Decent wages or a breadline economy: it's a no-brainer

The hostility that greeted Ed Miliband's ideas about increasing pay epitomises everything that's wrong with British business

• 
• • Ha-Joon Chang
  • The Guardian, Thursday 7 November 2013 20.31 GMT

Labour leader Ed Miliband delivers a speech on Labour's plans to tackle low pay, at Battersea Power Station in London. Photograph: Stefan Rousseau/PA

Ed Miliband's speech at Battersea power station in London on Tuesday this week attracted a lot of attention. Not least because of the Labour leader's own choice of battleground for the 2015 election, the debate has focused on his ideas about wages: his proposal to raise minimum wages in sectors such as finance, and to provide tax breaks for firms that pay living wages.

The reactions have been predictable. Many people are up in arms against the very idea that the government may "artificially" raise wages through market intervention. Many, including a former adviser to Tony Blair, solemnly warn that this will create unemployment and hurt British companies – or, to be more precise, companies that operate in Britain, as so few are owned by British citizens nowadays.

A typical reaction came from John Cridland, the director general of the CBI, who said in a BBC interview that employers "pay what they can afford to pay, depending on the income they get from the consumers". In this short sentence, Cridland – befitting his status as the spokesman for British business – has unwittingly managed to epitomise what is wrong with British business today.

To begin with, the argument shows the disingenuousness with which many large British companies describe themselves as helpless prisoners of market forces. It implies that the incomes companies get from their consumers are beyond their control, because they cannot charge their customers more than their competitors do.

But many companies do in fact have significant influence over what they charge (known technically as "market power"). It may be because they face little competition, like the railway companies. They may, like the payday loan companies, be dealing with poor customers in desperate situations. It may even be that they actively collude, like the big banks in the Libor scandal, or act in concert, like the energy companies in their recent price rises. Whatever the reason, it is simply not true that these companies have to take whatever customers give them.

So at least companies with market power are perfectly capable of paying their workers more by charging customers more, if they so wanted – except that they don't. Many are busy using the profits from overcharging customers to give big pay rises to their CEOs and give away money to their shareholders. Between 2001 and 2010, the top 86 UK companies included in the Europe 350 index distributed 88% of their profits to shareholders through dividends and share buybacks. Naturally, there is no money left for the workers.

More problematic than this misrepresentation of big business is Cridland's view – shared by many in business, government and media – that British companies cannot "afford" to pay higher wages. The subtext is that British companies have to compete with companies from low-wage countries like China, so British workers should feel lucky they are not paid even less, to match Chinese wages. In this view, whatever causes wages to rise needs to be abolished or at least seriously weakened: trade unions, health and safety regulations (the new whipping boy of the Tory right) or employers' national insurance contributions.

In the short term it may be true that raising wages hurts competitiveness, especially if you are a small company with no market power. However, even in this case the effects of higher wages may be offset by savings from reduced staff turnover and the improved efficiency of happier workers – as Miliband rightly pointed out.

In the long run, however, companies and countries should not be afraid of higher wages. If anything, higher wages are signs of success. They are proof that you are more productive than your competitors, so nations and enterprises should strive to pay higher wages in the long run.

Workers in German car factories are paid about 30 times more than their Chinese counterparts, and twice what their American "competitors" get. Despite that, German car companies more than match their Chinese and even US rivals.

One thing that enables German companies to stay ahead of the game is that Germany as a country has invested heavily in technical education and training, making its workers individually more productive than their foreign counterparts. A more important reason, however, is that German workers benefit from more productive technologies as a result of the investments that German companies have made in advanced machinery and research and development. It is exactly because British companies have not made similar investments that they "cannot afford" to pay their workers good wages.

The low-wage strategy so beloved of the British business elite – or what Miliband called the "race to the bottom" – has no future. If Britain is aiming to compete with China in terms of wages, it will have to lower them by 85%. It is doubtful whether this can be achieved even if it engineers a 30-year recession and installs the harshest military dictatorship. Worse, once it had reduced its wages to the Chinese level, it would have to contend with Vietnam, where wages are one-quarter those of China's. After dealing with Vietnam, Britain would have to face down the Ethiopias and Burundis of this world, with wages one-third that of Vietnam's, or less. Countries like Britain can never win that game.

Does Britain want to go back to Victorian times or, looking forward, become like some Middle East oil states, where a small wealthy minority is served by poorly paid workers with zero-hour contracts and minimal rights? Or does it want to reform its economic system so that its companies and government invest in raising productivity – and thus enable its workers to have decent wages, job security, and well-protected rights?

The choice seems like a no-brainer. Unfortunately, large sections of the British business and political establishment do not see it that way.

Why Germany is now 'Europe's biggest brothel'

Legalised prostitution, cut-price offers and a boom in sex tourism mean Germany's red light districts are thriving. But not everyone is happy with the country's liberal legislation

A Ukrainian prostitute in a brothel in Berlin: two-thirds of Germay's sex workers are thought to come from overseas. Photograph: Axel Schmidt/AFP/Getty Images

With skin-tight clothes and bum bags strapped around their waists, sex workers wait by the roadside close to Hackescher Markt, one of Berlin's busiest shopping and entertainment districts. This is a familiar sight just before dark in the capital of a country that has been dubbed "Europe's biggest brothel".

The sex trade in Germany has increased dramatically since prostitution was liberalised in 2002, with more than one million men paying for sex every day here, according to a documentary, Sex – Made in Germany, aired this week on Germany's public broadcaster, ARD.

Based on two years of research using hidden cameras, the film by Sonia Kennebeck and Tina Soliman exposes the "flat-rate" brothels where men pay €49 (£42) for as much sex as they want, as well as a rise in sex tourism, with men from Asia, the Middle East and North America coming to Germany for sex.

