Alpha markets

 Robert H Frank 

 

Though Adam Smith is ­almost universally regarded as the father of modern economics, most economists will eventually see Charles Darwin's ideas as the true intellectual foundation of our discipline. Smith's modern disciples celebrate his invisible hand theory, which says markets harness individual self-­interest to serve society's interests. Smith himself was more circumspect, claiming only that self-interested actions often lead to socially benign outcomes. But that claim is remarkable enough. Competition among greedy producers often yields innovations that result in cheaper and better products for everyone.

 
It was Darwin, however, who better grasped the complex relationship between individual and social interest. And we must turn to his account if we are to understand the recent meltdown in financial markets. His deep insight was that natural selection favours traits and behaviours according to their effect on individual organisms, not groups. Sometimes individual and group interests coincide. But interests at the two levels often conflict.
 
Male body mass is a case in point. Most vertebrate species are polygynous, meaning that males take more than one mate if they can. The qualifier is important, because when some take multiple mates, others get none. The latter don't pass their genes along, making them the ultimate losers in Darwinian terms. So it is no surprise that males often battle furiously for access to mates. Size matters in those battles. And hence the evolutionary arms races that produce larger males.
 
Bull elephant seals often weigh more than five times as much as females. But their size is a handicap, making them far more vulnerable to sharks and other predators. Given an opportunity to vote on a proposal to reduce their weight by half, bulls would have every reason to favour it. But they have no such opportunity. And any bull that weighed much less than others would never find a mate.
 
Similar conflicts arise when individual rewards depend on relative performance. This payoff structure, common in financial markets, helps explain why those markets sometimes fail catas­trophically. Wealth managers' salaries depend primarily on how well their investments perform in relative terms. Funds offering higher returns immediately attract cash from rival funds. If the invisible hand functioned as Alan Greenspan and other modern disciples of Adam Smith imagined, there would be no problem. Investors would be fully compensated for any additional risk they took in search of higher returns. But human brains forged by natural selection don't work as assumed in economics textbooks.
 
As our brains were evolving, immediate threats to survival loomed everywhere. Natural selection thus favoured a nervous system keenly sensitive to immediate relative payoffs, much less so to distant ones. Anyone disinclined to seize immediate gains at the risk of having to incur costs in the future would experience low relative rewards in the short run. And when competition was intense and immediate, such individuals often didn't survive to see the long run.
 
In market settings, a nervous system biased in favour of short-term relative reward is a recipe for disaster. When the price of an asset like housing is rising steadily, unregulated wealth managers can create leveraged investments that generate enormous rates of return. Even in the early years of this decade, many experienced analysts were warning that several mortgage-backed securities were poised to tumble. But investors faced a tough choice: they could earn high returns by continuing to invest in them, or they could move their money elsewhere. Many rejected the latter strategy because it would have required watching friends and neighbours pass them by.
 
Wealth managers felt compelled to offer the risky investments, since many customers would otherwise desert them. Managers also knew there would be safety in numbers when things soured, since almost everyone had been following the same strategy. The resulting collapse was inevitable.
 
Adam Smith's invisible hand is a truly extraordinary insight. But when rewards depend on relative performance, it doesn't always deliver.
 
The financial meltdown that caught Adam Smith's disciples off guard would not have surprised Darwin. One of his central themes was that because much of life is graded on the curve, wasteful arms races create conflict between individual and social interests. The good news is that unlike other animal species, humans can often resolve such conflicts through intelligent regulation.

---

Share your photos with Windows Live Photos – Free. Try it Now!

Why the benefits of massage may be a myth

Athletes use post-exercise rubdowns to boost recovery but the gains could be all in the mind


Peta Bee
To top athletes and anyone else who exercises a lot or has put him or herself through the rigours of a marathon or triathlon, a regular massage is considered almost as essential to keeping the body in condition as diet and training. After all, the kind of deep-tissue massage practised by registered sports massage therapists promises to increase blood flow to aching muscles and flush out metabolic waste products such as lactic acid after a hard workout.

Nothing could be better for your aching limbs. Or could it? In a study presented at the American College of Sports Medicine’s annual conference in Seattle this week, researchers claimed to have blown the myth that massage speeds up recovery from exercise. Professor Michael Tschavovsky of the health studies department at Queens University in Ontario, Canada, says that while most massage therapists believe that their work boosts circulation to the muscles and reduces fatigue, no study before his had tested the validity of this theory.

Tschavovsky asked 12 healthy male subjects to perform isometric hand-grip exercises for two minutes at a time while he and his team measured blood flow and lactic acid build-up every 30 seconds and for ten minutes after the exercise had finished. They also took the same measurements during rest, when the subjects had massage and during “active recovery” such as gentle jogging, walking or stretching. What they found was that massage did not increase — but decreased — blood flow to the muscles and hindered rather than improved the removal of lactic acid and other waste materials by as much as 25 per cent compared to “active recovery”.

“Anyone who believes that lactic acid symptoms are relieved by massage is wrong because the alleviation of discomfort is not due to waste products being flushed out after exercise,” Tschavovsky says. So does this mean that post-workout massage is a waste of time? Tschavovsky thinks not. He is a fan himself and admits to having massage to help his legs to recover after football tournaments. But he says that the benefits could all be in the mind. “It feels good, that’s the truth of it,” he says. “A lot of sports performance is psychologically based so if you feel you are in a better situation to train with massage then, yes, it probably does have the ability to improve your performance.”

