9 reasons Keynesians aren't winning the argument – and what to do about it

If the 'obvious' failure of austerity is to make way for Keynesian policies, its advocates must confront their critics head on

• 
• • Phillip Inman
  • guardian.co.uk, Friday 7 June 2013 12.20 BST

British economist John Maynard Keynes, at the UN International Monetary Conference, circa 1946. Photograph: Hulton Archive

Keynes is out of favour. In his place are the austerians who mistakenly liken the finances of nation states to domestic budgets. Unfortunately the Keynesians have fallen into the trap of thinking that the case they make is incontrovertible. It would hardly matter, except that their failure to address legitimate concerns – not those of rightwing commentators or the super-rich, but of voters on middle and low incomes – has blunted their sound argument for a stimulus package and allowed austerians to make most of the running. The "obvious" failure of austerity, recent improved figures for the economy notwithstanding, has done little to derail its continued application by the UK, Brussels and to a lesser extent, the US Congress.

Why? Here are nine assumptions that trip the Keynesians up.

1. They think policymakers refuse to change course because they don't understand

Liberal academics believe in the power of argument. If only the other person were intelligent enough to understand, they would realise that Keynesian economics is the only way to view the world. Paul Krugman, the Princeton economist who heads the list of left-leaning thinkers challenging austerity, believes officials in Brussels have opted for austerity simply because they misunderstood its negative effect on growth. Yet officials and politicians in Brussels are well aware of Keynesian theory and the history of the 1930s. The German finance minister, Wolfgang Schäuble, is many things, but being a bit thick is not one of them.

2. They think that everyone agrees austerity is wrong headed

Dean Baker is a left-leaning US economist and regular contributor to the Guardian. He said in a recent article: "We allowed policy to be waylaid by a misplaced obsession with deficits. Now that everyone in the debate recognises this mistake, it is time to focus on getting the country working again." Everyone agrees? In fact, most polls show voters approve of austerity. They want governments to cut annual budget overspends. The governor of the Bank of England believes in austerity. Three eminent mainstream British economists told MPs on the all-party Treasury select committee last month that the government had struck the right balance between cuts and spending. Austerity is bang on the mark, they said.

3. They think Brussels and the IMF have changed their tune

The EU commission boss, José Manuel Barroso, made comments in April that were leapt on by everyone on the left. He said austerity had reached its limits. Liberals said to themselves: finally he understands. But he only meant that in some countries voters were unwilling to accept more salary and welfare spending cuts, not that he agreed with them. He still thinks austerity is the right medicine. Later, a Brussels official told the Reuters news agency that Barroso had "miscommunicated" and there was no alternative to austerity, even if the word was avoided.

4. They make out that a spending boost with borrowed money is risk-free

The risks need to be explained. It is quite possible for governments to spend and find that growth remains elusive. A two-decade long spree by the Japanese has taken borrowing to more than 240% of GDP without boosting growth. To some extent it depends what the money is spent on. For instance, a high-speed rail link built by foreign companies (HS2, anyone?) will create less benefit than an immediate maintenance budget boost for existing lines.

5. They think central banks can carry on printing money with no risk

Quantitative easing involves central banks using their own money to buy government bonds (effectively lending the government money). They mostly buy the bonds from banks, which then use the cash to lend to other institutions and possibly, at some point along the chain, to small businesses. No risk? Not really. First, the banks can hoard the money to satisfy regulators who believe they are unsafe. Second, they can lend it, but factor in huge profit margins and pay themselves massive bonuses as a reward. And the money can be used to invest in property, for an easy profit, bypassing manufacturers.

6. They think quantitative easing can be switched off and normality will return

Just three central banks – the Bank of England, the Fed and the Bank of Japan – have created more than £3tn of debt and the figure is rising all the time. The Federal Reserve is creating around £50bn a month and the Japanese have joined in. Can all this money be sold back to the private markets without spooking investors, most of which have bought bonds or shares on the basis of never-ending central bank support? Probably the bonds will never be sold, but held until they mature, or they could be slowly drip-fed back into the international money markets, but the risks should be discussed.

7. They argue that no one should fear inflation

UK inflation fell to 2.4% in April, but remains well above wage rises, which trail at 0.8%. That's a big cut in living standards. Any politician who says inflation at 5% is not a worry will be blown away on election night. But that is what plenty of Keynesian economists, including Krugman, advocate. They have sound reasons for being relaxed about inflation. Most countries are worried about falling prices. And a stimulus package that raises demand is worth the risk of a short-term rise in inflation, even in the UK. Yet fearful middle-class savers and workers suffering pay freezes have legitimate fears.