Germany's law governing the sex trade is considered one of the most liberal in the world. It was passed by the former coalition government, made up of the Social Democratic Party (SPD) and the Greens, in a bid to strengthen the rights of sex workers and give them access to health insurance and benefits.

Since then, red light districts have become even more prominent in many major German cities including Berlin, Frankfurt and Hamburg, where the Reeperbahn is, notoriously, the focus for the sex trade. During the 2006 World Cup in Germany, brothels appeared close to football stadiums across the country to cater for fans before and after games.

But more than 10 years after the law was passed, critics are becoming increasingly vocal. They argue that although it may benefit those sex workers who choose to work in the trade, it also makes it easier for women from eastern Europe and countries outside the EU to be forced into prostitution by traffickers. Two-thirds of Germany's estimated 400,000 sex workers come from overseas.

"Migrant women who don't know the language are highly dependent on people to bring them here and to show them around," says Roshan Heiler, head of counselling at the Aachen branch of Solwodi, a women's rights organisation that helps women forced into prostitution.

She is not surprised at the number of men now paying for sex in Germany. "I think it's just a result of the legalisation," she says. "The men are not prosecuted and prices are low."

Meanwhile, Monika Lazar, spokeswoman on women's issues for the Alliance 90/Greens party, has defended the law, saying that making prostitution illegal again is not the way to improve working conditions. "Prostitution is still socially stigmatised, and that has not changed in the few years in which the law has been in effect," she says. "But the law is helping to strengthen the position of prostitutes and ensuring women, and men, are much better protected."

If only Britain had joined the euro

If Gordon Brown had chosen to join the single currency 10 years ago, both the European Union and Britain would be stronger now

• 
• • Will Hutton
  • The Guardian, Thursday 13 June 2013 19.30 BST

Gordon Brown with Paul Boateng and Dawn Primarolo in June 2003, just after his ‘not yet' decision on joining the euro. Photograph: Sean Smith for the Guardian

Ten years ago this week Gordon Brown said no to joining the euro. It is an anniversary on which Bank of England governor Mervyn King, Ukip's Nigel Farage, Unite's Len McCluskey and the Guardian's Larry Elliott, along with most of the British economic establishment, can all agree. On this, Brown was right.

Elliott set out the establishment consensus in a classic piece this month on his alternative history of what would have happened had Britain joined. Essentially, he says, there would have been a bigger boom in the runup to 2007 and a more disastrous bust. Britain would now be struggling to maintain its membership as anti-EU sentiment mushroomed, prompting its eventual exit, dramatising the inherent unsoundness of yoking disparate economies into one inflexible currency.

But there is a more optimistic, alternative history. The first obvious point is that Britain could have joined the euro only if a referendum had been won. A victory would have depended on it being an obvious good deal, with the pound entering at a competitive rate and the euro's structure, rules and governance reformed to accommodate British concerns and interests. The European Central Bank would have needed to look more like the US Federal Reserve, with more scope for fiscal and monetary activism. The Germans would doubtless have insisted, in return, that the EU banking system be more conservatively managed.

The last decade would have been very different. What none of the mockers of the euro ever acknowledge is the economic doomsday machine that Brown created through not joining. By not locking in a competitive pound, Britain suffered a decade of chronic sterling overvaluation, made more acute by the City of London sucking in capital from abroad to finance the extraordinary credit and property boom of those years.

Imports surged and exports sagged; the economy outside banking, which made goods and services to be sold abroad, either stagnated or shrank. Much of the best of UK manufacturing was auctioned off to foreigners. Today we find that, despite a huge currency devaluation, there are just not enough companies to take advantage of it: too much of the rest of British capacity, thanks to foreign takeover, has become a part of global supply chains that are indifferent to exchange-rate variation. Our export response has been feeble; evidence of the economic orthodoxy's inability to devise policies and structures that favour production.

Inside the euro, at a highly competitive exchange rate, Britain's exports would instead have soared, and its traded goods sector would have expanded, not shrunk. Regional cities would have boomed around sustainable activity rather than property and credit. The euro's rules would have meant a less reckless fiscal policy, and banks would have been more constrained in lending for property. They would have had to lend proportionately more to fast-growing real enterprise, reinforced because the new rules would have required them to lend in a more balanced way.

Britain would have entered the 2008 crisis with a far less unbalanced economy, a stronger banking system and international accounts, and a government deficit much less acute. And the reformed eurozone could have responded much more flexibly and cleverly than it did.

In any case, both Britain and Europe are now wrestling with depressed economic activity caused by overstretched bank and company balance sheets – and the exchange-rate regime is hardly the cause of this distress. Germany and the stronger EU countries are plainly wrong in their overemphasis on austerity as a solution, but surely right to argue that the only long-term solution is for the whole of Europe to move to their productivist, stakeholder capitalism.

British mainstream commentators see the obvious fissure between the stronger European north and the weaker south as proof positive that the euro is fatally flawed. But suppose countries like Greece or Ireland rise to the German challenge? Already there are encouraging auguries in both. If so, notwithstanding excessive austerity, they could weather the crisis, and become stronger.

There is plainly a chance one or more countries could leave, but there is a greater chance the system in some form will hold – it is in too many countries' interests to avoid failure. Then expect a pan-European recovery to begin in the second half of the decade that will gather strength in the 2020s.

Inside the euro for the last decade, the economic and political debate would have necessarily moved on. Having won a historic referendum decisively affirming Britain's future in Europe, the Blair government would have had to think in European terms about how to produce, invest, innovate and export. Sure, there would have been problems. But Britain outside the euro in 2013, with endless spending cuts, the biggest fall in real wages for a century, 500,000 people relying on food banks, and a weak unbalanced economy, is hardly a land of milk and honey.

