This perverse rage against the poor

HARISH KHARE in the hindu

  

The Hinduedit page statecradft 300813

 

With the economic boom petering out, those who benefitted from it are angry with the government for the Food Security Bill because it is paying attention to the needs of the underprivileged for a change

This week’s received wisdom insists that the Indian economy has irretrievably collapsed because on Monday, the Lok Sabha passed the National Food Security Bill (NFSB). The Hindu Business Lineheadline (Aug.28, page 1) said it all: “Re, Sensex sink on fears Food Bill will feed deficit.” The subtext of the lament appears to be that the rupee decline was the market’s way of registering a pointed disapproval of the food security initiative. The Schadenfreude-wallahs are as happy as are the market-reformers that the United Progressive Alliance (UPA) leadership has been fixed so gloriously for venturing into a “populist” course of action. The bandwagon routine has acquired a momentum of its own; even Hindi and other vernacular newspapers have allowed themselves to be mesmerised by the crisis-mongering on television. This, though, is no time to panic. This is the time to strike a balance between short-term difficulty and long-term promises and commitments.

What wrong signals?

Once every few decades comes a moment in a Republic’s life when a few fundamental commitments have to be renewed — or rejected. This is one such week, a time to test our core beliefs. It is also the time to ask a fundamental question: since when in this country has a veto been ceded to the markets and its manipulators, at home and abroad, to decide the issues of equity, social justice and economic fairness? There is something inherently perverse in the suggestion that this much-needed welfare measure would send out the “wrong” signals. Pray to whom? Those half-a-dozen professional financial manipulators in London?

Indeed, economists can always be relied upon to argue that there is always a better way to do anything. Some are competing among themselves to declare that this food security initiative will neither work, nor fetch any votes for the ruling party. Let us make no mistake. Beyond all these sophisticated arguments is a certain class prejudice, resentful that so many resources are being “wasted” for the poor and other socially disadvantaged people, that in this age of “reforms,” political considerations and calculations are being allowed to determine the allocation of societal resources.

This misses the very essence of the concept of political legitimacy in a democratic arrangement. A democracy survives and prospers only when every stakeholder gets an abiding sense of participation, partnership and entitlement. We often seem to keep forgetting that politics is all about who gets what at whose expense. During these last five years, at least for most of the time, the corporates and their policy preferences have been accorded unprecedented acceptance. The time is ripe to strike a new balance. And the NFSB does just that.

Reform by stealth

If we are honest with ourselves, we will have no difficulty in acknowledging that for 20 years, economic reforms have been operationalised without a political mandate. Not until recently when the Congress party held a public meeting to rally opinion behind the Manmohan Singh government’s FDI policy, did any political party have the courage to proclaim openly and boldly its commitment to “economic reforms.” Yet, the “reforms” have been routinely and regularly proclaimed to be “irreversible,” irrespective of the political colour of the government in New Delhi. The process has well been summed up in that evocative phrase, “reform by stealth.”

So now, when we are confronted with a veritable economic meltdown, we are ill-equipped to attend to the more serious and more debilitating crisis of our democratic project running out of its popular legitimacy. India’s democratic arrangements no longer appear to have the requisite social and political sanctions behind them. And we are unable to deal adequately with the systemic overload because our public discourse has been hijacked by a self-serving advocacy crowd and by a professionally disoriented media. For example, a year ago there was carping all around that the crony capitalists and the corrupt politicians were robbing the nation of its wealth, and we staged massive spectacles of resentment at Jantar Mantar; now, a year later, we are ranting and raving that we are not listening to or heeding those who rig the stock markets.

If shouting and screaming every evening could produce solutions to difficult and complex problems, India would have been the most efficacious and working corner of planet Earth. Despite the obvious disapproval of the shouting class, the UPA leadership has gone ahead with the Food Security Bill. Hence, the exaggerated anger.

As social philosopher Roberto Mangabeira Unger points out, a peaceful social order is in itself not enough; “ [S]ociety must be set up in a manner capable of justification in the yes of each of its members.” In political economy terms, each section of society, and every stakeholder gets to determine: what is in it for me? The Democratic Project is a social compact, an indefinable construct, but nonetheless one that hinges on a promise of a fair deal for all. The poor are asking this question with greater urgency — and in the Maoist-strongholds with arms and blood — as decades of “economic growth” have produced new inequities and disparities.

Rather than wait for the next round of the “Maoist” violence to jerk us back to harsh realities, what the Food law does is that at one stroke, it sends out a message that the Indian state has not turned its back on the poor, and that the have-nots continue to have a claim on the collective resources, and that they have not been left to their own devices or to the market’s curative potency.

This message has to be understood and appreciated in the context of the growing preference in some quarters for authoritarian solutions — throw out the encumbering paraphernalia of social equity or fairness, and let the floodgates of enterprise and business acumen be thrown wide open.

Resenting interventionism

A decade of economic prosperity has allowed millions and millions of middle-class families to realise their upwardly revised aspirations and life experiences; at the same time, the UPA saw to it that the welfare state kept expanding the “social agenda,” providing a safety net against the vagaries of the market.