8. They argue that stock market and house price rises are benign

Krugman is chief propagandist for the "spend now, deal with structural problems later" brigade, which means he simply won't address the issue. The London stock market recently neared its all time high despite a backdrop of static growth across Europe. UK house prices in property hotspots are above their 2007 peak. Is there a danger that some economies, the UK included, are simply repeating the mistakes of the early 2000s and encouraging debt-fuelled spending on unproductive assets like property to make a quick buck? Nouriel Roubini, known as Dr Doom for his pessimistic outlook for western economies long before the 2007 crash, oscillates between the Krugman view and warning of asset bubbles that could become the next economic atomic bombs. There needs to be a closer inspection of asset bubbles.

9. They believe politicians can be trusted to spend stimulus funds in the best way

Liberal economists assume voters trust politicians to spend funds sensibly. Multibillion pound investments in rail, nuclear energy and housing are needed but only a minority of voters trust the public sector to make a good job of it. For the time being, there needs to be an acknowledgment that civil servants and politicians of all political colours failed to spot the crash and are therefore not as smart as people once thought.

Conclusion

Keynesian economics is a valid response to the UK's protracted economic depression. There are always risks, but there were always risks with austerity and it has pushed up borrowing by as much if not more than a Keynesian stimulus would have done. Far from re-establishing confidence and generating growth, the UK has grown by 1.1% in three years. And it has a worsening trade balance and higher debt levels. Unemployment failed to rise by as much as expected, but it could be even lower by now. Economic green shoots are appearing, but can vanish with an early frost, which is possible with banks still strapped for cash and reluctant to lend.

It's important, then, that Keynesians win the argument. But if they want to do so, they've got to face their critics head on, and deal with legitimate concerns about the approach.

The Enlightenment Business: Wisdom For Sale

by Harsh K Luthar

Religion and spirituality today are a big business. Generally the spiritual teachers, preachers, and the so called enlightened masters of the day are really motivational speakers and self styled self-help expert who are engaged in entrepreneurial ventures aimed at financial and commercial success.  Every year people spend billions of dollars buying the books, CDs, and self-help programs offered by such teachers.

The commodity that the spiritual teachers in the new age sell in the free market is called “Enlightenment”. Enlightenment is intangible and not well defined as a product. The cost of production and storage costs of “Enlightenment”  are very low, and so there is always plenty in the inventory to sell!  Of course, there is the cost of marketing “Enlightenment”. Still even with that expense, the profit margins for this product or service have the potential to be very large for the established experts or the spiritual teachers.

In a very real and substantive sense, the so called modern teachers of “enlightenment” are far removed from the sages of old who cared nothing for money and financial gains and adopted a life of humility, poverty, and service. Some of the well known saints of India such as Sri Ramakrishna and Sri Ramana did not even touch money with their hands. Generally, in almost all the pictures, Sri Ramana is shown wearing one simple cloth piece called Kaupina, which is equivalent to an Indian underwear. These sages were venerated by their followers because they demonstrated in their life what true enlightenment embodies.

Many of the spiritual entrepreneurs of the day appear to seek the adoration and veneration from their followers without much inclination towards demonstrating behavior or conduct befitting a sage. Although it seems self-evident to most objective observers, it is not always obvious to many disciples and students of yogis, spiritual teachers, and cult leaders that their gurus are simply human beings and therefore limited and sometimes deeply flawed.

Just like the students, the so called “gurus”, “masters”, and “spiritual teachers” are susceptible to all the weaknesses of the body and the mind. I have observed that the humanity of spiritual teachers or leaders is very difficult for many of their followers to accept. The mentoring relationship between a spiritual guru and his/her disciples can be very complex. When the students realize that their spiritual leader, despite claims to moral superiority and being divine, etc., is just like them, it can come as a shock, a rude awakening. For many followers this can be a very traumatic event.

Many people continue to view their guru or their spiritual leader as being infallible even when overwhelming evidence points in the exact opposite direction.  To avoid facing the painful reality, some followers interpret the facts of their leaders conduct in creative ways to explain them away somehow. It happens. One has to only read the newspapers and the Internet sites to discover all the information there.  Spirituality and selling of wisdom is a huge business. The behavior of spiritual leaders can be analyzed from that perspective for a more complete understanding of the business of enlightenment.

