Morals: the one thing markets don't make

 

 

No amount of regulation will restore our sense of honour and shame. Economics needs ethics

Jonathan Sacks

 

The continuing disclosures about excessive pensions and payoffs, salaries and bonuses for people at the top stir in us feelings for the oldest of human bloodsports: the search for a scapegoat. But they ought to lead us to think more deeply about the values of our culture as a whole.
 
Often, these past months, I have found myself going back to one of the most painful conversations I have had. It was with one of Britain's leading industrialists. He had led his company to consistent success for decades. When I met him he had retired and was near the end of his life.
 
He was not a religious man but he was a deeply moral one. He spoke of the principles that had guided him in business and of the salary he had drawn. It was not negligible, but it was modest. What pained him was that his successor had awarded himself a salary ten times that amount, while systematically destroying the company he had so carefully built.
 
I recall another conversation with a successful investment banker. He told me that the first thing he had to establish was his character, his reputation for trustworthiness and honesty. Without that, he would have been unable to trade. Nowadays, he said, deals no longer depend on character but on lawyers.
 
Common to these stories is the gradual disappearance of the cluster of principles that went by the name of morality. Whatever its source - religion, conscience, custom or code - it meant that there are certain things you don't do because they are not done. You don't reward yourself when customers, clients or shareholders or employees are suffering losses. You don't pay yourself out of all proportion to what you pay others. You don't take advantage of your position just because you can. You are guided, even if no one is watching, by a sense of what is responsible and right. Without that internalised code of honour and trust, no institution can be sustained in the long run.
 
Somehow, between the 1960s and 1980s the idea prevailed that we could do without the moral sense. Who needed it any more? In the 1960s we thought that the State would take care of our problems. In the 1980s we thought that the market would. Self-imposed restraints were dismissed as outmoded and killjoy. Greed was good. The guy with the most toys when he dies, wins.
The result was that we began to lose our understanding of the vital distinction between the value of things and their price. The key example - at the heart of the entire financial collapse - was housing. The value of a house is that it is a home. It's a shelter, a haven, personal space in an impersonal world. For many, it's where we sustain a marriage and build a family. It's where love finds its local habitation and name.
 
At a point in time, some began to think of houses not as homes but as capital investments. They began to borrow more and spend more. Building societies duly obliged.
 
House prices kept on rising. Their attraction as investments grew, and so the cycle fed itself: ever higher prices, ever bigger mortgages, until house prices and borrowing lost all connection with average incomes and sustainability. Those who just wanted a home had no choice but to join the game, at great expense and risk. The speculators were convinced they had become richer, but in real terms they hadn't. The value of housing had changed not an iota, because value is not the same as price.
 
It was bound to collapse, and anyone who had thought it through, said so. The investor Warren Buffett called sub-prime mortgages "financial weapons of mass destruction" as long ago as 2002. In the collective madness, no one was listening.
 
After financial collapse many questions are being asked. Should there be more regulation? State ownership of financial institutions? Have we reached the end of the market economy? They are good questions, but they get nowhere near the heart of the matter.
The market economy has generated more real wealth, eliminated more poverty and liberated more human creativity than any other economic system. The fault is not with the market but with the idea that the market alone is all we need.
 
Markets don't guarantee equity, responsibility or integrity. They can maximise short-term gain at the cost of long-term sustainability. They don't distribute rewards fairly. They don't guarantee honesty. When it comes to flagrant self-interest, they combine the maximum temptation with the maximum opportunity. Markets need morals, and morals are not made by markets.
They are made by schools, the media, custom, tradition, religious leaders, moral role models and the influence of people. But when religion loses its voice and the media worship success, when right and wrong become relativised and morality is condemned as "judgmental", when people lose all sense of honour and shame and there is nothing they won't do if they can get away with it, no regulation will save us. People will outwit the regulators, as they did by the securitisation of risk so no one knew who owed what to whom.
 
The big question is: how do we learn to be moral again? Markets were made to serve us; we were not made to serve markets. Economics needs ethics. Markets do not survive by market forces alone. They depend on respect for the people affected by our decisions. Lose that and we lose not just money and jobs but something more significant still: freedom, trust and decency, the things that have a value, not a price.
 
Sir Jonathan Sacks is the Chief Rabbi of the United Hebrew Congregations of the Commonwealth

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The Pleasure Principle

  

By PATRICIA LEIGH BROWN and CAROL POGASH

SAN FRANCISCO

EVEN in a culture in which sex toys are a booming business and Oprah Winfrey discusses living your best life in the bedroom, a coed live-in commune dedicated to the female orgasm hovers at the extremes.

The founder of the One Taste Urban Retreat Center, Nicole Daedone, sees herself as leading "the slow-sex movement," one that places a near-exclusive emphasis on women's pleasure — in which love, romance and even flirtation are not required.
"In our culture, admitting our bodies matter is almost an admission of failure," said Ms. Daedone, 41, who can quote the poet Mary Oliver and speak wryly on the intricacies of women's anatomy with equal aplomb. "I don't think women will really experience freedom until they own their sexuality."

A core of 38 men and women — their average age the late 20s — live full time in the retreat center, a shabby-chic loft building in the South of Market district. They prepare meals together, practice yoga and mindfulness meditation and lead workshops in communication for outside groups as large as 60.

But the heart of the group's activity, listed cryptically on its Web site's calendar as "morning practice," is closed to all but the residents.