Now, the good days have seemingly come to an end, and there is anger that the state remains equally mindful of the welfare poor. We all thought that the poor have been disappeared from the policy drawing room; and suddenly, they are back with almost a veto. The narrative-controllers resent that. Just when they thought they had successfully defanged the Indian state of its interventionist impulses, here comes the Food Security Bill.

The bill can be seen as the other side of the “stimulus” coin. The 2008-2009 stimulus was used by the super-rich to buy real estate in London and other European cities. At that time, no one seemed to find anything inherently wrong at this massive, disproportionate allocation of resources for so few. None of it was invested here to create jobs; instead, the super-rich petulantly proclaimed that the government was not sufficiently attentive to their “sentiment” and hence they would take their ball (Indian savings and taxpayers) and play in other economies. No one complained; instead, the government was blamed for the corporate sector’s misplaced priorities.

If subsidised food can reduce the food spending of the poor, and place some surplus money in their hands, which would then be spent in India, that may end up stimulating domestic consumer demand. It would be a kind of stimulus lite, for the poor.

A ruling party in India is called upon to fulfil its basic obligation to keep intact the democratic credentials of the “system.” The food security legislation is a partial response to that obligation and must be applauded.

What Hindus can and should be proud of

RAMACHANDRA GUHA in the hindu

  

LINKS 

Those who care for the future of the religion should valorise the work of reformers who rid an ancient, ossified faith of its divisions, prejudices, and closed-mindedness

A bhadralok friend of mine is of the view that the Government of India should celebrate every December 16 as Vijay Diwas, Victory Day, to mark the surrender in 1971 of the Pakistani forces in Dhaka to the advancing Indian Army. My friend argues that such a celebration would take Indians in general, and Hindus in particular, out of the pacifist, defeatist mindset that he claims has so crippled them. The triumph in Dhaka represents for him the finest moment in a millenia otherwise characterised by Indian (and more specifically Hindu) humiliation at the hands of foreigners.

I was reminded of my friend’s fond fantasy when reading about the posters in Mumbai recently put up by members of the Bharatiya Janata Party. These carry portraits of a prominent BJP leader, with two accompanying slogans: ‘I AM A HINDU NATIONALIST,’ in English, and ‘Garv sé Kaho Ham Hindu Hain’, in Hindi. The latter slogan needs perhaps to be translated for south Indian readers, and set in context for younger ones. ‘Proudly Proclaim Our Hindu-Ness’, would be a faithful rendition. The slogan originates in the Ram Janmabhoomi campaign of the 1980s and 1990s, when it was used by the VHP, RSS, BJP, and Bajrang Dal cadres to mobilise men and materials in the drive to demolish a 16th century mosque in Ayodhya believed by many to be sited on the birthplace of the (mythical) God Ram.

Victory in Dhaka

Should Hindus be proud of the Indian Army’s victory in Dhaka in 1971? Perhaps as Indians, but not specifically as Hindus. The war had its basis in the savage repression of Bengalis in East Pakistan by the West Pakistan Army. The refugees who came to India were both Hindus and Muslims. The help rendered to them by the Government of India did not discriminate according to their faith. As for the Indian military campaign, the chief commander in the field was a Jew, his immediate superior a Sikh. A Parsi served as Chief of Army Staff. His own superior, the Prime Minister of India, had notoriously been disallowed from entering the Jagannath temple in Puri because she had not married a Hindu.

To be sure, many soldiers and officers in the Indian Army were of Hindu origin. Yet they never saw themselves in narrowly communal terms. In our armed forces, then and now, Hindu and Muslim, Christian and Sikh, Parsi and Jew, lived, laboured and struggled together.

Hindu in intent and content

Unlike the military campaign in East Pakistan in 1971, the campaign to build a temple in Ayodha was unquestionably Hindu in intent and content. No Muslims or Sikhs or Parsis or Jews or Christians participated in it. But should Hindus have been proud of it? I rather think not. In a society where so many are without access to adequate education, health care and housing, where malnutrition is rife and where safety and environmental standards are violated every minute, to invest so much political energy and human capital in the demolition of a mosque and its replacement with a brand-new temple seemed wildly foolish, if not downright Machiavellian. As it turned out, the Ram Janmabhoomi campaign led to two decades of strife across northern and western India, with thousands of people losing their lives and hundreds of thousands their homes and livelihoods.

The war of 1971 was not a Hindu war, and the destruction of the Babri Masjid was not something that could fill Hindus with pride. What then, should Hindus be proud of? The answer is that rather than seek for one defining moment, one heroic triumph, Hindus who care for the fate and future of Hinduism should instead valorise the quiet, persistent work of reformers down the centuries to rid an ancient, ossified faith of its divisions, its prejudices, and its closed-mindedness.