Of course, we need to understand each others’ humanity and even forgive friends, teachers, and gurus when they have made mistakes in judgement. I am not criticizing the whole spiritual arena but simply pointing out the importance of objectively and rationally assessing situations involving marketing of wisdom by the spiritual leaders of the day, whoever they may be and in whatever religious or spiritual tradition.

The need to remain loyal to our own intelligence and common sense when analyzing facts and situations, even when it comes to spiritual teachers, is important. To put another human being on a constant pedestal, even if that person is a guru or a spiritual teacher, is not fair to either that person or our own self.

Who is the ultimate Guru, other than our own Heart? This is the sacred Truth that we should grasp firmly and make it our own.

I don’t like to be overly critical of spiritual teachers in any religion or spiritual tradition. Certainly, they bring many benefits to people and parts of humanity.  But it seems to me that that many of the so called “gurus” and “spiritual masters” are plainly lacking in anything but the most superficial insight and knowledge.

Many of these self-help and self-proclaimed gurus struggle with serious emotional and psychological issues and need to be constantly on a power trip and thrive only when dominating their students and disciples. Some of these so called “spiritual teachers” even appear to lack proper mental balance, suffer from low self-esteem, and need to carefully reflect on their actions and behaviors before they go around advising others on how live properly.

It is no wonder that traditional religious and yogic orthodoxy in India  responded so negatively to the attacks of  Jiddu Krishnamurti and later Rajneesh (Osho). Despite the serious personal limitations and weaknesses of these two critics of  the existing orthodoxy, they were powerful voices in pointing out the hypocrisy of  gurus and masters in spiritual traditions who “sell” Universal Truths, and make disciples dependent upon them.

Ironically, both J. Krishnamurthy and Rajneesh (Osho) fell into the same mental and spiritual traps that they accused other teachers of being in. It happens. This is all part of the human condition. Everyone, including the so called gurus and teachers and the enlightened ones are struggling to find their place and path in this world. As long as “Enlightenment” is viewed as a commodity that can be sold and bought, there will be sellers and buyers. This is simply how the free market works!

I don’t know if it is completely up to us to decide what our part in the spiritual circus is. We should not be overly judgemental but simply use our rational intelligence in evaluating the spiritual scene. Despite the force of circumstances, if we stay aware and devoted to the Heart, the True inner Guru, I feel we will be OK.

Love and Namaste to all — Harsh K. Luthar

Who hails the get-up-and-go spirit of the beggar on 50k a year?

The right is usually keen to champion entrepreneurs, but there's disdain for hard-working London beggar Simon Wright

• 
• • Stephen Moss
  • guardian.co.uk, Thursday 6 June 2013 15.29 BST

Young person homeless, hungry and begging in London. Photograph: Alamy

There is a famous story in advertising folklore about David Ogilvy, founder of Ogilvy and Mather and one of the pioneers of the modern ad business. He was going down Fifth Avenue in New York and came across a blind man begging. The beggar had a sign: "I am blind, please help." But no one was helping – the beggar's hat was empty.

Ogilvy could have given him a dollar, but instead he did something more useful. He rewrote the beggar's sign. Now it read: "It is spring, and I am blind." The nickels and dimes poured in. Ogilvy had replaced a simple request for action with a story; he had added emotion to the man's appeal. People empathised with someone who could not fully partake of this most glorious season, and put their hands in their pockets.

I thought of the tale – some dispute its authenticity, but let that pass – when I read about Simon Wright, the beggar in Putney, south-west London, who has just been handed an asbo to stop him begging anywhere in London. Wright was probably Britain's most successful beggar, earning ("raking in" in the Mail's emotive language) £50,000 a year, living in a "smart" council flat, and spending his money in betting shops and amusement arcades.

In assessing the rights and wrongs of the case, one would really need to see the sign he was using. If, as the police say, he was claiming to be homeless, that is clearly misrepresentation – he needed an Ogilvy to produce a sign that was both effective and true. He also had a dog which some local people say was intimidating, but that sounds like an attempt to spice up the tale. Successful beggars' dogs usually look like they are in urgent need of some Winalot.