What his study shows, Tschavovsky says, is not that massage is useless but that it isn’t helpful for the claimed reasons. If it does work, scientists have yet to prove how.

Massage therapists are taking the findings with a pinch of salt. “Any sort of physical activity produces a cocktail of waste products — not just lactic acid — that vary according to the activity, the intensity of the workout, your age and diet,” says Mel Cash, principal tutor of the London School of Sports Massage, where many of Britain’s Olympic sports masseurs have trained. “A qualified therapist will be able to reduce the swelling of tissues and aid minor soft tissue injuries so that you are ready for your next workout.” Bob Bramah, a spokesman for the Sports Massage Association, the governing body of sports massage in the UK, says that there is plenty of evidence that massage is helpful after exercise. “But I also know by personal experience that what I do works,” he says. “I know that my players feel better afterwards. I know that as a result of that their performance is enhanced.”

But is it? Experts who have reviewed other types of massage claim that not only are many approaches ineffective but that some hold potential risks. Professor Edzard Ernst, a researcher into complementary medicine and director of the Peninsular Medical School in Exeter, says that part of the problem is that the profession is unregulated. While studies do show that massage can help to relieve a range of ailments from stress, migraines and infertility to back pain, sickle cell anaemia and joint problems, many are inconclusive.

A study at Ohio State University last year, for example, showed aromatherapy treatment to be relaxing because of a placebo effect, while a study of hot stone treatment (heated stones placed on the body) found that while the warmth was comforting there was no scientific evidence of a reduction in ailments. In the case of Thai massage, which aims to realign the body by using pressure on acupressure points, after a five-week study by the Touch Research Institute in Florida, subjects reported reduced job stress and elevated moods.

“In most cases the evidence is highly contradictory and while some studies suggest an effect others don’t,” Ernst says. “There is reasonably good evidence that massage can be helpful for back pain, but rigorous investigations are difficult to carry out because a good placebo does not exist.”

Susan Findlay, a spokeswoman for the General Council for Massage Therapies, the UK’s governing body for all soft-tissue techniques, says: “The lack of reputable studies boils down to massage being very difficult to investigate because there are so many variables, including technique, perception of benefits and the standard of a practitioner.” There are groups of people — including those with low platelet counts or who are taking blood-thinning medications, pregnant women and people with cancer, osteoporosis or rheumatoid arthritis — who should be cautious about having a massage and should do so only on medical recommendation. For them — and others — massage could do more harm than good.

Research by Dr Robert Gotlin, a sports and orthopaedic rehabilitation specialist at the Beth Israel Medical Centre in New York, suggested that 15-20 per cent of people who have massage for injuries end up having corrective treatment afterwards: problems they attributed to muscular pain were more likely to be linked to spine or bone abnormalities. Massage could make the problem worse, injuring nerves, causing muscle spasms or inflammation. Gotlin suggests that thin people avoid deeptissue techniques such as shiatsu and Swedish massage. They are good for easing tight muscles, he says, but can lead to damaged muscle tissue, nerves or bones, particularly around the spinal area, in people without much body fat to act as protection.

Ernst says that serious problems linked to massage are rare. A review of evidence he conducted for the journal Rheumatology uncovered a few adverse effects; the majority were associated with “exotic” types of manual massage or techniques delivered by underqualified practitioners. “Massage is not risk-free, but significant adverse events are true rarities.”

Un-Indian idol

Kapil Dev bowled fast at a time when his country didn't produce fast bowlers; his spirit lives on through the style and aggression of modern Indian teams



Gideon Haigh

May 30, 2009



'The liveliest and least imitable action of all' © Getty Images




In 1982 Scyld Berry, the very excellent cricket correspondent of the Observer who has lately become the editor of Wisden, published a fine book on England's recent tour of the subcontinent, entitled Cricket Wallah. No English writer to that point had studied India with such clarity, sympathy, or indeed rosy prophecy, for he far-sightedly concluded that the country would become "the capital of cricket": demography, he believed, was destiny.

In one judgment alone was Cricket Wallah amiss. On the basis of the tour's two one-day internationals, Berry thought that limited-overs cricket held "no great attraction" in India. Batsmen were still technically correct, and spin bowling endured, "integral, not an adjunct" to the game, for it "suited the rhythms of Indian life". In fact, he had just watched the cricketer who, more than any other, would challenge both those appealing preconceptions.

Two-hundred and seventeen of Kapil Dev's 432 Test wickets were taken in the heat and dust of India by uncompromising toil; he brought a gaiety to batting in a team that sometimes seemed unaware that Tests were no longer timeless. Above all, by leading India to the World Cup of 1983, he turned his country's cricket priorities on their head - and all this from most inauspicious beginnings.

