You can’t blame capitalism for this 'shambles’

Real free markets require genuine competition if they are to offer the constantly improving quality of service that is the redeeming virtue of private enterprise

A protester makes his point in front of the Bank of England Photo: GETTY

By Janet Daley

9:00PM BST 21 Jul 2012

What a feast the past week has been for the last adherents of the old socialist religion. There was yet another banking scandal and this one actually involved (wow!) laundering of drug money, and possible terrorist connections. And then there was a whopperoo of a public relations catastrophe, when a private firm’s commitment to providing security for the Olympics fell apart. So here we go again. From the planet where state power and government provision is an eternal fount of benevolence, come the voices of reproach. They always knew it would end like this: the forces of rabid capitalism have been allowed to pillage and destroy the moral fabric of the nation with their rapacious lust for profit, laying waste to the great public service ethos which once ruled our communal life.

Thank heaven for Mark Serwotka. Just as this outpouring of egregious moral hokum was reaching its ululating zenith, along came the Public and Commercial Services Union to remind us what the “public service ethos” is all about. Mr Serwotka’s comrades, who hold the security of the entire country in their grip, were to pull the plug at Britain’s ports of entry on the day before the Olympic Games opened. Ah, yes. There is the spirit of the untrammelled, invincible public sector at its purest: self-serving, politically ruthless, and indifferent to any needs or concerns outside its own vested interest. This was the mindset that once prevailed in the government-owned public services, with their hugely powerful national unions, which dominated our day-to-day existence within living memory.

Those of us old enough to recall what it was actually like to be persecuted by the North Thames Gas Board, to be put on a six-month waiting list for a telephone by the General Post Office, and to be at the mercy of dustmen who went on strike whenever their feelings were hurt, are not likely to be taken in by meretricious rhetoric about the glories of state ownership. It was the blinding rage against all of that – and the determination that it should never return – that kept the Conservatives in power for 18 years.

But I worry about the youngsters. Could a whole new generation of useful idiots be recruited to the cause of collectivism and state ownership, bamboozled by deliberately muddled assertions which do not stand up to examination? Will they be inclined, for example, to accept the hysterical claims that HSBC’s alleged money-laundering activity is a revelation about the nature of capitalism itself: that it encapsulates the essential immorality of the free market? Perhaps it would be pertinent for someone (David Cameron?) to point out that laundering drug money is not capitalism. It is not even “rampant capitalism”: it is a crime.

Freedom – as in “free market” – is not the same as lawlessness. If bankers are criminals, they should go to prison. It is the careless enforcement of the law – or a lack of the transparency which makes such enforcement possible – which should be in the dock here, not free-market economics. To consign capitalism to the devil because criminal activity went on within it is absurd. We may as well ban the ownership of goods because it creates the possibility of theft. Criminality is a danger under any system, because it is a function of human frailty. The point is to pursue and eradicate a particular crime, not to smash the freedoms under which it was conceivable. What is needed now is diligence and discipline in the running of markets – which brings us to that other great embarrassment for the private sector.

The word that has been uttered more than any other throughout the week (with much self-important pomposity in some cases) has been “shambles”. Yes, the failure of G4S to provide the security staff which they were contracted to recruit was indeed a four-star mega-shambles. But so was the Government’s failure to monitor the slipshod way that its contractor was managing such a vital programme. And for that matter, so was George Osborne’s last Budget, and the Coalition’s catastrophic attempt to hammer Lords reform through Parliament, and the BBC’s coverage of the Diamond Jubilee. Yes sir, “shambles” is the word of the moment – and it applies as much to amateurish, incompetent, self-indulgent government or national institutions as it does to hapless private companies that make very public messes.

This is the real British disease: unseriousness, lack of rigour, ill-discipline, failure to attend to detail and inadequate follow-through. Certainly it is true that what is now called “outsourcing” of public services – the disgraced Public Finance Initiative or public-private partnership – has taken a lot of hits. It has sometimes (but not always, as the neo-nationalisers would have you believe) ended up costing more and delivering less than it should. But that is almost wholly the fault of government agencies (both central and local) that are hopeless at commissioning and monitoring contractors. Getting value for money and insisting on efficiency are so alien to the mentality of public bureaucrats that they are far more inclined simply to hand over responsibility to outside firms and wait for them to perform miracles. Labour did this with the clear intention of fudging Whitehall spending limits so that it could pour even more money into its benefit entitlement programmes. The Tories do it in better faith but with less excuse for sloppy management: they are the people whose backgrounds ought to have taught them that private contractors need to be chased, harried and held to the mark.

But then the Tory record on privatisation has not been covered in glory. It will not do, for example, to dismantle a state monopoly in telecommunications only to hand it to a private monopoly. BT may not make you wait six months for a telephone, but they will rip you off with the joyous alacrity of a company that knows it has no effective competitors. Nor should the old gas and electricity boards have been stripped of their power only for energy supply to be run by a cartel of price-fixing giants. Real free markets require genuine competition if they are to offer the constantly improving quality of service that is the redeeming virtue of private enterprise. Otherwise private provision will seem like a profit-obsessed conspiracy against the public – hardly an improvement on the old nationalised industries, which had become comical in their failure to serve the consumer by the time the country threw them out. There is no time left for inept, half-hearted, inadequate administration. The argument against state power could be lost – and then another generation will have to learn the lesson all over again.

£13tn: hoard hidden from taxman by global elite

• Study estimates staggering size of offshore economy
• Private banks help wealthiest to move cash into havens

• Heather Stewart, business editor
• guardian.co.uk, Saturday 21 July 2012 21.00 BST

The Cayman Islands: a favourite haven from the taxman for the global elite. Photograph: David Doubilet/National Geographic/Getty Images

A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together – according to research commissioned by the campaign group Tax Justice Network.

