Friday, December 30, 2011

Forecast for 2012

I am probably in a minority of one in making the following forecast, but here it is for what it is worth.

Let me start with the apparently not very important countries, explain why I am doing so, and then move to the more important countries, and finally to what implications all that has for the management of your savings and wealth.

Established democracies (India and Indonesia) are being threatened by fascist forces (in one case Hindutva, in the other Islamist), though the established structures have so far proved resistant to fascist agendas. Expect the threats and attacks to continue, and let us hope that these democracies continue to weather the attacks.

Budding democracy in Nepal is threatened by Hindutva forces that want to restore the corrupt and incompetent monarchy. Here, one can only hope and pray, as the basic shape of what is to come is not clear.

Emerging or struggling democracies in North Africa and the Middle East face the possibility of having democracy nipped by Islamism (for example, Pakistan, Iraq, Tunisia and Egypt). In these countries, a particular Islamic ideology (Salafist or similar) is being imposed by violence on the population without anyone in authority seeming inclined or able to counter that, in order to nurture political, cultural, religious and social openness in these countries.

So what will happen if the anti-democratic forces in such countries succeed in imposing their agenda? The countries concerned may have an initial period of stability and even prosperity, but stagnation will soon ensue, and it may then take three generations before they liberate themselves from the hold of such forces.

China’s new generation of leaders, led in all probability by Xi Jinping and Li Keqiang, will have an interesting time helping determine and working with their new team. While they will have the support of the existing leaders, who will step down but remain available and influential, the key question is whether they will together be able to steer China through challenges it has never before faced in its history: a population gradually but inevitably becoming more open to the outside world at the same time as the growth rate falls below 8% and therefore begins to unleash social and political tensions as unemployment rises. It is not at all clear to me that China will find it easy to negotiate these challenges. There is therefore a very real danger of China taking to internal repression and/or external aggression.

Untoward developments in any country will further weaken confidence in emerging markets, and pull out from them even more money, both domestic and international.

That applies also to the European Union, though I am more optimistic about that. I expect that the 17 nations which have decided to go ahead with fiscal union will proceed with it, at least the important ones among them in the next three to six months, though it will take perhaps up to two years for everything to be agreed. Naturally, if the Euro project falters, then that will pull money ≈ out of the Euro area also.

Where will all the money pulled out of these countries go to? To the US and UK, where it is already headed in a significant though not yet substantial way.

The UK economy will begin an upswing for structural reasons from some time in 2012 (and the timing of that will depend to a certain extent on how well or badly the Olympics go from a financial and business point of view).

The US economy has already begun its upswing, as I stated publicly some months ago in my speech in Phoenix. This will continue. American banks will start lending to businesses again, and US businesses should do well, at least in the US itself. While unemployment will fall, it will regretfully not fall in proportion to economic growth, due to reasons I have detailed elsewhere.

President Obama will therefore have a recovering economy to boost his prospects of re-election, but a resistant rate of unemployment to mar his prospects.

While he will be tempted to focus all his energies on domestic issues in order to try and win the Presidential race, his chances of actually reducing unemployment and ensuring a victory depend entirely on whether he can take the international initiatives that will reduce unemployment - that is, by means of a world trade agreement that provides a level playing field for all countries, and does not unfairly privilege countries which improperly exploit their human resources, and avoid looking after their environmental and ethical responsibilities.

For the last three decades or so, unethical and environmentally-unfriendly practices have driven global "growth". This may be the crucial year which determines whether our leaders turn our back on that kind of growth and put growth on a new basis which is sustainable and just.

We are going into a year that could be dangerous or exciting, depending on how our leaders respond to the crises that are facing us in principle, and will face us even more in actuality this year.

So much for global politics. What about global economics? Here too we are in an unprecedented situation, with at least one of the best economies in the world now offering a negative rate of return for government bonds - in other words, investors are paying that government to keep their money for them, and losing money in order to do so, presumably on the basis that it is better to have a guaranteed (small) loss than the prospect of much bigger losses elsewhere (e.g. in equities).

What am I talking about?

