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Saturday 17 November 2012

‘Those Who’ve Tried To Change The System Via Elections Have Ended Up Being Changed By It’



On the anti-corruption movement that has implications for politics, media and the national discourse

Saba Naqvi Interviews Arundhati Roy

In August last year, Arundhati Roy wrote a piece that raised important questions about the Anna Hazare movement. A lot has changed since then and Arvind Kejriwal and Anna have taken divergent paths. Kejriwal will launch a political party on November 26 and in the last few months he has, along with lawyer Prashant Bhushan, taken on powerful politicians and corporates. Saba Naqvi sent Arundhati five questions on e-mail to get her views on what is an evolving situation that has implications for politics, media and the national discourse. Here are Arundhati’s very detailed answers.




What do you make of these many corruption exposes and do you see this as a healthy development?



It’s an interesting development. The good thing about it is that it gives us an insight into how the networks of power connect and interlock. The worrying thing is that each scam pushes the last one out of the way, and life goes on. If all we will get out of it is an extra-acrimonious election campaign, it can only raise the bar of what our rulers know we can tolerate, or be conned into tolerating. Scams smaller than a few lakh crores will not even catch our attention. In election season, for political parties to accuse each other of corruption or doing shady deals with corporations is not new—remember the BJP and the Shiv Sena’s campaign against Enron? Advani called it ‘Looting through liberalisation’. They won that election in Maharashtra, scrapped the contract between Enron and the Congress government, and then signed a far worse one!







"Each scam pushes the last out of the way. If all it ends in is an extra-acrimonious election campaign, it’ll only raise the bar of what our rulers think we can tolerate."





Also worrying is the fact that some of these ‘exposes’ are strategic leaks from politicians and business houses who are spilling the beans on each other, hoping to get ahead of their rivals. Sometimes it’s across party lines, sometimes it’s intra-party jockeying. It’s being done brilliantly, and those who are being used as clearing houses to front these campaigns may not always be aware that this is the case. If in this process there was some attrition and corrupt people were being weeded out of the political arena, it would have been encouraging. But those who have been ‘exposed’—Salman Khurshid, Robert Vadra, Gadkari—have actually been embraced tighter by their parties. Politicians are aware of the fact that being accused or even convicted of corruption does not always make a dent in their popularity. Mayawati, Jayalalitha, Jaganmohan Reddy—they remain hugely popular leaders despite the charges that have been brought against them. While ordinary people are infuriated by corruption, it does seem as though when it comes to voting, their calculations are more shrewd, more complicated. They don’t necessarily vote for Nice Folks.



Why do you think stories that the media knew about but never carried or paid a price for carrying are suddenly coming out like a rash and new details are emerging in the process?



Just because there is a new kid in town, we mustn’t forget that some media houses and several other groups and individuals, at cost to themselves, have played a part in exposing major scams, like the Commonwealth games, 2G and Coal-gate, which shone the light on private corporations and sections of the media as well. Ironically, the Anna Hazare movement last year concentrated solely on politicians and let the others off the hook. But you’re right, there are cases in which the facts were known, but they remained unpublished until now. And suddenly it’s raining corruption scams now—some are even being recycled. Corruption has become so blatant, so pathological that those involved don’t even try very hard to hide their tracks. Anna Hazare, Arvind Kejriwal and Prashant Bhushan have all played an important part in making it hard for the media to elide the issue. But the sudden rash of exposes also has to do with the growing competition between the various coalitions of politicians, mega corporations and the media houses they own. For example, I do believe there is some substance to the speculation that the expose of Gadkari has to do with Narendra Modi—backed by big business—positioning himself to become the BJP’s prime ministerial candidate and trying to get hostile lobbies out of the way. Now since it’s the era of corruption and balancesheets—blood is passe. It’s strange how often you hear commentators saying that it’s time to move on from the Sangh parivar’s Gujarat pogrom against Muslims in 2002 and to look ahead. The Congress party-led ’84 massacre of Sikhs in Delhi has been forgotten too. Killers and fascists are OK as long as they are not financially corrupt? What the newest anti-corruption movement led by Kejriwal and Bhushan is doing is important work that ought really to be done by the media and investigation agencies, and by people pressurising the system from outside. I’m not sure a new political party that is going to fight elections is the right vehicle. Given how elections work in India, given the amount of money and the machinations that go into them, what does this decision to stand for elections mean? There is a reason why the big political parties gleefully invite everybody to stand for elections. They know they control the arena, they want to turn newcomers into clowns in their circus, and wear them down by having to perform endlessly before a carnivorous media.







"While ordinary people are infuriated by corruption, it seems, when it comes to voting, their calculations are more shrewd. They don’t always vote for Nice Folks."





