HDI Oscars: Slumdogs Versus Millionaires

 

March 23, 2009

By P. Sainath
Source: The Hindu

What does it mean [for India] to rank much better on GDP per capita than in the HDI, as we do? It means we have been less successful in converting income into human development.

 

It has been the night of the long knives for our burgeoning billionaire population. Its band has just been decimated, falling by more than half from 53 to 24. The latest Croesus Count, also known as the Forbes Billionaires list, makes that much clear. We also fell by two notches to the sixth rank in the list of nations with the most billionaires. Our earlier No. 4 slot being slyly usurped by the Chinese who clock in with 29. More mortifying, we are a rung below the Brits who've grabbed Perch 5, with 25.

 

The net asset worth of India's brightest and best has also shrunk by over a third from the time of the last Forbes scroll. By 2007, that worth had reached $335 billion. That is, 53 individuals in a population of one billion held wealth equal to almost a third of their nation's GDP at the time. This year, that worth plunged to $107 billion. (A moment's respectful silence in memory of the dear, departed billions seems in order.) But there is some comfort in that our team is still worth more than twice what its Chinese rivals are. And we even now have eight billionaires more than all the Nordic nations put together — though they boast the highest living standards in the world.

 

"Four Indians were among the world's top ten richest in 2008, worth a combined $160 billion," points out Forbes. Today, alas, "that same foursome is worth just $54 billion." But the 29 Indian tycoons reduced to the penury of mere millionairehood should not lose heart. Forbes offers us these words of reassurance. "The winds of wealth can change quickly ... They may yet again blow favourably in the direction of these tycoons." So what if the big balances fly at half mast briefly? There could be gales ahead.

 

Alongside this grim tragedy runs a slightly longer-term saga. India has fallen to 132 in the new rankings of the United Nations Human Development Index (HDI) for 179 nations. Each year since 1990, the U.N. Development Programme has brought us this index, as a part of its Human Development Report. The HDI "looks beyond GDP to a broader definition of well-being." It seeks to capture "three dimensions of human development: a long and healthy life (measured by life expectancy at birth). Being educated (measured by adult literacy and enrolment in primary, secondary and tertiary education). And third: GDP per capita measured in U.S. dollars at Purchasing Power Parity (PPP)."

 

Worst in a decade

 

In the Index of 2007-08, India ranked a dismal 128. Now we're at 132. That is our worst ever grade on the Index this decade. It means, among other things, that little Bhutan, never once in the Forbes hall of fame, has trumped us in the new HDI rankings. The tiny Himalayan nation clocks in at 131. That is, a notch above its "second-fastest-growing-economy-in the-world" neighbour. Bhutan once languished amongst the bottom 15 nations in the U.N.'s HDI. It has never been among the world's fastest growing economies.

 

At rank 132, India also lags behind Republic of the Congo, Botswana, and Bolivia. (The last often called Latin America's poorest nation). The Occupied Territories of Palestine (torn by conflict for 60 years) are also ahead of us. Another neighbour — Sri Lanka — has been devastated by war for over two decades and has slipped a few notches. It still logs in at 104 — 28 rungs above India. Vietnam suffered casualties in millions in the war waged against it by the United States. Decades after, its agriculture is yet to recover from the planned destruction, lethal bombing, and the conscious use of deadly poisons. But Vietnam clocks in at 114. And China at 94 despite falling several places.

 

The bad news about the bad news is that these figures reflect the good news days. They relate to the year 2006. (The Sensex was booming. It breached the 10,000 and even 14,000-mark for the first time ever. The Indian economy also grew at 9.6 per cent in 2006-07 and 9.4 per cent in 2005-06.) Those were the glory days our 132nd rank is rooted in. The same period when we churned out 53 dollar billionaires. So the updated HDI numbers do not begin to capture the economic downturn. The picture will be even less pretty when those factors kick in.

 

They do capture, though, the revised purchasing power parity (PPP) estimates that clocked in by late 2007. These columns foretold this problem at the time (The Hindu, Dec. 24, 2007). It was clear that if the Index was using the older PPP data, then "even our awful HDI performance could get worse" once those were revised. (India's GDP per capita (PPP) fell from $3,452 to $2,489 with the new data.)