At 7 a.m. each day, as the rest of America is eating Cheerios or trying to face gridlock without hyperventilating, about a dozen women, naked from the waist down, lie with eyes closed in a velvet-curtained room, while clothed men huddle over them, stroking them in a ritual known as orgasmic meditation — "OMing," for short. The couples, who may or may not be romantically involved, call one another "research partners."

A commune dedicated to men and women publicly creating "the orgasm that exists between them," in the words of one resident, may sound like the ultimate California satire. But the Bay Area has a lively and venerable history of seekers constructing lives around sexual adventure.

San Francisco is proud of its libertine heritage, as Sean Penn recently demonstrated in "Milk." The search for personal transformation, including through sex, led to the oceanside hot tubs at the Esalen Institute in Big Sur, cradle of the human potential movement, and in the 1960s, communes flourished in the city, many espousing free love.

One Taste is but the latest stop on this sexual underground, weaving together strands of radical individual freedom, Eastern spirituality and feminism.

"The notion of a San Francisco sex commune focused on female orgasm is part of a long and rich history of women being public and empowered about their sexuality," said Elizabeth A. Armstrong, an associate professor of sociology at Indiana University, who has studied San Francisco's sexual subcultures.

As with many a commune before it, the leader of One Taste, Ms. Daedone, is a polarizing personality, whom admirers venerate as a sex diva, although some former members say she has cultlike powers over her followers. They say she sometimes strongly suggested who should pair off with whom romantically.

"There was always a pushing of peoples' boundaries," said Judy Silber, who lived at One Taste for three and a half years and left last fall. "We all knew it was a hardcore place, and we came to play hard."

The group has drawn scant attention during its four and a half years — perhaps because it is just the sort of community San Franciscans expect in their backyard — although there was a brief sensation when The San Francisco Chronicle wrote about the group's naked (nonsexual) yoga classes. Many voyeuristic non-yogis showed up. Now the yoga is fully clothed.

Those drawn to One Taste are an eclectic lot. Some are in life transitions, among them a baby-faced 50-year-old Silicon Valley engineer, a recently divorced man, who said that the practice of manually fixing his attention on a tiny spot of a woman's body improves his concentration at work.

Most residents are young questers, seeking to fill an inner void and become empowered through Ms. Daedone's blend of female-centric spirituality and sexuality. One, Beth Crittenden, 33, grew up in conservative Virginia tobacco country, a place, she said, where the fundamentals of the female anatomy were never discussed and masturbation was unmentionable. "I'd never done anything even in the dead of night," she said.

She stumbled onto the center's Folsom Street building, with its comfy overstuffed sofas, and enrolled in a women's self-pleasure course because her relationships with men, as she put it, "kept running into a cement wall."

She resisted offers to pursue further courses (for a fee), deleting the center's incessant e-mail messages. But on the cusp of her 29th birthday, she tentatively returned. "I was scared to open up my life that much, but I was more scared not to," she said.
Now an instructor herself, Ms. Crittenden talks about "the lingering velocity of my desire and my hesitation to give into it."
Another member, Racheli Cherwitz, 28, had spent years grappling with anorexia and alcoholism, she said. In search of identity, she moved to Israel and became an Orthodox Jew.

Discovering One Taste, she said, has improved her self-image and given her "deep physical access to the woman I am and the woman I want to be."

Ms. Cherwitz commutes to New York and offers private sensuality coaching at a satellite outpost operated by One Taste on Grand
Street. Many of her clients, she said, are married Orthodox Jewish couples from Brooklyn.

In the One Taste world, a weirdly clinical pact is made between the women and men. There is no eye contact during orgasmic meditation. The idea, similar to Buddhist Tantric sex, is to extend the sensory peak — and publicly share it — before "going over," as residents, who tend toward group-speak, call climaxing.

Although men are not touched by the women and do not climax, they say they experience a sense of energy and satiation. Both the strokers and strokees insist that all this OMing is really about the "hydration" of the self, the human connection, not sex.
Reese Jones, a venture capitalist-slash-geek-slash Ms. Daedone's boyfriend, likens orgasmic meditation to massage.

"It's a procedure to nourish the limbic system, like yoga or Pilates, with no other strings attached," he said. "When you go to a massage therapist," he added, "you don't take the masseuse to dinner afterward."

MS. DAEDONE'S inspiration and mentor as a sex guru was Ray Vetterlein, who achieved fame of sorts in sex circles by claiming to lengthen the average female orgasm to 20 minutes.

Mr. Vetterlein, now in his 80s, was inspired by Lafayette Morehouse, a controversial 40-year-old community still in existence in suburban Lafayette, Calif., that has been conducting public demonstrations of a woman in orgasm since 1976.
Morehouse's founder, Victor Baranco, was a former appliance salesman who called his philosophy "responsible hedonism." By some accounts, Mr. Baranco, who died in 2002, used coercive techniques of mind control.

"It was a huge ego-crushing machine, as any valid monastic tradition is," said a man who lived at Morehouse for 20 years and did not want to be identified.

Ms. Daedone's early career was hardly alternative: she studied semantics at San Francisco State University and then donned her pearls to help found an art gallery. But at 27, her world came crashing down when she learned that her father, from whom she was largely estranged, was dying of cancer in prison, after being convicted of molesting two young girls.

"Everything in my reality just collapsed," she said. "My body turned to stone and crumbled."

Her father had not behaved inappropriately toward her, Ms. Daedone said; on the contrary, he was a distant figure.
"There had been a way I felt close to him in this felt way, and then all of the sudden he would shut down," she said. "I later came to understand that he was trying to protect me from himself, from his pathology."