Many have walked this plank before. If, for example, Kejriwal’s party wins just a few seats, or none at all, what would it imply? That the majority of Indian people are pro-corruption? What stands exposed in all of this, other than the grand nexus between politicians and business houses, is that the media is struggling with its role as the ‘Fourth Estate’. A new political party, however good or honest, is not going to be able to resolve that anytime soon, because that is a structural problem. The media is hobbled by its economics. Recently in an interview, Vineet Jain of the Times Group was disarmingly frank when he said the Times Group was not in the business of news, but in the business of advertising. Apart from this, we have the problem of paid news and of outright ownership. Industrialists have always owned newspapers, but the scale of the operation has changed. Reliance Industries Ltd (RIL), for example, recently bought 95 per cent shares in Infotel, a TV consortium that controls 27 TV news and entertainment channels. Sometimes it’s the other way around: we have media houses own mining companies. Dainik Bhaskar, with a readership of 17 million, owns 69 companies with interests in mining, power generation, real estate and textiles. And then, of course, we have the newspapers and TV channels owned by politicians like Karunanidhi, Jayalalitha, Jaganmohan Reddy and others.



As the boundary between big business, big politics and news melts away, it’s becoming harder for journalists and reporters to do what was once considered an almost sacred duty—to comfort the afflicted and afflict the comfortable. That ideal has been more or less turned on its head.





‘Being against corruption is not ideology’. (Photograph by Sanjay Rawat)



Can anti-corruption be a valid plank for a political party?



I don’t think so. Corrupt politicians have shown themselves to be hugely popular. I hope Arvind Kejriwal and Prashant Bhushan’s party will have more to its plank than just anti-corruption.







"Since it’s the corruption and balancesheets era, blood is passe. We are asked to move on from the 2002 pogrom against Muslims in Gujarat and to look ahead."





I think the middle-class definition of corruption—as a sort of accounting problem—isn’t necessarily everybody else’s definition. Corruption is a symptom of a widening gap between the powerful and the powerless which, in India, is one of the worst in the world. That is what needs to be addressed. Moral policing, or even actual policing, can’t be a solution. What is that meant to achieve? Making an unjust system cleaner and more efficient? Setting up a parallel government with tens of thousands of police and bureaucrats, which is what the Jan Lokpal Bill envisages, will not solve the problem. Have our police and bureaucrats shown themselves to be guardians of the poor? Which pool will these new, honest souls be culled from? In a country where a majority of the population is illegitimate in the ways in which they live and work, the Jan Lokpal Bill could easily become a weapon in the hands of the middle classes—“Remove these filthy illegal slums, clear away these illegal vendors crowding the pavements”—and so on. The point is how do we define corruption? If a corporate house pays a thousand crore bribe to secure a contract for a coal-field, it’s corruption. If a voter takes a thousand rupees to vote for a particular politician, it’s corruption too. If a samosa-seller pays a cop a hundred-rupee bribe for a place on the pavement, that too is corruption. But are they all the same thing? I do not mean to suggest that there shouldn’t be a grievance redressal mechanism to monitor corruption, of course there should be. But that will not solve the big problem, because the big players only become better at covering their tracks.



For a political party to view the politics of this vast and complex country through the lens of corruption is—to put it politely—inadequate. Can we understand or address the politics of caste and class, ethnicity, gender, religious chauvinism, the whole of our political history, the current process of environmental devastation—and the other myriad things that make India’s engine work, or not work—all through the narrow, brittle lens of corruption? They can only be addressed if you know your people, if you have vision and ideology, not by just changing the props or costumes activists wear on stage when one or the other group accuses them of something or the other. Being against corruption is not in itself a political ideology. Even corrupt people will say they’re against corruption.



Change will come. It has to. But I doubt it will be ushered in by a new political party hoping to change the system by winning elections. Because those who have tried to change the system that way have ended up being changed by it—look what happened to the Communist parties. I think the insurrections taking place in the countryside will move towards the cities, not under any single banner, not in some orderly or revolutionary way, necessarily. It will not be pretty. But it’s inevitable.





Sections of the ruling class see the current exposes as ‘anarchy’. After the Ambani, KG basin and oil issue was raised, there were some commentaries about Kejriwal and “his leftist” friends. Your comments on this.



By ‘anarchy’, I presume they mean chaos, which is not what anarchy means. May I say that what the ruling classes are engaged in today, that is anarchy, by their definition. (By the way, I don’t know which of Arvind Kejriwal’s friends is a ‘leftist’.) Or are we now supposed to collapse ‘chaos’, ‘anarchy’ and the ‘left’ into one big ball of wax?







"As boundaries between big business, politics and news melt, journos find it harder to do what was once sacred duty: comfort the afflicted, afflict the comfortable."





I want to make just one very simple suggestion, and it is far from radical. Let’s say it is just a common minimum programme. We have become a country that is more or less run by private corporations. Let’s look at two of the biggest corporations who rule us today: Reliance and Tatas. Mukesh Ambani, who holds a majority controlling share in RIL, is personally worth $20 billion. RIL has a market capitalisation of $47 billion. Its business interests include petrochemicals, oil, natural gas, polyester fibre, SEZs, fresh food retail, high schools, life sciences research and stem cell storage services. It has a controlling interest in 27 TV news and entertainment channels. It has endowed chairs in foreign universities worth millions of dollars.