James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report, The Price of Offshore Revisited, released exclusively to the Observer.

He shows that at least £13tn – perhaps up to £20tn – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract the assets of so-called high net-worth individuals. Their wealth is, as Henry puts it, "protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy". According to Henry's research, the top 10 private banks, which include UBS and Credit Suisse in Switzerland, as well as the US investment bank Goldman Sachs, managed more than £4tn in 2010, a sharp rise from £1.5tn five years earlier.

The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world.

Oil-rich states with an internationally mobile elite have been especially prone to watching their wealth disappear into offshore bank accounts instead of being invested at home, the research suggests. Once the returns on investing the hidden assets is included, almost £500bn has left Russia since the early 1990s when its economy was opened up. Saudi Arabia has seen £197bn flood out since the mid-1970s, and Nigeria £196bn.

"The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments," the report says.

The sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor. According to Henry's calculations, £6.3tn of assets is owned by only 92,000 people, or 0.001% of the world's population – a tiny class of the mega-rich who have more in common with each other than those at the bottom of the income scale in their own societies.

"These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people," said John Christensen of the Tax Justice Network. "People on the street have no illusions about how unfair the situation has become."

TUC general secretary Brendan Barber said: "Countries around the world are under intense pressure to reduce their deficits and governments cannot afford to let so much wealth slip past into tax havens.

"Closing down the tax loopholes exploited by multinationals and the super-rich to avoid paying their fair share will reduce the deficit. This way the government can focus on stimulating the economy, rather than squeezing the life out of it with cuts and tax rises for the 99% of people who aren't rich enough to avoid paying their taxes."

Assuming the £13tn mountain of assets earned an average 3% a year for its owners, and governments were able to tax that income at 30%, it would generate a bumper £121bn in revenues – more than rich countries spend on aid to the developing world each year.

Groups such as UK Uncut have focused attention on the paltry tax bills of some highly wealthy individuals, such as Topshop owner Sir Philip Green, with campaigners at one recent protest shouting: "Where did all the money go? He took it off to Monaco!" Much of Green's retail empire is owned by his wife, Tina, who lives in the low-tax principality.

A spokeswoman for UK Uncut said: "People like Philip Green use public services – they need the streets to be cleaned, people need public transport to get to their shops – but they don't want to pay for it."

Leaders of G20 countries have repeatedly pledged to close down tax havens since the financial crisis of 2008, when the secrecy shrouding parts of the banking system was widely seen as exacerbating instability. But many countries still refuse to make details of individuals' financial worth available to the tax authorities in their home countries as a matter of course. Tax Justice Network would like to see this kind of exchange of information become standard practice, to prevent rich individuals playing off one jurisdiction against another.

"The very existence of the global offshore industry, and the tax-free status of the enormous sums invested by their wealthy clients, is predicated on secrecy," said Henry.
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BUSINESS

22 July 2012 Last updated at 15:43

Tax havens: Super-rich 'hiding' at least $21tn

COMMENTS (421)

A global super-rich elite had at least $21 trillion (£13tn) hidden in secret tax havens by the end of 2010, according to a major study.

The figure is equivalent to the size of the US and Japanese economies combined.

The Price of Offshore Revisited was written by James Henry, a former chief economist at the consultancy McKinsey, for by the Tax Justice Network.

Tax expert and UK government adviser John Whiting said he was sceptical that the amount hidden was so large.

Mr Whiting, director of the Office of Tax Simplification, said: "There clearly are some significant amounts hidden away, but if it really is that size what is being done with it all?"

Mr Henry said his $21tn is actually a conservative figure and the true scale could be $32tn. A trillion is 1,000 billion.

Mr Henry used data from the Bank of International Settlements, International Monetary Fund, World Bank, and national governments.

His study deals only with financial wealth deposited in bank and investment accounts, and not other assets such as property and yachts.

The report comes amid growing public and political concern about tax avoidance and evasion. Some authorities, including in Germany, have even paid for information on alleged tax evaders stolen from banks.

The group that commissioned the report, Tax Justice Network, campaigns against tax havens.

Mr Henry said that the super-rich move money around the globe through an "industrious bevy of professional enablers in private banking, legal, accounting and investment industries.

"The lost tax revenues implied by our estimates is huge. It is large enough to make a significant difference to the finances of many countries.

"From another angle, this study is really good news. The world has just located a huge pile of financial wealth that might be called upon to contribute to the solution of our most pressing global problems," he said.

'Huge black hole'

The report highlights the impact on the balance sheets of 139 developing countries of money held in tax havens that is put beyond the reach of local tax authorities.

Mr Henry estimates that since the 1970s, the richest citizens of these 139 countries had amassed $7.3tn to $9.3tn of "unrecorded offshore wealth" by 2010.

Private wealth held offshore represents "a huge black hole in the world economy," Mr Henry said.

Mr Whiting, though, urged caution. "I cannot disprove the figures at all, but they do seem staggering. If the suggestion is that such amounts are actively hidden and never accessed, that seems odd - not least in terms of what the tax authorities are doing. In fact, the US, UK and German authorities are doing a lot."

He also pointed out that if tax havens were stuffed with such sizeable amounts, "you would expect the havens to be more conspicuously wealthy than they are".

Other findings in Mr Henry's report include:

• At the end of 2010, the 50 leading private banks alone collectively managed more than $12.1tn in cross-border invested assets for private clients
• The three private banks handling the most assets offshore are UBS, Credit Suisse and Goldman Sachs
• Less than 100,000 people worldwide own about $9.8tn of the wealth held offshore.