The story of Hindu pride that I wish to tell also begins with Bengal, not with the surrender of the Pakistani Army in 1971, but with the work in the early 19th century of Rammohun Roy, who was unarguably the first great Indian modernist. Rammohun campaigned for the abolition of sati, for greater rights for women more generally, for the embrace of modern scientific education and for a liberal spirit of free enquiry and intellectual debate. His example was carried forward by other Bengali reformers, among them Ishwar Chandra Vidyasagar and Swami Vivekananda, who focussed on, among other things, education for women and the abolition of caste distinctions.

Epicentre of radical thinking

The torch first lit in Bengal was taken over, and made even brighter, in Maharashtra, which in the late 19th and early 20th centuries was the epicentre of reformist and radical thinking in India. The pernicious practice of ‘untouchability’ was attacked from below by Jotirau Phule and from above by Gopal Krishna Gokhale. Maharashtra also gave birth to India’s first home-grown feminists, such as Tarabai Shinde and Pandita Ramabai, who wrote searing tracts against patriarchal practices and motivated young girls to emancipate themselves through modern education.

In 1915, Mohandas K. Gandhi came back to India after two decades in the diaspora. Living in South Africa, he had been seized of the need to build harmonious, mutually beneficial, relations between Hindus and Muslims. This commitment to religious pluralism he now renewed and reaffirmed.  Meanwhile, he progressively became more critical of caste discrimination. To begin with, he attacked ‘untouchability’ while upholding the ancient ideal of varnashramadharma. Then he began advocating inter-mixing and inter-dining, and eventually, inter-marriage itself.

Gandhi was pushed to take more radical positions by B.R. Ambedkar, the outstanding lawyer-scholar who was of ‘Untouchable’ origins himself. A modernist and rationalist, Dr. Ambedkar believed that for Dalits to escape from oppression, they had to not look for favours from guilt-ridden reformers but themselves ‘educate, agitate and organise’ their way to emancipation. He remains an inspirational figure, whose work and legacy remain relevant for Dalit and Suvarna alike.

When India became independent in 1947, a central question the new nation faced was the relation of faith to state. There was a strong movement to create India as a ‘Hindu Rashtra’, a mirror-image of the Islamic nation that was Pakistan. The person who stood most firmly against this idea was the first Prime Minister, Jawaharlal Nehru. In a letter written to Chief Ministers on October 15, 1947, he reminded them that “we have a Muslim minority who are so large in numbers that they cannot, even if they want to, go anywhere else. They have got to live in India. This is a basic fact about which there can be no argument. Whatever the provocation from Pakistan and whatever the indignities and horrors inflicted on non-Muslims there, we have got to deal with this minority in a civilised manner. We must give them security and the rights of citizens in a democratic State.”

Gandhi was a heterodox Hindu, who was detested by the priestly orthodoxy; so much so that the Sankaracharyas once even organised a signature campaign that asked the British to declare Gandhi a non-Hindu. Nehru was a lapsed Hindu, who never entered a temple in adult life. He too was intensely disliked by the sants and shakha heads who arrogate to themselves the right to speak for Hindus. Ambedkar was a renegade Hindu, who was born into the faith yet decided in the end to leave it, through a dramatic conversion ceremony weeks before his death.

For all their lapses and departures from orthodoxy — or perhaps because of them — Gandhi, Ambedkar, and Nehru were the three 20th century figures who did most to rid Hinduism of its ills and excesses, who worked most heroically to nurture the spirit of equal citizenship that the Laws of Manu so explicitly deny. The work that they, and the equally remarkable reformers who preceded them, did, are what Hindus should be most proud of.

Entrenched prejudices

That said, Hindus still have much to be ashamed about. As the recent spate of attacks on Dalits and women shows, deep-rooted caste and patriarchal prejudices remain entrenched in many parts of India. Meanwhile, in countries that neighbour ours, Islamic fundamentalism is on the rise, giving ammunition to parties in India who represent the most sectarian and exclusive aspects of Hinduism themselves. The battles inaugurated by the likes of Rammohun Roy and Jotirau Phule, and carried forward by Ambedkar and Nehru and company, have now to be fought afresh. The abolition of caste prejudices; the elimination of gender hierarchies; the promotion of religious pluralism — these remain the elusive ideals of those who wish (proudly or otherwise) to call themselves Hindu and Indian.

10 lies we're told about welfare

Has someone made Jim Royle a policy adviser? Millions are being made poorer while we're fobbed off with porkies

• 
• • Ricky Tomlinson
  • guardian.co.uk, Tuesday 2 April 2013 14.47 BST

Protesters against the proposed 'bedroom tax' gather outside Downing Street in London. Photograph: Matthew Lloyd/Getty Images

Welfare reform, my arse. Has Jim Royle parked his chair, feet up, telly on, in the corridors between the Treasury and the Department for Work and Pensions? Employing him as adviser can be the only explanation for the utter rubbish that boils forth from this government on welfare.

Who else could have dreamed up the bedroom tax, a policy so stupid it forces people to leave their homes and drag themselves around the country in search of nonexistent one-bedroom flats?