The Tatas run more than 100 companies in 80 countries. They are one of India’s largest private sector power companies. They own mines, gas fields, steel plants, phone, cable TV and broadband networks, and run whole townships. They manufacture cars and trucks, own the Taj Hotel chain, Jaguar, Land Rover, Daewoo, Tetley Tea, a publishing company, a chain of bookstores, and a major brand of iodised salt. The Tatas are also hugely invested in foreign universities.



I don’t think that there are corporations like these elsewhere in the world—none with this range of business interests, that control our lives so minutely, that can hold us to ransom and can shut us down as a country if they are unhappy with the deals they are being given. This is the biggest danger facing us.



What our economists like to call a level playing field is actually a machine spinning with a centrifugal force that funnels the poor out like disposable residue, and concentrates wealth in fewer and fewer hands, which is why 100 people have wealth equivalent to 25 per cent of the GDP and hundreds of millions live on less than `20 a day. It is why most of our children suffer from severe malnutrition, why two lakh farmers have killed themselves and why India is home to a majority of the world’s poor.







"Unless mega corporations are reined in, unless cross-ownership of business is regulated, unless media is freed from its control, we are headed for a shipwreck."





Whether you are Communist, Capitalist, Gandhian, Hindutva-ist, Islamist, Feminist, Ambedkarite, Environmentalist, whether you are a farmer, a businessman, journalist, writer, poet, or fool, even if you believe in privatisation and in the new economy—whatever—if you have a modicum of concern or affection, leave alone love, for this country, surely you must see that this is the clear and present danger? Even if these corporations and politicians were scrupulously honest, it is an absurd situation for a country to be in. Unless mega corporations are reined in and limited by legislation, unless the levers of such untrammelled power (which includes the power to buy politics and policymaking, justice, elections and the news) is taken away from them, unless the cross-ownership of businesses is regulated, unless the media is freed from the absolute control of big business, we are headed for a shipwreck. No amount of noise, no amount of anti-corruption campaigns, no amount of elections can stop that.



You have in the past described the system as “hollowed out”. In that case do you see all this as a pantomime?



Pantomime is a harsh word. I see what is happening now as part of the unrest, anger and frustration that is building up in the country. Sometimes the noisiness of it makes it hard to see clearly. But unless we look things in the eye—instead of heading off in strange quixotic directions—we can look forward to the civil war, which has already begun, reaching our doorsteps very soon.