 

And yet, we'd be even lower down than rank 132 but for our showing on the GDP-per capita front. Even now, our rank on that front is six notches higher than our HDI rank. It makes us look better than we are. For instance, in making out the current rankings, U.N. researchers point out that the GDP per capita data for 2006 "caused India to rise one place." But "new data (for 2006) on life expectancy caused India to fall one place." India then also fell two more places as two more nations — Montenegro and Serbia — joined the list. Both fared better than we did. We fell a further two places "as a result of revised PPP estimates." That's how we ended up four slots below our last rank.

 

What does it mean to rank much better on GDP per capita than in the HDI, as we do? It means you have been less successful in converting income into human development. Our GDP per capita rank is six rungs above our HDI rank. Vietnam's HDI rank of 114 is 15 rungs above its GDP per capita rank. Unlike us, Vietnam has — despite awful historic handicaps — converted its wealth into human development far better.

 

Cuba logs in at 48, thus breaking into the top 50 nations in the HDI. (While India firms up its place in the bottom 50.) That's seven places above wealthy Saudi Arabia, whose per capita GDP is three times higher than Cuba's. In that ranking, Saudi Arabia is No. 35, towering above Cuba's 88. But when it comes to human development, Saudi Arabia lags seven rungs below Cuba. Apart from suffering lower income, Cuba has lived under crippling sanctions for decades. Sanctions that have imposed huge constraints and high prices on all essentials. Yet, life expectancy at birth in Cuba is now 77.9 years. That's almost the same as the U.S. (78). And about 14 years better than India's 64.1. Meanwhile, the U.S. has logged its worst rank ever, falling to 15 from 12. Between 1995 and 2000, the U.S. was always in the top 5, even staying at rank 2 for a couple of years. Like with India, its decline in HDI has come in the very years seen as its best, the Golden Age of the Free Market. The Nirvana point of neo-liberalism. A year into the economic reforms, India in 1992 ranked 121 among 160 nations then covered by the Index. Today, India is at 132 among 179 nations. Straight comparisons across that time are hard as the Index has changed in numbers and methodology. But the trend is clearly not joyous.

 

Steady decline

 

The HDI figures since 2002 signal a steady decline in the nation's conversion of wealth into human development — even as the numbers of its billionaires and millionaires doubled and trebled. Now the billionaires have shrunk in number, but not the slumdogs. There are at least 836 million Indians living on less than Rs. 20 a day, as the government's own report told us in 2007. Over 200 million of those get by on less than Rs.12 daily. And those are pre-downturn numbers, too. Maybe, we need a new Forbes 500 list — naming the world's 500 poorest citizens. Who could beat us on that one?

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Jade Goody: She showed the brutal reality of Britain

 

Johann Hari:  

 

There will be no rewrite of "Candle in the Wind" for Jade Goody's funeral, but in her own glottal, gobby way, she jabbed a knitting needle into the subconscious of Britain just as surely as Diana Spencer did, and revealed something dark and darkening about us. Why was a big-hearted, big-mouthed young woman who came fourth on a reality show back in 2002 seized on with such glee and turned into one of the most famous people in the country? Because we needed her, to salve our own soiled consciences.
 
In her short life, Jade showed how as Britain has spiralled into one of the most unequal and immobile societies on earth, we have begun to openly jeer and sneer at the people trapped at the bottom. We gleefully seized on her as "proof" that the people rotting on abandoned estates were not there because of the grim accident of birth, but because they were stupid and ugly and bigoted. And all we proved – with unwitting irony – was our own stupidity and ugliness and bigotry.
 
Here was a 20-year-old girl with a noisy laugh, a quick wit, and almost no knowledge. She thought "East Angular" was a separate country, and wondered what currency they use in Liverpool. So the press jeered that she was "a moron", "the High Priestess of the Slagocracy", and "proof of Britain's underclass".
 
That summer, a string of images of white, working-class women presenting them as bestial imbeciles dominated our screens. Vicky Pollard – a single mum so thick she swaps her baby for a Westlife CD, played by a multimillionaire private schoolboy – was becoming a national icon. A chaotic single mum established Wife Swap as one of our favourite shows. Words of straightforward snobbish abuse – "chav" and "pikey" – were becoming acceptable again.
 