That one has to be the result of too many hours in front of Jeremy Kyle (no offence) with the heating on full and a can of super-strength lager. It seems as if that is how this government views ordinary people: feckless and useless – poor, because they brought it on themselves, deliberately.

Maybe the cabinet is confused. Twenty-three millionaires in the one room can get like that. But do you know what, enough. Let's call this government's welfare policy what it is – wrong, nasty and dishonest.

Off the top of my head, I can list 10 porkies they are spinning to justify the latest stage of their attack on our 70-year-old welfare state.

1. Benefits are too generous

Really? Could you live on £53 a week as Iain Duncan Smith is claiming he could if he had to? Then imagine handing back 14% of this because the government deems you have a "spare room". Could you find the money to pay towards council tax and still afford to eat at the end of the week?

2. Benefits are going up

They're not. A 1% "uprating" cap is really a cut. Inflation is at least 2.7% . Essentials like food, fuel and transport are all up by at least that, in many cases far more. Benefits are quickly falling behind the cost of living.

3. Jobs are out there, if people look

Where? Unemployment rose last month and is at 2.5 million, with one million youngsters out of work. When Costa Coffee advertised eight jobs, 1,701 applied.

4. The bedroom tax won't hit army families or foster carers

Yes it will. Perhaps most cruel of all, the tax will not apply to foster families who look after one kid. If you foster siblings, then tough. But these kids are often the hardest to place. Thanks to George Osborne and IDS, their chances just got worse. And even if your son or daughter is in barracks in Afghanistan, then don't expect peace of mind as the government still has to come clean on plans for their bedroom.

5. Social tenants can downsize

Really, where? Councils sold their properties – and Osborne wants them to sell what's left. Housing associations built for families. In Hull, there are 5,500 people told to chase 70 one-bedroom properties.

6. Housing benefit is the problem

In fact it's rental costs. Private rents shot up by an average of £300 last year. No wonder 5 million people need housing benefits, but they don't keep a penny. It all goes to landlords. 

7. Claimants are pulling a fast one

No. Less than 1% of the welfare budget is lost to fraud. But tax avoidance and evasion is estimated to run to £120bn.

8. It's those teenage single mums

An easy target. Yet only 2% of single mums are teenagers. And most single mums, at least 59%, work.

9. We're doing this for the next generation

No you're not. The government's admitted at least 200,000 more children will be pushed deeper into poverty because of the welfare changes.

10. Welfare reforms are just about benefit cuts

Wrong. The attack on our welfare state is hitting a whole range of services – privatising the NHS, winding up legal aid for people in debt and closing SureStart centres and libraries. All this will make life poorer for every community.

Some call these myths. I call them lies. We are being told lies about who caused this crisis and lied to about the best way out of it. But I know one thing to be true: this government's polices will make millions of people poorer and more afraid. To do that when you do not have to, when there are other options, is obscene. That's why I'm backing union Unite'sOurWelfareWorks campaign in its efforts to help highlight the truth about our welfare state.

A detailed interview with Imran Khan. Excellent!

Interview with Imran Khan Part 1

Interview with Imran Khan Part 2

The beautiful game embodies everything that's bad about Britain

Unlike Germany's thriving Bundesliga, the Premier League is run for the super-rich, not fans

• 
• • Will Hutton
  • The Observer, Sunday 13 January 2013

Carson Yeung (fourth from left) poses with Birmingham's board of directors after acquiring the club in 2009. Photograph: Leon Neal/AFP/Getty Images

Birmingham City FC fans are in revolt. Their once proud club has not been well managed – to put it mildly – by "businessman" Carson Yeung, currently awaiting trial in his native Hong Kong, for an alleged £59m-worth of money laundering, and the process is not over yet. It is the degeneracy of British economy and society in a football microcosm – nothing to stop Cayman Island ownership, strange "sponsorships" and lush, anonymous director fees.

In Britain, there are no legal or governance structures that put football or the fans at the centre of a club owner's concerns. Rather, in keeping with the wider culture, football is "open for business". Market forces are deified as the only value worth celebrating and a business – even a football club – is no more than its owner's private plaything. The result is a moral and economic disaster – in football as in the wider economy.

Economists call this "rent-seeking" and those who don't know what the term means need only spend a few seconds surveying the history of the club since Mr Yeung, his son and third director Peter Pannu took it over in 2009. The club is owned by a holding company based in the Cayman Islands, but burdened by vast debts used by Yeung to buy it, now facing financial problems following the problems with Yeung's business affairs.

Their sole interest is selling off assets, chiefly good footballers in the transfer market, and now the club, to get their money back into the Cayman Islands – while paying large director fees for unnamed services. What they want is economic rent: a surplus created for doing nothing of value.

Britain is a rent-seeker's paradise, as many more football clubs other than Birmingham City can testify. We have created a looters' charter, with football as a playpen, within which the super-rich can do what they want. A recent flash point is the price visiting fans are charged for their tickets. (Manchester City fans protested at the £62 they were asked to pay for today's game at Arsenal.) If the price of admission, along with travel, is prohibitive, then the game is played to only one set of supporters in the stadium with one set of chants. The experience of a game shrivels.

