End of free-market capitalism?

Surviving the financial tsunami

From The Statesman
ND Batra

What will be US President George W Bush’s legacy to the world: an unfinished war on terrorism and global financial meltdown? In a subdued voice all that he could say initially was: “The American people are concerned about the situation in our financial markets and our economy, and I share their concerns.” But of course the government is doing much more than simply watching Wall Street blow up. Earlier the government took control of Fannie Mae and Freddie Mac, the government-sponsored gigantic home finance agencies, not only to help promote market stability and to ensure a housing market recovery but also to assure foreign debt buyers that their investments were safe. The Federal Reserve and the Treasury acted not too soon to prevent the collapse of one the world’s biggest financial companies, the American International Group (AIG), a development that could have given a fatal blow to global financial markets.

When a $13-14-trillion economy shakes, it causes a global earthquake. No one is even trying to stop the spiral of gloomy news. The mighty dollar has been falling in value, causing pain and anxiety. Consumer confidence is down and people are holding back from spending on durable goods such as cars, appliances, business equipment, electronic equipment, home furnishings and fixtures, and house wares and accessories. There are fewer buyers of houses even though house prices have declined substantially during the last two years. To stem the slide, Mr Bush and Congress came up with a $152-billion stimulus plan under which most taxpayers got from the government $300 to $1,200; but consumer spending did not lift the sagging economy.

Only six months ago, Mr Bush ritualistically said, “We believe in a strong dollar policy and we believe, and I believe, that our economy has got the fundamentals in place for us to be, to grow and continue growing more robustly, you know, hopefully more than we are growing now.” But the global market does not listen to Uncle Sam any longer. In fact when Federal Reserve Chairman Ben Bernanke warned during the second day of his semi-annual testimony before a congressional committee that even some banks might fail due to bad real estate loans, the stock market shrank in mortal fear. And no one believed him when he said that the overall banking system was in good shape, when Merrill Lynch had gone begging for billions of dollars of cash infusion from foreign government-controlled sovereign wealth funds. The levers of political power in Washington DC have little effect upon Wall Street, which runs on its own convoluted logic, alternating between illogical exuberance and uncontrollable panic.Today uncertainly and fear rule, though the recent massive infusion of liquidity by the Federal Reserve and European and Japanese central banks have firmed up the market for the time being.

It is rather strange that for Americans prosperity is so much tied up with the economics of the housing market. Market finance, in spite of all econometric models and theorising by economists, is essentially nothing more than a herd psychology of fear and hope.

Due to poor home mortgage lending practices verging on greed, banks started giving loans on low adjustable interest rates to people with poor or even no credit, hoping that since home prices were going up borrowers would re-finance their loans based on increased home equity.But sometime in this hope-and-faith-based financial system the weakest link snapped, lenders and borrowers started losing mutual trust, and whatever earlier seemed to be a blooming housing market turned into an empty myth, a speculative bubble that burst resulting in stampede and panic.

As the low initial interest rates on adjustable subprime mortgages were re-adjusted, borrowers defaulted and foreclosures began to rise. Even for the good borrowers, interest rates went up. Falling housing prices created negative equity, which made the mortgage relative to the value of the house much greater. Some people who bought houses with small or no down payment simply walked away, because their houses were worth much less than they originally bought for. There is nothing more humiliating for a person than losing his home to bank foreclosure, but many people swallowed their pride.

Foreclosures added to the market glut, so home prices kept sliding down and Americans began to feel less surefooted. Spending on non-essential goods, going to restaurants, buying a new a sofa, for example, seemed less necessary to many; and they postponed buying a new auto for another six months or even year. Banks shrank in fear lest consumers defaulted, so they pushed up the lending bar thereby reducing credit availability, which adversely affected economic activity further. So when Mr Bush thought that a tax refund would bring back spending and stimulate the economy, it was on the assumption that millions of small trips to malls would have an escalating effect, preventing the much-feared nightmare of recession from becoming a reality.