Emboldened by his referendum victory, Blair could have sacked Brown before the disastrous second phase of his chancellorship and lacklustre prime ministership. Blairism would have morphed into a new form of European social democracy, fashioning British-style stakeholder capitalism. UK politics would not have moved so decisively to the right, with conservatives preaching free-market Thatcherism while the left clings to a bastard Keynesianism – united only in their belief, against all the evidence including Britain's export performance, that floating exchange rates are a universal panacea.

A single currency demands disciplines and painful trade-offs: but floating exchange rates after a financial crisis are a transmission mechanism for bank-runs and beggar-my-neighbour devaluations. Magic bullets do not exist. Had Britain joined, both we and Europe would have been better placed, and Larry Elliott would now be writing about how better to get Britain to innovate and invest under a fourth-term Labour government. A better world all round.

We can ignore history at our own peril

Dileep Padgaonkar 

We shouldn’t turn to the past to compare or contrast it with the present in a mechanical fashion. That would be worse than odious: it would be misleading. But what we can and should do is to find out if the echoes of personalities, trends and processes that shaped events at a particular stage of history reverberate in our times. Such an exercise offers us a perspective that is all too often lost in the hurly-burly of daily life.

It took Adolf Hitler a good decade - from 1919 to 1929 -to gain control of the National Socialist German Workers’ Party (NSDAP). During this period he had made a mark in Bavaria with his fiery speeches redolent with ultra-nationalist rhetoric targeted at Marxists – an umbrella term that included communists and social democrats, trade-unionists and intellectuals, artistes and gays and, above all, Jews. But in those years, as he pointed out time and again, he was content to be the drummer boy of an array of right-wing forces. And he seldom failed to point out that his was a petty bourgeois background ‘without name, special position or connection’ and that he had ‘come up from the bottom.’ He also made much of the fact that he had abjured meat and alcohol and that his private life was scrupulously chaste – a claim that is still a matter of speculation.

For all his talk of socialism, Hitler, in order to acquire a cachet of legitimacy that he desperately needed to fulfil his dream of wielding political power, befriended landed aristocrats and industrial barons. They were wary of him at first because of his claim to champion the cause of workers, farmers, petty shop-keepers and civil servants. But by and by they came around to Hitler’s view that the crises that plunged Germany into chaos after its defeat in the First World War could not be contained without a powerful leader who would impose iron discipline to cleanse the Weimar republic of corrupt, self-serving, ineffective and hedonistic elites including, in the first place, ‘Marxist’ politicians, intellectuals and artists.

What impressed them – as it needed impressed ordinary folk – was not only Hitler’s single-minded pursuit to avenge the defeat of WWI but also his skills as a consummate actor. His oratory, as Ian Kershaw notes in his splendid two-volume biography of the Nazi leader, mesmerised his listeners. It included ‘ the delayed entry into the packed hall, the careful construction of speeches, the choice of colourful phrases, the gestures and the body language.’ About the delivery of the speeches, Kershaw adds: ‘A pause at the beginning to allow the tension to mount; a low-key, even hesitant, start; undulations and variations of diction, not melodious certainly, but vivid and highly expressive; almost staccato bursts of sentences, followed by well-timed ‘rallentando’ (gradual decrease of speed) to expose the emphasis of a key point; theatrical use of the hands as the speech rose in crescendo; sarcastic wit aimed at opponents: all were devices carefully nurtured to maximise effect.’

Hitler himself acknowledged what drove him to such frenzy. It was the recognition that ‘masses are blind and stupid. What is stable in them is one emotion: hatred.’ The more he preached intolerance and hatred as the solution to Germany’s problems, the more his audience ate out of his hands: hatred for rivals in his own party ranks and for political parties that stood in his way, hatred for minorities, hatred for liberals, hatred for Germany’s neighbours.  During these passages, as Kershaw writes, the crowds often interrupted him with cheers and shouts of ‘Bravo!’ followed at the end by a lengthy ovation, and cries of ‘Heil!’ 

The indoctrination of the masses, Hitler reckoned, was an imperative to realise his ambitions. He therefore laid great store by propaganda. He was the first politician in Germany to cut 50000 records of his speeches for nation-wide distribution and exploit the new technology of radio and the talkies to spread his message: something that was as effective then as the Internet is today. The message, however, has less to do with policies and programmes and more to do with rubbishing his ‘rootless cosmopolitan’ opponents on charges of acting at the behest of foreign, enemy forces who were hell-bent on striking at the roots of German nationalism.

That this approach worked is evident from the rapturous welcome he received on 24 February 1928 when, led by the stalwarts of his party, he declared that  ‘the Jew’ would have to be shown that ‘we’re the bosses here; if he behaves well, he can stay – if not, then out with him.’ Five years later, such rhetoric propelled him to absolute power with consequences that need no reiteration. But should students of history overlook the fact that statements along similar lines have been voiced against minorities in our own country before and after we got rid of colonial rule? And can one ignore the fact that the search of a ‘strong man’ to solve intractable problems led to rack and ruin in Europe in the 1930s and 1940s? 

Let me repeat: speaking about this past in Europe is not to harp on the situation in India today. Our political parties know that India is far too pluralistic to succumb to the lure of atavistic emotions, especially if one individual, or one family, claims to speak on behalf of one people, one nation and one culture. But we can ignore the developments in crises-ridden Weimar Germany at our own risk. We need sound policies, not sound bytes, reforms, not recrimination, debate, not demagoguery, a statesman, not a messiah.  

Understanding Germany and its Mittelstand ethos

Germany is right: there is no right to profit, but the right to work is essential

The strength of Germany lies in its medium-sized manufacturing firms, whose ethos includes being socially useful

• 
• • John Studzinski
  • The Guardian, Wednesday 6 February 2013

'The objective of every German business leader is to earn trust – from employees, customers, suppliers and society as a whole.' illustration by Belle Mellor

 

People talk too much about the economy and not enough about jobs. When economists, academics and bankers are allowed to lead the debate, the essential human element goes missing. This is neither healthy nor practical.