Global Banks are the Financial Services wing of the Drug Cartels

As HSBC executives apologise to the US Senate for laundering drugs money, the fact is that nothing changes

• 
• • Ed Vulliamy
  • guardian.co.uk, Saturday 21 July 2012 13.01 BST

A Colombian soldier inspects the harvest of a 50-acre coca plantation: fines for laundering drugs money may seem huge, but banks pay them out of petty cash. Photograph: Efrain Patino/AP

"Steal a little," wrote Bob Dylan, "they throw you in jail; steal a lot and they make you a king." These days, he might recraft the line to read: deal a little dope, they throw you in jail; launder the narco billions, they'll make you apologise to the US Senate.

Two months ago in Washington DC, a poor black man called Edward Dorsey Sr was convicted of peddling 5.5 grams of crack cocaine. Because he was charged before a recent relative amelioration in sentencing, he was given a mandatory 10 years in jail.

Last week, managers from Britain's biggest bank, HSBC, lined up before the Senate's permanent sub-committee on investigations – just across the Potomac river from the scene of Dorsey's crime – to be asked questions such as: "It took three or four years to close a suspicious account. Is there any way that should be allowed to happen?"

The "suspicious account" was that of a "casa de cambio", a currency exchange house operated in Mexico on behalf of the largest criminal syndicate in the world and one of the most savage, the Sinaloa drug-trafficking cartel. The dealings had been flagged up toHSBC bosses by an anti-money laundering officer, but to no avail – the dirty business continued. "No, senator," came the reply from a bespectacled Brit called Paul Thurston, chief executive, retail banking and wealth management, HSBC Holdings plc.

The same casa de cambio, called Puebla, was known to be under investigation in another case involving the Wachovia bank during the time HSBC was entertaining its money. US authorities had seized $11m from Wachovia's Miami office, on the way to securing the biggest settlement in banking history with Wachovia in March 2010, detailed in this newspaper last year.

Wachovia was fined $50m and made to surrender $110m in proven drug profits, but was shown to have inadequately monitored a staggering $376bn through the casa de cambio over four years, of which $10bn was in cash. The whistleblower in the case, an Englishman working as an anti-money laundering officer in the bank's London office, Martin Woods, was disciplined for trying to alert his superiors, and won a settlement after bringing a claim for unfair dismissal.

No one from Wachovia went to jail – and, said Woods at the time of the settlement: "These are the proceeds of murder and misery in Mexico, and of drugs sold around the world. But no one goes to jail. What does the settlement do to fight the cartels? Nothing. It encourages the cartels and anyone who wants to make money by laundering their blood dollars."

HSBC has been found to have handled $7bn in narco cash, "and this is the starter for 10", Woods now says. "We'll get the full picture over time. But what's the sanction on these banks? What's their risk? The cartels should renegotiate their charges with the banks. They're being priced for a risk element that isn't there."

Wachovia was not the first, neither will HSBC be the last. Six years ago, a subsidiary of Barclays – Barclays Private Bank – was exposed as having been used to launder drug money from Colombia through five accounts linked to the infamous Medellín cartel. By an ironic twist, Barclays continued to entertain the funds after British police had become involved after a tip-off, from HSBC.

And the issue is wider than drug-money. It is about where banks, law enforcement officers and the regulators – and politics and society generally – want to draw the line between the criminal and supposed "legal" economies, if there is one.

Take the top-drawer bank to the elite and Her Majesty the Queen, Coutts, part of the bailed-out Royal Bank of Scotland. On 23 March, the UK Financial Services Authority issued a final notice to Coutts, fixing a penalty of £8.75m for breach of its money-laundering code.

The FSA reviewed 103 "high-risk customer files" and "identified deficiencies in 73 files", showing "failure to conduct appropriate ongoing monitoring" over three years. In two cases, private bankers involved had "failed to identify serious criminal allegations against those customers". Rory Tapner, chief executive of the wealth division of RBS said that "since concerns were first identified by the FSA, Coutts & Co has enhanced its client relationship management process". The refrain was the same from HSBC last week, and every other bank after every other shameful revelation: we went awry, but we've fixed it.

Wouldn't it be interesting, though, to know Coutts's private view of Wachovia's case – or, at least of people such as Woods who do root out criminal laundering?

As it happens, through a rare glimpse, we do. Last year, the Wachovia whistleblower was offered a job at Coutts. But the bank suddenly withdrew its job offer. An internal email sent by the interviewer to a director of Coutts's wealth management programme explained the bank had "a very generic reason for our decision, citing the fact that we had become aware of an incident at Wachovia, one of Martin Woods's previous employers, and that Coutts was keen to avoid any risk of reputational damage that might relate to the incident".

The thought occurs to Woods, who is taking legal action against Coutts for mistreatment of a whistleblower, that he was too tenacious at Wachovia. Coutts declined to comment.

No one at Coutts was called to account for the FSA's alarming findings. No one was sanctioned under criminal law last month when the ING bank was fined $619m for illegally moving billions of dollars into the US banking system, in breach of sanctions – as HSBC has done with money from North Korea and Iran. Neither were they in 2009, when Lloyds TSB – 43% owned by the British taxpayer – was fined $350m for whitewashing Iranian money into the US. The fines seem huge to us, but banks pay them from petty cash.

If there is a prosecution, it is always "deferred", as with Wachovia, and a Californian bank called Sigue used by HSBC to receive the Mexican drug money. Be good for a year, and we'll forget about it. Since when did the likes of Edward Dorsey of Washington enjoy that kind of leniency?

A foremost trainer of anti-money laundering officers in the US is Robert Mazur, who infiltrated the Medellín cartel during the prosecution and collapse of the BCCI bank in 1991, and who tells the Observer that "the only thing that will make the banks properly vigilant to what is happening is when they hear the rattle of handcuffs in the boardroom".

It remains to be seen whether HSBC's barons will, like Wachovia's, avoid Dorsey's fate.

"People don't like to ask how close the banker's finger is to the trigger of the killer's gun," says Woods.