Her pathway back to life was initially Buddhism, which she pursued with a vengeance, intending to live in a Zen community. But at a party in 1998, she met a Buddhist who had a practice in what he called "contemplative sexuality."

He invited her to lie down unclothed, set a timer and, while stroking her, proceeded to narrate in tender detail the beauty he saw, the colors that went from coral, to deep rose, to pearlescent pink. "I just broke open, and the feeling was pure and clean," Ms. Daedone said. "In a strange way, I think at that moment I decided to live."

Since opening One Taste, she has allowed it to go through numerous permutations; to her chagrin, it initially attracted misfits who "liked to get sloppy and grope each other," she said.

She concedes that she has made mistakes — among them the naked yoga class — but she has been savvy about packaging her product. She changed the term "deliberate orgasm," as it is called by other practitioners, to the more marketable "orgasmic meditation."

Much of the community's tone revolves around Ms. Daedone, a woman of considerable charm, although detractors regard her as a master manipulator.

"Nicole groks people," said Marci Boyd, 57, the group's oldest resident, borrowing a phrase from Robert A. Heinlein's "Stranger in a Strange Land" that connotes understanding someone so totally that the observer becomes one with the observed.
Elana Auerbach, an original resident, who left the group with Bill Press, who is now her husband, said the upshot of Ms. Daedone's ability to become exactly the person an individual yearns for is that "they take on Nicole, exude Nicoleness."
"You stop trusting yourself and start trusting Nicole," she said.

Until recently, residents lived in tight quarters, sacrificing privacy for the group, two to a bed, 12 beds to a room, each bed separated by a curtain. Now they have private rooms in a building adjacent to the meditation center (both are somewhat providentially on Folsom Street, home of the world's largest annual leather, bondage and fetish fair).

Ms. Auerbach said that she and Mr. Press eventually decided they wanted a life that was "heart-focused rather than genital-focused." Now parents of a baby boy, they view their experience as a cautionary tale.

"Nicole promulgates a message and everyone else reflects that," Mr. Press said.

Ms. Daedone insists she does not invite or like the all-powerful image. "There's a high potential for this to be a cult," she said.
She recently moved out of the communal living quarters, in part to fight this tendency. "Whenever I was in the space, everybody treated me like a guru," she said. "I'd wake up and people would come sit on my bed."

Now she lives with Mr. Jones, her boyfriend, a braniac who sold a computer software company he founded, Netopia, to Motorola for $208 million, and makes financial resources available to One Taste, including helping to buy a retreat in Stinson Beach, Calif.
Ms. Daedone wants One Taste to be mainstream, and to that end the center presents lectures by rabbis and Tibetan monks, along with public classes and workshops in "mindful sexuality."

But a One Taste Peoria seems hard to imagine. At a weekend workshop at the center recently, attended by scores of men and women interested in learning orgasmic meditation, Ms. Daedone outlined her philosophy.

"In our culture," she said, while beatifically seated on a cushion, "women have been conditioned to have closed sexuality and open feelings, and men to have open sexuality and closed feelings. There's this whole area of resistance and shame."

Soon the aspiring OM-ers, including a couple from Marin County hoping to rekindle their marriage, gathered on the floor kindergarten-style around a massage table. Justine Dawson, a wholesome-looking 34-year-old community resident, took off her robe and hopped up. Another resident, Andy Roy, 28, began his task, his concentration so exquisite that he broke into a sweat.

Attendees were instructed to call out their feelings, and many did, describing the turn-on they, too, were feeling.
When it was over, Ms. Dawson emanated radiance worthy of a Caravaggio, a youthful innocence. In another context, it might have been a profound and romantic moment between two lovers. Instead, a different image came to mind: the post-coital interview by Howard Cosell, holding a microphone, in Woody Allen's "Bananas."

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The market is destructive. That's its point

 

 

Brown and Obama declare they love free trade. So why don't they follow the logic of their thinking?

Jamie Whyte

 

Governments must not respond to the financial crisis by erecting barriers to international trade. They must not adopt the "beggar thy neighbour" policies that deepened and prolonged the Great Depression of the 1930s.
 
So say most commentators and many politicians, including Peter Mandelson on these pages on Monday. Even President Obama, having advocated trade barriers during the Democratic primaries, now claims that he does not want to "send a protectionist signal". And Gordon Brown rarely misses an opportunity to recommend free trade in these troubled times.
 
They are confused. To see why, start by asking what is so good about free trade. The short answer is that it allocates resources to their most efficient uses. Any introductory economics textbook will explain how. But a simpler route to the answer is to see that international trade benefits us in the same way that technological advances do, as the economist Steven Landsburg explains with a fable (from his More Sex is Safer Sex: the Unconventional Wisdom of Economics): "Once there was a man who invented a new and cheaper way to analyse MRI data. Medical costs fell and more people got better care. The invention put some radiologists out of work, but even that had its upside - after a little retraining, the radiologists moved into other specialties where their talents were much appreciated.
 
"But one day, an investigative journalist tracked down the inventor's disgruntled former assistant and learnt that the great 'invention' was nothing more than a $600 laptop computer connected to the internet. The so-called inventor e-mailed data to Asia, where it was analysed by low-paid Asian radiologists. They e-mailed back their reports, which he advertised as the output from his machine."
 
Be it new technology or simply trade, the economic benefit of the new process is the same: cheaper medical care and, hence, resources liberated for other uses. And, be it technology or trade, these benefits could be eliminated by a subsidy to domestic radiologists. Suppose the analysis of an MRI scan costs $50 using the Asian radiologists and $100 using domestic radiologists. If government decided to subsidise domestic radiologists by $60 per MRI scan, then they could offer their services for $40 and patients would no longer prefer the Asian alternative.
 