Unemployment should be our prime concern. Spain, with youth joblessness close to 50%, is in the gravest crisis, but there is hardly a government on the planet that is not wondering what it can do to guide school-leavers into work, exploit the skills of older workers, and avoid the apathy and alienation of the jobless, which undermines not just the economy but also the social fabric.

There may be no definitive answer but, over the past half-century, Germany has come closest to finding it. Its postwar economic miracle was impressive, but its more recent ability to ride out recessions and absorb the costs of reunification is, perhaps, even more remarkable. Germany was not immune to the economic crisis of 2008-9, but the jobless rate rose more slowly than elsewhere in Europe. Although in recent months it has edged up towards 6.9%, it remains well below the euro area's 11.7% average. Germany's resilience springs from the strength of its medium-sized, often family-owned manufacturing companies, collectively known as the Mittelstand, which account for 60% of the workforce and 52% of Germany's GDP. So what can we learn from the Germans?
The enduring success of the Mittelstand has been well documented but rarely emulated. The standard excuse is that it is rooted in German history and culture and therefore unexportable. At a time when so much business is conducted on a global scale, via globally accessible media, this excuse is wearing thin.

Let me highlight some of the features unique to the Mittelstand model that I believe everyone should learn from – and imitate if they can. The first is what we might call the Mittelstand ethos – that business is a constructive enterprise that aims to be socially useful. Making a profit is not an end in itself: job creation, client satisfaction and product excellence are just as fundamental. Taking on debt is treated with suspicion. The objective of every business leader is to earn trust – from employees, customers, suppliers and society as a whole. This ethos chimes with the values of prudence and responsibility with which every schoolteacher hopes to imbue their pupils. Consequently, about half of all German high-school students move on to train in a trade. Business and education are natural bedfellows.

The second essential feature of the Mittelstand model is the collaborative spirit that generally exists between employer and employees. This can be dated back to the welfare state that Chancellor Otto von Bismarck established in the late 19th century to head off what he saw as the menace of socialism. Its modern-day equivalent is the system of works councils, which ensures that employees' interests are safeguarded, whether or not they belong to a trade union. German workers expect their employers to keep training them, enhancing their skills. In the post-reunification recession, it seemed only natural to German workers to offer flexibility on wages and hours in return for greater job security. More recently the government protected jobs by subsidising companies that cut hours rather than staff.

A third feature of the Mittelstand model is the determination of German companies to build for the long term. To this end, they tend to keep core functions such as engineering and project management in-house, while outsourcing production whenever this proves more efficient. Mittelstand companies are overwhelmingly privately owned, and thus largely free of pressure to provide shareholder returns. This makes them readier to innovate, and invest a larger proportion of their revenues in R&D. There are Mittelstand companies that file more patents in a year than do some entire European countries. It is one of the underlying reasons for their exporting success, even when their goods seem expensive.
Finally, German companies work closely with their suppliers. This has proved especially valuable in developing Sino-German trade. Unlike most of their international competitors, they are happy to take suppliers' representatives on trade missions. The result is that they can guarantee swift and sure supplies of components and other products. Chinese customers are not the only ones willing to pay extra for this kind of service excellence.

Of course, there are other factors that lie behind the success of the Mittelstand and of the German economy as a whole. Both the economy and political system are highly decentralised, with the result that local banks, businesses, entrepreneurs and politicians know and understand each other, making everyday co-operation easier – while, at the national level, Germany's leaders rarely miss an opportunity to promote their country's industry abroad.

Nonetheless, there is much that non-Germans could learn from. To close the gap between education and business, companies should take a greater interest in their local schools and colleges. If you haven't got spare cash for sponsoring gyms or computer equipment, go and talk to sixth-formers or degree students about what you do. Find out what graduates aspire to. It will help you to work out how to attract the next generation.

If you want to get more out of your employees and suppliers, consult them; invite them into your confidence. Don't complain: "We're not like the Germans. It won't work here." Think of a different way. Try harder.

The same applies to governments. Let me mention one simple legislative option. In German law, the owner of a family business who passes it on to the next generation can avoid paying inheritance tax if, during their tenure, they have increased employment and thereby benefited the economy. What better signal could a government give than by favouring those who create employment?

There is no question in my mind about which is the single most important feature of the Mittelstand model – its underlying ethos, which is based not on dry economic theory, but on everyday, practical humanity. The notion that business should be socially useful may have sprung from Germany's postwar conscience, but it has resonance now, when so many of our citizens are still suffering from the aftermath of the credit crunch and the failures of leadership it exposed.

There is no right to make a profit, and profit has no intrinsic value. But there is a right to work, and it is fundamental to human dignity. Without an opportunity to contribute with our hands or brains, we have no stake in society and our governments lack true legitimacy. There can be no more urgent challenge for our leaders. The title of the next G8 summit should be a four-letter word that everyone understands – jobs.

Hockey - The untold story of how India lost world supremacy

by Minhaz Merchant in the Times of India

Pakistan’s hockey stars have been forced out of the lucrative new Hockey India League, patterned on the cash-rich IPL. I will leave debate on the rights and wrongs of this to a later post as a sequel to Make Pakistan pay. For the moment, let’s stick to hockey – how India lost its global supremacy and how we can regain it.

One afternoon, as I watched the late Tiger Pataudi, India’s former Test cricket captain, playing a hockey match at Bombay Gymkhana, I realized that few were aware how good a hockey player Tiger was. He had long retired from Test cricket but played a brilliant game for the club that afternoon.

Later, chatting casually, he remarked, pointing to the lush green field: “The tragedy of Indian hockey is that we no longer play on grass like this.” Tiger was appalled that the international game had switched to astroturf, putting Indian players at such a disadvantage.