Friday 16 November 2012

Forget Bermuda, Britain's tax havens are much closer to home



It's easy to point a finger at Amazon and co, but UK-based trusts make it easier than ever for the rich not to pay their share
Wallet money
There are many UK companies that offer trusts 'guaranteed to protect almost all your wealth from inheritance tax'. Photograph: Image Source/Alamy
The hottest ticket this week was a ringside seat for the public accounts committee's roasting of tax-avoiding Starbucks, Google and Amazon. Committee chair Margaret Hodge in full flight gave them a magnificent tongue-lashing, with Tories hot on her heels too, pouring derision on "don't be evil" companies' pretence to make next to no profit as they siphon cash into tax havens. Even the comptroller and auditor general lost his temperand called their evidence "insulting".
These are only opening salvos, as the Germans and French take aim too against companies pretending their profits arise in Bermuda or Luxemburg. John Lewis's managing director is calling on the Treasury to demand tax is paid in the country where profits are made:Amazon made £3.3bn in sales but paid zero UK corporation tax on any of the profits of that income. "They will out-invest and ultimately out-trade us," tax-paying John Lewis protests, unable to compete fairly with tax-shirkers. This should be easy to fix. Vince Cable says he's angry – but HMRC could refuse to accept these companies' accounts.
Everyone can point a shocked finger at foreign giants who bamboozle or intimidate our tax collectors. But the culture of avoidance runs deep. Labour tiptoed round the edge of the tax avoidance industry, chased off by City blusterers who called tougher tax collection a Labour stealth tax. But since the crash, the collapse in tax revenues has created soaring national debt, so the need for the Treasury to collect every penny owed has become more pressing. The culture of getting away with what you can has to give way to a popular understanding that one man's tax dodge is his own community's lost children's centres, libraries and swimming pools. So where does it all begin?
In a sedate Sussex hotel, St James's Place Wealth Management invited a flock of retired people of comfortable means to one of their genteel sales pitches on how to avoid tax. Observing unannounced, I listened to them selling their Rolls Royce anti-tax vehicles and investment funds: one fund was so stellar that it grew in 30 years from £30,000 to £2.7m – and how the room gasped in admiration. Yes, yes, we were all well warned that investments can go down as well as up, but the upside of that £2.7m looked more compelling than any risk. But the real seller for these elderly people concerned ways to avoid "uninvited guests at the sharing out of your estate". Those "uninvited guests" are the rest of the nation's taxpayers.
The atmosphere was impish and jocular, with the taxman as pantomime villain. Shocking stories were told of what befalls the estates of those without cunning advisers. Charles Clore lived abroad to avoid tax, but because he foolishly wanted to be buried "back home", the taxman deemed he was not really resident abroad at all and his whole estate was subject to inheritance tax. Gasps of shock. On screen, up came Prince Philip's whimsical remark that "All money nowadays seems to be produced with a natural homing instinct for the Treasury" – though in his case money makes the reverse journey from the Treasury to his trouser pocket. "Taking the worry out of wealth," was the theme, as one presenter promised: "We can protect your money from the dangers of tax," explaining how to offshore money.
But the big sell is trusts, special ones devised for this company's clients, guaranteed to protect almost all your wealth from inheritance tax. They are right, it can be done easily. Put all moveables and all cash and investments into a discretionary trust, and it passes to your heirs without tax as soon as you die, not even waiting for probate. It counts as a gift so the beneficiaries need pay no tax either. Called a "discretionary trust", as technically St James's are the legal trustees, the discretion in fact remains in all but name with you: the company will do whatever you ask, so you still control the fund and you can still take money from it. But for reasons that defy basic tax fairness, it avoids all inheritance tax. Why?
Even worse, hard-pressed local authorities are denuded by these trusts too. As St James's advisers eagerly pointed out, if you hide away your assets in a trust, it can't be counted when calculating how much you should contribute to your care if you need to go into a residential home. He warned that could be £1,300 a week in fees – more gasps – so why let your council take your money when you can salt it away safely in a trust? Let poorer taxpayers pick up the bill instead.
Richard Murphy, tax campaigner and adviser to the public accounts committee and others, says no one knows how much money passes through these trusts. They are opaque, unregistered and the taxman neither knows if they exist nor what's in them. Far more tax is probably avoided this way than the mere £3bn collected in inheritance tax: only 3.5% of estates pay it – and they may not be the richest. Why any Labour chancellor – or Tory for that matter – lets this dodge persist is a mystery. Inheritance is a neuralgic political topic, ever since the issue panicked Gordon Brown into ducking an election in 2007. But since so few estates pay it, it's hard to see why the 96.5% of ordinary taxpayers who never leave enough to get above the £650,000 couples' inheritance tax allowance would not support ending this loophole for the rich.
Meanwhile, the public accounts committee is summoning back Amazon after this week's "deliberately evasive" display of "outrageous" ignorance by one of their executives: he didn't know who owns their Luxembourg-based holding company that pays a fraction of the UK's tax rate. The return match is not to be missed. Margaret Hodge is calling for complete transparency to stop companies claiming "commercial confidentiality" to hide their accounts. She wants aggressive avoiders to be named and shamed and denied public contracts, and she suggests the public boycott tax avoiders.
On 8 December UK Uncut is protesting against Starbucks, setting up creches, libraries and women's refuges in the coffee shops, as payback for services that might stay open if Starbucks paid fair tax. Is it time the committee looked at how the likes of PricewaterhouseCoopers, KPMG, Accenture and McKinsey devise ever more elaborate tax dodges for their clients, yet with the other hand seize ever fatter contracts from the state they help strip bare of revenues?

Thursday 15 November 2012

Scientists find 'fidelity' hormone which keeps men from straying


The chemical oxytocin helped men in romantic relationships keep their distance from strangers they might find attractive.
They stayed about four to six inches further away when approaching or being approached by good-looking women than those given a dummy drug.
Dubbed the 'cuddle drug', oxytocin is naturally made in the body and is involved in sex, sexual attraction, trust and confidence.
It is released into the blood during labour - triggering the production of breast milk - and floods the brain during breastfeeding, helping mother and baby bond.
Researchers said their findings published in The Journal of Neuroscience suggest oxytocin could promote fidelity. In contrast oxytocin had no effect on single men. 
Dr René Hurle­mann, of Bonn University in Germany, said: "Previous animal research in prairie voles identified oxytocin as major key for monogamous fidelity in animals.
"Here we provide the first evidence that oxytocin may have a similar role for humans."
In the study his team administered oxytocin or a placebo via a nasal spray to fifty-seven healthy and heterosexual men, about half of whom were in monogamous relationships.
Forty-five minutes later the participants were introduced to a female experimenter they later described as "attractive".
As the woman moved towards or away from the volunteers the men were asked to indicate when she was at an "ideal distance" as well as when she moved to a place that felt "slightly uncomfortable."
Dr Hurlemann said: "Because oxytocin is known to increase trust in people we expected men under the influence of the hormone to allow the female experimenter to come even closer - but the direct opposite happened."
The effect of oxytocin on the monogamous men was the same regardless of whether the beauty maintained eye contact or averted her gaze - or if the men were the ones approaching or withdrawing from her.
Oxytocin also had no effect on the men's attitude towards the woman - both those who received the hormone and the placebo rated her as being equally attractive.
In a separate experiment the researchers found oxytocin had no effect on the distance men kept between themselves and a male experimenter.
They said future studies are needed to determine exactly how oxytocin might act on the brain to affect behaviour.
Psychiatrist Professor Larry Young, of Emory University in Atlanta who was not involved in the study, said the hormone could be nature's way of encouraging fathers not to stray.
He said: "In monogamous prairie voles we know oxytocin plays an important role in the formation of the pair bond.
"This study suggests the general role of oxytocin in promoting monogamous behaviour is conserved from rodents to man."