The subsidy would not reduce the cost of domestic radiologists; their MRI analyses would still cost $100 to produce. The subsidy would thus divert resources away from their more efficient use. In other words, it would create waste. Since the wasted resources would no longer be available for alternative uses, the subsidy would make us poorer.
 
That is the reasoning of those of us who love free trade - or, at least, of most of us. It cannot be the reasoning of Mr Obama and Mr Brown. For, besides declaring their love of free trade, they declare their love of subsidies. They claim they can make us richer by maintaining the subsidies they already have in place - of agriculture and healthcare, to name but two of countless examples - and by adding subsidies for other industries as well, such as construction and car manufacturing.
 
Those who think subsidies will enrich us doubt the merits of the market mechanism. They doubt that market prices result in an efficient allocation of resources and they doubt the value of what the sociologist Joseph Schumpeter dubbed "creative destruction". They believe that the cost to those who lose their jobs or businesses as a result of competition exceeds the benefits to society provided by more efficient production. Economic planners - using subsidies, taxes, quotas, regulations and so on - can, they think, achieve better results than free markets.
 
Never mind which view is right. The question is which view Mr Obama and Mr Brown endorse. The contradiction in their pro-subsidy, pro-free trade position lies not merely in the inconsistent theoretical foundations of these two positions. It is more direct. As the MRI fable illustrated, domestic subsidies are themselves barriers to free trade. Mr Brown's subsidy of British carmakers (if only for "green" cars), creates a barrier to the import of more efficiently produced foreign cars.
 
It is fascinating, if futile, to speculate on the source of our leaders' incoherence. I suspect it comes from a superficial, pick-and-mix dedication to doing "what works". They have heard that trade barriers aggravated the Great Depression and also heard that Roosevelt's public works programme helped to return America to growth. So they plump for both subsidies and free trade, failing to think hard enough about how these policies are supposed to work to notice that their combination is impossible, not just intellectually but practically.
 
Mr Brown has long advocated impossible combinations, such as increasing both labour market flexibility and employee protection (just one of the miracles that he and Tony Blair promised their Third Way would deliver). But it is disappointing to discover that, after emerging from the fog of grandiose rhetoric, Mr Obama has the same tendency.
 
Jamie Whyte is the author of Bad Thoughts: A Guide to Clear Thinking
 

• Have your say

 

Glen is completely wrong. The standard of living would rise marginally in the UK and dramatically in Asia. And wages do not tend to a global average, they rise overall because money and resources including labour are not being wasted but are being allocated efficiently.

As has been happening.

 

Alan Wilkinson, Russell, New Zealand

 

That's fine as long as you accept that wages and standards of living will initially at least tend to some sort of global average. The standard of living in the UK would drop dramatically and that in Asia would rise marginally. I for one am not so altruistic.

 

Glen, Melbourne,

 

 

I suspect the main idea of loudly promoting free trade is to try to persuade other markets to stay open and non-protectionist rather than a serious declaration of personal intent. The reasoning would thus appear to be political rather than economic.

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The logic of arranged marriage in India 15 Mar 2009, 2226 hrs IST, Santosh Desai

Why does the institution of the arranged marriage survive in India in this day and age? The India I am talking about in this case includes the educated middle class, where the incidence of arranged marriages continues to be high and more importantly, is accepted without any difficulty as a legitimate way of finding a mate. Twenty years ago, looking at the future, one would have imagined that by now, the numbers of the arranged marriage types would have shrunk and the few remaining stragglers would be looked down upon as belonging to a somewhat primitive tribe. But this is far from being so. The answer lies partly in the elastic nature of this institution, and indeed most traditional Indian customs, that allows it to expand its definition to accommodate the needs of modernity. So today's arranged marriage places individual will at the heart of the process; young men and women are rarely forced to marry someone against their wishes. The role of the parents has moved to that of being presiding deities, with one hand raised in blessing and the other hand immersed purposefully in the wallet. The need for some arrangement when it comes to marriage is a very real one, both here as well as in those cultures where arranged marriages are anathema. The blind date, being set up by friends, online dating, the speed date, reality swayamvar-type shows are all attempts to arrange ways that one can meet a potential spouse. Here the idea of love is being not-so-gently manufactured by contriving a spark that could turn into the cozy fire of domesticity. The arranged marriage of today is more clearly manufactured but it also offers a more certain outcome. Online matrimonial sites are full of young professionals seeking matches on their own, knowing that what is on the table here is not a date but the promise of marriage. In the West, the curiously antiquated notion that it is the prerogative of the man to propose marriage makes for a situation where the promise of marriage is tantalizingly withheld by one of the concerned parties for an indefinite period of time. Indeed, going by Hollywood movies, it would appear that to mention marriage too early in a relationship is a sure way of scaring off the man. So we have a situation where marriage is a mirage that shimmers on the horizon frequently, but materializes rarely. The mating process becomes a serial hunt with the man doing the pursuing to begin a relationship and the woman taking over the role in trying to convert it into something more lasting. At a more fundamental level, the idea that romantic love is the most suitable basis for a long-term relationship is not as automatic as it might appear. Marriage is the only significant kinship tie that we enter into by choice. We don't choose our parents, our relatives or our children — these are cards that are dealt out to us. For a long time, in a lot of cultures, and even now in some, marriage too is a relationship we do not personally control. This view of marriage works best in contexts where the idea of the individual is not fully developed. People live in a sticky collective and individuality is blurred. A young Saraswat Brahmin boy, earning in four figures was sufficient as a description and one such person was broadly substitutable with another. As the role of the individual increases and as dimensions of individuality get fleshed out in ever newer ways, marriage must account for these changes. The idea of romance makes the coming together of individuals seem like a natural event. Mutual attraction melts individuals together into a union. In contexts where communities fragment and finding mates as a task devolves to individuals, romance becomes a natural agent of marriage. The trouble is that while the device works very well in bringing people together, it is not intrinsically equipped to handle these individuals over time. For, the greater emphasis on the individual has also meant that personal needs and personal growth come to occupy a privileged position in every individual's life. Falling in love becomes infinitely easier than staying in it as individuals are no longer defined primarily by the roles they play in marriage. So we have a situation where people fall in and out of love more often, making the idea of romance as a basis of marriage not as socially productive as it used to be. Romantic love seeks to extend the present while the arranged marriage aims at securing the future. It keeps the headiness of romance at bay, and recognizes that romance and the sustenance of a socially constructed long-term contract like marriage do not necessarily converge. Of course, the arranged marriage has its own assumptions about what variables make this contract work and these too offer no guarantees. In a world where our present has become a poor indicator of our future, the idea of arranging marriages continues to hold charm. Whether it is cloaked in tradition as it is in India or in modernity as it is elsewhere, the institution of marriage needs some help. The expanded Indian view of the arranged marriage functions as a facilitated marriage search designed for individuals. Perhaps that is why convented matches from status families will continue to look for decent marriages, caste no bar.