For the rent-seeker, this is emotional sentimentality. Everybody now knows that market forces are both best and irresistible, a perfect justification for putting up ticket prices to whatever the market will bear. Christian Siefert, CEO of the German Bundesliga, told the Observer recently that football is one of the last areas where people are brought together: "We want to have our whole society as part of our football, in our stadiums", explaining why the owners of football clubs forgo the highest possible ticket prices. It is not a sentiment that Mr Yeung, or the many other foreign owners of British clubs, would share. Why worry about British society? We exist to be looted and privately mocked for our connivance in our own destruction.

Flexible and free markets, we have had drummed into us for 30 years, are the reason why Britain is now the world-beating economy that it has become and Germany and the European Union are in the doldrums. The Premier League, slavishly following these principles, is self-evidently, or so runs the line, the best football league in Europe. Pity the poor Germans and the daffy Herr Siefert, who worry about who owns their companies and football clubs, care about fan culture and invest in their young talent.

They don't welcome "wealth creators" such as Carson Yeung with no questions asked, and because German clubs reserve parts of their grounds for standing room only cheap tickets, they don't maximise the economic value of their sporting assets. Down that road lies ruin – or so a bevy of economic commentators and Eurosceptic Conservative MPs will rush to tell us.

But the German approach to football, as with their wider economy and society, is beginning to win admirers, not least among football supporters. There are three German sides in the last 16 of the Champions League this year and fuddy-duddy Dortmund played Manchester City, exemplar of British-style market forces, off the park. What's more, they care about their fans. It is a great club rather than a sheikh's passing whim. The Premier League is now considering something very German: capping the prices that clubs can charge visiting supporters. Football as a sport might just, in one tiny step, challenge the law of the market.

British football needs to go much further. German football clubs require that a majority of votes are exercised by fans. There can't be Carson Yeungs because they would be outvoted. German clubs invest in homegrown talent. Sixty per cent of Bundesliga players are homegrown compared with 39% of Premier League players.

The lessons go wider still. Eighteen years ago, I argued in The State We're In that it was obvious that Germany would outperform Britain economically, just as it is obvious that it will do the same – unless we reform ourselves wholesale – over the next 18. What is so depressing about today's economy is not just that we stand on the verge of a triple dip recession, but that, like our football clubs, so much of our economic base is organised around rent-seeking.

Nor do we seem to have learned much. There should be a vibrant debate about how to reproduce in Britain what evidently works in Germany. We need companies organised around long-term business purpose and to create a whole network of public and private institutions, law and practice that buttresses them. Yet the heart of the Eurosceptic, anti-EU case is that, instead, we need to leave to reinforce the market "flexibilities" and "freedoms" that have created such fantastic British success. Let the looting get more intense.

We are far gone. There is no majority in the Premier League for serious reform. Foreign owners are not going to vote to qualify their autonomy, allow more supporter voice or limit their capacity to compete by offering sky-high player wages. On the other hand, there is a growing argument for change – witness the possible concession on ticket prices.

It's the same with wider economic reform. The average size of a British manufacturing firm is 14 people: the majority of large firms and factories are foreign-owned. We have constructed an economy in which the rent-seekers and Carson Yeungs are the majority. It is very clear what needs to be done. The signs are confusing, but, as in football, maybe the grip of the looters is weakening as the evidence mounts of their vandalism. Here's hoping.

Needed: An exit policy for bad businessmen

S A Aiyer

Vijay Mallya has not paid employees of Kingfisher Airlines for months, and has defaulted on thousands of crores due to suppliers and creditors. Yet he has just donated three kilos of gold, worth almost one crore, to the Tirupathi temple. In August, he offered 80-kilo gold plated doors to the Kukke Subramanya temple in Karnataka. Possibly he believes that the gods can be bought off in ways that employees and creditors cannot.

How can a man who owes enormous sums to employees and creditors be free to throw gold around like small change? If there were any justice, surely the gold and golden doors should be seized from the temples and handed over to the employees and creditors. Surely they should have first right to Mallya’s assets.

After two decades of economic reform , we have not yet evolved rules that facilitate the exit of poor managements before they ruin a company beyond redemption. Kingfisher Airlines has been ground to the dust by Mallya, a liquor baron who should never have entered this space.

A free-market economy is not just a device giving owners the freedom to sack employees. It is one where creditors and employees have the right to seize a company defaulting on dues, and sack the management. The managing shareholder or promoter is only one of many stakeholders. If he cannot meet his obligations to other stakeholders , they should oust him in a true free market economy. In India, alas, our unreformed regulations and procedures leave promoters in control no matter how big a mess they make.

In the US, creditors can quickly seize a company that defaults on dues, and reorganize or sell it to a new owner . The owner can get temporary protection from creditors through Chapter 11 proceedings. In this, a judge determines whether the company is so far gone that it must be liquidated, or whether it can be saved through mutual sacrifices by creditors, employees and owners. In the process, the judge can change the owner. So, often workers survive bankruptcy proceedings , but the owner does not. That is what we should aim for in India too: an exit policy for incompetent, defaulting owners.