But neither he nor his advisors understood what was happening until they saw even trillion-dollar financial institutions with global tentacles like Freddie Mac, Fannie Mae and AIG in danger of being sucked into the black hole.Now that the unbridled trust in the self-correcting mechanism of free-market capitalism has been belied, the US government’s massive intervention to save the financial system from total collapse, you might say, is no different from what an authoritarian government, socialist or capitalist, would have done in similar circumstances.

The point is that in an increasingly globalised financial system, the role and the authority of the government, instead of decreasing, has become more important than ever. If the state ~ the ultimate saviour ~ were to wither away, who would come up with a trillion-dollar rescue package to mop up the toxic assets created by global corporates?

(ND Batra is professor of communicationsat Norwich University)

America: A nation divided for good reasons

The US is a nation divided for good reasons

From The Statesman
ND Batra

The American people observed the seventh anniversary of the 11 September terrorists’ attacks under the patriotic triangulation of God, the USA and Terrorism. The triangulation, the equivalent of space-age global positioning systems, enables the American people to be aware of the threat to their existence, the American way, relative to the known positions and undeclared intentions of the US’s enemies, and makes Americans see the world differently, whether they support Senator Barack Obama or Senator John McCain for the presidency.

If you are visiting the US for the first time, you might feel there’s too much of God here. That’s perhaps the first cultural shock you might feel on arrival but very soon it wears away because the American people don’t give much meaning to it, not as much as does the Islamic militants’ resounding cry, Allah O Akbar. And Americans invoke God often because sometime they have nothing else to say. Driving through the Pennsylvania Dutch countryside, a visitor would find it hard not to notice the billboard admonishing: “Everyone shall give an account of himself to God.” The US dollar bill says, “In God We Trust.” When someone takes an oath of office, he or she has to repeat after the person who administers the oath, “So help me God.” If you sneeze, someone will say, “Bless you,” even if the person does not know you.

Most Americans invoke God as a social crutch, much as a Frenchman would say bonjour (which, perhaps means, pardon my ignorance, that French wine and women are the best), unless Americans feel stressed and threatened as happened in the aftermath of the 11 September terrorist attacks when they mixed God with patriotism to make heady booze that would have blown your head off. It is also true that, more than ever, American political discourse, including whatever wisdom spouts from the White House, is suffused with references to God despite the constitutional brick wall between the church and the state.

You can’t live in fear and be free and so invoking God makes you feel free from fear. But to be free means to make your choice. Making a choice also includes choosing your own God, monotheistic or polytheistic; or even the God-particle that the CERN lab in Switzerland is trying to discover. It is not the government’s business to tell an American what God to choose, thus spake the US Constitution, and so ruled the United States Court of Appeals for the Ninth Circuit on 26 June 2002. The decision came after a lawsuit filed by a physician, Dr Michael Newdow, an atheist who complained that his elementary school daughter’s First Amendment rights to be free from God were violated when she was given no choice but to “watch and listen as her state-employed teacher in her state-run school leads her classmates in a ritual proclaiming that there is a God, and that ours is ‘one nation under God’”.That does not mean that atheists have no place in these US, except that they should not take their atheism too seriously.

Not all states require the Pledge of Allegiance to be included in the school day but half of the state legislatures have made its inclusion a requirement. Making the situation murkier is a 1943 US Supreme Court ruling that children cannot be forced to recite the pledge, though the school’s public address system may recite it. In matters of religion, the government shall remain uninvolved, that is the constitutional mandate. Until 1954, the Pledge of Allegiance included the phrase “one nation indivisible”, but to fight the godless communism, the Soviet or Chinese variety, Congress changed the pledge to include “one nation under God.”

The wall between church and state seemed to some extreme secularists to crack a little bit. And since then God, not a sectarian one, Catholic or Protestant, but a generic God, a mythical Supreme Deity, has found a frequent place in public discourse. In a 2-1 ruling, Judge Alfred T Goodman of the Circuit Appeal Court ruled that the pledge that we are a “nation under God” is identical to saying that we are a nation “under Jesus”, a nation “under Vishnu”, a nation “under Zeus”. Such a profession violated the First Amendment mandate that the government shall stay neutral in matters of religion. It would send a wrong message to impressionable children that if they did not participate in the recitation of the pledge, they might become “outsiders”, the judge wrote.

