Is this Prosperity for Real?

By Pritish Nandy

Despite the economic downturn there remain clear signs of growing prosperity all around us. Almost every week someone or the other walks into my office wanting to make a movie and ready to pay for it. It was like this ever since I entered this profession. But earlier, people came with a few lakhs, a script, a camera and an autograph book. Now they come with ten or twenty crores.

Most of them come from remote towns and states, where they claim to have made a neat fortune in some business they are not ready to disclose details about. Others come, having sold off some ancestral land or property. They turn up in Mumbai with big dreams of making movies and doubling or tripling their wealth. When I warn them it’s not that easy, many go away with disbelief. Most times I turn them back because they come with cash. They are surprised when I tell them that the real guys who make movies in this town do not deal in cash any more. Only hustlers do.

But what never ceases to surprise me is the amount of wealth that actually exists in India. It is possibly because once you are a few miles out of the main cities, no one really bothers about things like taxes. Life is simpler. You neither hire CAs nor do you bump into tax officers. You simply do your business and get ahead with life. I seriously doubt how many of the rich guys out there actually bank their wealth. They put their profits back into land and property or gold and, now, increasingly into fancy SUVs and a lifestyle that they see in television serials and movies. That’s what defines their ambitions.

But yes, prosperity exists in certain pockets and it’s clearly growing. Much of this prosperity comes from two things: Inflation and the selling of family assets that the young generation is no longer keen to hold. So the wealth you see is not actually created, as all real wealth ought to be. It is wealth that is generated from the falling value of the rupee and the rising cost of land and property. It is, in that sense, illusory. For the amount of money you get from selling a family asset once acquired in thousands and now being sold in crores is not really all that much as it may appear. The crores you now get have the same purchasing power as the few thousands that were once paid to acquire that very asset. It is the value of the rupee that has fallen. So these crores will not fetch you much more than what those thousands could have fetched your grandfather. And those who sell those assets ultimately find them irreplaceable and the huge pile of cash they get is blown up quicker than they imagine, on a trashy lifestyle that they think will upgrade the quality of their life. It never does. But you realise that only after the money disappears.

That is the danger with unearned wealth. It disappears as swiftly as it comes. And because you never made the effort to acquire the skills required to earn that money, you are unlikely to know how and where to spend it in a way that can actually enhance the magic of your life. That leaves you worse off than where you began. At least you had the assets then. Now you are left with nothing.

I see this happening all around me. Suddenly people become rich and then equally suddenly, they become poor again. In between there’s a lot of selling and buying and selling that takes place but seldom the creation of any real wealth. It’s always land, property, gold, and family heirlooms that have appreciated in value over the years. When you sell them, you sell your past without acquiring a real future. People who talked in thousands begin to talk in lakhs and people who talked in lakhs now talk in crores. But they are talking about the same things. It is just that some extra zeroes have been added to the numbers and no one quite knows why.

But one thing is certain: When old assets become central to the idea of creating wealth, it means we have lost our skills in knowing how to build new ones. All we are relying on is inflation, and inflation just grows the numbers but never gives you anything more in real terms. Certainly not a better life.

'The Press Decides Which Revolutions To Report'- Arundhati Roy

The celebrated dissenter on the 10th anniversary of 9/11, mass uprisings in the Arab world, the Anna Hazare movement, her old comrades-in arm like Medha Patkar and Prashant Bhushan, Maoism, writing and much else.

Rajesh Joshi

 

Rajesh Joshi: The 10th anniversary of September the 11th attacks on the US is upon us. What do you think has changed in the world, or hasn’t changed, in these years?
Arundhati Roy: Plenty has changed. The numbers of wars that are being fought has been expanded and the rhetoric that allows those wars —that are essentially a battle for resources —is now disguised in the rhetoric of the war on terror, and has become more acceptable in some ways and yet more transparent in other ways.

Perhaps the most dangerous thing that has happened is that increasingly we are seeing that these wars can’t be won. They can be initiated. But they can’t be won. Like the war in Vietnam was not won. The war in Iraq has not been won. The war in Afghanistan has not been won. The war on Libya will not be won. There is this initial pattern where you claim victory and then these occupation forces get mired in a kind of slow war of attrition. That’s also partially responsible for the global economy slowly coming apart.

