The Indian middle class and the ruling elites are rejoicing the country's elevation as the world's sixth largest economy surpassing Britain. The celebration is a function of India's increased importance in the committee of nations, broadly made possible by a trajectory of higher economic growth and technological globalisation and is manifested by unbound patriotism, not so much based on pluralistic values and all round development but mostly on cultural and philosophical supremacy. A similar self belief on intellectual and ideological supremacy once influenced the leftists to think of themselves as the saviour of the world and the custodian of the progressive mindset.
The celebration, however, overlooks the fact that India is still home to one-third of the world's poor and around one-fourth of Indians are yet to be illuminated by the enlightenment of conventional education. These make it irrelevant for the Indian poor as to whether their national economy is the sixth largest in the world or even higher in the pecking order.
It would possibly have, had the "Trickle Down Hypothesis" - the basic proposition of which was that take care of the rich and the poor would look after themselves based on the residual income trickling down from the enhanced affluence of the rich - worked in today's complex world. The proponents of the Trickle Down Hypothesis may have envisaged a much simpler proposition that the rich gets richer and also pulls some poor out of poverty, but in today's complex world the rich gets richer only at the cost of the poor and more often than not under state patronage and political tautulege.
For the poor every day is a struggle often made worse by the fancied expediency of the state which is supposed to look after their interests. The decision of the Indian government to demonetise higher currencies was first dished out under the garb of a patriotic zeal to create a corruption-free country. Soon it was taken over by the prime minister's desire to evolve a cashless economy with the simplistic assumption that a cashless economy is a precursor and a precondition of a corruption free or a controlled corruption economy.
I am in favour of a cashless economy as it secures me from the risk of misplacing paper currency and also saves me from accessing cash. But the prerequisites of the introduction of a cashless economy revolves around the trust on plastic as an alternative to paper money, reliance on banks and their reliability as an important instrument of economic activities, a certain level of literacy and numeracy, adequate technology to run a cashless economy and the ability of the people to adapt to it and the general awareness about the benefits of a cashless economy to name a few.
Unfortunately, India with its size, diversity and demographic profile is yet to be ready to take such a plunge. Moreover to assume that being cashless is a way of becoming corruption free or at least controlled corruption is too simplistic an assumption to make. Had it been so, the West would have been able to weed out much of its corruption as it is widely cashless.
Rather than being dependent on the use of currency for transactional purposes, corruption is more a function of inadequate policies, poor implementation, political will and lack of collective awareness and wisdom about the pitfalls of corruption. The agents of corruption re-calibrate their mechanisms every time there is a new legislation to stamp it out and re-adjusts the risks involved. Resorting to corruption is a parallel trade and the agents modify themselves to adapt to every possible changes to enhance their efficiency.
Rather than using demonetisation to weed out corruption in the garb of corruption and to satisfy queer personal ego, the government should rather focus on reforming the institutions like poll funding which in itself is the fountainhead of political favour in the form of quid pro quo, expanding the tax base by incorporating agricultural income under the purview of income tax, encouraging the people to pay their due tax by streamlining the tax structure and creating awareness about the benefits of progressive taxation.
The ever increasing Indian middle class and the upward mobile are however in favour of a cashless set up without adequate infrastructure as they are in favour of a streamlined lifestyle. This emanates from a false sense of importance caused by a steady rise in income and oppulance following economic liberalisation.
The irony is that the ever increasing middle class is yet to take over the impoverished and the deprived sections of society. Snowed down by abundance and increased level of comfort, the middle class is rendered myopic about the plight of the majority.
All comments are personal.
Wednesday
EU referendum overrides political homogeneity
Homogeneous is a curious word for Europe at this point of
time in history. Ethnically the most homogeneous continent in the world,
according to a landmark study by the Harvard Institute of Economic Research in
2002, is faced with a situation which may change the tone and tenor of future politics
in Europe. The economic cooperation – then known as the Common Market following
the Treaty of Rome – initiated about six decades ago as a harbinger of peace,
reconstruction and prosperity in the years following the Great Wars is now the
subject of a heated war of words both within Britain and across Europe.