Leaving aside the specifics of whether the sign did perpetrate a fraud, the bigger point seems to be the old British story that we resent success – the "tall poppy syndrome" theMail generally likes to whine about. Wright was a man at the top of his profession, the ultimate advertising success story: someone who had cracked the puzzle of how to make a lot of people give you something for nothing. But that was his problem. People resented his success. No one can tolerate a successful beggar. Beggars really aren't allowed to be choosers. He had to be put back in his box.

The right is usually keen to champion hard-working entrepreneurs, so why be so sniffy about begging? It's a perfect market: we encounter many beggars; we can't give to them all, even if we would like to; so they have to be astute in their choice of location and the way they make their appeal. Ogilvy realised this: he produced a brilliant piece of advertising in a very demanding commercial sector. How do you make a passing stranger part with money for absolutely nothing other than a warm feeling inside?

Wright had chosen the perfect location: affluent Putney. He positioned himself near a bank, so people taking out £50 would feel guilty when they saw him. And he worked very hard. Even the police had to admit he was a Stakhanovite. "He worked pretty much every day, and had done so for about three years," they said. "He certainly put in the hours." His success produced a host of imitators – nine other beggars invaded his patch – but he saw them off, the original and the best, the No 1 begging brand on the block.

Here, then, was a man whose industry and commercial acumen would, you might think, be celebrated in coalition Britain. He was earning a decent income (presumably tax free because it was a gift) and putting a lot of cash back into the local economy. He should probably have been given some sort of business initiative award. Instead, he has been stripped of his livelihood, will now be on benefits, and is threatened with prison if he begs again. From being a substantial net contributor to GDP – goodness know what his £50,000 was generating if we take the Keynesian multiplier into account – he has become a drain on the national purse. And we wonder why the public finances are in a mess.

Britain has said sorry to the Mau Mau. The rest of the empire is still waiting

British colonial violence was brutal, and systematic. If there is any justice, the Mau Mau's stunning legal victory should be the first of many

• 
• • Caroline Elkins
  • The Guardian, Thursday 6 June 2013 19.46 BST

Kenyans tortured during the Mau Mau rebellion are to receive compensation payments from the British government. Photograph: Dai Kurokawa/EPA

On Thursday nearly 200 elderly Kikuyu people travelled from their rural homesteads and sat before the British high commissioner in Nairobi. Over half a century had passed since many were last in front of a British official. It was a different era then in Kenya. The Mau Mau war was raging, and Britain was implementing coercive policies that left indelible scars on the bodies and minds of countless men and women suspected of subversive activities.

In the 1950s they experienced events in colonial detention camps that few imagined possible. Yesterday they gathered to witness another once unimaginable thing: the much-delayed colonial gesture at reconciliation. The high commissioner read extracts fromWilliam Hague's earlier statement in parliament. Hague acknowledged for the first time that the elderly Kikuyu and other Kenyans had been subjected to torture and other horrific abuses at the hands of the colonial administration during the Mau Mau emergency. On behalf of the British government he expressed "sincere regret" that these abuses had taken place, announced payments of £2,600 to each of 5,200 vetted claimants, and urged that the process of healing for both nations begin.

The faces of the elderly camp survivors betrayed the day's historical significance. Tears rolled down faces lined from years of internalised pain and bitterness. Many sat motionless as the high commissioner read the statement. Others let out audible gasps, and cries of joy. Some burst into song.

By any measure the announcement was stunning. With it, Britain jettisoned its appeal of the Mau Mau reparation case in the high court. Filed in 2009, the case was the first of its kind against the former British empire. Archival documents amassed for my book, Imperial Reckoning: The Untold Story of Britain's Gulag, were submitted in support of the case, together with other historical evidence.

As it dragged on, more evidence emerged, this time from the British government. In early2011 it announced the discovery of some 300 boxes of previously undisclosed files in Hanslope Park. As expert witness I reviewed many of these documents, hundreds of which offered additional evidence of colonial-directed coercion and torture. Facing a mountain of damning facts from imperial yesteryear, the British government chose to settle.

Britain's acknowledgement of colonial era torture has opened as many doors at it has closed. Kenya was scarcely an exception. British colonial repression was systematised and honed in the years following the second world war. First in Palestine, and then Malaya, Kenya, Cyprus, Aden, Northern Ireland and elsewhere, British coercive counter-insurgency tactics evolved, as did brutal interrogation techniques. The Mau Mau detention camps were but one site in a broader policy of end-of-empire incarceration, torture and cover-up.