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Without fear, Viru’s come into his own

Harsha Bhogle
Posted online: Mar 13, 2009 at 0948 hrs
It would be easy to image Virender Sehwag as a pirate, terrifying genteel passengers on a cruise liner with his weapons and his audacity. Picture the bandana, the cutlass coming down with the speed of a bat clobbering a ball past mid-on! Pity then that he has the look of a genial halwai from Chandni Chowk, chubby cheeks and an enduring tussle with his girth, enjoying his jalebis as much as he does serving them; never too far from a smile and, as we now know, from the odd wink as well!
New Zealand’s bowlers might think he is a bully, riding roughshod over them and trivialising their offerings. But he isn’t a bully either because all bullies are, inherently, cowards shying away when someone bigger comes along. Over the last eight years, Sehwag has taken on the quickest in demanding circumstances and sometimes he has won and sometimes he has lost. But he is willing to take on the bowlers and the conditions, not afraid to lose, and that is not a quality bullies possess!

There is a secret to his fearlessness, a trait that resides in all those who are happy to live with risk; or indeed risk as most of us perceive it. Sehwag is not afraid of getting out. It doesn’t mean he is lackadaisical or that batting is a reckless, momentary pursuit. It is just that his mind is free from the fear of defeat.

And as most of us would have seen in our own lives, the moment we contemplate defeat, we open our doors to it. I’m sure he is aware, like most of us are, that in the pursuit of success, failure is always a neighbour, a by-stander waiting to jump in. But the more we look sideways at this neighbour, the less we look ahead. Sehwag has this extraordinary ability to let failure jump in from time to time but not worry too much about it.

But then, he has always been like this. What explains this amazing burst, this transformation from a potentially great but terribly ordinary one-day batsman to one that bowlers around the world fear and who, in his last 20 games, averages 60 with a strike rate of 130? For years Sehwag was a huge under-achiever, averaging a mere 30 at the top of the order and possessed of a maddening urge to find the fielder at third man to a ball that was short and outside off stump. Now he hardly seems to get out there and surely it cannot be because bowlers have stopped bouncing it short and high outside his off stump? Is speed, or lack of it, the issue, or are bowlers indeed bowling fuller or is there a greater discretion in strokeplay?

My guess is that he now has a greater variety of shots, especially on the leg side. He always flicked the ball well off his pads but could be kept quiet by the ball that bounced into his rib cage. Now he seems to have a couple of shots for balls in that area. First, the trademark straight jab through mid-wicket, a shot achieved through his incredible bat speed. But more important, when it gets higher, he has started pulling the short ball. And anything that comes off the middle of the bat and achieves decent elevation goes out of the ground in New Zealand anyway!

I also suspect he is being given the space that every performer needs. Inherently, performers need to be happy souls; a trapeze artist worrying about his job will probably find the safety net. With Gambhir, Yuvraj and Raina batting well, Dhoni solid and reliable and Tendulkar still evergreen, Sehwag probably has the licence to play his brand of fearless cricket. And he seems to be carrying this freedom with a touch of gravity because it can be a thin line between bravery and recklessness. For Sehwag to find out how far his ability can take him, he must have the freedom to play in his style and this team, through its composition and attitude, is giving him this freedom.

And so Sehwag can embellish our game with his own brand of cricket; so different from the two greats of this era — Rahul Dravid and Sachin Tendulkar. Dravid is the kind who would study angles like a draftsman, work out the best ones to employ and then use his incredible work ethic to perfect them. Tendulkar, for all his genius, has never been independent of the field setting; either showing up gaps through his placement or creating them where he wants to by playing the ball elsewhere (see how he plays the paddle sweep which forces a fielder to be placed there and opens up a gap where he wants it to be opened).

But Sehwag looks upon the field placement as an independent event; something the opposition captain has to do but not anything he needs to worry about.

That is why it is a great game; because it has room for all kinds; and because it has room for Sehwag.