Wednesday 14 November 2012

Brics miracle over as world faces decade-long slump


US Conference Board fears Brics miracle over as world faces decade-long slump

The catch-up boom in China, India, Brazil is largely over and will be followed by a drastic slowdown over the next decade, according to a grim report by America’s top forecasting body.

US Conference Board fears BRICS miracle over as world faces decade-long slump
Image 1 of 3
China’s double-digit expansion rates will soon face, fallng to 3.7pc from 2019-2025 as the aging crisis hits. 
Europe's prognosis is even worse, with France trapped in depression with near zero growth as far as 2025 and Britain struggling to raise its speed limit to 1pc over the next three Parliaments.
The US Conference Board’s global economic outlook calls into question the "BRICs" miracle (Brazil, Russia, India, China), arguing that the low-hanging fruit from cheap labour and imported technology has already been picked.
China’s double-digit expansion rates will soon be a romantic memory. Growth will fall to 6.9pc next year, then to 5.5pc from 2014-2018, and 3.7pc from 2019-2025 as the aging crisis hits and investment returns go into "rapid decline".
Growth in India - where the reform agenda has been "largely derailed" - will fall to 4.7pc to 2018, and then to 3.9pc. Brazil will slip to 3pc and then 2.7pc. Such growth rates will leave these countries stuck in the "middle income trap", dashing hopes for a quick jump into the affluent league.
"As China, India, Brazil, and others mature from rapid, investment-intensive ‘catch-up’ growth, the structural ‘speed limits’ of their economies are likely to decline," said the Board. 
The fizzling emerging market story is a key reason why the West has relapsed this year. The world is now facing a synchronized downturn all fronts, with little scope for fiscal and monetary stimulus.
France slumps to bottom of the class, with Britain close behind
"Mature economies are still healing the scars of the 2008-2009 crisis. But unlike in 2010 and 2011, emerging markets did not pick up the slack in 2012, and won’t do so in 2013," it said.
The Conference Board says Europe’s demographic crunch and poor productivity has reduced trend growth to near 1pc, though it could be worse if the region makes a hash of monetary policy and follows Japan into a "structural deflation trap". Large numbers of people may be shut out of the jobs market forever.
Germany will outperform Italy and France massively over the next five years, implying a bitter conflict within EMU over control of the policy levers. While the report does not analyze debt-dynamics, it is hard to see how the Club Med bloc could keep its head above water in such a grim scenario or stop political revolt coming to the boil.
Bert Colijn, the Board’s Europe economist, said France’s woes stem from low investment, as well as delayed austerity and reform. The reckoning will now come.
He thinks Spain will fare better since it has already taken its bitter medicine. It is expected to grow at 1.8pc for the next decade as "Schumpeterian" creative destruction clears away dead wood and unleashes fresh energy - a contentious point since labour economists argue that unemployment of 25.6pc is doing permanent damage to parts of the workforce, and therefore to economic potential.
America has a younger age profile and should eke out 2.5pc to 3pc growth until 2018, and 2pc thereafter. It has a big "output gap" of 6pc of GDP to close before it hits any speed limit, so part of this is just the effect of elastic snapping back.
Emerging markets deflate
The Board said lack of demand lies behind the current global malaise, but the fading technology cycle may prove a greater threat over the long-term.
The thesis is based on work by professor Robert Gordon from Northwestern University, who argues that the great innovation burst of the last 250 years is a "unique episode in human history" and may be fading. His claims challenge the work of Nobel laureate Robert Solow - orthodoxy since the 1950s - that economic growth is a perpetual process once the right legal and market framework is in place.
The Conference Board’s forecast is starkly at odds with a report by the OECD last week predicting that China would keep growing at 6.6pc until 2030, and India at 6.7pc -- propelling the two rising powers to global dominance.
Apostles of the BRICS revolution are certain to dispute the claims. Yet there could be no clearer sign that the emerging market euphoria of the last decade has fully deflated.