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| Jeremy Corbyn voted to opt out of Europe in 1975 |
The referendum on whether Britain should or should not be
part of the European Union (EU) has divided the island nation like never before
in the immediate past, and has exhibited signs of a tumult in the
conceptualisation of political homogeneity.
The hard-line left within the Labour Party, like Michael
Foot and Tony Benn, may have staunchly opposed Britain’s integration with what
was then called the European Community during the earlier referendum in 1975. But
their present day political descendants like the Leader of the Opposition Jeremy
Corbyn and Shadow Chancellor John McDonnell are campaigning vigorously so that
Britain remains within the EU. The Foots and the Bens may have apprehended that
the economic integration was a ‘capitalist ploy’ to keep the real wage low, but
the incumbent Labour group supporting the ‘Remain Campaign, were brandishing
their opponents as a “bunch of snooty Eurosceptics” who were out to compromise
on job losses leading to further hardship for the working class Britons.
Interestingly, during the 1975 referendum, as a local
councillor in the London Borough of Haringey, Corbyn voted 'No' to Britain's
membership of the European Community. Britain, however, voted 67 to 33 to stay
in. In fact, Corbyn was first elected to the House of Commons in 1983, the year
Labour leader Michael Foot was defeated with a radically left-wing manifesto
that included a pledge to withdraw Britain from the European Economic
Community, which later became to be called the EU. Though the Labour's leadership
then embraced the EU, Corbyn in 1993 voted against ratifying the Maastricht
Treaty that laid the groundwork for the modern European Union.
When it comes to the Conservatives, on any day and on any
issue Prime Minister David Cameron is considered to be much more centre of
right than his controversial predecessor Margaret Thatcher. Those who are aware
of the developments surrounding the ‘UK Rebate’ - a financial mechanism which
reduces the UK's contribution to the EU budget and is in effect since 1985 - as
extracted from the union by Thatcher in the 1980s, know that the ‘Iron Lady’ of
British politics was more keen on negotiations to leverage benefits for Britain
than an outright exit. After all, Thatcher’s political philosophy revolved
around balancing the books and taking stock of her political profit and loss
when it came to clinching deals and inking agreements.
Cameron may be a different brand of Tory politician as
compared to Thatcher, propagating ‘compassionate Capitalism’ as against the
ruthlessness of the Iron Lady, and yet he chose a similar path of negotiation,
and thereby clinch a deal favourable to Britain, rather than proposing an exit
from the union.
Politics they say make strange bedfellows. It’s also true
that politics makes the best of friends into worse adversaries. Nothing can be nearer
to truth of this than what’s being witnessed in contemporary British politics.
The party is literally in the midst of a civil war with the ‘Remain Camp’
involved in a slanging match with the ‘Leave Camp’, similar to what was
witnessed by the Labour Party when its Prime Minister Harold Wilson held a
referendum in 1975 on whether the UK should be or not in what was then termed
as the European Community. Apart from Prime Minister Wilson the likes of Roy
Jenkins and David Owen favoured Britain remaining within Europe, but it was
strongly opposed by the hard-line left leaders Michael Foot and Tony Benn.
 |
| Debate on Europe divides Etonian pals |
The wedge of divide is equally pronounced within the
Conservative Party this time round. Some of Prime Minister Cameron’s trusted
lieutenants in government and in the party are up in arms when it concerns
Britain’s position in Europe. Justice Secretary and Lord Chancellor Michael
Gove is one of the leading figures in the ‘Leave Campaign’, but only recently
as the Education Secretary he was in-charge of putting in place the prime
minister’s education agenda, the biggest of all being the exam and curriculum
reforms to elevate Britain’s position among the developed countries on the various
aspects of school education.
Another heavyweight in the ‘Leave Campaign’, Preeti Patel
was handpicked by Cameron to don the mantle as the Minister of State for
Employment and also provided her with the special privilege to seat around the
cabinet table. The elevation of the minister born to a Ugandan-Indian migrant
family assumes significance for a plethora of issues plaguing the British
economy, including the controversy surrounding the zero-hour contracts which in
effect is one of reasons behind showing lower unemployment figures despite a
rise in part-time jobs and underemployment; the high youth unemployment figures
and in the backdrop of the call for British jobs for the British people being
one of the main planks of the hard-line Eurosceptics. Patel is also seen as a
go between Cameron and his Indian counterpart Narendra Modi. These, however,
didn’t stop Patel from shifting to the opposite camp of the British prime
minister.