The other difficulty is that the more the weapons of conventional warfare become nuclear —and all this kind of air bombing and so on —the more it becomes clear to people who are fighting occupations that you can’t win a conventional war. So, ironically the accumulation of conventional weaponry is leading to different kinds of terrorism and suicide bombings and a sort of desperate resort to extremely violent resistances. Violent, ideologically as well, because you have to really motivate people to want to go and blow themselves up. So, [it's a ] very, very dangerous time.

You have been very critical of the war on terror, especially the US policy. Would you have preferred a Saddam Hussain or a Taliban regime in Afghanistan?

Well, it does look as if the Taliban regime is going to return in Afghanistan in some form or shape. And obviously, people like Saddam Hussain were first created and put in place and supported and funded and armed by the US. This process is something that a country that seeks hegemonic power can put in the despots it wants, topple them when it wants and then get mired in these kinds of battles where eventually it’s having to desperately scramble to get some foothold of a some face-saving measure in, say, Afghanistan. So, eventually, you are not ever going to get rid of despots or dictators or Taliban. The Taliban was also created by them. That kind of ideology was almost handed out as a kind of weaponry by them at the time they were fighting the Soviets which nobody really mentions. They just talk about Pakistan having had those camps but those camps were actually funded by the CIA and by Saudi Arabia, which is now one of the greatest despotic regimes wholly embraced by the US.

How do you look at the mass uprisings across the Arab world? Do you think it’s a positive development?

Obviously there are very positive things about it but the jury is still out on them, in terms of what happened in Egypt for instance. Hosni Mubarak was in power for 40 years. We knew that three months before the uprising in Tahrir Square, the papers were reporting that he was on his death bed. Then this uprising happened. And then you had such enthusiastic reporting by the western press about the uprising — the press decides which revolutions to report and which not to report and therein lies politics. You had similar huge uprisings, let’s say in Kashmir which was more or less blacked out and yet you had this being reported very enthusiastically but at the end of it you had headlines which said: 'Egypt Free, Army Takes Over'.

And today there are ten thousand people being tried in military tribunals. There is probably the emergence of the Muslim Brotherhood happening now; it’s a negotiated emergence. I would say that it would be a successful uprising and a real democracy if they manage to completely stop the Egyptian role in the siege of Gaza. I don’t know if that’s going to happen.

There are lots of manipulations going on. In India, as well as in these places, there is also the use of people’s power. People are angry. People are genuinely furious. People who have lived under these despotic regimes are desperate. But just moving the big blocks a little bit allows an eruption to take place. Is that eruption really going to end up in a genuine democracy or is that anger going to be channelised into something else?... We are still waiting.

Aren’t you happy that dictatorships are falling like a pack of cards?

I would be happy if they were not going to be replaced by military regimes. I would be happy if I was sure that whatever takes its place isn’t going to be another manipulation... I would be happy. But at this moment in Egypt, people are being picked and tried in military tribunals just the way they were under Hosni Mubarak. Of course, I am happy but why should you be celebrating something unless what you are celebrating is the right thing?

You have been supporting people’s movements everywhere but you are very critical of the Anna Hazare movement. Common people participated in the movement, after all.

I don’t support all people’s movements. I certainly didn’t support the Ram Janambhumi movement which was one of the largest people's movement in this country – the movement to topple the Babri masjid and build a temple there. I think all kinds of fascism could describe itself as people’s movements and I don’t support fascism. I am not an indiscriminate supporter of people’s movements. In this particular case, I think it’s very important to read what was going on and what was going on was not simple. We are at a stage where huge corruption scandals mostly involving mining corporations and telecom companies and so on have been exposed for their links to the government, links to the media, for looting billions of dollars and there is no accountability, neither from the government nor from the corporations. And there is a huge amount of popular anger against them.