But in this newspaper – when we revealed the original "cease and desist" order against HSBC – the former head of the UN Office on Drugs and Crime, Antonio Maria Costa, posited that four pillars of the international banking system are: drug-money laundering, sanctions busting, tax evasion and arms trafficking.

The response of politicians is to cower from any serious legal assault on this reality, for the simple reasons that the money is too big (plus consultancies to be had after leaving office). The British government recruits a former chairman of HSBC as trade secretary just as the drug-laundering scandal breaks.

Herein, along with Dylan's dictum, lies the problem. We don't think of those banking barons as the financial services wing of the Sinaloa cartel.

The stark truth is that the cartels' best friends are those people in pin-stripes who, after a rap on the knuckles, return to their golf in Connecticut and drinks parties in Holland Park.

The notion of any dichotomy between the global criminal economy and the "legal" one is fantasy. Worse, it is a lie. They are seamless, mutually interdependent – one and the same.

Indians Great, Greater, Greatest?

Ramachandra Guha in The Hindu

Choosing the ‘Greatest Indian After Gandhi’ is di icult when the present exerts such a strong pull over our view of the past and there is a wide variation between how the ‘greatness’ of an individual is assessed by the aam aadmi and by the expert, says Ramachandra Guha




Nations need heroes, but the construction of a national pantheon is rarely straightforward or uncontested. Consider the debate in the United States about which faces should adorn the national currency. The founding figures of American Independence — Jefferson, Washington, Hamilton, Madison, and Franklin — are all represented on the dollar bill, albeit on different denominations. So are the 19th century Presidents Andrew Jackson, Abraham Lincoln, and Ulysses S. Grant. In recent years, right-wing Americans have campaigned for their hero, Ronald Reagan, to be represented on the national currency. This, it is said, is necessary to bring it in line with contemporary sentiments. Of 20th century Presidents, Franklin Delano Roosevelt is represented on the dime, and John F. Kennedy on the dollar. Both were Democrats. Republicans now demand that the pantheon feature one of their ilk. In 2010, a Congressman from North Carolina, Patrick McHenry, canvassed for a law mandating that Ulysses S. Grant be replaced on the fifty dollar bill by Ronald Reagan. “Every generation needs its own heroes”, said McHenry. The American hero he was anointing for our times was Reagan, “a modern day statesman, whose presidency transformed our nation’s political and economic thinking”.


Turn now to that other large, complex, cacophonous, democracy — our own. After India became independent, the national pantheon offered to its citizens was massively dominated by leaders of the Congress Party. Mahatma Gandhi was positioned first, with Jawaharlal Nehru only a short distance behind. Both had played important roles in the freeing of the country from colonial rule. Both were truly great Indians. That said, the popular perception of both was helped by the fact that the party to which they belonged was in power for the crucial decades after Independence.


Newspapers, the radio, and school textbooks all played their role in the construction of a narrative in which Gandhi was the Father of the Nation and Nehru its Guide and Mentor in the first, formative years of the Republic’s existence. Until the 1960s, the dominance of Nehru and Gandhi in the national imagination was colossal. When, in that decade, the American scholar Eleanor Zelliot wrote a brilliant dissertation on B.R. Ambedkar and the Mahar movement in Maharashtra, she was unable to find a publisher. But then the Congress started to lose power in the States. In 1977 it lost power for the first time at the Centre. The rise of new political parties led naturally to revisionist interpretations of the past. New heroes began to be offered for inclusion in the nation’s pantheon, their virtues extolled (and sometimes magnified) in print, in Parliament, and, in time, in school textbooks as well.


The Indian who, in subsequent decades, has benefited most from this revaluation is B.R. Ambedkar. A scholar, legal expert, institution builder and agitator, Ambedkar played a heroic (the word is inescapable) role in bringing the problems of the untouchable castes to wider attention. He forced Gandhi to take a more serious, focused, interest in the plight of the depressed classes, and himself started schools, colleges and a political party to advance their interests.


Ambedkar died in December 1956, a political failure. The party he founded scarcely made a dent in Congress hegemony, and he was unable to win a Lok Sabha seat himself. But his memory was revived in the 1970s and beyond. His works began to be read more widely. He was the central, sometimes sole, inspiration for a new generation of Dalit activists and scholars. Obscure at the time of his death in 1956, condescended to by the academic community until the 1980s (at least), Ambedkar is today the only genuinely all-India political figure, worshipped in Dalit homes across the land. Notably, he is not a Dalit hero alone, his achievements recognised among large sections of the Indian middle class. No one now seeking to write a book on Ambedkar would have a problem finding a publisher.


The (belated) incorporation of Ambedkar into the national pantheon is a consequence largely of the political rise of the subaltern classes. Meanwhile, the pantheon has been expanded from the right by the inclusion of Vallabhbhai Patel. Paradoxically, while Patel was himself a lifelong Congressman, the case for his greatness has been made most vigorously by the Bharatiya Janata Party (BJP). BJP leaders and ideologues speak of Patel as the Other, in all respects, of Jawaharlal Nehru. They claim that if Patel had become Prime Minister, Kashmir would have been fully integrated into India. Under Patel the country would have followed a more pragmatic (i.e. market-oriented) economic policy, while standing shoulder-to-shoulder with Western democracies against godless Communism. Nor, if Patel had been in charge, would there have been (it is claimed) any appeasement of the minorities.


The BJP reading of history is tendentious, not least because Patel and Nehru were, in practice, collaborators and colleagues rather than rivals or adversaries. To be sure, they had their disagreements, but, to their everlasting credit, they submerged these differences in the greater task of national consolidation. Theirs was a willed, deliberate, division of labour and responsibilities. Nehru knew that Patel, and not he, had the patience and acumen to supervise the integration of the princely states and build up administrative capacity. On the other side, as Rajmohan Gandhi demonstrates in his biography of Patel, the man had no intention or desire to become Prime Minister. For Patel knew that only Nehru had the character and personality to take the Congress credo to women, minorities, and the South, and to represent India to the world. 