"There are no fast bowlers in India," 15-year-old Kapil was told when he complained about the short rations at lunch at a training camp at Brabourne Stadium in 1974. The judgment was hurtful, but not unfounded. In the last Test India had played at home, for example, the new ball had been taken by Eknath Solkar (two overs) and Sunil Gavaskar (one over), then surrendered to the slow-bowling wiles of Bedi, Chandra and Prasanna. It had not, however, been ever thus. Peer back to pre-war, pre-partition India, and the country's opening attack was probably superior to Australia's. The likes of Tim Wall and Ernie McCormick had nothing to teach Mohammed Nissar and Amar Singh, except that Nissar's best years were swallowed by World War II, while Amar succumbed to pneumonia aged 30.

A "feeling of loss" pervaded Indian cricket in their wake, according to its historian Mihir Bose, which intensified over the next 40 years whenever the country's batsmen crossed paths with bowling of real pace. Ray Lindwall and Keith Miller made them suffer in Australia, Fred Trueman lorded it over them in England, and Charlie Griffiths nearly killed Nari Contractor in Barbados. Most ignominiously Clive Lloyd's pacemen set about Bedi's batsmen like sadistic thugs in a dark alley at Sabina Park in April 1976.

By that stage Kapil had been a first-class cricketer for one season, without much encouragement. In his second game for Haryana, versus Delhi, he played against Bedi, who was selling one of his Gray-Nicolls bats, and had set a reserve on it of Rs 500. With help from his friend Ashok Malhotra, Kapil scraped together Rs 475, but there were no discounts, and no gimmes either: his first tour, to Pakistan, was played on pitches apparently prepared for the diplomatic parity of drawn Tests.

From the first, nonetheless, Kapil upset cricket's prior balances of power. In Spin and Other Turns, Ramchandra Guha describes the first morning of Kapil's Test career, how in his second over the teenager sent a bouncer past the pentangle on Sadiq Mohammad's cap, "very likely the fastest delivery from an Indian bowler since independence". Sadiq's summon of a helmet was so unforeseen that it took some overs to arrive; as Guha notes: "It is a wonder there was one at the ground at all". When West Indies toured India soon after, they dished it out, as was their wont, but Kapil was no less hostile. Normally above the fray, Wisden described the Chepauk Test as "a bumper war" in which India "for once gave as good as they got". Bose believes it a hinge point in Indian cricket history.



Gavaskar, great as he was, could never rival the epic grandeur of a Viv Richards. Kapil, in an era of the international game uncommonly blessed with fast-bowling allrounders, more than held his own against them




Kapil altered also the Indian team's internal dynamics. The dominant presence in the country's cricket to that time had been Gavaskar, batting's classical sculptor: patient, implacable, self-sufficient, self-involved, peppery temper beneath a surface urbanity. Kapil provided a rival to national affection, and a new source of national self-definition. Gavaskar, great as he was, could never rival the epic grandeur of a Viv Richards. Kapil, in an era of the international game uncommonly blessed with fast-bowling allrounders, more than held his own against them.

Remember? Botham, Imran, Hadlee: all fierce rivals. You could imagine them in a western saloon. Botham would be the one chesting open the swing doors and shouting the bar, Imran the one comfortably encircled by comely belles in crinoline, Hadlee the one staring fixedly at his ice water. But that Injun, Kapil - he held aloof. He had the liveliest and least imitable action of all, a skipping, bounding run of gathering energy, and a delivery stride perfectly side-on but exploding at all angles, wrists uncoiling, arms elasticising, eyes afire. Which was part of his significance. No fast bowlers in India? Kapil could have hailed from no other country.

All that stood in the way of Kapil's bowling was his batting, full of generous arcs and fearful cleaves, signed with an exuberant pull shot that featured a chorus-line kick from his crossed front leg. At first, team-mates took Kapil's run-making more seriously than he did himself: he reached the first of eight Test hundreds in Delhi 30 years ago only because Syed Kirmani sacrificed himself, a cacophony of calls sending them to the same end.

He retained a sense of play and adventure into which even opponents sometimes entered. At the Gabba in December 1980, he launched Jeremy Coney over the roof of the Clem Jones Stand and into Stanley Street during an innings of 75 off 51 balls; the puckish New Zealander waved his white handkerchief like a flag of surrender.

Selectors were sterner, benching Kapil after the Delhi Test of December 1984, when he hit his second ball for six and his third down long-off's throat as India stumbled to defeat against England. But Kapil, for all that he accomplished, never really repented. He won the Lord's Test of June 1986 with three fours and a six off Phil Edmonds; he saved the follow-on there four years later with four consecutive sixes off Eddie Hemmings.

It was the year of the building of the Compton-Edrich Stand, and I happened to be amid a throng of ecstatic Indian supporters in temporary seating in front of it. I can still hear the glorious "thunk" of those straight drives, each faster and flatter than the last, into the building site behind us: they lent new meaning to the expression "hard-hat area".

Lord's was the venue, too, of that fabled match 26 years ago, after which Kapil could have retreated to an ashram but remained one of the most significant players who ever lived - all because of one catch. It came from the top edge of the bat of Viv Richards, then on course to be match-winner for the third consecutive World Cup final, and it looked suspiciously like providence.



'Has a more difficult catch been made to seem easier at a more critical moment in the annals of the game?' © PA Photos





Kapil had deposed Gavaskar as captain, in one of those Indian intrigues that outsiders find unintelligible, and led his country with expected spirit and unexpected smarts. Gavaskar, never a one-day natural, had had a wretched tournament, and been first to fall that day in India's ramshackle 183. West Indies in reply had charged to 50 for 1.