‘Beginning of the end of tax havens’

 

 

By Vanessa Houlder
Published: March 13 2009 18:55 | Last updated: March 13 2009 18:55
 

A cascade of concessions on tax secrecy by some of the world's leading private wealth centres has been hailed as a breakthrough in a decade-long international assault on evasion.
 
Gordon Brown, British prime minister, talked on Friday about "the beginning of the end of tax havens".
 
The pursuit of tax evaders by foreign countries will be made easier by the promises of greater co-operation by Switzerland, Austria, Luxembourg, Hong Kong, Singapore, Liechtenstein, Andorra and others. They have bowed to pressure by adopting international standards on transparency, although insisting they will continue to protect investors' privacy.
 
Richard Hay of Stikeman Elliott, an international law firm, said: "Switzerland's capitulation to the OECD is a game-changer."
The anti-tax haven initiative led by the Organisation for Economic Co-operation and Development has been stymied by charges of hypocrisy. The tiny islands and states accused of harbouring undeclared money deflected attacks by pointing out that similar charges could be levelled at OECD member states such as Switzerland as well as Asian financial centres such as Hong Kong and Singapore.
 
Concessions by big players such as Switzerland and Singapore rip that defence away from the remaining offshore centres such as Panama that cling to secrecy. They also dilute the threat that the closure of one haven will simply divert money to another.
The moves pave the way for intense pressure to be applied to the remaining hold-outs. Angel Gurría, secretary-general of the OECD, noted that "many jurisdictions still maintain arrangements that prevent them from assisting foreign authorities in tax investigations". Offshore centres reluctant to co-operate with foreign tax authorities face the threat of being "blacklisted" at next month's London summit. Sanctions ranging from higher withholding taxes to restricting banking transactions could be applied.
 
But critics of tax havens are sceptical about the OECD's initiative. Foreign tax authorities wanting to take advantage of tax information exchange agreements need to supply evidence of their suspicions. If they have no "smoking gun", they will be unable to extract information. More-over, the bilateral deals on information exchange rarely help developing countries chase down evaders. Oxfam, the charity, said this week that losses from offshore evasion may cost developing countries more than they receive in foreign aid.
 
Bankers and lawyers in the finance centres affected by this month's announcements have been keen to emphasise the limits to the concessions. Jean Schaffner, a Luxembourg partner of Allen & Overy, said the state's proposals were a "good compromise between the need to co-operate with foreign tax administrations and the desire to preserve privacy". Fears that foreign authorities could make "blanket requests" for information were not realised.
 
Moreover the crackdown on evasion does not tackle complex issues concerning corporate use of offshore centres, which companies often favour for their tax-neutrality and legal structure. The US administration has promised action against avoidance by US companies using tax havens.
 
Offshore centres are also anxiously eyeing anti-tax haven bills introduced in both US Houses of Congress last week, which were endorsed by Timothy Geithner, Treasury secretary, who promised "a much more ambitious effort to deal with offshore tax havens".
The legislation listed 34 "secrecy jurisdictions", although there was provision for jurisdictions to be removed if they have "information exchange practices that effectively overcome those secrecy barriers".
 
Offshore centres are also braced for a new attempt by the European Commission to close loopholes in the Savings Directive, its 2005 anti-evasion legislation. The Commission is keen to extend its geographic reach to ensure that evaders do not simply shift their money to centres such as Hong Kong, Singapore and Dubai.
 
Some offshore centres said they hoped that the political furore over tax havens before next month's G20 meeting might die down. Geoff Cook of Jersey Finance, which represents Jersey's finance industry said the concessions: "will defuse it to a large degree." But some influential politicians were guarded about the impact of the concessions.
 
Christine Lagarde, French finance minister, warned that "the devil is in the detail". She said: "We must go all the way and see if banking secrecy is sufficiently lifted."

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Myth of Free Trade and the Secret History of Capitalism

 

March 12, 2009

By Ha-Joon Chang and Amy Goodman

Source: Democracy Now!

 

AMY GOODMAN: The US government has poured hundreds of billions of dollars into the US economy in the wake of the financial crisis. But what steps are being taken to address the crisis on a global scale? On Sunday, the World Bank warned of the first global recession since World War II, with the world economy set to shrink for the first time since the 1940s. The bank also cautioned that the cost of helping poorer nations in crisis would exceed the current financial resources of multilateral lenders. The economic crisis is projected to push around 46 million people into poverty this year.

 

The financial crisis is forcing some to rethink the neoliberal policies widely blamed for the financial collapse. On Monday, British Prime Minister Gordon Brown called for a new international fund to support poorer countries during the global recession. He also acknowledged richer Western nations have often imposed economic policies on poorer countries that they haven't followed themselves.

 

PRIME MINISTER GORDON BROWN: We will work with the World Bank and our G20 partners to build support for a new fund specifically to help the world's poorest through the downturn. Too often, our responses to past crises have been inadequate or misdirected, promoting economic orthodoxies that we ourselves have not followed and that have condemned the world's poorest to a deepening crisis of poverty.

 

 

 

AMY GOODMAN: Brown says he'll raise the issue of a global fund at the next G20 meeting in July.

 

Well, my first guest has been among the leading economists to criticize the neoliberal policies imposed on poor nations but not followed by the West. Ha-Joon Chang is an economist at the University of Cambridge specializing in developmental economics. In 2005, he was awarded the Leontief Prize for Advancing the Frontiers of Economic Thought. He is author of the books Kicking Away the Ladder: Development Strategy in Historical Perspective, and his latest is called Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism.