Go to any extremely unequal society, say, South Africa, or South America, and you will find a furiously suppressed sense of guilt. It's hard not to ask, at the back of your mind, "Why am I here in this mansion, while they are in the slums?" This guilt is resolved one way: by convincing yourself that the poor are sub-human, and don't have feelings like you and me. Oh, the people in the barrios and townships? They're animals! They stink! They're stupid! Jade and Vicky and the labelling of the poor as "chavs" filled that role for us. They know nothing! They are repulsive!
 
Nobody wanted to stop and ask: why doesn't Jade know much? Here's why. Her mother was a seriously disabled drug addict, so Jade didn't go to school much because she stayed at home to look after her. From the age of five, she was in charge of doing the cooking and ironing and cleaning. Jade explained: "As early as I could remember, I'd spent my whole life trying to protect my mum, frantically hiding the stolen chequebooks she used to have lying around the house when the police barged in on one of their raids; desperately denying to the teachers at school that she'd hit me for fear of being sent to social services."
 
Her father treated her even worse. He stashed a gun under her cot, and her first memory was of him shooting heroin in her bedroom, his eyes rolling back and his body juddering. Eventually, after periods in and out of prison, he was found dead from an overdose in the toilet of a Kentucky Fried Chicken. "He died without a single vein left in his body," Jade said. "In the end, he'd injected every single part of it and all his veins had collapsed, even the ones in his penis."
 
Despite this, Jade always worked, in shops, for minimum wage, and stayed away from drugs (apart from weed). She applied for Big Brother because her mum was sinking into crack addiction, and she couldn't think of any other way to avoid witnessing it. To the end, she was terrified of matches, and couldn't bear to have tinfoil in her house, because they reminded her of crack.
And so she appeared in British public life, and we jeered and howled and held her up as a poster-girl for "the underclass". Jade soon proved her latent smartness by turning her fourth place on Big Brother into a fortune, launching her own brand of perfume, a beauty salon, and a series of sensitive, rather beautiful autobiographies, all appealing to young women who had never seen people just like themselves on television before. The perception of her slowly changed. As people learned about her life story – and saw her chaotic, broken mother being interviewed – many realised that their gleeful poring over her mispronunciations had been vile. The sense of superiority was, for a moment, scrambled.
 
Then came Celebrity Big Brother, and oh, how we rejoiced. Jade was placed in the house with Shilpa Shetty, a sweet, unworldly Bollywood star who had been raised with servants and never had to do anything practical for herself. She activated all of Jade's feelings of being sneered at and patronised all her life. Jade said: "Ultimately, we were fighting because we were from different classes ... I didn't want anyone to think they're better than me, just because they have more money or have had a more educated upbringing. And, to me, she was a posh, up-herself princess."
 
One day, Shilpa tried to flush an entire cooked chicken down the toilet. Jade, enraged and perplexed, started to scream at her. "Who the fuck are you? You aren't some Princess in Neverland!" she yelled. She said Shilpa clearly had no idea how ordinary Indians lived, and howled: "You need a day in the slums!" This was seized on as racist, equivalent to telling her to go back where she came from. But it wasn't. Other housemates did say despicable, racist things about Shilpa: the beauty queen Danielle Lloyd said "I think she should fuck off home ... She can't even speak English properly." But Jade didn't; her own father was mixed-race, for one.
 
But here was a way we could rehabilitate our Jaded view of the white working class, and feel self-righteous about it too. If we can't feel superior to the poor because they are stupid, then we can feel superior to them because they are racist. One newspaper ran the typical headline "Class vs Trash" over a picture of Shilpa and Jade, and a columnist huffed that Jade's problem was "hating her social superiors". Once more, we could hate the poor and feel good about it too.
 
And even when she was dying, we continued to jeer. Nobody said John Diamond was "exploiting" his cancer by writing about it in The Times, but Jade's decision to talk about it on TV so she could leave a pot of cash for her kids was apparently evidence of her "vulgarity". One newspaper huffs that now we will be subjected to "a chav state funeral".
 
Even as she rots, we still want to see Jade Goody as a "chav" imbecile, subconsciously reassuring us that our own higher place in the class pyramid is earned by our intellect and sensitivity and anti-racism, rather than by the fluke of birth.
Believe that if you want, but you should know it's not Jade you are condemning, but yourself.