Between 1928 and 1980, India won 8 Olympic gold medals in hockey. After 1980, we have not won a single hockey gold. At the 2012 London Olympics, India’s hockey team finished last in a field of 12.

The reasons for this are complex. But a principal cause is the betrayal of the country’s national sport by those elected to guard it and the ruthless duplicity of European and Australasian hockey authorities.

Till the early-1970s, hockey globally was played on grass. Indian players, bred on the fields of Punjab, Kerala and Goa, were unbeatable. Only Pakistan, with a similar lineage, offered competition.

All that changed in the mid-1970s. The International Hockey Federation (FIH) altered the rules to make synthetic astroturf the mandatory playing surface for international hockey tournaments.

The 1976 Olympics in Montreal was the first Games in which astroturf was used in hockey. For the first time since it began playing hockey in the 1928 Games in Amsterdam, India did not win even a bronze medal. The Indian Hockey Federation (IHF) should have objected. Whether through collusion or apathy, it did not. All Olympic Games henceforth were played on hard astroturf.

India has few astroturf grounds. They are expensive to lay (over Rs. 8 crore) and difficult to play on. While grass, on which hockey had been played internationally for nearly a century, allowed skilled Indian and Pakistani players to trap the ball, dribble and pass, astroturf suits the physicality of European and Australian hockey players based on raw power rather than technical skill.

Affluent Western countries like Holland, Germany and Australia have hundreds of astroturf grounds. The advantage is palpable. Not surprisingly, since 1980, Europe and Australia have dominated world hockey. India and Pakistan have slipped out of the world’s top five hockey-playing nations.

Indian sports administrators must share the blame. Not only were they complicit in allowing the change in playing surface from grass to synthetic astroturf, they were slow to adapt to it once the rules had been changed. Astroturf grounds were not laid. Local tournaments continued to be played on grass. When India played abroad, it started with a huge handicap.

As Sardara Singh, currently India’s best hockey international, said in a television interview, “Hockey players in India play on astroturf for the first time at the age of 19 or 20 and find it hard to adapt.”

What is the way forward? While astroturf cannot now be wished away, India can use its growing commercial influence to host a separate annual field hockey tournament. The game would be transformed. Just as tennis is played on different surfaces (grass at Wimbledon, clay at the French Open and hard courts at the US and Australian Opens), there is no reason why hockey can’t have two optional surfaces: astroturf and grass.

Like tennis players adapt to grass, clay and hard courts within a span of months (between the French Open in May, Wimbledon in July and the US Open in September), so can professional hockey players. Grass is hockey’s natural surface. It tests skill not just strength.

India’s hockey authorities, fractured by internecine rivalries, have little global clout. It is India’s corporate sector, with an interest in future Olympic gold medals, which must lead the campaign to restore natural turf as one of two alternative playing surfaces of choice in future international hockey tournaments. The new Hockey India League could set the example in its next edition. Sponsorships for field hockey tournaments would follow.

India has begun winning Olympic medals in individual sports since the Beijing Games but none in team sports like hockey. That must change. In India less than 0.1% of the population (around one million) has access to the facilities, nutrition and training athletes from Western countries and China do. In “sports-access” terms, our population is equivalent to New Zealand’s. It is no shame to win fewer medals than smaller, richer countries. But it is a shame not to give our national sport, hockey, a level playing field.

Borussia Dortmund boss attacks Premier League's oligarch owners

 

• Chief executive says English game is losing its soul
• Germany's cheap tickets and standing areas show the way

• David Conn in Dortmund
• The Guardian, Sunday 2 December 2012 21.00 GMT

Borussia Dortmund's chief executive, Hans-Joachim Watzke, says that links between fans and clubs in Germany are now stronger than they are in England. Photograph: Gary Calton for the Guardian

 

The chief executive of Borussia Dortmund, who play Manchester City in the Champions League on Tuesday, has launched a passionate defence of German football principles and attacked English clubs' ownership by rich men from overseas.

Hans-Joachim Watzke described German football as "romantic" for retaining its "50% plus one" rule, which requires Bundesliga clubs to be owned by their members. He questioned the ethos and sustainability of Premier League clubs' ownership, including City being owned and funded by Sheikh Mansour of Abu Dhabi.

Of City, a club he visited for last month's 1-1 draw in the first match between the two, Watzke said: "I am a little bit romantic, and that is not romantic. In England people seem not to be interested in this – at Liverpool they are fine for the club to belong to an American. But the German is romantic: when there is a club, he wants to have the feeling it is my club, not the club of Qatar or Abu Dhabi."

Watzke was a prominent supporter of the 50% plus one rule when it was challenged last year by Martin Kind, the president of Hannover. Dortmund are floated on the stock market, but the members elect the president and four members of the club's supervisory board – and also vote to decide major issues of club policy.

"I was the biggest opponent of changing the rule," Watzke said in an interview with the Guardian at Dortmund's Signal Iduna stadium in the build-up to the City match. "Germans want to have that sense of belonging. When you give [the supporters] the feeling that they are your customers, you have lost. In Germany, we want everybody to feel it is their club, and that is really important."

All 36 Bundesliga clubs are owned or controlled by their members, except the historic exceptions of Wolfsburg, owned by Volkswagen, Bayer Leverkeusen, owned by the pharmacy giant Bayer, and Hoffenheim, which is now funded by a single very wealthy entrepreneur, Dietmar Hopp.

Apart from those three and Kind's Hannover, the remaining 32 voted to keep the 50% plus one rule, which was introduced in 2001 when the Bundesliga clubs broke away to run the league competition independently from the German Football Association, the DFB.

"In former times in England I think the relationship between the club and supporters was very strong," Watzke argued. "Our people come to the stadium like they are going to their family. Here, the supporters say: it's ours, it's my club."