The reason I am very suspicious about what is happening here is that I feel that this anger from the top to the bottom is channelised into a people’s movement and that anger which was a very amorphous anger was being used to push through this very specific piece of legislation which I don’t think anybody— including a lot of the people who were pushing it— has read. And if you read that bill, it is not only legally ludicrous but the people who call themselves Team Anna themselves said that people were angry and we provided them the medicine. The Team Anna are themselves saying that the people didn’t read the bill but they said ‘give us some medicine for the sickness’, but they didn’t read what it said on the label of the medicine bottle. Very, very few people have read it. And that medicine is far more dangerous than the illness itself. That’s why I am worried. Then it became this moral movement which started to use the old symbols of religious fascism that all of us have seen, that started to exclude the minorities.

Some of your comrades-in arm like Medha Patkar and Prashant Bhushan are part of that movement. How can you say that the movement has streaks of fascism? Do you doubt Medha Patkar and Prashant Bhushan’s integrity or is it their understanding?

It’s not a question of doubting their integrity. I doubt their (Prashant Bhushan and Medha Patkar’s) understanding for sure on the Lokpal bill — I am not doubting their integrity. Neither of them has brought in the politics they spent their life time doing; they left it outside at the doorstep. I just want somebody to have a proper conversation about that bill that they were insisting be passed without discussion through Parliament by the 30th of August. If you look at the bill, it’s so terrifying. Firstly, it’s so un-worked out. It asks for ten people of integrity —and proper class —to be running a bureaucracy that would contain about 30,000 officers. There is no comment on where those officers are coming from, who they are; there is no idea of what you mean by corruption in a society like ours. Sure there is corruption — from poor people having to bribe government officers to get their ration bills to corporates paying and getting rivers and mountains to mine for free.
But corruption is a value system, which has to be pinned to a legal system. And I keep saying that there are huge numbers, millions of Indians, who live untitled and unidentified outside this legal system. Supposing you live in Delhi. You have huge number of slums, illegal hawkers, squatters' settlements. Suddenly some middle class community can say, ‘I live in Jorbagh there is a slum there, it’s illegal. The politicians are keeping them there because they get votes; the municipalities are allowing them because they get bribes. Get them out of here. These are illegal people’. What’s the meaning of corruption has not been debated. Forget the fact that they are asking for a bill where these ten people are at the top and there is an additional bureaucracy of 30,000 who will be given a huge amount of money by the government and they have the right to prosecute, to sentence, to tap phones, to dismiss, to suspend and to enquire into the activities of everybody from the PM to the judiciary downwards. They are just setting up a parallel hierarchy! What’s happening is that the middle class which has benefited from these policies of privatisation and globalisation has become impatient with democracy.

If globalisation and privatisation is not the answer, according to you, then what is?

I think that the only way that we can begin to move to a place where people have some rights is by learning how to become an opposition which demands accountability. What the Jan Lokpal bill does is to set up another Super Cop. I am saying that the beginning of moving towards a society that we would like to live in is to force accountability. And that is only when people begin to stand by those who are fighting for their rights and demand that something happens. Not when they look away and say: that’s not my problem that people are being killed in Dantewada. I am a middle-class person and I believe that I should benefit. If we live in a democracy and you believe that everybody does have certain minimum rights, then you’ve got to be able to open your eyes to it. That’s what I try and do in whatever way I could by standing by those resistance movements that are questioning everything from big dams to mining to all these things—who are refusing to give up their lands, who are standing up to the biggest powers, whether it’s the army or the corporations and all of that.

You are a fierce critic of the Manmohan Singh government’s economic policies but India’s development has been praised by President Barack Obama of the US and British Prime Minister David Cameron. Many would say you are using your celebrity status as a Booker Prize winner author to criticise the path that India has taken after the collapse of the Soviet Union?

Booker Prize and all that is meaningless. There are plenty of famous people who can use their fame to sell shoes or coca cola. Nobody can use their fame meaninglessly. For me, I am a writer; I am somebody who sees the world in a particular way. And I keep saying that these words like ‘India’s development’ have become meaningless because who is India? When you say 'India' are you talking about the few hundred billionaires or are you talking about the 830 million people who live on less than 20 rupees a day? Surely, some people in India have developed very fast beyond their wildest dreams but they have done that by standing on the shoulders and the bodies of large number of other Indians. I keep saying when you have ten people in a room and one person become a billionaire and two people are doing really well and the rest of seven are starving and someone says, 'Hey, there are seven people are starving in this room', and you say, 'Why are you being negative? People have developed!' It doesn’t matter who I am, what I won, what I didn’t win. If I am saying something that is relevant it will have a place in this world. If I am being stupid, if I am being negative, if I am being meaningless, I won’t have a place in this world. So, there is no point in personalising things because it doesn’t really help.