Kingfisher Airlines never made a profit, not even in the boom years when its rival airlines were profitable. Creditors should have moved in years ago when it became clear that the skills of a liquor baron were irrelevant for an airline. But in India creditors cannot quickly seize a company, least of all when the owner has political clout (as in Mallya’s case).

In the old licence permit raj, banks and financial institutions had to support existing managements and keep rescuing them. This has not changed despite the 1991 reforms. Banks have to keep throwing good money after bad.

Today Kingfisher is so worthless that it no longer makes sense to seize it and find a buyer. SBI Chairman Pratip Chaudhuri estimates that rehabilitating Kingfisher will cost a billion dollars. Nobody will do so — a new airline can be started for maybe just $100 million. Kingfisher has just lost its flying licence. Mallya’s hopes of being rescued by Etihad Airways of Abu Dhabi look like pure fantasy.

Even if it makes no sense to seize the airline today, why not seize his liquor business? Why not seize his prize luxury possessions, ranging from paintings to yachts or jets? Why not take over his cricket team, Royal Challengers ? Why not take over his football team Mohun Bagan, and his Formula 1 racing team Force India? Why is he allowed to keep all these, along with gold that he donates to temples, when he says he doesn’t have enough to pay employees or suppliers? He has given personal guarantees to banks: why are these not being enforced?

Mallya can be congratulated on one thing. Service was top-class in Kingfisher , and the airline gained a good reputation for quality. Had the airline been seized early on, it could definitely have been sold to a new owner. However , its reputation has steadily fallen with its continuing financial crisis, leading to cancelled flights and official grounding.

I constantly hear that India has gone in for neo-liberal policies. That’s pure rubbish. Neo-liberalism would have given employees and creditors the right to quickly seize and sell a company that cannot meet its obligations. The problem is not liberalism but the continuing old illiberalism that keeps promoters in charge, forcing other stakeholders to take a hit. Temples and religious trusts can keep enormous donations from defaulters instead of handing them over to others who, in all justice, should have the first right to such money or gold. This area desperately needs reform.

Europe's €50bn subsidy that enriches landowners and kills wildlife

The EU's farm subsidies are a modern equivalent of feudal aid. As Europe suffers under austerity, it's right to call for reform

• 
• • George Monbiot
  • The Guardian, Monday 26 November 2012 20.30 GMT

'Not long ago, farm payments were justified on the grounds that world demand was low. Now they are justified on the grounds that world demand is high.' Photograph: Andrew Matthews/PA

There's a neat symmetry in the numbers that helped to sink the European summit. The proposed budget was €50bn higher than the UK government could accept. This is the amount of money that European farmers are given every year. Britain's contentiousbudget rebate is worth €3.6bn a year: a fraction less than our contribution to Europe's farm subsidies.

Squatting at the heart of last week's summit, poisoning all negotiations, is a vast, wobbling lump of pork fat called the common agricultural policy. The talks collapsed partly because the president of the European council, pressed by François Hollande, proposed inflating the great blob by a further €8bn over six years. I don't often find myself on their side, but the British and Dutch governments were right to say no.

It is a source of perpetual wonder that the people of Europe tolerate this robbery. Farm subsidies are the 21st century equivalent of feudal aid: the taxes medieval vassals were forced to pay their lords for the privilege of being sat upon. The single payment scheme, which accounts for most of the money, is an award for owning land. The more you own, the more you receive.

By astonishing coincidence, the biggest landowners happen to be among the richest people in Europe. Every taxpayer in the EU, including the poorest, subsidises the lords of the land: not once, as we did during the bank bailouts, but in perpetuity. Every household in the UK pays an average of £245 a year to keep millionaires in the style to which they are accustomed. No more regressive form of taxation has been devised on this continent since the old autocracies were overthrown. Never mind French farmers dumping manure in the streets: we should be dumping manure on French farmers.

It would be unfair to stop there. There are plenty of people in the UK who deserve the same treatment. Last year the House of Commons environment, food and rural affairs committee, in a bizarrely unbalanced report, maintained that the farm subsidy system does not go far enough. It wants to supplement payments for owning land with a resumption of headage payments: money for every animal farmers cram into their fields.

This nonsense outfrenches the French. There were excellent reasons for phasing out headage payments in 2003. They provided an incentive to load the hills with as many animals (mostly sheep) as possible, regardless of the impact on the natural world and the welfare of the sheep. The extra sheep flooded the market, bankrupting the farmers whom the payments were supposed to protect. The committee's proposal accords with a longstanding and idiotic European principle: the less suitable a region is for farming, the more money is spent to ensure that farming persists there. This is the rationale for such extra subsidies as less favoured area payments.