Watzke, himself a lifelong supporter of Dortmund, who drew 1-1 with runaway Bundesliga leaders Bayern Munich on Saturday, linked the system of member-ownership and control to the maintenance of affordable tickets and standing areas at top flight German football.

At Dortmund, the 25,000 fans who form the famous "Yellow Wall" standing area in the Signal Iduna stadium's south stand pay just €190 (£154) for a season ticket for the 17 home Bundesliga matches. Season tickets that also include entry to the first three Champions League group games cost slightly more at €220, working out at exactly €11 for each match.

"Here, it is our way to have cheap tickets, so young people can come," Watzke said. "We would make €5m more a season if we had seats, but there was no question to do it, because it is our culture. In England it is a lot more expensive. Football is more than a business."

Watzke argued that Dortmund, who top the group of City, Real Madrid and Ajax while the English champions cannot qualify for the knockout stages, have been able to compete with such clubs thanks to sensible management, coaching and player recruitment, despite not having the resources of a rich individual such as Sheikh Mansour backing the club.

"Everybody told me you cannot play in the Champions League against clubs like Manchester, they have more money. But we are trying to do it ourselves, in our way.

"There are a lot of ways to Rome," he said. "Chelsea have won the Champions League. But Chelsea's question is: what happens after [Roman] Abramovich?"

Circumcision is an affront to decent human behaviour

We rightly decry female genital mutilation. Why, then, are so many happy to condone the male equivalent?

• 
• • Catherine Bennett
  • The Observer, Sunday 22 July 2012

Rabbi Jonathan Romain. Photograph: Martin Argles for the Guardian

Checking the official website, I can find no denial to date that would cast doubt on the claim, by rabbi Dr Jonathan Romain, that the Queen chose to have HRH the Prince of Wales and his brothers, Andrew and Edward, circumcised. But perhaps that is to be expected: the rabbi said their circumcisions were common knowledge. In Charles's case, he told the BBC's Today audience, the "snip" was performed by a Jewish expert, or mohel, who later had the honour of reconfiguring the speaker's own private parts.

The hope, presumably, was that – particularly in this jubilee year – loyal listeners would accept that anything that is good enough for royal British knobs, particularly that belonging to the Duchy Originals magnate, cannot also amount, as a German regional court has decided, to "grievous bodily harm". While I wish the rabbi all the best, there seems no obvious reason why the royal family's traditional aversion to foreskins should prove any more influential than its passion for polo, corgis and homeopathic remedies. Particularly when, as the rabbi will know, secular circumcision has been declining in Britain, even among its principal enthusiasts in the upper classes, in the decades since doctors ceased to extol its allegedly "hygienic" effects, much cherished by Victorians. It was not only that they hoped to control lustfulness and avert a staggering variety of illnesses, the operation would further cleanse and tidy up a zone one supporter depicted, in 1890, as a "harbour for filth".

Admittedly, for a risible Victorian health obsession, male circumcision has done supremely well. While diagnoses of the vapours and melancholy have all but vanished, ditto the more recent fashions for tonsillitis and MPD, the official protection of non-therapeutic circumcision for cultural reasons has, in turn, licensed its religious supporters to advertise the ritual as a helpful and rational advance in disease control.

Rabbi Romain would not, I think, have risked some preposterous hints about "health reasons", as if divinely ordained amputation had an equally sound basis in current epidemiology, if the BMA did not still endorse the parental right to excise healthy bits of a male baby. Official guidance to British doctors has long been clear that "evidence concerning the health benefits from non-therapeutic circumcision is insufficient for this alone to be a justification". But parents, the BMA believes, should be entitled in this case "to make choices about how best to promote their children's interests".

In contrast, the controversial judgment by a regional German court, following a case in which a Muslim boy suffered a botched procedure, concluded that the "fundamental right of the child to bodily integrity outweighed the fundamental rights of the parents". The boy could decide for himself, later, if he wanted to be circumcised.

Circumcision enthusiasts from usually contradictory faiths united to denounce a ruling that Germany's Central Council of Muslims described as a "blatant and inadmissible interference" in parents' rights. A German rabbi called it "perhaps the most serious attack on Jewish life in Europe since the Holocaust".

The German parliament has, perhaps understandably, voted to overturn Cologne's judgment and to protect the non-therapeutic – ie, pointless circumcision of male newborns – thus upholding, simultaneously, the wise choices of the British royal family, the Muslim tradition of khitan and the enduring authority of God's covenant with Abraham, as set out in Genesis: "He that is born in thy house, and he that is bought with thy money, must needs be circumcised: and my covenant shall be in your flesh for an everlasting covenant. And the uncircumcised man child whose flesh of his foreskin is not circumcised, that soul shall be cut off from his people; he hath broken my covenant."

Unlike Romain's playful "snip" and the BMA's preferred "intervention", Genesis makes it clear with its no-nonsense "flesh" and "foreskin" that British circumcisers enjoy an unusual, anomalous freedom where children's bodies are concerned. Even smacking parents are restrained if their obedience to the Old Testament exhortation "he who withholds his rod hates his son" leaves more than transient redness. Properly, male circumcision should be categorised with a host of ritual crimes against children, including facial scarring and forced marriage, force-feeding and tooth extraction, which are usually summarised as harmful traditional practices and suppressed, whatever the religious or cultural arguments.

Parental rights have not, opponents of male circumcision often point out, been allowed to trump those of young girls in the case of its related barbarity – female genital mutilation – which is officially banned and denounced, even in its least-devastating manifestations, as an inexcusable assault on a child's physical integrity. Neither the prevalence of FGM nor the argument that prohibition will only force it underground has dissuaded the World Health Organisation from unequivocal condemnation. "FGM," it says, "is recognised internationally as a violation of the human rights of girls and women."