Is Maoism the answer?
Of course it’s not the answer. However, as I keep saying what I believe is the answer is the diversity of resistance and the Maoists are at one end — the very militant end of the diversity. And they fight deep in the forests which are being filled with paramilitary and police and surely in that tribal village where no television camera ever reaches, where no Gandhian hunger strike is ever going to make the news, there is only the possibility of an armed resistance. Outside, that armed resistance will be crushed in a minute. The Maoists have not had any success outside. You need to look at other kind of resistance outside. The resistance movements often confuse the necessity for tactical differences with ideological differences. But the fact is that one of the things I think is wonderful in India is that there is a huge bandwidth of resistance movements who are being very effective and who are insisting on their rights and who are winning some battles. When you come back to this business of corruption, I would like to say that you have hundreds of secret memorandums of understanding (MoUs) between the governments and private corporations, which will result in a kind of social engineering across central India — forests, mountains, rivers — all of it given away to corporations. Millions of people are fighting for their rights. Nobody stood there and said can you declare those MoUs.

What does the state do? It has to defend itself.

Implicit in that statement is that the state is the enemy of the people and it has to defend itself. And if you see what’s happening in the world, increasingly that’s true that states and their armies are turning upon what traditionally were their own peoples. Wars are not always being fought between countries; they are also being fought by the state against their own people — a kind of vertical colonisation as opposed to a horizontal one.

Do you love to mess with power?

I do believe that the only way to keep power accountable is to always question it, to always mess with it in some way or the other.

Some people would say it’s very convenient of you to criticise things from a safe corner. What do you think your role is going to be in the future? Are you going to be a writer or have you every thought of joining politics?

It’s not a serious question, I am afraid. What I do is politics. What I write is politics. Traditionally this is what writers have done. So to separate commentary from writing, from politics, minimises politics, minimises writing, and minimises commentary. This has historically been the role of writers. I could surely go and wear a khadi sari and sit in the forest and become a martyr but that’s not what I plan to do. I have no problem being who I am, writing what I have because I am not playing for sainthood here. I am not playing for popularity. I am not asking to be hailed as a leader of the masses. I am a writer who has a particular set of views and I use whatever skills I have, I deploy whatever skills I have, whatever means I have to write about them, not always on my own behalf but from the heart of the resistance.

In an interview to Financial Times you once said, and I quote: “I feel like I’ve done a very interesting journey over the last 11 years, but now I’m ready to do something different. Two years ago, I told myself, ‘no more, enough of this’, and I was working on some fiction. Then this huge uprising happened in Kashmir.” Some would say your activism is just another career move — I’ve done this and now let’s move on and do something more exciting?

It’s not about more exciting things, it’s about writing again. If I am a writer and I have written in a certain way, then suddenly you feel like, for example The God of Small Things is a very political book but then there became another phase of very urgent and immediate politics and it became non-fiction. But I think fiction is a deeper, more subversive kind of politics. Like if you read The God of Small Things, dealing with issues of caste for example. It’s not about the government or the state versus the people; it’s about the absolute malaise within your own society. Fiction is a much better way of dealing with it. You can’t allow yourself to just be bogged down doing the same thing, thinking the same ways or using the same techniques of writing. It’s always a challenge. And it can never be that I will stop being a political person. Of course, I think that everybody, even a fashion model, is political. It’s the kind of politics you choose is what you choose to do. There is no escaping that. This idea that politics is only going out and standing for elections or addressing rallies is a very superficial thing.