Energy pricing: the market is manipulation



As an oil industry whistleblower, I know the energy sector is even more flawed than this week's exposé of gas prices reveals
north sea oil
'The real problem lies not with gas, but crude oil – which is suffering perhaps the greatest market manipulation the world has seen.' Photograph: Getty Images
The Guardian's investigation into the alleged "Libor-like" fixing of UK gas prices was doubly ironic for me. The first irony is that, as director of compliance and market supervision of the International Petroleum Exchange (now ICE Futures Europe) in the 1990s, I was heavily involved in the development and legal architecture of the gas-market contract that has now allegedly been manipulated.
The second painful irony is that in 2000 the Guardian published detailed allegations made by me on very similar micro-manipulation of the International Petroleum Exchange's Brent futures contract-settlement prices. This systemic manipulation was so pervasive that traders referred to the on-exchange profits they made at the expense of the manipulators – who profited "off-exchange" – as "grab a grand".
Unfortunately, I described the manipulation as "systematic" – taken to mean that some of the players were routinely manipulating the price most of the time – rather than "systemic", where most of the players manipulate the market some of the time. On this basis the commissioner appointed to investigate my allegations rejected them, and in finest whistleblower tradition my reputation was destroyed: I lost my livelihood, home and marriage. Had the crude oil market been properly investigated at that time, subsequent oil market history would probably have been very different.
One thing I have come to realise since my failed attempt at whistleblowing is that the short-term trading exposed this week is only part of the problem. The malaise runs much deeper. If you want to find out who really has an interest in rigging the market, ask who benefits from medium- and long-term high commodity prices: it's the producers, stupid. From De Beers' diamond hoarding to coffee-grower cartels, if the history of commodity markets tells us anything it's that if producers can find leverage to support commodity prices, they will.
The real problem in the energy market lies not with gas, but crude oil – which is suffering perhaps the greatest market manipulation the world has seen. This is due to financialisation of markets which began in crude oil about 12 years ago, but only became significant from around 2005 onwards. From the mid-90s, a new type of investor entered the markets as investment banks created new vehicles – index funds, exchange traded funds and so on – which enabled investors to invest directly in equities, precious metals; commodities generally and above all, in energy, with a view to "hedging inflation". Rather than speculatively taking a risk in search of a profit, they sought only the return of their capital, and the preservation of the value of their investment relative to dollars, sterling and so on.
To understand what happened to oil, we just need to look at the Enron scandal. The fundamental scam perpetrated here was based on an ancient financing method known as "prepay". Quite simply, this occurs when producers sell their product at a discount for cash now, with delivery later. So via intermediary banks such as JP Morgan and Citigroup, Enron were able to opaquely obtain "off-balance sheet" financing disguised as commodity trades of which Enron's investors and creditors were blithely unaware.Essentially, Enron was borrowing dollars and lending commodities.
A similarly opaque prepay technique has been responsible since 2005 for the inflation of two oil market bubbles. The first – a private sector bubble – culminated in July 2008 in a spike to $147 a barrel, and then a collapse to $35, causing great pain to producers used to high prices. At this point key producers – facilitated by friendly investment banks – resorted to prepay to finance themselves, and a public sector bubble was rapidly inflated during 2009.
In my analysis, the US and Saudis then hit upon a strategy that loosely "pegged" the oil price against the dollar within an agreed trading range, keeping prices relatively stable. But this trick only worked until early 2011, after which Fukushima and supply shocks in Libya and Iran have caused more turmoil.
I believe that there is now virtually nothing holding the oil market up, and that when (not if) Iran reaches an accommodation with the US on terms similar to those spurned by Dick Cheney in 2003, we will see the oil market price fall, possibly dramatically.
I have been warning for some time that risk-averse investors – whose very presence in the market causes the inflation they wish to avoid – are taking a much higher level of market risk than they appreciate. If I am correct, this will – sooner rather than later – give rise to the next Great Regulatory Disaster.
Perhaps worse than this, and particularly relevant to my work on financial market resilience, there is a significant risk of the sort of discontinuity in market price that took place in the tin market in 1985 when the market price collapsed overnight, from the price level supported by producer cartel stockpiling of $8,000 a tonne to the much lower price of $4000 a tonne, which reflected the influx of new low-cost tin supply.
The presence in the market of middlemen who have an interest in volatility and opacity means that we have now reached a stage where market manipulation is no longer an aberration: the market is the manipulation.
So what can be done? In the long term, crude oil prices can only go up, and many would argue that for the sake of the environment it is essential that carbon fuel prices are set at levels at which demand is low. The problem then is how best to distribute interationally and domestically the surplus value thereby created, in particular in investment in renewable energy, and above all in the cheapest energy of all – energy savings.
This will require a new (in fact very old) – and non-toxic – type of market architecture, and the good news is that this are already emerging as the current market paradigm approaches its end.

India on stage and in-yer-face



In 2007, I went to the Royal Court to see Free Outgoing, a play by Anupama Chandrasekhar, from Chennai. It was directed by the then rising star, Indhu Rubasingham, who has recently replaced Nicolas Kent as artistic director of London's Tricycle theatre.

The central role of a distraught mother was played flawlessly by Lolita Chakrabarti, whose own first play, Red Velvet, is getting rave reviews at the Tricycle. Chandrasekhar sparkled in the constellation of Royal Court emerging playwrights and hers was the first contemporary Indian drama to be staged at a non-fringe venue in Britain. Five years earlier, she had been on the Court's International Residency programme and there she learnt to hone her work, raise her game. And how.