That the BJP has to make the case for Patel is a consequence of the Congress’s capture by a single family determined to inflate its own contributions to the nation’s past, present, and future. Sonia Gandhi’s Congress Party recognises that a pantheon cannot consist of only two names; however, in their bid to make it more capacious, Congressmen place Indira and Rajiv alongside Nehru and Mahatma Gandhi. Thus the ubiquitous and apparently never-ending naming of sarkari schemes, airports, buildings, and stadia, after the one or the other.


The preceding discussion makes clear that political parties and social movements play a crucial role in how the national past is conveyed to citizens in the present. Indians admired by parties and movements, such as Ambedkar and Patel, have had their achievements more widely recognised than might otherwise have been the case. By the same token, great Indians whose lives are incapable of capture by special interests or sects have suffered from the enormous condescension of posterity.


Consider, in this regard, the current invisibility from the national discourse of Kamaladevi Chattopadhyaya. Married to a man chosen by her family, she was widowed early, and then married a left-wing actor from another part of India. She joined the freedom movement, persuading Gandhi to allow women to court arrest during the Salt March and after. After coming out of jail, Kamaladevi became active in trade union work, and travelled to the United States, where she explained the relevance of civil disobedience to black activists (her turn in the South is compellingly described in Nico Slate’s recent book Colored Cosmopolitanism). After Independence and Partition, Kamaladevi supervised the resettlement of refugees; still later, she set up an all-India network of artisanal cooperatives, and established a national crafts museum as well as a national academy for music and dance. Tragically, because her work cannot be seen through an exclusively political lens, and because her versatility cannot be captured by a sect or special interest, Kamaladevi is a forgotten figure today. Yet, from this historian’s point of view, she has strong claims to being
regarded as the greatest Indian woman of modern times.

Earlier this year, I was invited to be part of a jury to select the ‘Greatest Indian Since Gandhi’. The organisers did me the favour of showing me a list of 100 names beforehand. Many of the names were unexceptionable, but some strongly reflected the perceptions (and prejudices) of the present. For example, Kiran Bedi was in this list, but Kamaladevi Chattopadhyay wasn’t, a reflection only of the fact that the latter did not live in an age of television. There was also a regional bias: compiled in Delhi, the preliminary list did not include such extraordinary modern Indians as Shivarama Karanth, C. Rajagopalachari, and E. V. Ramaswami ‘Periyar’. There was also a marked urban bias: not one Indian who came from a farming background was represented, not even the former Prime Minister Charan Singh or the former Agriculture Minister (and Green Revolution architect) C. Subramaniam. Nor was a single Adivasi on the list, not even the Jharkhand leader Jaipal Singh.


Since this was a provisional list, the organisers were gracious enough to accommodate some of these names at my request. The revised list was then offered to a jury composed of actors, writers, sportspersons and entrepreneurs, men and women of moderate (in some cases, considerable) distinction in their field. Based on the jury’s recommendations the 100 names were then brought down to 50. The names of these 50 ‘great’ Indians were then further reduced to 10, in a three-way process in which the votes of the jury were given equal weightage with views canvassed via an online poll and a market survey respectively. The results
revealed two striking (and interconnected) features: the strong imprint of the present in how we view the past, and the wide variation between how the ‘greatness’ of an individual is assessed by the aam aadmi and by the expert.


Here are some illustrations of this divergence. In the jury vote, B.R. Ambedkar and Jawaharlal Nehru tied for first place; each had 21 votes. The online poll also placed Ambedkar in first place, but ranked Nehru as low as 15th, lower than Vallabhbhai Patel, Indira Gandhi, and Atal Bihari Vajpayee. Even Sachin Tendulkar, A.R. Rahman, and Rajnikanth were ranked higher than Nehru by Net voters. In the jury vote, the industrialist J.R.D. Tata and the social worker Mother Teresa were ranked immediately below Ambedkar and Nehru. Vallabhbhai Patel was ranked fifth by the jury, but an impressive third by Net voters. This suggests that like Ambedkar, Patel has a strong appeal among the young, albeit among a different section, those driven by the desire to see a strong state rather than the wish to achieve social justice. Nehru, on the other hand, is a
figure of disinterest and derision in India today, his reputation damaged in good part by the misdeeds of his
genealogical successors.The most remarkable, not to say bizarre, discrepancy between the expert and the aam aadmi was revealed in the case of the former President of India, A.P.J. Abdul Kalam. Only two (out of 28) jury members voted for Kalam to be one of the shortlist of 10. On the other hand, Kalam was ranked first by those surveyed by market research, and second in the online polls.


What explains this massive variation in perception? The jury was motivated perhaps by the facts — the hard,
undeniable, if not so widely advertised facts — that Kalam has not made any original contributions to scientific or scholarly research. Homi Bhabha, M.S. Swaminathan, and Amartya Sen, who have, were thus ranked far higher than the former President. Nor has Kalam done important technological work — recognising this, the jury ranked the Delhi Metro and Konkan Railway pioneer E. Sreedharan above him.
In the popular imagination, Kalam has been credited both with overseeing our space programme and the nuclear tests of 1998. In truth, Vikram Sarabhai, Satish Dhawan, U.R. Rao and K. Kasturirangan did far more to advance India’s journey into space. Kalam was an excellent and industrious manager; a devoted organisation man who was rewarded by being made the scientific adviser to the Government of India. It was in this capacity that he was captured in military uniform at Pokhran, despite not being a nuclear specialist of any kind.