In the wake of its announcement, Britain now faces potential claims from across its former empire. From a historical perspective, the government has every reason to be concerned about its legacy. There is unequivocal evidence of colonial brutalities in end-of-empire Malaya, Cyprus and elsewhere. Whether there is enough for successful legal claims is another matter altogether, however.

Lessons from the Mau Mau case in the high court are instructive. History was on trial, as it would be in other cases. As such, the level of historical reconstruction needed was extraordinary, as was the volume of evidence for a successful claim. The case was one that clearly rose and fell on highly detailed levels of historical knowledge and evidence.

The Kikuyu had a team of three historical experts – myself, David Anderson and Huw Bennett. Together, we brought decades of revisionist research to the case, and with it a full range of knowledge necessary for a successful claim. Outside Kenya, no other field has the depth or breadth of revisionist scholarship documenting British colonial violence at the end of empire. In part, this is due to the fact that British colonial authorities destroyed evidence at the time of decolonisation, or withheld other boxes of files for years. Regardless, without revisionist work, other potential cases will be at a disadvantage.

From a historian's perspective, two other factors were also at play. First, the discovery of the Hanslope files added layers of additional evidence crucial to the success of the Mau Mau claims. Some 8,800 files from 36 other colonies were discovered alongside the Kenya documents. However, none of these files, or at least those that the British government has now released to the National Archives, provide the kind of evidence contained in the Kenya documents. Second, the claimants and their historical experts were guided by the sharp legal minds and experience of Leigh Day and the Kenya Human Rights Commission. In effect, this was an exercise where expert, revisionist scholarship and human rights law came together with great effect – another first for the former British empire.

A cynic might say that the British government played its hand as best it could, and with an eye to other cases; that it dragged out proceedings for years so future claimants are now deceased; that its release of potential evidence files at Hanslope has been less than transparent, despite public claims to the contrary. Moreover, the high court's rulings over the past four years have tipped its hand to other potential cases. We now know that the chances of descendants of victims filing successful claims are slim, and the watermark for overcoming the statute of limitations is exceedingly high, as is the amount of historical evidence and expert forensic analysis. None of these factors bodes well for other potential claims.

Ultimately, the Mau Mau case is as symbolic as it is instructive. Regardless of future claims, Britons can no longer hide behind the rhetoric of unequivocal imperial success. Instead, British liberalism in the empire – with its alleged spread of civilisation, progress, liberty and rule of law justifying any coercive actions – has been irreversibly exposed.

Instead of being one-offs, Britain's colonial violence was as systematised as its efforts at cover-up. The British validation of the Mau Mau claims – and its first form of an apology for modern empire – offers its citizens an opportunity to understand more fully the unholy relationship between liberalism and imperialism, and the impacts not only on the elderly Kikuyu, but on themselves.

9 Qualities Of Truly Confident People

by Dharmesh Shah

First things first: Confidence is not bravado, or swagger, or an overt pretense of bravery. Confidence is not some bold or brash air of self-belief directed at others.

Confidence is quiet: It’s a natural expression of ability, expertise, and self-regard.

I’m fortunate to know a number of truly confident people. Many work with me at HubSpot, others are fellow founders of their own startups some of whom I've met through my angel investment activity. But the majority are people I’ve met through my career and who work in a variety of industries and professions.

It comes as no surprise they all share a number of qualities:

1. They take a stand not because they think they are always right… but because they are not afraid to be wrong.

Cocky and conceited people tend to take a position and then proclaim, bluster, and totally disregard differing opinions or points of view. They know they’re right – and they want (actually they need) you to know it too.

Their behavior isn’t a sign of confidence, though; it’s the hallmark of an intellectual bully.

Truly confident people don’t mind being proven wrong. They feel finding out what is right is a lot more important than being right. And when they’re wrong, they’re secure enough to back down graciously.

Truly confident people often admit they’re wrong or don’t have all the answers; intellectual bullies never do.

2. They listen ten times more than they speak.

Bragging is a mask for insecurity. Truly confident people are quiet and unassuming. They already know what they think; they want to know what you think.

So they ask open-ended questions that give other people the freedom to be thoughtful and introspective: They ask what you do, how you do it, what you like about it, what you learned from it… and what they should do if they find themselves in a similar situation.

Truly confident people realize they know a lot, but they wish they knew more… and they know the only way to learn more is to listen more.