This approach is justified by a groundless claim: that farming, particularly in the uplands, is required to protect the environment. The European commission maintains that farming is essential to "combat biodiversity loss" and reduce emissions of greenhouse gases. The parliamentary committee claims that fewer cattle and sheep in the hills has led to "undergrazing", causing such horrors as the growth of bracken. How nature managed to survive for the 3 billion years before humans arrived to look after it is anyone's guess.

These statements are seldom accompanied by anything resembling a scientific reference. They reflect a biblical view of human stewardship. It would be lovely to believe that hill farmers, the landholders with whom it is easiest to sympathise, are delivering only blessings, but this is pure wish fulfilment.

Flooding of the kind now blighting the UK is exacerbated by grazing in the hills, which prevents trees and scrub from growing. The sparser the vegetation with which the hills are clothed, the faster the water runs off. Woodland and scrub preserve more carbon – both above and below ground – than pasture does. There has been a catastrophic decline in farm wildlife in the past few decades, as a result of grazing, drainage, sheep dip residues poisoning the streams and farmers' clearance of habitats. Last week's shocking report on the state of the UK's birds shows that while 20% of all birds have been lost since 1966, on farmland the rate is over 50%.

The subsidy system doesn't just encourage this destruction: it demands it. A European rule insists that to receive their main payment farmers must prevent "the encroachment of unwanted vegetation on agricultural land". In other words, they must stop trees and bushes from growing. They don't have to grow crops or keep animals on the land to get their money, but they do have to keep it mown. All over Europe essential wildlife habitats are destroyed – often on agriculturally worthless land – simply to expand the area eligible for subsidies.

The European commission maintains that subsidies are required to help farmers "contribute to growing world food demand, expected … to increase by 70% by 2050". But if world food demand is expected to grow by 70%, why do we need subsidies? Not long ago, farm payments were justified on the grounds that world demand was low. Now they are justified on the grounds that world demand is high. The policy comes first, the justifications later.

While David Cameron is right to press for major cuts, he is simultaneously seeking to goldplate the injustice by opposing the only vaguely progressive measure in the commission's proposals for reform: capping the money farms can receive, at a maximum of €300,000. This, our government complains, would discourage the "consolidation" of land. Britain already has one of the highest concentrations of land ownership on earth. How much more "consolidation" do we need? And how much more brazenly could Cameron favour the interests of his aristocratic chums?

Europe is in crisis. It is in crisis because the money has run out. Essential public services are being cut (often unjustly and unnecessarily), but at the same time €50bn a year is being paid to landowners. This spending is so gross, so nakedly indefensible, that it's hard to understand why it does not obsess activists across the political spectrum: from UK Uncut to the TaxPayers' Alliance. Seldom in the field of human conflict was so much given by so many to so few.

Unlimited Liability for Speculative Bankers

Bankers must be made to bear the cost of their reckless risk-taking

Separating retail and investment banking is not enough. Speculative banking needs to have unlimited liability

• 
• • Prem Sikka
  • guardian.co.uk, Sunday 4 November 2012 13.10 GMT

Lehman Brothers employees leaving the Canary Wharf building in London, carrying their possessions in boxes, aftert the bank collapsed in 2008. Photograph: Graeme Robertson

 

Hot on the heels of the Libor scandal and money-laundering at HSBC and Standard Chartered Bank comes the allegation that Barclays Bank attempted to manipulate the US energy markets to make profits. Of course, Barclays has no direct interest in buying or selling oil, gas or electricity. Its aim is to make profits by betting on the price changes, a process that often drives up the price of the underlying commodity and forces ordinary people to pay sky-high prices.

This speculative activity is facilitated by complex financial instruments known as derivatives, described by investment guru Warren Buffett as "financial weapons of mass destruction". Behind the technical jargon lies a giant gambling machine, which bets on anything that can be priced. The hard cash needed to settle the outcome of the bets is always highly uncertain until the contracts mature, which could be 10 to 15 years in the future. And, like other bets, derivatives don't always pay off – as the cases of Nick Leeson at Barings and more recently Jérôme Kerviel at Société Générale exemplify.
The UK government claims that speculation will be curbed by a separation of investment banking from the retail side. This, it is claimed, will protect savers and taxpayers from the toxic effects of risky positions adopted by bankers. This policy will not work. Even after separation, investment banks will continue to use funds from retail banks, pension funds and insurance companies for their speculative activities. The speculators will continue to shelter behind limited liability and dump losses on to innocent bystanders. Unless the benefit of limited liability is removed from investment banks, their losses and reckless risks will inevitably be transferred to other sectors. The separation between retail and speculative operations needs to be accompanied by unlimited liability for investment banking, ensuring that those who take excessive risks are 100% liable for their mistakes.

Derivatives are central to the current economic crisis. In 2008, Lehman Brothers collapsed with 1.2 million derivatives contracts, which had a face value of nearly $39 trillion, though the economic exposure was considerably less. For nearly six years before its demise, almost all of the pre-tax profits at Bear Stearns came from speculative activities. It could not continue to pick winners indefinitely, and collapsed in 2008. It had shareholder funds of $11.8bn, debts of $384bn and a derivatives portfolio with a face value of $13.4 trillion. The derivatives gambles also brought down American International Group (AIG) – the world's largest insurer – and Washington Mutual. Then in October 2011, MF Global, a US brokerage firm that specialised in delivering trading and hedging solutions, filed for bankruptcy. It had nearly 3 million derivatives contracts with a notional value of more than $100bn.