Now Madan Lal bowled a bouncer - a bouncer to Richards. What's Hindi for chutzpah? The crowd on the midwicket boundary began shrinking back; even Father Time ducked. In the event Richards miscued, but the ball would have fallen safe had any other fielder been stationed near the drop zone. As it was, Kapil Dev turned, ran back with the flight of the ball, loose stride eating up the distance, cast a split-second glance over his shoulder, and collected the descending ball in his fingertips - making even this look deliberate. Has a more difficult catch been made to seem easier at a more critical moment in the annals of the game?

India had won one game in two previous World Cups, against East Africa; now they won what remained their only global trophy until the Twenty20 World Championship 18 months ago. Both wins similarly tilted the cricket world off its axis. One-day cricket went forth and multiplied in the subcontinent, to the extent that the next Cup was held there four years later, just as Twenty20 did 24 years later, making India its social, cultural and financial fastness.

Kapil was part of that shift, too, shoulder to shoulder with Subhash Chandra's Indian Cricket League, while Gavaskar was firmly in the camp of the official Indian Premier League. Much else had transpired between times, but it was almost as though their unspoken rivalry had never quite ended. The ICL has floundered and the IPL prospered, so Gavaskar might consider his the last word; yet today's stylish, aggressive Indian stars, like MS Dhoni, Virender Sehwag, Ishant Sharma and Zaheer Khan, are more obviously Kapil's spiritual heirs.

Gideon Haigh is a cricket historian and writer

After Iraq, it's not just North Korea

 

 

The nuclear weapons states are the main drivers of proliferation. Only radical disarmament can halt their spread 

• Seumas Milne
• guardian.co.uk, Wednesday 27 May 2009 21.00 BST

 

The big power denunciation of North Korea's nuclear weapons test on Monday could not have been more sweeping. Barack Obama called the Hiroshima-scale ­underground explosion a "blatant violation of international law", and pledged to "stand up" to North ­Korea – as if it were a military giant of the Pacific – while Korea's former imperial master Japan branded the bomb a "clear crime", and even its long-suffering ally China declared itself "resolutely opposed" to what had taken place.

 
The protests were met with ­further North Korean missile tests, as UN ­security council members plotted tighter sanctions and South Korea signed up to a US programme to intercept ships suspected of carrying weapons of mass destruction. Pyongyang had already said it would regard such a move as an act of war. So yesterday, nearly 60 years after the conflagration that made a charnel house of the Korean peninsula, North Korea said it was no longer bound by the armistice that ended it and warned that any attempt to search or seize its vessels would be met with a "powerful military strike".
 
The hope must be that rhetorical inflation on both sides proves to be largely bluster, as in previous confrontations. Even the US doesn't believe North Korea poses any threat of aggression against the south, home to nearly 30,000 American troops and covered by its nuclear umbrella. But the idea, much canvassed in recent days, that there is something irrational in North Korea's attempt to acquire nuclear weapons is clearly absurd. This is, after all, a state that has been targeted for regime change by the US ever since the end of the cold war, included as one of the select group of three in George Bush's axis of evil in 2002, and whose Clinton administration guarantee of "no hostile intent" was explicitly withdrawn by his successor.
 
In April 2003, North Korea drew the obvious conclusion from the US and British aggression against Iraq. The war showed, it commented at the time, "that to allow disarmament through inspections does not help avert a war, but rather sparks it". Only "a tremendous military deterrent force", it stated with unavoidable logic, could prevent attacks on states the world's only superpower was determined to bring to heel.
 
The lesson could not be clearer. Of Bush's "axis" states, Iraq, which had no weapons of mass destruction, was invaded and occupied; North Korea, which already had some nuclear capacity, was left untouched and is most unlikely to be attacked in future; while Iran, which has yet to develop a nuclear capability, is still threatened with aggression by both the US and Israel.
Of course, the Obama administration is a different kettle of fish from its ­predecessor; it had earlier floated renewed dialogue with North Korea and has made welcome noises about nuclear disarmament. Whether such talk was ever going to impress the cash-strapped dynastic autocracy in Pyongyang – which had had its fill of broken US commitments and the new belligerence from its southern neighbour – seems doubtful. In any case, having gone so far, it was surely inevitable the regime would want to rerun its half-cocked 2006 test to demonstrate its now unquestioned nuclear power status.
 
Yet not only has America's heightened enthusiasm for invading other countries since the early 1990s created a powerful incentive for states in its firing line to acquire nuclear weapons for their own security. But all the main nuclear weapons states have, by their persistent failure to move towards serious disarmament, become the single greatest driver of nuclear proliferation.
 
It's not just the breathtaking hypocrisy that underpins every western pronouncement about the "threat to world peace" posed by the "illegal weapons" of the johnny-come-latelys to the nuclear club. Or the double standards that underpin the nuclear indulgence of Israel, India and Pakistan – now increasing its stock of nuclear weapons, even as the country is rocked by civil war – while Iran and North Korea are sanctioned and embargoed for "breaking the rules". It's that the obligation of the nuclear weapons states under the non-proliferation treaty – and the only justification of their privileged status – is to negotiate "complete disarmament".
 