---

Rajesh Joshi works with BBC Hindi Service where this interview was first broadcast in Hindi

Ratings Agency Hypocrites

S&P’s downgrade carries a large dose of irony, since the extra debt the U.S. has piled on recently came courtesy of S&P's moronic toxic asset ratings.

by Nomi Prins | August 7, 2011 7:6 AM EDT

Can’t say rating agencies don’t have a sense of humor. Last weekend, the painfully embarrassing bipartisan political drama to raise the U.S. debt ceiling centered around doing whatever it took to avoid losing our sacrosanct AAA credit rating. This weekend, under cover of a Friday night, with markets safely closed and global traders gone for the weekend, the best-known rating agency, Standard and Poor’s, basically mooned U.S. economic policy.

On one main score, S&P’s downgrade rationale is right: Washington policy-making is decidedly "dysfunctional.” In fact, that’s a seismic understatement.

But that would also be a fair description of S&P’s decision-making in recent years. Remember: In the run-up to this very financial crisis, for which our debt creation machine at the Treasury Department ramped into over-drive, S&P was raking in fees for factory-stamping "AAA" approval on assets whose collateral was hemorrhaging value.

That high class rating was the criterion hurdle that allowed international cities, towns and pension funds to scoop up those assets, and then borrow against them because of their superior quality, and later suffer devastating losses and bankruptcies when the market didn’t afford them the value that the S&P AAA rating would have implied.

Perhaps, this downgrade is S&P’s way of saying, we’re on it now—we’re not going to give bad debt a pass anymore. Earlier this week, they downgraded a bunch of Spanish and Danish banks that are sitting on piles of crappy loans. Then, of course, there was Greece.

But just like Washington, the agency is missing the main reason for the recent upshot in debt. There’s a bar chart on the White House website that cites an extra $3.6 trillion of debt created during the Obama administration which is labeled for "economic and technical changes." That figure doesn’t include the $800 billion of stimulus money delineated separately, which is more deserving of that moniker.

Banks concocted $14 trillion of toxic assets that S&P rated AAA between 2003 and 2008.

Jin Lee / AP Photo

But it’s not like the GOP, in particular its Tea Party wing, screamed once about that $3.6 trillion figure during the latest capitol cacophony. Instead, the Treasury Department made up a name for Wall Street subsidies, and Congress went along. And until this spring, when the debt cap debate geared up a notch, S&P was pretty mum about this debt and exactly why it was created.

Recall, banks concocted $14 trillion of toxic assets that S&P rated AAA between 2003 and 2008—or higher in credit worthiness than it now deems the U.S. government to be. These banks now store $1.6 trillion of excess Treasury debt on reserves at the Fed (vs. about zero before the 2008 crisis) on which interest is being paid. In addition, the Fed holds $900 billion of mortgage related assets for the banks. Plus, about a half of trillion of debt is still backing some of AIG’s blunders, JP Morgan Chase’s takeover of Bear Stearns, the agencies that trade through Wall Street, and other sundries. That pretty much covers the extra debt since 2008—not that S&P mentioned this.

But yes, S&P is right. There is no credible plan coming from Washington to deal with this excess debt, nor is the deflection of the conversation to November fooling anyone, but that’s because there’s been no admission from either party as to why the debt came into being.

The bottom line? In the aftermath of the financial crisis, the U.S. created trillions of dollars of debt to float a financial system that was able to screw the U.S. economy largely because banks were able to obtain stellar ratings for crap assets, which had the effect of propagating them far more quickly through the system than they otherwise would have spread. The global thirst for AAA-rated assets pushed demand for questionable loans to fill them from the top down, as Wall Street raked in fees for creating and selling the assets. Later, banks received cheap loans, debt guarantees, and other financial stimulus from Washington when it all went haywire, ergo debt.

Despite a few congressional hearings on the topic, the rating agencies were never held accountable for their role in the toxic-asset pyramid scheme. Now they are holding the U.S. government accountable. The U.S. government deserves it, not because spending cuts weren’t ironed out, but because Wall Street stimulus wasn’t considered, the job market remains in tatters, and there’s no recovery on the horizon.

Still, the downgrade demonstrates that the U.S. doesn't run the show—the private banks and rating firms that get paid by them, do.

August 7, 2011 7:6am