Denmark's Central Bank has just placed government bonds with three-, six- and nine-month terms, and gained 2.32 billion Danish kroner (approximately EUR 310 million). Two of the three bonds offer investors a return of less than zero per cent - the State will have to pay back less money than it has been lent. The interest for the three-month bonds is minus 0.21 percent, while the interest for the six-month bonds is minus 0.07 percent. Meanwhile, if you were interested in Italian government bonds, those were offering over 9% interest. That is now the gap between bonds from an "unsafe" economy versus bonds from a "safe" economy. Expect more such offers from governments, but weigh them carefully.

Stupid quesiton, but why did not the Danish investors put more of their money in gold? Because even gold might still be over-valued in the current circumstances. Why not more money then in real estate? Because current prices regarding that may turn out to be a bubble too.

So what is the best way of investing? Spread your portfolio as wide as possible, forgetting growth and focusing solely on protecting the value of your savings or wealth. The worst investments might well turn out to be, as I have said for a long time, in the so-called "liquid investments" (i.e. in quoted instruments), which are most exposed to a fall in value. And the best investments might turn out to be those you make in real businesses, producing real goods and services, run by people you know and can trust. But don't forget that it is the US market which is the only one that is guaranteed to grow - unless something extremely stupid is done by America's leaders.

As we go through the swings and roundabouts, and the ups and downs, of 2012, let's do our best with our money and our talents, but let's keep in the forefront of our minds that this life is temporary.

What matters to us eternally is whether we are living our lives on the basis of developing a relationship with God, or whether we want to run our own lives in defiance or ignorance of God.

May Jesus the Lord bless and guide each of us on our path as we consider these things. Sphere: Related Content

My first American Christmas celebration

For family reasons, I had to be in the US over Christmas this year, which gave me the opportunity to observe and celebrate how Americans "do" Christmas.

On the sunday before Christmas, our friends took us to Lake Avenue Church in Pasadena, one of the megachurches, and it was quite a moving experience, not least because the orchestra is first-rate, and would be first-rate even for a professional one (this one is of course a purely volunteer one - quite extraordinary.

On Christmas Eve, we returned to the Church for the midnight service, which was candlelit - totally magical.

Even for a die-hard anti-christian (me), it was something to see these so well done, balancing the performance aspects with things that involved the participants, whether singing or prayer or passing the peace....

On Christmas Day itself, our hosts had family together in order to read the Bible together, and to talk to God (and listen to God) together.

We were also at two different Christmas parties. One was a relatively straightforward evening, not unlike any other family celebration, though the father of the house has the hobby of being a gourmet chef, so the food was excellent (though I speak from first-hand experience only regarding the vegetarian dishes, of course; for the non-veg dishes, I am simply reporting the views of the others there).

The second party was quite extraordinary (at least from my point of view): there were about 50 people there, family and friends, all ages; there were drinks and quickbites to welcome everyone, then a parlour game involving accepting a random number, which indicated the order in which one could go to the tree and pick a packed present and share the excitement of presents being opened - but the next in line could ask for any of the "open" presents, which added to the piquancy of the occasion! - but all the presents were fun so it all went very well. This was followed by about an hour of carolling led by a choir from a nearby public school (very good). No idea how late some of the other stayed, but we took off at about 9pm as I am an early bird.

On mentioning the above to another American friend, here's the response I had: "I'm happy you enjoyed your first-ever American Christmas Party. I don't really think that gathering should be considered a typical American Christmas Eve. The family and friends part, absolutely! I can only speak from my own personal experiences and say that my childhood Christmas Eve's were roast beef and mashed potatoes, and I'm certain we children provided all the Christmas carols!!!!! And our "Santa Claus" only brought pajamas for all the children and we were expected to put them on, fall asleep and let the adults have some fun!!"

Well, all I can say is, thank God I wasn't offered that cuisine, or I would have had to be content with mashed potatoes. And the idea of Santa presenting pyjamas to the little ones so they can be sent packing seems like a good bit of respite for the adults, but no fun at all for the children!

