poverty line of $1.25 translates into Rs 23.75 per day. This is slightly above the government’s rural poverty line of Rs 22.40 but far below the urban Rs 28.95, and roughly equal to the all-India average poverty line of Rs 24.25.

The World Bank poverty line has been accepted globally for decades, so it is somewhat ridiculous for Indian critics to suddenly declare—quite erroneously—that people cannot live on so little. The harsh reality is that hundreds of millions across the globe are living on half as much. That is a tragedy. But it does demonstrate that neither the World Bank nor Montek Ahluwalia is setting poverty lines below starvation level.

The Planning Commission says the proportion of poor Indians has fallen from 37.2 % in 2004-05 to 29.8% in 2009-10. Sceptics say the fall is too sharp to be true. I would argue the very opposite—that the fall in poverty is actually even sharper than indicated by the 2009-10 survey. That year was a terrible drought year, and this would have artificially inflated the poverty rate.

Another NSSO survey is being done in 2011-12, and i am willing to bet that this will show a big fall in poverty over 2009-10—because the 2011 monsoon was normal. Any takers?