A fellow Etonian, Cameron and former London Mayor Boris
Johnson are on the same page on a number of issues ranging from politics to
governance. Despite having their fair share of differences, the two are thought
to have a good rapport and they also share a few jokes. Johnson is now accusing
the prime minister of scare-mongering on a possible ‘Brexit’, the slick name
provided to Britain’s exit from the EU, and on his part Cameron is alleging ‘rabble
rousing’ by the ‘Leave Campaign’ of which the former London Mayor is a leading
light.
Tirthankar Bandyopadhyay is a journalist and media consultant.
He can be contacted at tirthankarb@hotmail.com
All comments are personal.
Sunday
Separated at birth!
The World Economic Forum has set up a new task force in January this year with the Bank of England Governor
Mark Carney and his counterpart at the Reserve Bank of India, Raghuram Rajan,
to study how rapid changes in technology affect financial stability and growth.
However, there are more similarities between the two economist-governors than
sharing a global task force.
 |
| Raghuram Rajan predicted the 2008 financial crisis |
In 2005, during the
heydays of easy money and sub-prime mortage, Rajan warned about the growing
risks in the financial system and proposed policies that would reduce such
risks. Rajan's comments evinced criticism from no less than the former US
Treasury Secretary Lawrence Summers who termed the warnings “misguided”
and Rajan a "luddite".
However, following the 2008 economic crisis, Rajan's views came to be seen as
prescient.
Carney's actions as the
Governor of the Bank of Canada, prior to donning the mantle at the Bank of
England, are said to have played a major role in helping Canada avoid the worst
impacts of the financial crisis that began in 2007. The most important being
the decision to cut interest rates in March 2008, only a month after his appointment.
Now as the head of the
Bank of England, Carney is warning against a possible British exit from the
European Union. Carney's argument is straight and simple - overlooking the
risks do not necessarily reduce them - a somewhat similar vein to what Rajan
articulated in 2005.
 |
| Mark Carney is blamed for scare mongering |
Carney's comments
attracted severe criticism from British politicians of the 'Leave Campaign' who
are alleging politicisation of institutions and that the governor is toeing the
line of Prime Minister David Cameron and Chancellor George Osborne in the
fractured Tory government.
Rajan has also drawn flak
from the likes of the maverick Indian politician Subramanium Swamy, who is baying for his blood in a bid to
hit the incumbent Finance Minister Arun Jaitley in his (Swamy) mission to grab
the chair for running India's finances. A friend posted that Rajan was seen at
the bustling shopping district of Oxford Street on Saturday and his wife was at
the Boots, possibly getting some anti-septic cream to soothe the wounds inflicted
by the bristling broadside of a desperate Dr Swamy.
Carney met his wife,
Diana Fox a British economist specialising in developing nations, while at the
University of Oxford, and Rajan is married to Radhika Puri Rajan, whom he met
while they were both students at IIM Ahmedabad. Radhika teaches at the
University of Chicago Law School.
Tirthankar Bandyopadhyay is a journalist and media consultant.
He can be contacted at tirthankarb@hotmail.com
All comments are personal.
Musing on sadness
The election campaign in West Bengal has turned out
to be a slanging match. Look to your left or even to your right, it is the same
mud-slinging which is having its day. The content of the campaign has been
taken over by allegations and counter-allegations, that too in words matching
those erupting from the gutter. Even the commentators and the civil society are
so polarised that the civility in the society has been replaced by vulgar
expression of might. The irony is that this is the same Bengal which was once
considered to be citadel of civility and cultural conformation.
Over the past few weeks, I spent some time to be a
mute observer of what’s going around only to make an effort to get to the truth
behind the cumulative decadence in values that is gulping Bengal. Though not
sure if I have managed to do so, but prima facie it seems that the sharp
accusations are a function of the expansion of the sample space of the
stakeholders.