It was quite interesting to see how many homes and how much of the public spaces were all lit up for Christmas - and it is sad to reflect how Indian homes are being lit less and less now for the Indian festival of lights, Diwali.

Would I have another Christmas in the US? Yes, gladly, though I suspect that this might be my only one in the USA, as we don't have any of our close family there, and Christmas is, like Diwali, more a family time than anything else. Sphere: Related Content

Monday, December 19, 2011

Why the US is becoming the country in the developed world with the least freedom

Why would a free country vote to abolish its freedom?

Because freedom is essentially something that resides in the hearts and minds of people, and all the institutions that are created, maintained or modified by a people reflect basic attitudes and beliefs for which they are prepared to work and, if need be, to die.

US freedoms were built, like they always have to be built, from the inside out. They are also dying from the inside out.

Once any group of people stop believing in the importance of freedom, or stop being willing to work and die for freedom, then freedom gradually or swiftly dies.

That is what we have been witnessing in this generation, the 2nd or 3rd since America started rejecting its own "soul" (for a discussion of what constituted that soul, see Dr. Vishal Mangalwadi's THE BOOK THAT MADE YOUR WORLD, Thomas Nelson, USA, recently published).

But why do I say that the US is becoming the least free country in the developed world?

Because US legilators have just passed, with an astounding two-thirds majority, a bill with the suitably military name of "HR 1540", which gives the US President power to detain "terrorist suspects" indefinitely. Such suspects, who can be arbitrarily arrested, include U.S. citizens on American soil.

Till recently, Bush and Obama claimed to have the legal power to do these things, but it was not clear whether or not they actually had this power, because their claim rested on obscure and contentious issues in law, custom and Constitution.

Following the passage of HR 1540, however, there can be no further challenge to such Presidential claims. Earlier, Presidents did not indubitably have that power, though they claimed it; now that power has indubitably been given to them by American lawmakers, duly representing the American people.

Why does HR 1540 constitute the end of US freedoms? Because it is the Administration that now defines what is a terrorist, as well as who is or is not a suspect. Any "suspected terrorist" can be arrested at any time, and kept under detention indefinitely - without trial and without bringing her or him before any court: no explanation or defense of the action is necessary at all.

I doubt that President Obama will misuse this authority (though he could of course do so, and there is very little apart from his own conscience now to stop him).

But what will prevent future Presidents from defining as "suspected terrorists" anyone who is a meddling journalist, political opponent, or social activist?

The US's record on freedom is not unblemised. Consider McCarthyism and the resulting vilification and hounding of "suspected Communist sympathisers" from the 1940s to the 1950s.

So what does it take to maintain freedom? The willingness to invest time, effort and (some, at least minimal) money to ensure that public policies and administrative actions are fair, just, and in the public interest.

Given the march of Mammon since a nice man (Ronald Reagan) unleashed it, public spiritedness has declined, and politics has become the province of the huckster, the cowboy and the con artist. That is an inevitable consequence once a culture starts enshrining greed and worshipping money instead of probity and public interest.

Can the US be returned to freedom? In the next few years, probably yes - though it will require at least tens of thousands of people willing to make huge sacrifices to restore the freedoms that have been lost as a result of the passage of this bill.

Want to know how far the US has fallen from its traditions of freedom? Most Americans did not even know that HR 1540 was being discussed, and had no idea what it portended.

My conclusion: Americans have fallen away so thoroughly from their "soul" or their heritage that they have become totally focused on their "security" and have abandoned any interest in even knowing about threats to their freedoms.

How do I know that?

Well, were you watching the blogosphere and the US media???

How much discussion of HR1450 did you see? Sphere: Related Content

Global framework for financial services finally looks set

Finally, it appears that all the combined tactics of the contra lobby has resulted in no paralysis of the move towards new global regulation of the financial services industry:

Of course, much remains to be done in strengthening this global framework. For example, America's Dodd-Frank legislation created an Office of Financial Research, which was given the responsibility of gathering information that financial institutions have till now withheld from regulators, for the purpose of identifying systemic risks to the financial system; this kind of responsibility needs to be extended, one way or another, to the global level.