The extent of this cutting, which "has no health benefits", involves removal of "healthy and normal female genital tissue" and is associated with ideas about "unclean" sexual parts, is immaterial. "It is nearly always carried out on minors and is a violation of the rights of children. The practice also violates a person's rights to health, security and physical integrity, the right to be free from torture and cruel, inhuman or degrading treatment, and the right to life when the procedure results in death."

And the genital mutilation of a boy? The WHO has a separate, notably upbeat fact sheet about that. "Male circumcision is one of the oldest and most common surgical procedures worldwide," it notes, respectfully, "and is undertaken for many reasons: religious, cultural, social and medical." Here, it finds, the removal of healthy, normal genital tissue and violation of a child's rights and physical integrity for reasons often associated with sexual cleanliness can be a positive boon, now that circumcision may – or may not, given risk compensation – help contain HIV. For neonates, the WHO commends the Mogen clamp method and a local anaesthetic, adding that "a pacifier soaked in sucrose solution has been found to be effective in reducing fussiness in infants".

It can't only be because the Queen is a fan of trimming the sexual organs of non-consenting male minors that this practice, with its well-documented risks of infection and disfigurement, is still, in a culture of improving child protection, allowed to pass as unexceptional, even civilised behaviour. Some critics of circumcision speculate that the extraordinary contrast in the protection now extended, in theory at least, to the bodies of young girls and boys, relates to conventional expectations about female vulnerability and male endurance of pain.

Whether Genesis, the law or local culture explains the difference in approach, the original German judgment was right – children need protecting from it. Either the mutilation of children is wrong or, as many resentful supporters of FGM would argue, it is every parent's fundamental right to redesign their child's genitals.

Euro exit and depreciation would bring economic gains

In an exclusive extract from his updated book, Roger Bootle explains why allowing a country such as Greece to leave the euro is not as hard as critics think.

Austerity has provoked protests in Greece Photo: AP

By Roger Bootle

10:00PM BST 21 Jul 2012

'Many of the issues bedevilling the world economy have coalesced into a new and extremely serious problem – the crisis of the euro. This threatens to shake the world to its foundations.

How it pans out will be the critical determinant of whether the world manages to stage a reasonable economic recovery or plays out an extended rerun of the Great Depression.

The eurozone’s predicament is both financial and economic. The financial element centres on debt. Several countries have public debt burdens that are unsustainable. In some cases, private debt is also overwhelming. Meanwhile, this excessive debt in the public and/or private sectors, which can barely be serviced never mind repaid, threatens the stability of the banking system, which owns large amounts of it.

The economic problem concerns cost and prices. Monetary union was supposed to bring convergence between member countries with regard to costs, prices and, indeed, just about everything else. In fact, after the monetary union was formed, in the now troubled peripheral countries of the eurozone – Portugal, Italy, Ireland, Greece and Spain – costs and prices continued to rise rapidly relative to other members of the union. This caused a loss of competitiveness vis-à-vis the German-led core of between 20pc and 40pc, resulting in large current account deficits (i.e. an excess of imports over exports) and the build-up of substantial net international indebtedness.

To return to prosperity, these countries clearly need a depreciation of what economists call the real exchange rate; that is, the level of their prices and costs compared to other countries’, as translated through the exchange rate ruling between their currencies. Clearly, the financial and economic aspects of the crisis are closely intertwined.

For countries afflicted by the twin problems of excessive debt and uncompetitiveness, leaving the euro and letting their new currency fall potentially offers not just a feasible but even an attractive way out. If successful, it would help support an economic recovery through increased net exports, while not increasing the burden of debt as a share of GDP through domestic deflation.

Indeed, the higher inflation unleashed by devaluation would reduce real interest rates and thereby tend to boost spending. Moreover, outside the euro there would be some scope to operate a policy of quantitative easing. This might also help to boost domestic demand. If the troubled peripheral eurozone economies were able successfully to deploy this adjustment mechanism, then they would not only improve their own GDP outlook, but also help to allay concerns about the long-term sustainability of their debt situation and, thus, bolster the long-term stability of the “core” countries, too.

From a purely economic standpoint, the optimal reconfiguration of the eurozone would probably be the retention of a core northern eurozone centred on Germany, in which it seems clear that Austria, the Netherlands, and Luxembourg could remain. Finland and Belgium could also fit in tolerably well.

Perhaps the most intriguing issue is the potential position of France. It has been Germany’s close economic ally and partner, but France’s recent economic and fiscal performance has in some ways more closely resembled that of the peripheral economies. It has a current account deficit as opposed to Germany’s surplus and its primary budget deficit is close to that of Greece. It also has strong banking and financial links to Greece and the other peripheral economies.

Given these points, there would be a strong economic case for France to stay out of a northern euro. Indeed, there would be attractions for it in joining – and indeed leading – a southern euro, if one existed, or, more informally, a grouping of former euro members. A French-led bloc of former euro members would split the eurozone into two roughly equal parts, with the southern bloc slightly larger. Yet this would amount to a complete overturning of post-war French economic and political strategy. I suspect the French establishment would choose to stick with Germany without even thinking about it. If so, France could end up paying a heavy price.

The question is, could a break- up of the euro be achieved? There does not appear to be any insurmountable legal barrier to a country leaving the euro and remaining within the EU, even without the prior agreement of other member states.

A bigger issue is the legal status of any new currency and its impact on contracts specified in euros. While this threatens to be a legal nightmare, there is a way forward. In what follows, to keep matters simple, I assume that Greece is the first to leave, and that its new currency is called the drachma. But when I refer to Greece this should be taken as shorthand for any, or all, of the peripheral countries.