3. They duck the spotlight so it shines on others.

Perhaps it’s true they did the bulk of the work. Perhaps they really did overcome the major obstacles. Perhaps it’s true they turned a collection of disparate individuals into an incredibly high performance team.

Truly confident people don’t care – at least they don’t show it. (Inside they’re proud, as well they should be.) Truly confident people don’t need the glory; they know what they’ve achieved.

They don’t need the validation of others, because true validation comes from within.

So they stand back and celebrate their accomplishments through others. They stand back and let others shine – a confidence boost that helps those people become truly confident, too.

4. They freely ask for help.

Many people feel asking for help is a sign of weakness; implicit in the request is a lack of knowledge, skill, or experience.

Confident people are secure enough to admit a weakness. So they often ask others for help, not only because they are secure enough to admit they need help but also because they know that when they seek help they pay the person they ask a huge compliment.

Saying, “Can you help me?” shows tremendous respect for that individual’s expertise and judgment. Otherwise you wouldn't ask.

5. They think, “Why not me?”

Many people feel they have to wait: To be promoted, to be hired, to be selected, to be chosen... like the old Hollywood cliché, to somehow be discovered.

Truly confident people know that access is almost universal. They can connect with almost anyone through social media. (Everyone you know knows someone you should know.) They know they can attract their own funding, create their own products, build their own relationships and networks, choose their own path – they can choose to follow whatever course they wish.

And very quietly, without calling attention to themselves, they go out and do it.

6. They don't put down other people.

Generally speaking, the people who like to gossip, who like to speak badly of others, do so because they hope by comparison to make themselves look better.

The only comparison a truly confident person makes is to the person she was yesterday – and to the person she hopes to someday become.

7. They aren’t afraid to look silly…

Running around in your underwear is certainly taking it to extremes… but when you’re truly confident, you don’t mind occasionally being in a situation where you aren't at your best.

(And oddly enough, people tend to respect you more when you do – not less.)

8. … And they own their mistakes.

Insecurity tends to breed artificiality; confidence breeds sincerity and honesty.

That’s why truly confident people admit their mistakes. They dine out on their screw-ups. They don’t mind serving as a cautionary tale. They don’t mind being a source of laughter – for others and for themselves.

When you’re truly confident, you don’t mind occasionally “looking bad.” You realize that that when you’re genuine and unpretentious, people don’t laugh at you.

They laugh with you.

9. They only seek approval from the people who really matter.

You say you have 10k Twitter followers? Swell. 20k Facebook friends? Cool. A professional and social network of hundreds or even thousands? That’s great.

But that also pales in comparison to earning the trust and respect of the few people in your life that truly matter.

When we earn their trust and respect, no matter where we go or what we try, we do it with true confidence – because we know the people who truly matter the most are truly behind us.

The Murthys and the Maoists

HARISH KHARE in the hindu

  

Between the relentless demands of corporate leaders and the capacity of the underclass to match the state’s violence, India needs a vision for itself that is morally defensible.

In the first week of 2011, Prime Minister Manmohan Singh allowed himself to be persuaded to accept N.R. Narayana Murthy’s invitation to travel to Mumbai to preside over a function to give away the Infosys Social Science Prizes. The Prime Minister even agreed to attend a dinner that Mr. Murthy wanted to host in his honour after the function at the Taj Mahal Hotel. So far so good. A few days before the event, there was a massive behind-the-scenes dust up between the Prime Minister’s staff and Mr. Murthy. The rub was that Mr. Murthy thought that since he was paying for the dinner, he had a right to dictate not only the guest list but even the seating arrangement. However, there is something called protocol and the dignity of constitutional offices. If the Governor and the Chief Minister of Maharashtra were to be at the dinner, they had to necessarily be seated on either side of the Prime Minister, whereas the host thought he ought to be sitting next to Dr. Singh. Mr. Murthy, however, was not one to be so easily rebuffed. As soon as the first course was served, he sought to convert the evening into a grand intellectual conversation and proceeded to invite his son to open the bowling. And the young son wanted to know from the Prime Minister what the government proposed to do so that young men like him could come back to India.

All this is recalled because the young man is now back in India, as executive assistant to his father, who in turn has allowed himself to be persuaded to take charge of Infosys again. Nepotism, did you say? No; no sir. A private company is free to hire anyone. Fair enough, but not exactly.