 

Welcome to Democracy Now!, as you come from, well, Gordon Brown's country to this one. First, what is your assessment of the situation right now? Warren Buffett has just said that the economy has gone off a cliff.

 

HA-JOON CHANG: Well, I think we are facing the biggest economic crisis since the Great Depression. Now, it probably wouldn't get as bad as the Great Depression, because, unlike in the Great Depression, governments are more willing to intervene with deficit spending and nationalizing financial institutions and giving subsidies to industry and so on, whereas in the 1930s they more kind of adamantly held onto free market doctrines, which they subsequently abandoned, but, I mean, there was a period of time when they just held onto it and lost the opportunity. So I don't think the impact would not be as severe as what it was in the 1930s, but yes, I mean, there's no question that this is as big or possibly even bigger a crisis than what we saw in 1929.

 

AMY GOODMAN: Can you explain what are neoliberal policies? And then you can critique them.

 

HA-JOON CHANG: Yes. Well, basically, the reason why it's called "neoliberal" is that it's a successor to nineteenth century classical liberal doctrine. I mean, "liberal" in American usage usually means kind of the left to the center, but in the European usage, "liberal" means basically belief in the free market and private ownership and basically rule of money.

 

Now, neoliberals have moderated some of the old liberal beliefs. For example, the old liberals actually thought that democracy was bad for capitalism. You know, they thought if you have democracy, poor people vote and create things like income tax, which they have, but, I mean, it actually helped the economy rather than destroyed the economy like the liberals said. So the neoliberals [inaudible] some degree of progressive income tax. The liberals used to be against, for example, having a central bank. The neoliberals actually like the central bank pumping money into the economy when things are going wrong. So it has modified the classical liberal doctrine, but neoliberalism still has, in its core, belief in free market, free trade, deregulated economy and private ownership.

 

AMY GOODMAN: Do you find it funny that you're saying—that Gordon Brown is saying what you have been saying for a while—

 

HA-JOON CHANG: That's right, yeah.

 

AMY GOODMAN: —talking about the hypocrisy of the West? But explain what that is, what the US has done or what the West has done with poorer countries when they're in trouble, and then what we do when we're in trouble.

 

HA-JOON CHANG: That's right, yeah. For example, when the developing countries go into financial crises like the rich countries are experiencing today, they were told by the IMF and the World Bank, and ultimately the rich country governments which control these institutions, that they have to cut spending; ideally, they should run budget surplus. They have to raise interest rate to 30, 50, even 80 percent in some countries. And basically, they have to tighten the belt. Now that the rich countries have the financial crisis, they have cut interest rate to practically zero. You know, I mean, when South Korea had its financial crisis back in 1997, the IMF insisted that the country runs budget surplus equivalent to one percent of GDP. This year in the US alone, budget deficit is estimated to be equivalent to something like 12 percent of GDP.

 

Now, I mean, how do you explain that? I mean, that these policies are not good enough for you? I mean, "We'll use one set of policy, which we think are the good ones, but you have to use something else." You know, the American writer Gore Vidal once upon a time famously said that the American economic system is socialism for the rich and capitalism for the poor, and the international macroeconomic policies have been like that. I mean, it's what I call monetarism for the poor and Keynesianism for the rich. So when the rich countries have a fall in demand, they think nothing of boosting it up by printing money and increasing government spending; the poor countries shouldn't do that.

 

Now, it's not only the macroeconomic policy where this hypocrisy has a role. For example, the rich countries have been telling the developing countries to adopt free trade and told them, "Look, I mean, all countries in history probably, with the possible exception of Japan, have become richer through free trade. So how do you think that you guys can manage it otherwise?" Well, actually, if you look at the British history, American history, you find that today's rich countries used protectionism, center, left and right, when they were developing countries. You know, I mean, for about one century, until the Second World War, the United States was actually the most protectionist country in the world. You know, there's something there when Pat Buchanan said free trade is not free American, because in its 200 years of history, it has practiced free trade only for about fifty years.

 

AMY GOODMAN: We're talking to Ha-Joon Chang, economist at University of Cambridge, just here from London, going back. Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism is his book. We'll be back with him in a minute.

 

[break]

 

AMY GOODMAN: Our guest is Ha-Joon Chang. He is a world-renowned economist, wrote Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism. I wanted to ask you about the Obama administration's response to the financial crisis. This is President Obama speaking Friday in Columbus, Ohio.

 

PRESIDENT BARACK OBAMA: Now, there were those—there were those who argued that our recovery plan was unwise and unnecessary. They opposed the very notion that government has a role in ending the cycle of job loss at the heart of this recession. There are those who believe that all we can do is repeat the very same policies that led us here in the first place. But I also know that this country has never responded to a crisis by sitting on the sidelines and hoping for the best.

 

 

 

AMY GOODMAN: President Obama. Your response, Ha-Joon Chang?

 

HA-JOON CHANG: Right. Well, no, I mean, I agree with this sentiment, but the people he put in charge of the economy, like Paul Volcker and Larry Summers, I mean, these are people who actually created this problem. You know, Volcker is, if you like, the godfather of monetarism in this country. And Larry Summers, when he was at the World Bank as the chief economist and then when he was at the Treasury later, I mean, was going around the world preaching to other countries that they have to deregulate their financial market, open up their borders to the American and other rich country financial flows. Now, what they are doing now isn't what they were doing before, but if they have started believing in something else, they should come clean and apologize, don't you think? I mean, because these are the people, with others, who created these problems.