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Let’s penalize all the culprits, including ourselves

 

22 Mar 2009, 0248 hrs IST, Swaminathan S Anklesaria Aiyar

Through history, said my former editor Girilal Jain, whenever things go wrong, Indian rulers blamed the bania. The US is no different. After the global meltdown, US politicians are baying for the blood of financiers. They have just legislated a 90% tax on bonuses of staff at AIG, the insurance giant rescued by the US government. Legislators were angry that financiers responsible for AIG's collapse could be rewarded with bonuses, and sought to expropriate these. Many Indians will cheer. Yet, banias alone are rarely responsible for disasters: many others are usually responsible too. The financial crisis occurred in the most regulated sector of the US and world economy. So it was a failure not just of bankers but of the state, regulators, investors, and all other participants. If you can tax AIG staff, why not all the others? For starters, what about a retrospective 90% tax on the two Fed chiefs, Alan Greenspan and Ben Bernanke? They knew bubbles were forming in housing and stock markets, but instead of halting this they claimed it was best to let the bubbles burst and then sweep up the mess. Next, tax all US legislators who for decades sought to make all Americans home owners through excessive implicit and explicit subsidies. One law forced banks to lend to sub-prime poor borrowers. Legislators created Fannie Mae and Freddie Mac, government-sponsored entities that bought or underwrote four-fifths of all US mortgages, and enjoyed exemption from normal regulations. Politicians repeatedly rejected stiffer regulation despite Greenspan's warning that these under-regulated giants posed huge risks. Next, tax regulators. All major countries had regulators for banking, insurance and financial/ stock markets, but these were asleep at the wheel. Critics today demand more regulations, but these will not thwart the next crisis if regulators remain asleep. A 90% tax might keep them awake. Next, tax all banks and mortgage lenders. Instead of keeping mortgages on their own books, lenders packaged these into securities and sold them. So, they no longer had incentives to thoroughly check the creditworthiness of borrowers. Lending norms were constantly eased. Ultimately, banks were giving loans to people with no verification of income, jobs or assets. Next, tax all existing and former employees of investment banks. Once famous for providing financial services such as underwriting and wealth management, these institutions recently began trading on their own account. Deservedly, all five top investment banks have disappeared. But their former employees are still around, so why not expropriate them? Next, tax all staff of the rating agencies. Moody's and Standard and Poor's failed to spot the rise in risk as bank leverage skyrocketed. They allowed BBB mortgages to be laundered into AAA mortgages. Next, tax all finance ministers, central bankers and economists who created the Basle rules for banks across the world. Basle-II rules allowed banks to use credit ratings and historical models to lower the risk-ratings of many securities. This dilution of norms led to excesses everywhere. Iceland's banks went bust holding loans/securities totalling 10 times its GDP. Next, let's tax all US consumers. They used to save 6% of disposable income some time ago, but recently that fell to zero as they went on a huge borrow-and-spend spree. This fuelled the asset bubbles, and also created huge, unsustainable trade deficits. Next, tax China, OPEC and all other Asian countries that undervalued their currencies to stimulate exports and create large trade surpluses with the US. They accumulated trillions in forex reserves, and put these mostly into dollar securities. This depressed US interest rates, fuelling a borrowing binge there. Finally, let's tax everybody. People in all countries and markets were delighted when housing prices boomed, stock markets boomed, and credit became cheap and easily available. Bubbles inflated in full public view, but neither politicians nor the public wanted to stop the party. They all loved easy money and rising asset prices, and this trumped prudence across the world. Of course, there is not the slightest chance that politicians will tax all those responsible, including themselves. It is far simpler to blame the bania, who is, after all, not blameless. Yet, economics has a way of providing rough justice of its own. To tackle the global recession, countries across the world are running huge budget deficits. These are now being financed by printing trillions of dollars worth of currency. This tsunami of money now helps combat the recession, but will in a few years produce a monetary overhang that fuels high global inflation. Inflation is the tax that we will all pay, as the penalty for our own part in creating bubbles that we loved until the day they burst.

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Tax havens exist because of the hypocrisy of larger states

 

 

By John Kay
Published: March 20 2009 20:00 | Last updated: March 20 2009 20:00
 

By the pool of my French house in Menton, I often contemplate the economic consequences of the least-known uprising of Europe's year of revolutions in 1848. The citizens of Menton and Roquebrune wrested independence from the neighbouring principality of Monaco. The rebellion ended six centuries of Grimaldi rule. The result deprived the state of its agricultural hinterland and cost the Grimaldi dynasty the major part of its revenues.
 