Yet far from doing any such thing, both the US and Britain are investing in a new generation of nuclear weapons. Even the latest plans to agree new cuts in the US and Russian strategic arsenals would leave the two former superpower rivals in control of ­thousands of warheads, enough to wipe each other out, let alone the smaller fry of global conflict. So why North Korea, no longer even a signatory to the treaty and ­therefore not bound by its rules, or any other state seeking nuclear protection, should treat them as a reason to disarm is a mystery.

 
Obama's dramatic plea for a "world without nuclear weapons" in Prague last month was qualified by the warning that such a goal would "not be reached quickly – perhaps not in my lifetime". But a lifetime is too long if the mass proliferation of nuclear weapons is to be halted. Earlier this month, ­Mohammed ElBaradei, the outgoing director general of the International Atomic Energy Agency, told the Guardian that without radical disarmament by the major powers, the number of nuclear weapons states would double in a few years, as "virtual weapons states" acquire the capability, but stopped just short of assembling a weapon, to "buy insurance against attack".
 
This is what Iran is widely assumed to be doing, despite its denial of any interest in acquiring nuclear weapons. And the evidence is now growing that the US administration is heading towards harsher sanctions against Tehran rather than genuine negotiation, as two former US national security council staffers, Flynt and Hillary Mann Leverett, argued in the New York Times at the weekend. That was also the message Hillary Clinton sent to North Korea last month when she said talks with the regime were "implausible, if not impossible".
 
In fact, they are desirable, if not essential. Obama has set out a positive agenda on the nuclear test ban treaty, arms cuts and control of fissile material. But if, instead of slapping more sanctions on Pyongyang, the US were to push for far broader negotiations aimed at achieving the long-overdue reunification of Korea, its denuclearisation and the withdrawal of all foreign troops – now that would be a historic contribution to peace.

---

Surfing the web just got more rewarding. Download the New Internet Explorer 8

How economics lost sight of real world

 

 

By John Kay
Published: April 21 2009 20:51 | Last updated: April 21 2009 20:51

The past two years have not enhanced the reputation of economists. Mostly they failed to point out fundamental weaknesses of financial markets and did not foresee the crisis, and now they disagree on appropriate policies and on the likely future course of events. Although more economic research has been done in the past 25 years than ever before, the economists whose names are most frequently referenced today, such as Hyman Minsky and John Maynard Keynes, are from earlier generations.
 
Since the 1970s economists have been engaged in a grand project. The project's objective is that macroeconomics should have microeconomic foundations. In everyday language, that means that what we say about big policy issues – growth and inflation, boom and bust – should be grounded in the study of individual behaviour. Put like that, the project sounds obviously desirable, even essential. I confess I was long seduced by it.
Most economists would claim that the project has been a success. But the criteria are the self-referential criteria of modern academic life. The greatest compliment you can now pay an economic argument is to say it is rigorous. Today's macroeconomic models are certainly that.
 
But policymakers and the public at large are, rightly, not interested in whether models are rigorous. They are interested in whether the models are useful and illuminating – and these rigorous models do not score well here.
 
Indeed, at an early stage of the project Robert Lucas, one of its principal architects, who received the Nobel prize for his contributions, developed what is known as the Lucas critique. He argued that ordinary standards of statistical validity should not be applied to the project's predictions. According to his colleague Thomas Sargent, Lucas was concerned that such tests rejected "too many really good models".
 
Economists, like physicists, have been searching for a theory of everything. If there were to be such an economic theory, there is really only one candidate, based on extreme rationality and market efficiency. Any other theory would have to account for the evolution of individual beliefs and the advance of human knowledge, and no one imagines that there could be a single theory of all human behaviour. Not quite no one: a few deranged practitioners of the project believe that their theory really does account for all human behaviour, and that concepts such as goodness, beauty and truth are sloppy sociological constructs.
 
But these people discredit themselves by opening their mouths. That people respond rationally to incentives, and that market prices incorporate information about the world, are not terrible assumptions. But they are not universal truths either. Much of what creates profit opportunities and causes instability in the global economy results from the failure of these assumptions. Herd behaviour, asset mispricing and grossly imperfect information have led us to where we are today.
 
There is not, and never will be, an economic theory of everything. Physics may, or may not, be different. But the knowledge we can hope to have in economics is piecemeal and provisional, and different theories will illuminate different but particular situations. We should observe empirical regularities and – as in other applied subjects such as medicine and engineering – we will often find pragmatic solutions that work even though our understanding of why they work is incomplete.
 
Max Planck, the physicist, said he had eschewed economics because it was too difficult. Planck, Keynes observed, could have mastered the corpus of mathematical economics in a few days – it might now have taken him a few weeks. Keynes went on to explain that economic understanding required an amalgam of logic and intuition and a wide knowledge of facts, most of which are not precise: "a requirement overwhelmingly difficult for those whose gift mainly consists in the power to imagine and pursue to their furthest points the implications and prior conditions of comparatively simple facts which are known with a high degree of precision". On this, as on much else, Keynes was right.

---

" Upgrade to Internet Explorer 8 Optimised for MSN. " Download Now

Why ‘too big to fail’ is too much for us to take

 

By John Kay
Published: May 26 2009 20:35 | Last updated: May 26 2009 20:35

 
Neither a democratic society nor a market economy can accept the notion that a private business is "too big to fail".
 