Mr. Murthy is not just a private businessman, minding his own business. He has often sought to inject himself into the public domain, telling a thing or two to the political class about how to behave. He has been serenaded as an “iconic” entrepreneur. During the heyday of civil society triumphalism two years ago, there was even a suggestion that Mr. Murthy be made President of India. That was the time when India’s corporate leaders thought they had the ethical credentials to write open letters to the Prime Minister and preach virtues of good governance.

Also read 1. Just how corrupt is Britain
2. Prices, Profits and Markets
3. Dantewada and the Maoists

Like other corporate leaders, the Murthys, father and son, represent an unrepentant ideological approach to the Indian state, its morals, manners and policies and purpose, but they are not the only ones to do so. The Maoists — who once again made their presence felt last month when they massacred the Congress top political leadership in Chhattisgarh — too have a list of ideological claims of their own on the Indian state. Both groups are relentless; both are unforgiving.

The May 25 attack was the boldest ideological challenge that the Maoists have posed to the country’s political leadership. Violence makes a demand on all stakeholders. It was no surprise, then, that as soon as news trickled in of the attack on the Congress convoy in Bastar, the party’s vice-president, Rahul Gandhi, should have taken off for Raipur. It was a commendable journey of political solidarity. It would be interesting to find out if the bloody massacre in Sukma has helped Mr. Gandhi re-set his ideological compass.

Let it be recalled that this is the same Mr. Gandhi who had allowed himself to be persuaded in August 2010 to travel to the Niyamgiri Hills in Orissa, where he told the adivasis that he was their “sipahi,” or soldier in Delhi. Only two days before that visit, the Central government had pointedly withdrawn environmental permission to the Vedanta Group to mine the area for bauxite. For good measure, the young Gandhi had proclaimed that development meant that “every voice, including that of the poor and adivasis, should be heard.” It would be nice to know if Mr. Gandhi has resolved his ideological equivocations in the aftermath of the Chhattisgarh violence.

For two decades the Indian political class has gone about believing that “development” and “growth” are innocuous and painless. The prevailing orthodoxy insists that the Indian state has one and only one business: to get out of the businessman’s way. There is an unwillingness to acknowledge the basic nature of power: irrespective of its political arrangement, every society plays host to a ceaseless struggle over who gains what at whose expense. Growth and development invariably produce dislocation and dispossession. Good politics in a democratic idiom can go a long way in ameliorating the alienation and anger.

PRO-POOR INITIATIVES

The UPA’s approach has been to let the corporate marauders run amok while salving its democratic conscience with a slew of pro-poor, aam aadmi-centric initiatives. In the process, for the past nine years, the country has periodically been treated to a mock controversy over whether Sonia Gandhi’s National Advisory Council was usurping the government’s space and prerogatives, or, when this or that NAC member walks out in a huff, whether the government is not being sufficiently pro-poor. The UPA’s approach neither mollifies the corporate buccaneers nor satisfies the poor and the disadvantaged.

The corporates, however, have sized up the divided political leadership across the spectrum. They have finessed their tactics. If a government is slow to give them the policy breaks that they demand, the democratic space and its anarchic habits will be creatively used to unleash civil unrest on this or that pretext. There is always the age old anger against “corruption” to be tapped. And, as it were, one can always rely on an auditor or a judge to step in to divert attention away from corporate misdemeanours of the most serious kind.

PINCER MOVEMENT

No wonder, then, that the Indian state is caught in a pincer movement. From one side, the ideologues and practitioners of “growth” are unrelenting in their insistence that the country’s natural resources and citizens’ savings be made available to them for exploitation; and, from the other direction, the state is confronted by a vast underclass that is unwilling to see any reason to sacrifice its land and forests so that some others can enjoy the benefit of “progress.” Just as the corporates have served sufficient notice that they have no qualms in taking the state on and causing misery to its political functionaries, the underclass, too, is willing to match the state’s capacity for violence, bullet for bullet.

Both the Murthys and the Maoists are forcing the Indian state to take a stand. For too long, the Indian political leadership has refused to confront the Grand Conundrum: for whom does the state exist, whom does the state seek to reward and whom does it strive to protect against whom. The UPA leadership has neither the appetite for a brutal repression of the angry tribal, nor is it likely to be able to lure the Naxalites into a democratic engagement without a demonstrable capacity to stand up to corporate greed. A kind of alternative arrangement is already on the drawing board: the Gujarat model of no dissent, no trade unions, no civil society, no Medha Patkar, no tribal resistance, no protests.