Despite these high-profile casualties, risk-hungry investment bankers remain undeterred. The face value of the global derivatives trade is about $1,200 trillion (£749 trillion). With a global GDP of $65-70 trillion, the world economy is not in a position to absorb even 0.1% ($1.2 trillion) of losses.
The UK's GDP is about £1.5 trillion. Just three UK banks – Barclays, HSBC and Royal Bank of Scotland (RBS) – alone have a derivatives portfolio, with a face value totalling nearly £100 trillion. Barclays leads the way with £43 trillion. It has recently reported a third-quarter loss of £47 million, but its balance sheet points to a more serious position. Barclays' last full-year accounts show assets of £1.56 trillion and capital of only £65bn, meaning that its gross leverage is nearly 24 times its capital base. A decline of just 4% in asset values would wipe out its entire capital. Barclays' balance sheet shows gross exposure to derivatives of £539bn, though the bank could argue that this is offset by hedges of £528bn, leaving a net exposure of £11bn. The difficulty is that the hedges, as Lehman Brothers, Bear Stearns and Northern Rock have learnt, do not necessarily work in the desired way and always depend on the position of the counter parties in a highly unpredictable environment.

Merely separating retail and investment banking will neither choke off nor contain the effects of toxic gambles, because speculative activities will affect other sectors of the economy. For any possibility of containing the crisis, speculative banking needs to have unlimited liability. Thus, if the bets go bad, bankers will personally need to bear the negative consequences. One of the tasks of the banking regulator should be to ensure that the size of the bets bears a reasonable relationship to the assets of the gamblers, so that cavalier bankers are not able to gamble more than they can lose. No retail bank, pension fund, insurance company or pension fund should be able to provide money to any investment bank without specific approval from its stakeholders.

The above reforms will help to reduce speculative activity and quarantine the negative effects of reckless gambling. They will also remind neoliberals that the freedom to speculate needs to be accompanied by responsibilities.

Shakeup of A-levels

Reforms expected to include eventual scrapping of A-level modules and introduction of dissertations of up to 5,000 words

• Nicholas Watt, chief political correspondent
• The Guardian, Wednesday 17 October 2012

Michael Gove's plans have been criticised by Labour, who say they ignore important subjects such as computing and engineering. Photograph: Gideon Mendel/Corbis

The education secretary, Michael Gove, is to shake up the A-level system as he moves to introduce the principles of the international baccalaureate (IB) to schools in England.

Students hoping to attend the elite Russell Group of universities will be expected to write dissertations of up to 5,000 words and to show an academic breadth of knowledge.

Anyone studying arts subjects, such as English and history, would be expected to choose a "contrasting" subject in the sciences or maths. Those studying the sciences would be expected to take a "contrasting" arts subject. The changes are designed to answer universities' complaints that too many students have a narrow outlook and often lack basic literacy skills.

Gove's latest move follows his announcement last month that he is to scrap GCSEs in favour of what he regards as a more academically rigorous English baccalaureate (EBacc) system.

In the next stage of reforms, Gove is not planning to scrap A-levels, but is hoping to drive up standards by developing an overall framework known as the ABacc. Students would still sit A-levels, but there would be major changes:

• It is expected that A-level modules would eventually be scrapped. Gove has done this with GCSEs and is minded to do so again with A-levels, though he is expected to move at a slower pace.

• Students would be stretched by being asked to write dissertations of up to 5,000 words. This would probably be in addition to their A-levels and would give them a higher overall ABacc grade. Many universities have complained that students often struggle to write longer essays.

Liz Truss, the new education minister who campaigned in favour of improving the teaching of maths in her days as a backbencher, has advocated longer essays.

While Gove is introducing the principles of the IB, he does not want to introduce the actual IB system across English schools, although it is favoured by many public schools. The qualification is managed from abroad and demands a breadth of subjects that would stretch many schools.

A Department for Education spokesman stressed that the plans, first disclosed in the Times, were at an early stage. "A-levels will not be replaced under any circumstances. There are public consultations about reforming A and AS-levels. There are also numerous suggestions about new ABacc league table measures but no decisions have been made." The Times said the mix would also include voluntary work.

Stephen Twigg, the shadow education secretary, said: "We support the concept of an ABacc. However, Labour would ensure it includes a broad range of subjects and sits alongside our proposed vocational courses. If these changes include community work, an extended project and a wider range of courses, then that is welcome.

"Unfortunately, Michael Gove seems to be ignoring important subjects like computing and engineering which are critical for the modern economy. The government must address the big challenges to ensure a One Nation education system – ensuring a gold standard route for vocational education and every pupil studying English and maths until the age of 18."