Liberal democracies of the modern world based on lightly regulated capitalism acknowledge two mechanisms of accountability – the marketplace and the ballot box. In the marketplace, organisations that do not meet, or respond to, the needs of society are ground between the twin pressures of their customers and their investors. At the ballot box, politicians that do not meet, or respond to, the needs of society suffer popular rejection.
Commercial success and democratic election are the only sources of legitimate authority in a society that no longer relies on spiritual leadership nor respects hereditary titles. An organisation exempt from either of these disciplines represents an unaccountable concentration of power. As we have today at Citigroup, Barclays and Deutsche Bank.
 
If "too big to fail" is incompatible with democracy, it also destroys the dynamism that is the central achievement of the market economy. In principle, there is no reason why disruptive innovations and radically new business models should not come from large, established, dominant companies. In practice, the bureaucratic culture of these organisations is such that this rarely happens. Revolutions in business generally come from new entrants. That is why so many of today's market leaders – Microsoft and Google, Vodafone and Easyjet – are companies that did not exist a generation ago. These companies could not have succeeded if governments had been committed to the continued leadership of IBM and AOL, AT&T and British Airways.
 
Any form of selective government support distorts competition. To win such subsidy today, the companies concerned must, like General Motors and Citigroup, be both large and unsuccessful. It is difficult to imagine a policy more damaging to innovation and progress.
 
The assertion that in future we will supervise the activities of large banks so that their businesses do not fail represents a refusal to address the issue. Even if that assertion were credible – and it is not – the outcome would not deal with either the political problem or the economic problem. Such regulation fails to call managers effectively to account, while supervision that ruled out even the possibility of organisational failure would kill all enterprise.
 
There should be a clear distinction in public policy between the requirement for essential activities to survive and the continued existence of particular companies engaged in their provision. There are many services we cannot do without – the electricity grid and the water supply, the transport system and the telecommunications network. These activities are every bit as necessary to our personal and business lives as the banking sector and at least as interconnected. Even a brief hiatus in their supply is intolerable.
But the need to keep the water flowing does not establish a need to keep the water company in business. We do not mind if one chain of high street shops closes its doors, because there are many other places to buy our clothes and groceries. Other industries are different. We cannot contemplate keeping aircraft circling over London while the liquidator of Heathrow Airport Ltd finds the way to his office.
 
In all industries where there is or might be a dominant position in the supply of essential public services, there needs to be a special resolution regime. The key requirement is that assets that are needed for the continued provision of these services can be quickly separated from the organisations engaged in their supply. The businesses involved must be required to operate in such a way that such a separation is possible. In some relevant industries such a scheme exists; in others it does not. In all cases, review and contingency planning is required.
 
"Too big to fail" – whether the claimant is a bank or an auto company – is not a status we can live with. It is both better politics and better economics to deal with the problem by facilitating failure than by subsidising it.

---

Share your photos with Windows Live Photos – Free. Try it Now!

UK BBC Holocaust Denial

 

By Dr Gideon Polya

24 May, 2009
Countercurrents.org

The UK British Broadcasting Corporation (BBC) has produced a book and a lavish, 6-part TV series called "The Story of India". However the 6th episode that deals with India under the British manages to completely ignore horrendous, repeated British-imposed atrocities on a scale of death greater than that of the World War 2 (WW2) Jewish Holocaust (5-6 million dead, 1 in 6 dying from deprivation), most notably the 1769-1770 Bengal Famine (10 million dead), the WW2 Bengal Famine (6-7 million dead) and the British India Holocaust in general that was associated with 1.8 billion excess Indian deaths in the period 1757-1947. [1, 2].

Indeed in the TV series "The Story of India" the very word "Famine" is not even mentioned as such even once – the presenter Michael Wood refers to "famine-stricken refugees" in talking about 18th century British military campaigns in the South of India and, later in the Indian Holocaust-ignoring 6th episode, an image is given of a volume in the Indian National Library with the title "Famine".

Just imagine the outcry in the West - and indeed around the World – if the BBC produced a lavish TV series entitled "The Story of Germany" and failed to mention its millennium history of massacring Jews and culminating in the WW2 Jewish Holocaust (5-6 million dead, 1 in 6 dying from deprivation) and the WW2 Holocaust in general (30 million Slav, Jewish and Roma deaths).

Does the BBC somehow regard Indians or non-Europeans in general as somehow Lesser Creatures in deleting horrendous British atrocities from "The Story of India"?

Does the BBC secretly subscribe to the views of a succession of racist Englishmen who regarded Indians in much the same way as the German Nazis regarded Jews i.e. as untermenschen [sub-humans]? Here, with documentation, is a sample of 7 of those views – but before reading them see the following image of starving Indians in British India circa 1900: http://mwcnews.net/content/view/26713/42/ (of course there are no such images in the BBC's sanitized "The Story of India"). [3].

1. Lord Hastings (Lord Moira, Marquess of Hastings and Governor-General of India, 1813-1823) (1813): "The Hindoo appears a being nearly limited to mere animal functions and even in them indifferent. Their proficiency and skill in the several lines of occupation to which they are restricted, are little more than the dexterity of which any animal with a similar conformation but with no higher intellect than a dog, an elephant, or a monkey, might be supposed to be capable of attaining. It is enough to see this in order to have full conviction that such a people can at no period have been more advanced in civil policy." [4].