The principle of “Lex Monetae” states that everything that governs the currency of a country can legally be determined by the national government concerned. Major legal problems arise, however, because the euro is both the national currency of Greece, for now at least, and the common international currency of the EU as a whole. Hence, there may be uncertainty whether any reference to the euro in a contract should be interpreted as the national currency of Greece at the time payment is due, and hence the new drachma, or the common international currency of the EU as a whole, in which case it would remain the euro.

As it happens, most sovereign debt is issued under local laws. In this case, an exiting government could simply redenominate its debt into the new currency at the official conversion rate, applying Lex Monetae.

At the point of departure, the Greek government would need to declare a conversion rate from euros into drachmas. What should it be? I suggest the new currency should be introduced at parity with the euro. Where an item used to sell at €1.35, it would now simply sell at 1.35 drachmas. This would promote acceptance and understanding throughout the economy.

In the run-up to exit, controls would be required to prevent capital flight and a banking collapse in Greece – this is not some hypothetical problem. Greece and Ireland are already seeing huge contractions in their money supply as a result of deposit withdrawals. Accordingly – and in particular, from the announcement of the redenomination until banks were able to distinguish between euro and drachma withdrawals – banks and cash machines would need to be shut down.

Because euro exit and depreciation would bring considerable economic gains, which would both reduce deficits (and therefore the rate of growth of debt) and increase GDP, the scale of any implicit and explicit default following a euro exit is likely to be smaller than if the country had stayed in the euro.

After leaving the eurozone, it is inevitable, and necessary, that the new currency fall sharply to restore the competitiveness that has been lost over the past decade or more. Greece and Portugal require a depreciation of their real exchange rate of about 40pc, Italy and Spain about 30pc and Ireland about 15pc.

It is likely that the exchange rate depreciation would raise the price level by about 15pc in Portugal, 13pc in Greece, and 10pc in Italy, Spain, and Ireland.

Assuming that this adjustment takes place over a two-year period, the effect would be to raise the annual inflation rate by about 7pc per year in Greece, about 6pc in Portugal, and 5pc in Italy, Spain, and Ireland. The historical experience from Argentina in 2002 and Iceland in 2008 is that inflation is then likely to fall back sharply. Of course it needs to, if any real depreciation is to be secured from the large nominal depreciations.

A key determinant of the degree of impact of a eurozone exit on those countries remaining within the currency union would be the extent of “contagion effects”. These might result from the direct adverse economic and financial effects of an exit, but also from the increased perception that other countries might leave the euro. Accordingly, decisive measures to limit such effects would be vital.

The first and most immediate would probably be substantial measures to support the banks of the remaining members, to prevent bank runs in the potentially exiting countries. This would probably involve large injections of liquidity by the ECB. There would also need to be a substantial increase in the firepower of the bail-out funds, probably supplemented by additional support from international organisations such as the IMF.

It seems likely that the remainder of the eurozone would need to take much more decisive steps toward some form of economic and political union. This might involve the implementation of commonly issued eurozone-wide bonds – “eurobonds” – which would effectively allow the troubled peripheral economies to borrow at something close to the eurozone’s average interest rate. However, more direct forms of fiscal transfers from the core economies to the periphery might also be needed.

Suppose that Greece made a success of its euro exit, with growth surging and unemployment falling. It would then surely be impossible for politicians in the peripheral countries to argue that there was no alternative to never-ending austerity within the euro. Parties advocating euro exit would gain in popularity and the market would react by pushing up peripheral countries’ bond yields. At that point, contagion from Greece’s exit could well prompt the departure of other countries.

If any country leaves the euro there are bound to be winners and losers. For Greece, devaluation and default would produce two sorts of loser: those whose capital is reduced by redenomination or default, and those whose real incomes are reduced by the higher inflation unleashed by the devaluation. The most important beneficiaries of all would be currently unemployed Greek workers. Their gains consist of the prospect of future income, in contrast to a presumed near-zero income if the present path continues.

The break-up of the euro would be an event of such political and economic import that everyone, including financial markets, should be awed by it. And the immediate results could be truly awful, involving banking collapses and heaven knows what. However, I suspect that both businesses and the authorities are much better prepared for the euro’s demise than they were for the Lehmans crisis. Indeed, future historians may come to regard the latter as a lucky break, because it alerted people to the dangers of financial instability and encouraged them to put in place arrangements to deal with the really big crisis that was yet to come.

Moreover, the resolution of the euro crisis promises relief from some of our acute economic pressures. I have highlighted the contrast between deficit and surplus countries. The attitude of the latter seems to have been: “Thank goodness the leak isn’t in our part of the boat.” Yet getting out of the current depression will require the surplus countries to spend more.

The euro has enabled Germany to continue its oversaving, in a way that could never have happened with the deutschmark, which would have risen strongly on the exchanges and thereby counteracted the effects of Germany’s slow growth of costs. The demise of the euro would release us from this straitjacket. The peripheral countries – whose economies are collectively slightly larger than Germany’s – would be able to grow again, and in Germany and the other northern core countries the pressure would be on to boost domestic demand to offset loss of demand caused by lower net exports. In short, the demise of the euro is part of the solution.

The crisis happened as a result of the phenomenal arrogance and incompetence of the European political elites. It is more a failure of government than of markets. However, the mechanism that brought the system to its nemesis was fully in line with the market defects that I analyse in my book. What undermined Spain and Ireland was a purely speculative boom centred on real estate that came straight out of the textbook of financial bubbles; bubbles that modern markets, central banks, regulators, and economists confidently believed no longer existed.

It is the expression of the belief that sheer political will can overcome market forces – and the living proof that it cannot.

So the euro crisis is really another expression of the forces that brought us so close to financial and economic disaster in 2008-09. It is the second shoe to drop. Having played a major role in getting us into this mess, once exchange rates are unshackled and are allowed to do their work, markets can also play a major role in getting us out of it.”