The court discovered a glaring contradiction in what the US Constitution professes and what the American people want to believe and practise. The pledge excludes some polytheists who worship multiple gods and goddesses; atheists and agnostics; or those like the Buddhists, who believe in nirvana, a state of supreme bliss, tranquillity and purity that is attained when the self is absorbed into the Infinite. It has been argued that the recitation of the pledge that includes “one nation under God”, is psychologically coercive, because it forces people to accept monotheism as the sole religious path available to them. The pledge not only violates the Constitution but also negates cultural pluralism. It violates freedom of choice. We should return to the original wording in the pledge, “one nation indivisible”, so it is argued.

Most Americans, like the dissenting Judge Ferdinand F Fernandez, however, dismissed the fear that the US might become a theocracy because of the inclusion “under God” in the pledge. The appeal court’s ruling was overturned by the US Supreme Court decision in 2004.

Late Justice William Rehnquist said, “To give the parent of such a child a sort of ‘heckler’s veto’ over a patriotic ceremony willingly participated in by other students, simply because the Pledge of Allegiance contains the descriptive phrase ‘under God’, is an unwarranted extension of the establishment clause, an extension which would have the unfortunate effect of prohibiting a commendable patriotic observance.”

But Governor Sarah Palin of Alaska, the young and the feisty running mate of Mr McCain for the presidency told Mr Charlie Gibson of ABC News last week that “God has a plan”.

Let’s see whether God’s plan is descriptive or prescriptive, evolutionary or intelligent.

(ND Batra is professor of communicationsat Norwich University)

Behold US Diplomatic Might

NSG waiver: This day will live in glory for India

From The Statesman
ND Batra

If you had any doubt about the global power and reach of the US diplomacy, you should ponder the one-off waiver that the Nuclear Suppliers Group (NSG) gave in connection with the India-US nuclear deal in Vienna on Friday. The NSG was established in 1974 after India’s first nuclear test to exclude the country from access to nuclear fuel.

Ironically, the same exclusive 45-nation club has now decided to allow India full access to nuclear fuel for civilian purposes, in spite of the fact that India never signed the Nuclear Non-Proliferation Treaty. The international group’s opposition to the deal came not only from China, as was expected, but also from a handful of smaller nations including Austria, Ireland and New Zealand, who wanted to give India conditional access, which of course India would not have accepted. A nick-of-time diplomatic iteration of India’s long-standing nuclear policy by External Affairs Minister Pranab Mukherjee that “India has a long-standing and steadfast commitment to universal, non-discriminatory and total elimination of nuclear weapons”, and that India would observe a voluntary nuclear test moratorium was enough to clinch the deal.

Commending the atomic club action, Prime Minister Manmohan Singh said, “It marks the end of India’s decades-long isolation from the nuclear mainstream and of the technology denial regime.” The decision will be Dr Singh’s greatest political achievement apart from giving India the momentum of a dynamic 8-9 per cent sustainable annual economic growth. Few politicians have done so much for India as Dr Singh in spite of the fact that he is perceived so unglamorous, non-assertive and ordinary looking.

In some ways India’s nuclear deal with the US is not unusual. In early May, Russia and the US signed a civilian nuclear power deal under which companies in both countries would have access to nuclear technology through joint ventures. The agreement would open up Russia’s huge uranium reserves to US companies and give Russian companies access to the US’s multibillion-dollar nuclear energy industry. From being great nuclear rivals to becoming nuclear partners would be a giant step, if Russia’s recent missteps in Georgia do not dampen the deal.

As the head of Russia’s state nuclear corporation, Mr Sergei Kiriyenko, said at that time, “The signing of this agreement opens a gigantic field of opportunities for economic cooperation in the large and growing businesses linked to the civilian use of nuclear energy.” That’s what India should also expect from the nuclear deal with the US.

China too is going ahead forging nuclear deals to meet its increasing energy needs. China plans to build 32 nuclear power plants by 2020 at a cost of about $50 billion, an enormous undertaking which can be accomplished only by accessing nuclear technology and markets in the US, Europe, Japan and Russia. China has signed uranium deals with Russia, Australia and Niger. So will India, hopefully.