The patron-client relationship which is the
mainstay of any political formation is now utilised to its optimum level and
even beyond for the sake of distribution and redistribution of favours. In the
process what they are missing out is that there is enough redistribution of
favour but not adequate generation of resources. Majority of those who are
pawns in the process of socio-political polarisation and degeneration are
actually the stakeholders. Since their level of engagement with the stakes and
dependence over them have increased with every passing day, these pawns are
shouting their lungs out and often resorting to other vitriolic and vulgar means
to maintain their positions of prominence and privilege.
Often the media is the favourite punching bag of
every evil that engulfs the society. However unfortunate and unfair it may
sound, but in this case, the media has also emerged as a powerful stakeholder
with serious contention in rendering the politics of the land murky. The out of
proportion media explosion has created a workforce who are inept with their
knowledge, expertise, experience and insight to deal with the sharp divisions
that are manifesting a fractured polity. Conventionally being the mirror of the
society, the media with its inadequacies is actually projecting a rapturously
vulgar imagery of an already broken state.
Historically, the civil society was considered to
be an intermediary between the state and the individual. That’s how the civil
society oiled the wheels of capitalism for generations. The trade unions, the
pressure groups, the intelligentsia, the media – they all are well-orchestrated
tools of capitalism to contain systemic discontent. When the
allegiance of the civil society shifts from the objective of sustenance of the
social system and is fractured between warring factions it is the society which
turns out to be the ultimate looser.
So whatever be the outcome on the 19th of May, it
is Bengal and the Bengalis who are the real losers. The decadence and the
depletion in the values, lexicon, civility, reverence and imagery are gradually
turning out to be irreversible. It seems that in the folly of political one-upmanship
not many are bothered about the moralistic degradation.
Tirthankar Bandyopadhyay is a journalist and media consultant.
He can be contacted at tirthankarb@hotmail.com
All comments are personal.
Friday
Keynesianism in action
This year marks the 80th anniversary of the publication of John Maynard Keynes's seminal work "The General Theory of Employment, Interest and Money". It was first published in February 1936. Keynes had expected his magnum opus to redefine economics and so it did, especially in the post-war years. Many see the demise of Keynesianism in the advent of Neoliberalism and its graduation to becoming the dominant discourse in contemporary economic thinking. Keynesianism, however, is still in action amidst the roadworks and the construction projects.
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| Roadworks in Labour-controlled Hounslow Council (Pics courtesy: alamy.com) |
Spend more to create demand was the ethos of his demand-determined model. By then J B Say's tenet that "supply creates its own demand" had been diluted as an economic principle. Keynes also underlined role of the government in generating and enhancing demand, situating the state much beyond its conventional realm of managing the finances, law and order and foreign policy. All for generating the much needed demand to boost a post-depression economic order. Our teacher Kunja Behari Kundu, or KBK as he was generally known, likened "demand" with a bride as the groom followed her during the time of their marriage.
The threat of Communism was hanging over the Capitalist world and the Great Depression of the 1930s was good enough reason to impress upon the ordinary Europeans and also the world that Communism was a force to reckon with. If it couldn't alter the political landscape of Western Europe then a large part of the credit was due to Keynes. He was almost the saviour of Capitalism against Communist onslaught, and it was a coincidence of sorts that Keynes was married to Lydia Lopokova, a ballerina of Russian decent.
 |
| Keynes with wife Lydia Lopokova (Pics courtesy: Getty Images) |
"Physics was too easy for me", Keynes once told his friend and physicist Max Planck, but had "an affection for Economics", then considered to be a science of the naysayers. He along with Virginia Woolf, E M Forster and Lytton Strachey were part of the Bloombury Group, who lived, worked and studied together at Bloomsbury near the School of Oriental and African Studies (SOAS) and the University College, London (UCL).
Was Keynes concerned or even bothered about his legacy? Probably not. His concern was more for the short-run. "In the long-run we are all dead", Keynes once famously said. And yet he lives and relives in the roadworks, the under-construction school buildings and new railway tracks even 70 years after his physical demise.
Tirthankar Bandyopadhyay is a journalist and media consultant.
He can be contacted at tirthankarb@hotmail.com
All comments are personal.
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