Prince Florestan hatched a scheme with the entrepreneur, François Blanc, to restore the family fortunes. Blanc built a casino on the hills of Monte Carlo opposite the royal palace, where punters could indulge in games of chance that were illegal in France and many other European states. The venture had a shaky start, but a new railway brought visitors from across the continent. Gambling made the tiny state prosperous.
 
Florestan and Blanc brought the concept of the sanctuary, or haven, to economic policy. A small jurisdiction attracts business by implementing a more liberal fiscal or regulatory regime than its neighbours. Smugglers and pirates had occupied territories for centuries, but their activities were outside the law, and anyone who dealt there did so at real risk to their property and person. The haven provides the apparatus of the legal state while enabling its clients to escape the inconveniences of regulation and taxation and unwanted attention to their affairs.
 
Doing business in a haven is expensive. In the 19th century, the rail fare to Monte Carlo was substantial. Today the costs of establishing an offshore company or trust put such arrangements out of the reach of ordinary people. So the clients, individuals and corporations are necessarily affluent. Since the disreputable simply disregard the law, and the morally upright observe its spirit as well as its letter, the customers of the haven are respectable, but not very respectable, citizens – the gambling aristocrats of the 19th century, the tax exiles of today. Monaco has never shaken off Somerset Maugham's tag of "a sunny place for shady people".
 
From its inception, the existence of the haven depended on the hypocrisy of its larger neighbours, which tacitly acknowledged the utility of the haven as a safety valve. Their politicians could denounce excesses of wealth and proclaim the need to regulate improper or immoral behaviour, but their rich and famous citizens could always ensure that the restraint on them did not become too onerous.
 
Governments can make life difficult for the havens or for the people who use them. But they rarely do. After decades of pontification, only mild bullying was needed to persuade Switzerland, the most respectable and most powerful of havens, to modify its banking secrecy. The Monaco casino project would have been stillborn if there had been genuinely principled opposition from neighbouring states. Monaco, then and now, is completely dependent on France for its physical infrastructure and on the European financial system for its financial infrastructure. Minor harassment of returning visitors, and a more determined refusal to co-operate with companies that did business in the haven, would have ended the project.
 
People are willing to make agreements under the laws of Bermuda, not just because they know that the laws of Bermuda are not very different from the laws of England, but also because they also know that the consequences of agreements made under the laws of Bermuda will be enforced by the courts of England. Such formal recognition is the essential difference between dealing with a haven and dealing with smugglers, and a difference that exists because we choose to facilitate it.
 
Few managers of hedge funds based in St James's in London or Connecticut could locate their registered offices on a map. Many havens are islands, which is why we use the term offshore. Most are under present or former British jurisdiction, accidental relics of empire and naval power. The territories have been allowed, even encouraged, to reduce their dependence on British government aid by attracting global financial services activity. With great success, in many cases. The tiny population of the Cayman Islands has a per capita income well above that of the mother country.
 
So when the haven falls into disrepute – as recently in the Turks and Caicos Islands – it falls to the British government to sort it out. If you operate in the penumbra of legality, as havens do, it is easy to slip outside the bonds of legality altogether. Where there is legal avoidance of tax and regulation, illegal avoidance of tax and regulation is rarely far behind, and often hard to distinguish: where there is secrecy the motive is frequently impropriety; where there is impropriety, criminality is rarely far behind, and hard to distinguish. To turn a blind eye to avoidance of the law is to undermine all law.
 
Today's political outrage is humbug. Havens exist only because larger states allow them to exist, and larger states allow them to exist because the customers of havens are the rich and powerful. In the 1860s, the typical client of a haven was a patron of Blanc's casino: in the years after 2000, the typical client of a haven was a hedge fund registered in Grand Cayman. Plus ça change, plus c'est la même chose.

 
John Kay's latest book, The Long and the Short of It, was published in January

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Morals: the one thing markets don't make

 

 

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

Jonathan Sacks

 

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

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The Pleasure Principle

  

By PATRICIA LEIGH BROWN and CAROL POGASH

SAN FRANCISCO

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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The market is destructive. That's its point

 

 

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

Jamie Whyte

 

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

• Have your say

 

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

As has been happening.

 

Alan Wilkinson, Russell, New Zealand

 

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

 

Glen, Melbourne,

 

 

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

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