The nuclear deal will assure India’s growing economy reliable and uninterrupted supply of nuclear fuel, when the last mile, the US Congress approval, is done. The civilian nuclear deal will open to India the world of sophisticated technology developed by the global nuclear powers, the US, Japan, Europe and Russia, with whom India has growing diplomatic and commercial relations.Access to high-end technology is imperative to keep India globally competitive.

The Indo-US deal is about having faith in India to develop as an alternative model of rapid economic growth without compromising fundamental freedoms. Rapid economic growth of the Indian economy will raise millions of Indians out of poverty. Without plentiful and reliable energy sources, however, poverty cannot be eliminated.

An economically dynamic India on a perpetual growth curve will lift its neighbours in South Asia and help make the world more economically dynamic.

Apart from removing hurdles in India’s search for alternative energy sources to fuel its growing economy, the deal will give India a strategic platform in the knowledge industry and encourage research and development in clean energy technology. As Mr Ratan Tata told Mr Karan Thapar of CNN-IBN a little over a year ago, “Over time this will give India a tremendously powerful position in the knowledge industry, in research and development, in high technology.”

From a humble agricultural power to a great knowledge power is every man’s dream in India. India must go beyond information technology outsourcing and capture the corporate global, as it has begun to do, for example, in automobiles and pharmaceuticals.

Clean coal technology, nuclear energy and solar power are practical alternatives for which the US and other advanced countries will open doors to India. France, for example, gets 80 per cent of its energy from civilian nuclear plants and is ready to collaborate with India in nuclear power development. India needs hundreds of billions of dollars of foreign direct investment in building power plants and world-class infrastructure to increase its manufacturing base in order to create employment opportunities for its growing young population.In the course of time a whole new world of sophisticated global technology will be opened to India, enabling it to spur its economic growth further. In return, India has agreed to do what other nuclear powers have been doing under the nonproliferation treaty, that is open some of its civilian nuclear power plants to inspection and continue to observe abstinence on nuclear testing. Its nuclear deterrent will remain off limits.

India’s sovereignty cannot be compromised, if the country continues to be economically and politically strong.
Poverty compromises national sovereignty. Poor, failed states have little sovereignty.

Regardless of who comes to power at the Centre next year, India should have one prime political goal: domestic harmony based on rapid economic growth in the range of 9-10 per cent that reaches the bottom of the pyramid, India’s not so silent masses that need more than the Nano and cell phones and slogans of azadi and freedom.

(ND Batra is professor of communicationsat Norwich University)

Kashmir and Arundhati Roy

Deconstructing Arundhati Roy and her tribe

From The Statesman
ND Batra

Ms Arundhati Roy, writing in The Guardian (UK) about the trouble in Kashmir, makes an interesting self-observation, with an aura of exceptionalism, saying, “For someone like me, who is not a Muslim”, the Islamic idea of freedom is hard to accept. Ah! But what if she were Muslim?

Islam would have been an unbearable burden upon someone born with a free spirit, 451-degree Fahrenheit imagination and a big incendiary mouth (“India’s many torture centres and Abu Ghraibs in Kashmir… The Indian military occupation of Kashmir makes monsters of us all”) for the simple reason that Islam (a non-pluralistic religion with an uncompromising claim for truth about one God the Greatest, the Prophet and the Holy Book), and secular freedom, as she has understood it, do not chime together. It is the same reason why Ms Taslima Nasreen, the Bangladeshi writer, does not find any Muslim country comfortable and has returned to India claiming, “India is my home though Kolkata is where my heart is.” If you open the door, all Bangladeshis will come to India because India has much greater freedom than any Muslin country. India has a future. Only the blind don’t see it.But what is wrong with Kashmiri Muslim separatists who do not find India comfortable as the rest of 150 million Muslims do? Ms Roy is puzzled and wonders, “Those who wish to turn to the Qura’n for guidance will no doubt find guidance there.