The great sociologist, Edward Shils, once observed that every society needs grandiose visions and austere standards; the political and intellectual leadership is obliged to prod society to its own historical ideals — “elements which must be recurrently realized without even being definitively realizable, once and for all.” Perhaps we should be thankful that both the Murthys and the Maoists are inviting us to find a vision for India that is morally defensible.

IMF admits: we failed to realise the damage austerity would do to Greece

Athens officials react to report with glee, saying it confirms that the price extracted for country's bailout package was too high

• Larry Elliott, Phillip Inman and Helena Smith in Athens
• The Guardian, Wednesday 5 June 2013 23.05 BST

IMF chief Christine Lagarde. Greek media recently quoted her describing 2011 as a 'lost year', partly because of IMF mistakes. Photograph: Stephane Mahe/Reuters

The International Monetary Fund admitted it had failed to realise the damage austerity would do to Greece as the Washington-based organisation catalogued mistakes made during the bailout of the stricken eurozone country.

In an assessment of the rescue conducted jointly with the European Central Bank (ECB) and the European commission, the IMF said it had been forced to override its normal rules for providing financial assistance in order to put money into Greece.

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Fund officials had severe doubts about whether Greece's debt would be sustainable even after the first bailout was provided in May 2010 and only agreed to the plan because of fears of contagion.

While it succeeded in keeping Greece in the eurozone, the report admitted the bailout included notable failures.

"Market confidence was not restored, the banking system lost 30% of its deposits and the economy encountered a much deeper than expected recession with exceptionally high unemployment."

In Athens, officials reacted with barely disguised glee to the report, saying it confirmed that the price exacted for the €110bn (£93bn) emergency package was too high for a country beset by massive debts, tax evasion and a large black economy."

Under the weight of such measures – applied across the board and hitting the poorest hardest – the economy, they said, was always bound to dive into an economic death spiral.

"For too long they [troika officials] refused to accept that the programme was simply off-target by hiding behind our failure to implement structural reforms," said one insider. "Now that reforms are being applied they've had to accept the bitter truth."

The IMF said: "The Fund approved an exceptionally large loan to Greece under an stand-by agreement in May 2010 despite having considerable misgivings about Greece's debt sustainability. The decision required the Fund to depart from its established rules on exceptional access. However, Greece came late to the Fund and the time available to negotiate the programme was short."

But having agreed that there were exceptional circumstances that warranted the biggest bailout in the Fund's history, officials were taken aback by the much bigger than expected slump in the Greek economy. The country is now in its fifth year of recession and the economy has contracted by 17%. The IMF thought it would contract by just 5.5%.

In the evaluation of the package provided in 2010, the IMF said: "Given the danger of contagion, the report judges the programme to have been a necessity, even though the Fund had misgivings about debt sustainability.

"There was, however, a tension between the need to support Greece and the concern that debt was not sustainable with high probability (a condition for exceptional access).

"In response, the exceptional access criterion was amended to lower the bar for debt sustainability in systemic cases. The baseline still showed debt to be sustainable, as is required for all Fund programmes."

In the event, the report added, the Fund was open to criticism for making economic projections that were too optimistic."

While the report says a deep recession was unavoidable, it is critical of senior officials in Brussels and European capitals who said Greece would fare better outside the euro. Concerns that Greece could be ejected from the euro and return to the drachma intensified an already febrile situation.

"Confidence was also badly affected by domestic social and political turmoil and talk of a Greek exit from the euro by European policymakers," it said.

Brussels also struggled to co-ordinate its policies with the ECB in Frankfurt, according to the report.

"The Fund made decisions in a structured fashion, while decision-making in the eurozone spanned heads of state and multiple agencies and was more fragmented."

The Greek media recently quoted IMF managing director Christine Lagarde describing 2011 as a "lost year" partly because of miscalculations by the EU and IMF.

The authoritative Kathimerini newspaper said the report identified a number of "mistakes" including the failure of creditors to agree to a restructuring of Greece's debt burden earlier – a failure that had had a disastrous effect on its macroeconomic assumptions.

"From what we understand the IMF singles out the EU for criticism in its handling of the problem more than anything else," said one well-placed official at the Greek finance ministry.

He added: "But acknowledgement of these mistakes will help us. It has already helped cut some slack and it will help us get what we really need which is a haircut on our debt next year."