2. Charles Dickens (circa 1857): "I wish I were Commander in Chief over there [India]! I would address that Oriental character which must be powerfully spoken to, in something like the following placard, which should be vigorously translated into all native dialects, "I, The Inimitable, holding this office of mine, and firmly believing that I hold it by the permission of Heaven and not by the appointment of Satan, have the honor to inform you Hindoo gentry that it is my intention, with all possible avoidance of unnecessary cruelty and with all merciful swiftness of execution, to exterminate the Race from the face of the earth, which disfigured the earth with the late abominable atrocities [2,000 British killed in the 1857 Indian War of Independence aka the 1857 Indian Mutiny]". [5].

3. Report of the Indian Famine Commission 1880 (arguing against generous famine relief): "the great object of saving life and giving protection from extreme suffering may not only be as well secured, but in fact will be far better secured, if proper care be taken to prevent the abuse and demoralisation which all experience shows to be the consequence of ill-directed and excessive distribution of charitable relief." [6].

4. Lord Curzon, Viceroy of India on the 1900 Indian Famine, January 1900 (arguing against generous famine relief): "In my judgement any government which imperilled the financial position of India in the interests of a prodigal philanthropy would be open to serious criticism. But any government which, by indiscriminate alms-giving, weakened the fibre and demoralised the self-reliance of the population would be guilty of a public crime." [7].

5. Winston Churchill, speech to the House of Commons (1935): "In the standard of life they have nothing to spare. The slightest fall from the present standard of life in India means slow starvation, and the actual squeezing out of life, not only of millions but of scores of millions of people, who have come into the world at your invitation and under the shield and protection of British power." [8].

6. Winston Churchill to Leo Amery, Secretary of State for India (1942): "I hate Indians. They are a beastly people with a beastly religion." [9].

7. Winston Churchill (1953) (in an egregious act of Nobel Prize-winning Holocaust Denial in which he totally wipes out any mention of the 6-7 million Indians he deliberately starved to death in 1943-1945): "No great portion of the world population was so effectively protected from the horrors and perils of the World War as were the peoples of Hindustan. They were carried through the struggle on the shoulders of our small Island." [10].

Here is a list of immense British atrocities in its over 2 centuries of genocidal mis-rule in India (substantially from 1757-1947) that were simply not noticed by the BBC's TV series "The Story of India" (for detailed histories of India, details of British atrocities in India and detailed documentation see my books "Body Count" and "Jane Austen and the Black Hole of British History"). [1, 2].

1. 1769-1770 Bengal Famine (10 million dead).

2. Other pre-20th Century famines in British India, in particular those in Bengal, Bihar and Orissa (1769-1770), Rajasthan, Oudh and elsewhere in northern India (1782-84), Rajasthan, Bombay, Gujarat and north-western provinces (1812-1815), north-western provinces, Punjab and Rajasthan (1837-1838), Madras, Deccan, Bihar, Bengal and particularly Orissa (1866; 3 million dead), Rajasthan and northern India (1868-1870), and throughout much of India from Hyderabad to Rajasthan and the Punjab (1899-1900; millions dying).

3. 25 million Indian cholera deaths in 19 th century India due to British transmission of the disease from Bengal by rail and sea (and by sea around the world).

4. 1.5 billion Indian excess deaths in the period 1757-1947 (1.8 billion excess deaths in the British-dominated Native States are included).

5. 17 million Indians died in the Spanish influenza pandemic (1918-1923) out of a world total of about 50 million, this being exacerbated by the return of hundreds of thousands Indian soldiers from WW1 and British Empire commerce.

6. 1943-1945 Bengal Famine (first WW2 atrocity to be described as a "Holocaust" – by Jog in 1944; 6-7 million Indians deliberately starved to death by the British under Churchill; see the 2008 BBC "confessional" broadcast involving myself, 1998 Economics Nobel Laureate Professor Amartya Sen of Harvard University, medical historian Dr Sanjoy Bhattacharya, Wellcome Institute, University College London, and other scholars: http://www.open2.net/thingsweforgot/
bengalfamine_programme.html ). [11].

How did the BBC's "The Story of India" manage not to notice this 2 centuries of appalling carnage that is unprecedented in human history in its sheer magnitude?

The BBC's TV version of "The Story of India" did qualitatively (if not quantitatively) notice Indian collateral damage in South Indian British wars and brutal British reprisals after the 1857 "Indian Mutiny". In addition, the book version mentions the 1866 Orissa Famine (3 million dead) but attributes this to the El Nino meteorological phenomenon and makes passing reference to British administrative failure: "In the almost thirty years since the Mutiny they [educated Indians] had seen for themselves the failure of British government in many key areas, but especially in the basic one of providing food and security to the population" (p281).

What "The Story of India" resolutely ignores is the merciless British policy for over 2 centuries of keeping the Indian population on the edge of starvation (see Winston Churchill's 1935 speech quoted above) – this deliberate strategy enabling a relatively small number of British troops and much larger numbers of well-fed Indian sepoys to keep several hundred million Indians subjugated.