But what of those who do not wish to do that, or for whom the Qur’an does not make place?” Uttering such words about the Holy Book (no place in Qur’an?) would have been blasphemous if she were in Saudi Arabia, where as a Muslim apostate she would have been stoned to death or would have been running from one hiding place to another as Mr Salman Rushdie did for years after he had supped with Satan. Unquestioned obedience (to the religious doctrine) is freedom in Islam as it is in the traditional Christianity of which the historical consequences have been authoritarianism, intolerance and the Inquisition; not freedom and democracy which developed only after the Western mind began to unshackle itself from medieval religious orthodoxy.

Visiting the Kashmir Valley on the wings of poetic eloquence and with fire in her belly during the recent protests, Ms Roy hyperventilated about Srinagar, “The city floated on a sea of smiles. There was ecstasy in the air.” Kashmiris were free from fear. All they wanted was freedom from democracy by exercising their right for self-determination so that they could live according to the Shariat as the Taliban are trying to do in Pakistan and Afghanistan. But Ms Roy’s free spirit turned fearful and she began to wonder what would happen to the Hindus of Jammu, when Kashmiris are finally allowed to quit “nanga bhhookha Hindustan” and bravely march to “jan se pyara Pakistan” led by the self-proclaimed supreme leader Syed Ali Shah Geelani. Would they too have the right to self-determination? “Will the hundreds of thousands of Kashmiri Pandits living in exile, many of them in terrible poverty, have the right to return?” she asks. And she knows the answer.

Kashmir has seen one of the worst ethnic cleansing in recent history but Ms Roy, like other Indian intellectuals, opinion-makers and politicos, is afraid to call a spade a spade. Amazingly she brackets the fringe people with great writers like herself. Listen to her falsetto agony and self-pity: “What will happen to homosexuals and adulterers and blasphemers? What of thieves and lafangas and writers who do not agree with the ‘complete social and moral code’? Will we be put to death as we are in Saudi Arabia?” (Italics added). That Kashmiri scenario of freedom will be an intolerable nightmare and Ms Roy wants India to wake up and get out of a hellhole: “India needs aazadi from Kashmir...” Half a million Hindus who visit Amarnath every year too will be free from the burden of treading the inhospitable mountains. And the poor Muslims of Jammu, who will be deprived of the blessings of Kashmiri azaadi, too will find their own freedom as rest of the millions of Indian Muslims have found.

Echoing Ms Roy’s revelation of how the militancy is miraculously changing to non-violence in Kashmir, Jug Suraiya of the Times of India wondered what India would do if Mr Geelani, and “his followers were to adopt the strategies of non-cooperation and satyagraha…” If Mr Geelani were to develop the true spirit of Gandhian sataygraah and non-violence, he would cease to be the Geelani we know, the man who has never stopped believing that Kashmir being a Muslim majority region belongs to Pakistan and there is no other way except the Islamic way, the doctrine Al Qaida and the Taliban want to impose on all Muslims. The only man who ever succeeded in following Mahatma Gandhi was Martin Luther King Jr, who said 45 years ago, “I have a dream...” And that dream has come true in the rise of Senator Barack Obama, the first Black to be nominated the presidential candidate of a major political party in the US. That is an example of a non-violent revolution.

Mr Suraiya asks rhetorically, “By letting Kashmir go peacefully would the idea of India be subverted? Or would it be enlarged and further endorsed? That is the real import of the so-called Kashmir question: it has become the question of the idea of India, and what that idea means to us.”

Letting Kashmir go peacefully into the belly of the beast, the Taliban, is not my idea of India.

Will “India minus the K-word” (Kashmir) or A-word (Arunachal Pradesh) or N-word (Nagaland) still be India? No. India will not be India. India is much more than a mere geographical, sociological or philosophical idea in the minds of the English-speaking intelligentsia living in their gated communities. India is unlike any other nation, a nation so sharply divided and so diverse, culturally, racially and linguistically, that the only way the sufferings of millions of people can be mitigated, the only way natural and manmade disasters can be confronted and overcome is to keep India together ~ whatever it takes. No nation can survive without statesmanship; or without force.

(ND Batra is professor of communications at Norwich University)