 

AMY GOODMAN: What do you think needs to be done right now?

 

HA-JOON CHANG: Well, I think one important thing that this country needs to do is basically to abandon this obsession with private ownership and go for nationalizing the banks. You know, what the government is proposing now is basically "We'll plug whatever gap that emerges in the banking sector, because if they go down, we go down all together." No, I mean, at one level it's true. But if you want to do that, you have to actually make people answer to these demands. So, now that the taxpayers are paying all this money, why not actually nationalize these banks and make them public servants so that they answer to those who have paid for them?

 

AMY GOODMAN: What do you think of the debate here in the United States, while you're here watching television, the whole controversy over nationalizing the banks?

 

HA-JOON CHANG: Well, I think that this is the legacy of, if you like, neoliberal dominance. I mean, somehow, what you guys call the N-word here is a dirty word. But actually, in the history of capitalism, there are many countries that have run very successful economies on the basis of nationalized banking sector. For example, France until the 1990s, I mean, was basically based on nationalized banking system, and still the government has quite a lot of stake in the banking sector. Singapore, which people believe is some example of free market economy, is actually, in that country, more than 20 percent of national output is produced by nationalized companies.

 

AMY GOODMAN: You're originally from South Korea.

 

HA-JOON CHANG: That's right, yeah.

 

AMY GOODMAN: What about South Korea?

 

HA-JOON CHANG: Well, in South Korea, too, you know, I mean, it didn't use public ownership as much as Singapore or France, but there are very successful companies like POSCO, the steel company, that is now the third largest steel company in the world, was started out as a government-owned enterprise. I think this notion that public enterprises do not work and therefore nationalization will be a disaster, I mean, it's not supported by evidence.

 

AMY GOODMAN: What about nationalization of companies like GM and Chrysler?

 

HA-JOON CHANG: Well, if you—no, I mean, let's play by the capitalist logic. If the taxpayers are paying the money, you have to nationalize them. You know, I mean, the whole problem, people say, is that all these bankers were playing with other people's money. So now, I mean, that they are being paid by the taxpayers, it is only right that the taxpayers control these companies. If they don't want this money and they don't want to be nationalized, they should go bankrupt.

 

AMY GOODMAN: Ha-Joon Chang, I wanted to ask you about Latin America, how leaders there are responding to the economic crisis after decades of following Western demands. Earlier this year, the World Social Forum was held in Brazil. Several Latin American presidents criticized the US for exercising double standards and allowing massive state intervention in financial markets. This is Ecuadorian President Rafael Correa.

 

PRESIDENT RAFAEL CORREA: [translated] The guilty parties in this crisis try to give lessons on morality and good economic handling. The most powerful people on the planet have united to find a therapy for the dying. They're getting together—the central bankers, the representatives of large financial firms, the people primarily responsible for the crisis.

 

 

 

AMY GOODMAN: Ecuadorian President Rafael Correa. He's also a trained economist and was reportedly influenced by your work.

 

HA-JOON CHANG: Yes. I mean, I think he has read my work, and in a number of places, he has quoted me. Yes, but Rafael is only—I mean, the striking examples of a whole group of Latin American leaders which have abandoned neoliberalism and are seeking their own ways. I mean, you know, today, which country in Latin America really listens to the United States? I mean, only Colombia and Chile. And I mean, even Chile now has President Bachelet, who famously joked that the reason why the United States doesn't have a coup d'etat is—unlike Latin America, is that it doesn't have US embassy. And, of course, that led to a diplomatic stir there. But now, even in Paraguay, I mean, the country which was ruled by military dictator General Stroessner for thirty-five years, has this left-wing former bishop as the president. And the whole continent has basically been drifting away from the neoliberal American strategy. And with this crisis, they'll move away even further, unless America changes its approach to the continent.

 

AMY GOODMAN: One of the people you take on big time in your book is Thomas Friedman. Your first chapter, "The Lexus and the Olive Tree Revisited: Myths and Facts About Globalization." We only have a minute to go, but what do you think are the myths that need to be debunked in this country?

 

HA-JOON CHANG: Well, basically, the myth is that America has been founded on the free market; the government has done very little; it has thrived under free trade. But actually, if you look at the history, this is actually the country that has succeeded most with protectionist policies. This is a country which has huge industrial policy, only that it's called research funding in defense industry and research funding in health research. It actually spends, in proportional terms, a lot more money than Japan or European countries in supporting research and development, thereby steering the industries into certain directions. So let's put it this way. I mean, this country has to basically come to terms with what it has done. I mean, it has been haunted by this ideology that, "Oh, we never did anything other than free market and free trade." It's time to give that up.

 

AMY GOODMAN: Do you think that America will continue to be a leader in the world economically, or do you think this is going to fundamentally change its position?

 

HA-JOON CHANG: No, I think in relative terms, it's obviously in decline, but, I mean, it's still, by far, the single richest economy in the world. And, you know, I mean, I give credit where it's due. I mean, it's the only country which became the world hegemony and created room for other countries to rise together. These were the Marshall Plan days, which sadly ended in the '70s, and the US became even more kind of insistent on pushing these wrong policies on the developing countries and some other countries. But, you know, it has a great record, and I think that the country should exploit that history and try to reinvent itself as a new leader in the world.

 

AMY GOODMAN: I want to thank you, Ha-Joon Chang, for being with us. His latest book, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism. Safe travels back to Cambridge.

 

HA-JOON CHANG: Thank you.

 

AMY GOODMAN: He's an economist there at the University of Cambridge in Britain.

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