A key reason for Abdul Kalam’s rise in public esteem is that he is perceived as a Muslim who stands by his
motherland. In the 1990s, as there was a polarisation of religious sentiment across India, Kalam was seen by many Hindus as the Other of the mafia don Dawood Ibrahim. Dawood was the Bad Muslim who took refuge in Pakistan and planned the bombing of his native Bombay; Kalam the Good Muslim who stood by India and swore to bomb Pakistan if circumstances so demanded. This was the context in which Kalam was picked up and elevated to the highest office of the land by the Bharatiya Janata Party. The BJP wanted, even if symbolically, to reach out to the minorities they had long mistrusted (and sometimes persecuted). In this rebranding exercise, the fisherman’s son from Rameswaram proved willing and able. A second reason that Kalam is so admired is that he is an upright and accessible public servant in an age characterised by arrogant and corrupt politicians. As President, Kalam stayed admirably non-partisan while reaching out to a wide cross-section of society. He made a particular point of interacting with the young, speaking in schools
and colleges across the land, impressing upon the students the role technology could play in building a  prosperous and secure India. A.P.J. Kalam is a decent man, a man of integrity. He is undeniably a good Indian, but not a great Indian, still less (as the popular vote would have us believe) the second greatest Indian since Gandhi. Notably, the Net voters who ranked Kalam second also ranked Kamaladevi Chattopadhyay 50th, or last. At the risk of sounding elitist, I have to say that in both cases the aam admi got it spectacularly wrong.


III

A nation’s pantheon is inevitably dominated by men and women in public affairs, those who fought for independence against colonial rule, and thereafter ran governments and crafted new laws that reshaped society. One of the appealing things about the exercise I was part of was that it did not choose only to honour politicians. The longlist of 50 had actors, singers, sportspersons, scientists, and social workers on it. Commendably, in their own selection of Ten Great Indians since Gandhi, expert as well as aam admi sought to have a variety of fields represented. Collating the votes, a final list of 10 was arrived at, which, in alphabetical order read: B.R. Ambedkar; Indira Gandhi; A.P.J. Abdul Kalam; Lata Mangeshkar; Jawaharlal Nehru; Vallabhbhai Patel; J.R.D. Tata; Sachin Tendulkar; Mother Teresa; A.B. Vajpayee.
Reacting both as citizen and historian, I have to say that six of these 10 choices should be relatively uncontroversial.

Ambedkar, Nehru and Patel are the three towering figures of our modern political history. J.R.D. Tata was that rare Indian capitalist who promoted technological innovation and generously funded initiatives in the arts. Although in sporting terms Viswanathan Anand is as great as Sachin Tendulkar, given the mass popularity of cricket the latter has had to carry a far heavier social burden. Likewise, although a case can be made for M. S. Subbulakshmi, Satyajit Ray or Pandit Ravi Shankar to represent the field of ‘culture’, given what the Hindi film means to us as a nation, Lata had to be given the nod ahead of them. It is with the remaining four names that I must issue a dissenting note. Taken in the round, Kamaladevi Chattopadhyay’s achievements are of more lasting value than Indira Gandhi’s. If one wanted a non-Congress political figure apart from Ambedkar, then Jayaprakash Narayan or C. Rajagopalachari must be considered more original thinkers than A.B. Vajpayee. Mr. Vajpayee’s long association with sectarian politics must also be a disqualification
(likewise Indira Gandhi’s promulgation of the Emergency).

As for Mother Teresa, she was a noble, saintly, figure, but I would rather have chosen a social worker — such as Ela Bhatt — who enabled and emancipated Indians from disadvantaged backgrounds rather than simply dispensed charity. My caveats about Abdul Kalam have been entered already. In the intellectual/scientist category, strong arguments can be made in favour of the physicist Homi Bhabha and the agricultural scientist M.S. Swaminathan Although I wouldn’t object to either name, there is also Amartya Sen, acknowledged by his peers as one of the world’s great economists and economic philosophers, and who despite his extended residence abroad has contributed creatively to public debates in his homeland.

To choose 50 and then 10 Great Indians was an educative exercise. One was forced to consider the comparative value of different professions, and the claims and pressures of different generations and interest groups. However, I was less comfortable with the further call to choose a single Greatest Indian. For it is only in autocracies — such as Mao’s China, Stalin’s Russia, Kim Il-sung’s North Korea and Bashir Assad’s Syria — that One Supreme Leader is said to embody the collective will of the nation and its people.


This anointing of the Singular and Unique goes against the plural ethos of a democratic Republic. To be sure, one may accept that politics is more important than sports. Sachin Tendulkar may be the Greatest Indian Cricketer but he cannot ever be the Greatest Indian. But how does one judge Ambedkar’s work for the Dalits and his piloting of the Indian Constitution against Nehru’s promotion of multiparty democracy based on adult franchise and his determination not to make India a Hindu Pakistan? And would there have been an India at all if Patel had not made the princes and nawabs join the Union?


In his famous last speech to the Constituent Assembly, Ambedkar warned of the dangers of hero-worship in politics. In a less known passage from that same speech he allowed that a nation must have its heroes. That is to say, one can appreciate and admire those who nurtured Indian democracy and nationhood without venerating them like gods. In that spirit, one might choose hundred great Indians, or fifty, or ten, or even, as I have ended by doing here, three. But not just One.

Time to explode the myth that the private sector is always better

Steve Richards in The Independent

The deeply embedded assumption that a slick, efficient, agile, selfless private sector delivers high-quality services for the public is being challenged once more in darkly comic circumstances. Those inadvertent egalitarians from the security firm G4S have failed to recruit enough security officers so it seems anyone will be able to wander in to watch the 100 metres final. Or at least that would have been the case if the public sector had not come to the rescue in the form of the army.