The play's subject was taboo – sex between unmarried, Indian teenagers and the revenge of society, its hypocrisies and repressive customs that push against modernity even in hubs of new technology. Deepa, a "good" girl and bright pupil, has sex with a schoolboy. He records the juicy moments on his mobile and the clips circulate. She, her widowed mum and brother are horribly ostracised. The audience, mostly white that day, seemed discombobulated, I thought. A comprehensive school teacher asked me if the sex was "realistic or believable". She sounded almost as disapproving as the cruel keepers of virtue on stage and miffed that India was not conserving its old self for the Occident to romanticise and to vacation in. In contrast, I and my Asian friends felt the opposite: Indian drama was finally getting away from Bollywood clichés and religious masques, speaking truths, repudiating conformity. Chandrasekhar's works are not generally staged in India, though some do sneak into small, rebellious venues. Other young talent is similarly thwarted by censoriousness, the lack of resources and spaces for inventive and daring work.
This week at the Royal Court five more such writers will have their plays performed as rehearsed readings. I saw them all as full productions in Mumbai in January at the Writers' Bloc Festival of new writing from all over the country. Some were edgy and tragic, others sharp and funny, all profoundly affecting. 

Artistically brilliant, urgent, energetic, authentic and eloquent, they touched nerves in the body of their nation, made it twitch. They were among the most powerful examples of modern theatre I have ever seen.
The Royal Court collaborated with Rage, a Mumbai theatre company, to create this festival. Rage was set up in 1993, by Shernaz Patel, Rajit Kapur who are both esteemed actors, and writer Rahul da Cunha. The multitalented ensemble commissions, directs, produces and constantly stretches the parameters of the possible.

Da Cunha explained why and how it all started. Being in Mumbai, a city that "progresses and regresses at the same time" and in a nation "going forwards and backwards and still holding together and to its democracy" is what kicked the Rage trio into action:

"We were driven, restless, felt it was time for modern India to find its voice, its own stories and put them on stage. We didn't have our own English-language theatre except, of course, for Shakespeare, Pinter, Osborne and so on. We started Indianizing the great Western plays, but what we really wanted, and young urban audiences were hungry for, were Indian dramas in English. In a crazy, haphazard way we thought, we knew, the time had come for that to happen. Some people thought drama in English would be elitist. We didn't – what we wrote and directed would have to be in the English Indians actually speak, their intonation, expressions and articulations."

Just as their ideas were shaping up, the Royal Court's artistic director Dominic Cooke and associate director Elyse Dodgson, turned up in Mumbai for a night after conducting a workshop in Bangalore. Call it karma. Da Cuhna, grabbed them, introduced himself and Rage and using his immense persuasive powers got them to promise workshops in Mumbai. They did, and a partnership was forged, with valued help from the British Council. Dodgson, other Royal court nurturers and Phyllida Lloyd went over and released more pent-up creativity than they could ever have imagined. The incipient dramatists were given tools, taught essential skills. At the first Writers' Bloc festival in 2004, in Da Cunha's view, "The level was pretty stunning. Young people saw the results and were totally engaged." Chandrasekhar's disturbing festival play about an Indian talk-show hostess who has acid thrown at her proved that she was both brave and singularly gifted.

Rage's founders carried on making their own remarkable work too. One gripping play I saw in 2010 was Pune Highway, written by Da Cunha and with Kapur in the lead. It was a pacy buddy thriller exposing India's furious and thoughtless globalisation and its ethically vacant middle class, again cutting edge and unsettling for Indians who prefer PR or patriotic art.

India's theatre tradition began in classical times when religious stories were enacted in Sanskrit or as mimes in villages and communities. Gods, improbable heroes and myths were loved by high and low and kept them god-fearing. They are still performed during festivals and at auspicious times. A parallel tradition was drama in local and regional Indian languages. The works, whether classic, extraordinary, worthy or barren, were and still are loved by millions. Parsi theatre was another popular strand. Parsis are descended from original Zoroastrians who fled Persia when Muslims took over that land. They settled in India and under the Raj, this small, urban and successful community became famous for its well-produced and popular comedies and farces in Gujarati.

From the 19th century onwards, playwrights wrote questioning and more complex works – the greatest of them Bengal's polymath Rabindranath Tagore, the first non-European to win the Nobel Prize for literature in 1913. By that time, Shakespeare and other European masters were being read and performed by Westernised urban Indians. After independence, those cultural bonds remained intact. Felicity Kendal's family were nomadic players who took the Bard to rural areas; the Sixties film Shakespeare Wallah told the story.

Since then prestigious drama and music schools have been established and become centres of excellence. I have seen some of their fine productions too, though these seemed to me to keep assiduously within the boundaries of "acceptable" art – unlike the breakout works produced at the Writers' Bloc festival.
In the week I spent at the festival, I saw how Dodgson and her team and the transformative Rage company interacted with writers and directors, never letting standards slip, never slipping into patronising allowances. Their intensity, honesty and sense of purpose stimulated astonishing creative heat and resolve in the artistes and writers. Dodgson is a force of nature and was described to me as the "godmother" of the creative cohort. One of the youthful actors said to be it was "like being in the fastest car, feeling the breeze and excitement, but never losing control because you are trying to reach somewhere where nobody has gone before. It's about control and real freedom, giving expression to things kept locked up. Escape from the usual. You don't know how the young of India need that."