Overall, however, the acceptance by the USA of Basel III, as the new rules are called, is to be welcomed and should help stabilise the global financial system.

Naturally, we will need to see the final form of Basel III before detailed comments can be made or its overall effectiveness assessed. Sphere: Related Content

Sunday, December 18, 2011


A full-throated command to a drilled mass
I remember it dimly from parade grounds seen in childhood
the assembled drumbeat of feet disintegrating into hubbub, obscurity and dust.

But there is also a subtlety, addressed to individuals who turn their backs
to go boldly where the facts lead them astray
from the main stream of conformity, and its gathered strength.

So it was that two men, smiling, frowning, angry, polite
said to me, their minds and lips nimble
far from skirmishing with anything that might sound even vaguely like
that word strong, separating me from a field where I with them had toiled and struggled.

FAIR? No, sir!
HURTS? Yes, sir!

(Really, sir!)

Reluctancy turns me round and about
spins me dizzy
till I do, eventually, stagger to attention,
take the deepest breath
and, softly as asssisted strength, whisper
“Dismiss”, and shake from my feet the dust. Sphere: Related Content

Friday, December 09, 2011

Orthodox views of the current situation versus my views of the current situation

Analysis just issued by one of the best-known financial houses says that we should expect a growth rate of 2% in the US in 2012, zero growth in the Eurozone, and that, "in light of the dramatic shift in the worldwide balance of power, the hopes of the struggling industrialized countries rest on the emerging markets".

The house in question does not seem to have noticed that, while emerging markets may at least be growing, they are now growing at a sharply decelerating rate - and that their slowed rate of growth means that all their so-called "power" will be needed to fight their own social and political problems. Whether that "power" will be enough for those purposes depends on how "dramatic" the slowdown is - as well as on the wisdom of the leaders concerned.

Briefly, the BRIC countries: Brazil's economy will be substantially hit; Russia's will be hit too, but how much it is hit will depend on energy prices; India's will probably be hit least; China's will probably be hit most.

Other emerging markets will mostly stop emerging, and will probably largely "de-emerge" or sink, as they usually tend to do in troubled times. Sad and tough. But there it is.

The Eurozone's "tiny but structurally important" decisions taken yesterday indicate very little of what will actually happen, because the decisions (which appear to be boringly technical) will need to be approved by their Parliaments (and even the UK Government may be forced by developments to have a referendum regarding whether or not to finally join the Eurozone - I have said that the country should have structural recovery in 2012, but there are other factors which are too much to go into here).

If, as I expect, the Parliaments of the 17 Eurozone and non-Eurozone countries which have decided to commit themselves to a treaty for deeper economic integration over the next three months to negotiate and may require referendums in countries such as Ireland. If the Parliaments concerned do not approve, then the uncertainty about the Eurozone will continue. My guess is that for psychological reasons, some of the Eurozone countries which are most committed to the present course will attempt to rush agreement through their Parliaments. The timing and weight of the countries which first get this through, and the timing and weight of any countries that do not, is what we have to watch. Meanwhle, markets have reacted initially positively, marginally, while the propaganda barrage has been skeptical.

The US will almost certainly grow at more than 2%: how much more, I cannot say - as that depends on what is happening in the rest of the world. But the surprise for the US economy can be expected to be on the upside, in spite of the fact that the various existing stimulus measures are expected to run out, and in spite of the impending race for the Presidential election. That growth is also why Obama has a fighting chance of getting re-elected (I should say that I am neutral regarding his continued Presidency, and I am "equally neutral" on anyone else . whether from his party or from the Republicans - getting in as the next President: the US system is now so corrupt that I do not think it makes much difference who is President).

BTW don't believe what Obama will say in an interview to be broadcast tomorrow about an economic fix for the US taking years to be effective. I greatly doubt there is any chance of a real economic fix till there is a proper crash, as there is no sign that anyone in a position is authority is even contemplating any economic fix at present: everyone is focusing on how to hang on to or consolidate their own power.

Of course, what Obama means by an "economic fix" is not clear. If he means "for growth to return", he is likely to be surprised, as I indicate above.