What an emblematic story of changing times. From the late 1970s until 2008, the fashionable orthodoxy insisted that the public sector alone was the problem. Advocates of the orthodoxy took a knock or two when the banking crisis cast light on parts of the pampered, sheltered and partially corrupt financial sector. Now we get a glimpse of incompetence and greed in another part of the private sector. As light is shed wider and deeper, we keep our fingers crossed that the public sector can rescue the Olympics from chaos.

The pattern is familiar but has been obscured until the arrival of this accessibly vivid example, an Olympic Games staged in a city paranoid about security without many security officers. For decades, private companies were hired on lucrative contracts for projects that the state could never allow to fail. If the companies delivered what was required, they earned a fortune. If they failed, the taxpayer found the money to meet the losses and those responsible for the cock-up often moved on to new highly paid jobs.

The lesson should have been learnt when Labour's disastrous Public Private Partnership for the London Underground collapsed, as this was another highly accessible example of lawyers, accountants and private companies making a fortune and failing to deliver. The Underground could never close, so all involved knew that in the event of failure, the Government or the Mayor of London would be forced to intervene. Boris Johnson described the arrangement at the time as "a colossal waste of money".

He was right, but that has not stopped his colleagues in Government looking to contract out to the private sector at every available opportunity. Andrew Lansley had hoped to make the NHS a great new playground for companies seeking an easy profit. He still might do so. Expect Michael Gove's so-called free schools to become profit-making enterprises if the Conservatives win the next election, and perhaps the academies, too. Maybe there will be a G4S-sponsored school.

G4S already runs prisons and some of the police operations that are being increasingly contracted out to private companies. The welfare-to-work contract secured by another company, much hailed by gullible ministers when the deal was announced as an example of efficiency and effectiveness, is already under critical scrutiny.

A fortnight ago, I argued that we are living through a slow British revolution partly as a result of the financial crisis and the exposure of reckless, unaccountable leadership from the City. The era of light regulation that allowed some bankers without much obvious talent to make a fortune is over. Now, slowly, the assumption held from Thatcher to Blair to Cameron that the delivery of public services should lie with the private sector is being overturned, too.

As is always the case in British revolutions, the change is being driven by startling events and not by political leadership. The Coalition still burns with an ideological zeal formed in the 1980s, the Conservative wing at one with Orange Book Liberal Democrats in their indiscriminate hunger for a smaller state and their undying faith in the private sector.

At the top of both parties, there are crusading advocates of an outdated vision that places too much faith in the likes of G4S and not enough in the potential dependability of a more efficient and accountable public sector.

This is not to argue that the public sector is perfect. Parts of it are complacently inefficient and paralysed by a sense of undeserved entitlement. The Coalition deserves some credit for seeking to increase transparency and accountability in an often over-managed and wasteful sector. In the case of the Olympics debacle and other equivalent deals, part of the culpability lies with government departments that negotiate on behalf of the taxpayer.

Last week, The Independent revealed that there had been no penalty clause in the G4S contract. On Tuesday, its unimpressive chief executive told the Home Affairs Committee that the company still expected to collect £57m for its contribution to the Olympic Games, an expectation that brings to mind once more that damning, ubiquitous phrase from the old Britain: "rewards for failure".

Who draws up these contracts? Which ministers sign them off? Why is their instinct always to outsource when there is now a mountain of evidence that failure follows?

Instead of focusing on the arduously unglamorous task of making the public sector more efficient and adaptable, ministers, like their New Labour predecessors, prefer still the deceptive swagger of the incompetent entrepreneur. The gullibility is more extraordinary now we finally get to know more about these supposed geniuses. Senior bankers earning millions stutter hesitantly when questioned by unthreatening MPs on select committees, incapable of articulating a case. Nick Buckles from G4S was so thrown by the Home Affairs Committee that he lapsed into a debate about whether the few security guards he had managed to hire spoke "fluent English", claiming not to know what such a term might mean. One of the great revelations since Britain's slow revolution began in 2008 is how many unimpressive mediocrities had risen in the unquestioning, unaccountable darkness that, until recently, acted as a protective layer for parts of the private sector.

But in the end look who is ultimately held to account. The Home Secretary, Theresa May, was called to the Commons twice this week to answer questions about what went wrong. She will be back in September. A government can outsource but it will still be held responsible, quite rightly, for the delivery of public services.

So political survival should motivate ministers in future to draw up much tighter deals with companies and to focus more on improving the public sector rather than expensively by-passing it. The voters have had enough of these abuses and yet, trapped by the past, some ministers show an ideological inclination to be abused for a little longer.

The UK Banking Fraud

Libor scandal: gunfight on Threadneedle Street

This is not just some common or garden mishap or even misbehaviour at a big business. This is 'fraud'

• Editorial
• guardian.co.uk, Tuesday 17 July 2012 20.50 BST

Only two weeks into the market-rigging scandal and already the economic-policy establishment resembles the final scene of Reservoir Dogs: a bunch of men in suits all blindly shooting at each other.

Former Barclays boss Bob Diamond has landed the Bank of England's Paul Tucker in deep trouble, with a note implying that he encouraged the misreporting of money-market rates. Barclays' ex-chief operating officer Jerry del Missier told MPs this week that Mr Diamond ordered him to fiddle Libor rates. And Barclays was accused by theFinancial Services Authority (FSA) on Monday of a "culture of gaming – and gaming us". The FSA has been dumped in it by Mervyn King, who argued on Tuesday that it was not the Bank's job to regulate Libor – the implication being that it was the FSA's fault. Both the FSA and the Bank agree that prime responsibility for monitoring Libor lay with the British Bankers' Association. And then there is George Osborne, whose main contribution to the chaos has been to suggest to a magazine interviewer that Gordon Brown and his lieutenants are somehow to blame.