The five readings selected for London include Mahua by Akash Mohimen, which was originally written in Hindi and has been translated. Incredibly young and gifted, he chose as his theme extreme rural poverty and addiction to hooch. It made audiences weep silently. Ok Tata Bye Bye by Purva Naresh, also a translation from Hindi, is about feisty, smart sex workers selling their bodies to truck drivers. The other three deal with property developers and broken communities, the conflict in Kashmir and ruthless modernisation. None of these plays is maudlin or sanctimonious. They are real and engaging, reveal aspects of a country still barely known by Brits. And best of all, not one of them features a noisy wedding or call-centre story.

Tuesday 13 November 2012

Texas secession petition reaches 25,000 signatures.


 Even Obama doesn't warrant this conservative pessimism

Texans have provided enough signatures to demand an official White House response
If at first you don’t succeed … secede! That seems to be the attitude of the folks in 20 states who have reacted to the re-election of Barack Obama by petitioning for independence from the United States. Anyone over thirteen can sign up on the White House website and it requires only a first name and last initial to do so. The petitioners in Texas have reached the threshold of 25,000 signatures necessary to trigger an official response from the administration. The answer will doubtless be a big fat "no" – and Governor Rick Perry has affirmed that Texas should stay in the Union. But it’s interesting to note just how many in the Lone Star state would rather go it alone than suffer "four more years".
The mood on much of the Right is pure Götterdämmerung – as if America had just elected Lenin himself. [Mark Steyn: “Americans as a whole have joined the rest of the Western world in voting themselves a lifestyle they are not willing to earn.” Charles Cooke: “If we are to lose America as it has been, could we not ask that it be lost to something better than this?”] A common theme is that the only way a candidate as radical as Barack Obama could have won is because the tipping point has been reached and America has tipped beyond redemption. The old values of self-reliance and moral liberty are out; the welfare state and youthful permissiveness are in. Given such fatalism, who can blame the conservatives of Texas for wanting to break away and start all over again? Who hasn’t felt the desire to secede from everybody else – to ride off in to the sunset with nothing but a gun for company? Ah, to live in a righteous republic of one…
Some of those signing the petition will be libertarians, others will be Confederate chauvinists. But I also detect the lingering influence of Calvinist pessimism. When John Winthrop told the Puritans of the 17th century that they had come to the New World to build a city upon a hill, he warned that it was possible that they would fail. It didn’t take long for the Puritans to decide that they had. Two generations later and they were writing Jeremiads complaining that the spirit of the early colony was lost; church attendance was declining, the children were rebelling and society was just hurtling towards destruction. The American experiment was over barely before it had begun.
So was born a common theme in American history: the declension from an honourable beginning to a dishonourable end. In the 1790s, partisan politics threatened to splinter the republic. In the early 19th century, industry destroyed the agrarian ideal. Catholic immigration undermined the Protestant hegemony. Alcohol promised apocalypse. Cults rose and fell that pledged to hold back the tide of progress and maybe even reverse it a little. Such was the static purity of the Shaker church that they eschewed breeding altogether and took children only through adoption. It was not a smart way to do business; today there are only three Shakers left.
The sheer number of Jeremiads testifies to the number of times that America has been predicted to die … and hasn’t. The Jeremiad is actually best understood as a challenge rather than a prediction of doom, but it is invariably defied by history. Of course, there is a temptation to add, “Until now.” After all, a country with so burdensome a debt and as large a government is more destined to fail than the patchwork of farms that made up the old colony (and to bring the rest of the world down with it).
But the reality is that 2012 is not the end of America. Obama's Hispanics will not always vote Democrat (the idea that they will borders on racist), gay people will form their own little nuclear units and become dully conservative, the young will mature into frugal taxpayers, and Texas will not secede. It's far more likely that liberalism shall dig its own grave. Recall that in 1964, the liberal pundits declared the death of conservatism because Goldwater lost the election so decisively. Four years later, and riots and war – fuelled by the over-extension of the welfare/warfare state – caused the election of Richard Nixon and the birth of the Silent Majority. Obamanomics will go the same way. It’s only a matter of time before the Silent Majority has cause to be heard again.
What conservatives must do in the meanwhile is convert their Calvinist pessimism into evangelical optimism. Ronald Reagan loved to quote John Winthrop and his idea that America could be a city upon a hill. But he put a Gipper spin on it: it was shining city upon a hill that had both a figurative and a literal meaning: “a tall proud city built on rocks stronger than oceans, wind-swept, God-blessed, and teeming with people of all kinds living in harmony and peace, a city with free ports that hummed with commerce and creativity, and if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here.” There’s a reason why Reagan won the presidency by two landslides. People vote for hymns of hope, not Jeremiads.
As for the conservatives of Texas, they should stop all this foolishness about quitting the Union. Don't secede, guys. Get even.