What a disgrace! Tell everyone you can – because history ignored yields history repeated. South Asia is currently under immense threat from First World-imposed global warming. Many scientists now doubt that we can avoid further damaging temperature increases to over 2C above that in 1900. According to top UK climate scientist Dr James Lovelock FRS fewer than 1 billion people (mostly European) will survive the century due to First World profligacy and unaddressed man-made climate change – this translating to 10 billion deaths (mostly of non-Europeans, 3 billion Muslims, 2 billion Indians) in an already-commenced Climate Holocaust and Climate Genocide. [12].

Peace is the only way but silence kills and silence is complicity. Tell everyone you can (a) about Western holocaust commission and holocaust denial and (b) how they can act to help save India from a 2 billion-victim, First World-imposed Climate Genocide and help save Muslims from a looming First World-imposed, climate change-based, 3 billion-victim, Muslim Holocaust.

[1]. Gideon Polya, "Body Count", G.M. Polya, Melbourne, 2007: http://globalbodycount.blogspot.com/ and http://mwcnews.net/Gideon-Polya .

[2]. Gideon Polya, "Jane Austen and the Black Hole of British History. Colonial rapacity, holocaust denial and the crisis in biological sustainability", G.M. Polya, Melbourne, 2008: http://janeaustenand.blogspot.com/ .

[3]. Gideon Polya (2008), "Media lying over Churchill's crimes. British-Indian Holocaust", MWC News: http://mwcnews.net/content/view/26713/42/ .

[4]. Lord Hastings (1813), Private Journal I, p30 quoted by Spear (1971), p198 [Spear, P. (1971) The Nabobs. A Study of the Social Life of the English in Eighteenth Century India (Peter Smith, Gloucester, Massachusetts)] and by Plumb (1963), p178 [Plumb, J.H. (1963), England in the Eighteenth Century (Penguin Books, London) ].

[5]. Grace Moore (2004), Dicken and the Empire. Discourses of class, race, and colonialism in the works of Charles Dickens" (Ashgate Publishing, Aldershot, UK): http://www.amazon.com/Dickens-Empire-
Discourses-Colonialism-Nineteenth/dp/g
lanceands=books/0754634124

and

http://books.google.com.au/books?id=ZUxw0x
84cGwC&pg=
PA94&lpg=PA94&dq=exterminate+dickens+%22
commander%22&source=bl&ots=HYRvwOuGJK
&sig=gTCZ7lGSDKf
20lcjsseDgicVm7k&hl=en&ei=xjkXStmlK6j8tgOC97
HbCA&sa=X&oi=book_result&ct=result&r
esnum=5#PPA94,M1 .

[6]. Famine Commission Report (1880); quoted in Kachhawaha (1985), p32 [Kachhawaha, O.P. (1985), Famines in Rajasthan (1900 A.D. - 1947 A.D.) (Hindi Sahitya Mandir, Jodhpur)].

[7]. Lord Curzon (January 1900) quoted in Edwardes (1967), pp230-231 [Edwardes, M. (1967), British India 1772-1947 (Sidgwick & Jackson, London)].

[8]. Winston Churchill, Hansard of the House of Commons, Winston Churchill speech, Hansard Vol. 302, cols. 1920-21, 1935; quoted by Jog (1944), p195 [Jog, N.G. (1944), Churchill's Blind-Spot: India (New Book Company, Bombay)].

[9]. Winston Churchill (1944), in Diary of Amery (Secretary for India), September 9, 1942; quoted by Ziegler (1988), pp 351-352 [Ziegler, P. (1988), Mountbatten. The Official Biography (Collins, London) ].

[10]. Churchill (1954), vol. 4, p181 [Churchill, W.S. (1954), The Second World War. Volumes I-VI (Cassell, London)].

[11]. Dr Gideon Polya, Professor Amartya Sen, Dr Sanjoy Bhattacharya et al., BBC (2008), The things we forgot to remember. The Bengal Famine:: http://www.open2.net/thingsweforgot
/bengalfamine_programme.html ).

[12]. Gideon Polya (2009), "Letter to global warming-threatened Island States – take climate criminal Australia et al to ICC", Bellaciao, 2009: http://bellaciao.org/en/spip.php?article18830 .

Dr Gideon Polya published some 130 works in a 4 decade scientific career, most recently a huge pharmacological reference text "Biochemical Targets of Plant Bioactive Compounds" (CRC Press/Taylor & Francis, New York & London, 2003: http://www.amazon.com/Biochemical-Targets-Plant-Bioactive-Compounds/dp/0415308291 ). He has recently published "Body Count. Global avoidable mortality since 1950" (G.M. Polya, Melbourne, 2007: http://globalbodycount.blogspot.com/ and http://mwcnews.net/Gideon-Polya) and an updated 2008 version of his 1998 book "Jane Austen and the Black Hole of British History, Colonial rapacity, holocaust denial and the crisis in biological sustainability" (G.M. Polya, Melbourne, 2008: http://janeaustenand.blogspot.com/ ). He is currently teaching Biochemistry theory and practical courses to second year university agricultural science students at a very good Australian university.

---

" Upgrade to Internet Explorer 8 Optimised for MSN. " Download Now