This is the British economic-policy establishment under unprecedented pressure – and what an unseemly, blame-ducking, buck-passing panic it presents. Not just the humbling of some of our most senior and respected officials but also the erraticism with which they have been making policy. Take, for instance, the ousting of Bob Diamond. The FSA's Adair Turner told MPs this week that when he spoke to the Barclays chairman Marcus Agius after the Libor scandal, he had expected Mr Diamond to walk the plank. Something was obviously lost in translation, however, because Mr Agius stood down instead. It took the intercession of Mervyn King to force out the Barclays chief executive. And why exactly was Mr Diamond pushed out? Not for any direct involvement in the Libor scandal but, in the words of Mr King yesterday: "They [the bank] have been sailing too close to the wind across a wide number of areas." No actual infraction; just a general sense of having gone too far for too long. This raises the question of why no regulator seriously intervened in Barclays before the Libor scandal. Bob Diamond has been head of one of Britain's biggest banks since January 2011, yet no official has brought up a previous incident where they told the board to change their behaviour or their personnel. The impression left is of rather rough justice. As Andrew Tyrie, head of the Treasury select committee, drily observed in the same session, by that measure every chief executive in the land is "only a couple of bad dinners" away from being forced out of a post.

This is not just some common or garden mishap or even misbehaviour at a big business. As Mr King observed on Tuesday, this is "fraud". And it has not just been carried out by Barclays, but by a string of other financial institutions – who between them fiddled the benchmark interest rates that are used as reference for hundreds of billions of pounds' worth of transactions. Some of the commentary about this scandal has brought up the fact that this occurred during the credit crunch in 2008, when it would apparently have been in everyone's interests to pretend that all was normal in money markets. Maybe, except that this scamming took place over at least four years – and the kindest interpretation of the evidence to date is that officials asked barely any questions. In place of supervision there was what looks like worrying chumminess. "Well done, man. I am really, really proud of you," Mr Diamond emailed the number two at the Bank on his promotion in December 2008. Mr Tucker replied: "You've been an absolute brick."

This story has so far revolved around one bank rigging one set of interest rates, involving emails and letters and committee hearings. Imagine what a serious, wide-ranging inquiry could uncover. Britain certainly needs one, because this blossoming scandal threatens not just the reputation of an industry but the regulators and ministers who let it run riot.

This German circumcision ban is an affront to Jewish and Muslim identity

A German court has rejected identity and history in favour of a liberal concept of choice, but there's more to right and wrong

• 
• • Giles Fraser
  • guardian.co.uk, Tuesday 17 July 2012 10.50 BST

'Circumcision is the way Jewish and Muslim men are marked out as being involved in a reality greater than themselves.' Detail of Circumcision of Jesus Christ by Pellegrino da San Daniele Photograph: Elio Ciol/Corbis

In November 2010, a Muslim doctor in Germany carried out a circumcision on a four-year old-boy at the request of his parents. A few days later the boy started bleeding and was admitted to Cologne's University hospital who reported the matter to the police. Last month, after a lengthy legal battle, a judge in Cologne outlawed male circumcision as being against the best interests of the child.

Muslim and Jewish groups have been understandably outraged. This week, Germany's chancellor Angela Merkel set herself against the court ruling by telling members of her CDU party that "I do not want Germany to be the only country in the world in which Jews cannot practise their rites." It beggars belief that a German chancellor ought to have to utter such a sentence.

Yet the circumcision of babies cuts against one of the basic assumptions of the liberal mindset. Informed consent lies at the heart of choice and choice lies at the heart of the liberal society. Without informed consent, circumcision is regarded as a form of violence and a violation of the fundamental rights of the child. Which is why I regard the liberal mindset as a diminished form of the moral imagination. There is more to right and wrong than mere choice.

Indeed, making choice the gold standard in every circumstance is to concede to the moral language of capitalism.

I was circumcised by the mohel when I was eight days old on my grandmother's kitchen table in St John's Wood. It wasn't done for health reasons. It was a statement of identity. Whatever is meant by the slippery identification "being Jewish" – my father is, my mother is not – it had something to do with this. Circumcision marked me out as belonging. Years later, when my wife objected to the circumcision of our new son on the grounds that it was cruel and unnecessary, I reluctantly gave way. Intellectually, I knew that there was little left of "being Jewish" to protect. After all, my wife was not Jewish and I had become a Christian priest. Halachically, it made no sense.

For all of this, I still find it difficult that my son is not circumcised. The philosopher Emil Fackenheim, himself a survivor of Sachsenhausen concentration camp, famously added to the 613th commandments of the Hebrew scriptures with a new 614th commandment: thou must not grant Hitler posthumous victories. This new mitzvah insisted that to abandon one's Jewish identity was to do Hitler's work for him. Jews are commanded to survive as Jews by the martyrs of the Holocaust. My own family history – from Miriam Beckerman and Louis Friedeburg becoming Frasers (a name change to escape antisemitism) to their grandson becoming Rev Fraser (long story) to the uncircumcised Felix Fraser – can be read as a betrayal of that 614th commandment.

And I have always found this extremely difficult to deal with. On some level, I feel like a betrayer.

As I argued in this week's Church Times, one of the most familiar modern mistakes about faith is that it is something that goes on in your head. This is rubbish. Faith is about being a part of something wider than oneself. We are not born as mini rational agents in waiting, not fully formed as moral beings until we have the ability to think and choose for ourselves. We are born into a network of relationships that provide us with a cultural background against which things come to make sense. "We" comes before "I". We constitutes our horizon of significance. Which is why many Jews who consider themselves to be atheists would still consider themselves to be Jewish. And circumcision is the way Jewish and Muslim men are marked out as being involved in a reality greater than themselves.

This, however, is a complete anathema to much modern liberal thought that narrows religious and ethical language down to the absolute priority of personal autonomy and individual choice. Liberalism constitutes the view from nowhere. Liberalism has no sense of history. And it is because the Cologne court had so little sense of history that it made such a ridiculous and offensive decision.