If he means "for the US political system to be sorted out so that growth is more equitably distributed", that is going to have to wait for spiritual, moral and ethical revival in the US population and particularly its leaders.

If Obama means things like Dodd-Frank to be effective, he is partially right, though it is already starting to bite - and whether it continues to bite will depend on political shenanigans. Sphere: Related Content

Wednesday, December 07, 2011

What are the advantages and disadvantages of Twilk?

One of my blog-friends has sent me a mail encouraging me to use this new-ish application ("ap") called Twilk.

On checking it out, I find nothing on the internet about the advantages and disadvantages of using this ap.

Here is what I find from the Twilk site itself about what the ap does and does not do:

"This application will be able to:
•Read Tweets from your timeline.
•See who you follow, and follow new people.
•Update your profile.
•Post Tweets for you.

This application will not be able to:
•Access your direct messages.
•See your Twitter password".

While what Twilk does NOT do is comforting, and I am comfortable about all the other things that Twilk is able to do (e.g. read my Tweets and see who I follow), I am not comfortable about Twilk's ability to "follow new people".

What does Twilk mean by "new people" (presumably people who I do not follow)?

HOW does Twilk find such "new people" to follow? Presumably via the people who I do follow?

If so, how does it get access, without their permission, to their contact lists?

Or does it automatically mail everyone who I follow and ask for their permission to access their contact lists?

Or does it do so more subtly by mailing them and inviting them to join Twilk?

Perhaps one of my readers can enlighten me? As usual, either via a personal email or via a response here.

Oh, and BTW, if you're wondering what Twilk actually does, all it does is "prettify" your Twitter site with the avatars of everyone you follow and everyone who follows you.

Not much use if you don't like the avatars concerned.

But if you do like the avatars concerned, does putting all these avatars on your Twitter page not also slow down the download of your Twitter page, specially in locations where only has a slow or shared line?

Thanks for any information you share. Sphere: Related Content

Why I am a Devolutionist

No, I am not referring to the devolution of political power from London to the UK's regions.

I am referring to Devolution as contrasted with Evolution.

Why am I writing this post? Essentially, because I have been challenged on this recently, and have never written anything on it.

Devolutionists are unconvinced by Creationism as well as by Evolutionism.

Why am I a Devolutionist and not an Evolutionist?

For two main reasons.

First, it is clear that, while mutations occur, the vast majority of these are "sub-normal" (so they don't survive) rather than "super-normal" (in fact, there is no evidence of any "super-normal mutations" at all, as far as I can discover at present). However, whatever the mechanism, it is clear that existing biological organisms can be arranged in "trees". If one discounts the human tendency to consider ourselves "superior" to other organisms, the "trees" can be arranged in a Devolutionary manner just as easily as in an Evolutionary manner. Consider further that humans can be killed pretty quickly, whereas "primitive" life forms (e.g. fungi and viruses) are extremely hard to eliminate. So on the basis of "survival of the fittest", fungi and viruses are more "survivable" than humans, so should they not be considered much more "advanced" or "fit" than us?

Second, physics came before biology; and physics is not dependent on biology, while biology is dependent on physics. The Second Law of Thermodynamics makes clear the principle of entropy. It is unlikely that the reverse of entropy, which is necessary for Evolution to take place, actually took place. Further, Evolutionists offer us no evidence to believe that the reverse of entropy takes place or has taken place anywhere, nor do Evolutionists offer us any reason why entropy should be reversed on earth, and only in relation to life forms.

Not quite QED, perhaps. But that is my thinking so far. Sphere: Related Content

Do we really need such research?

In another example of apparently entirely unnecessary research, Dr. Peggy Huang of Tulane University discovers that companies which agree to give their CEOs all-cash payouts, in case they step down, significantly underperform their competitors.

A cash-only contract in force during a given year is associated with annual stock returns over the subsequent three years that are 4.2% lower than the average returns of firms whose CEOs have no severance provisions.

Do we really need to know whether the returns are 4.2% lower, or 4% or 5%?

Isn't it obvious that, if I am a CEO with the parachute of a cash payout, that will tend to incentivise me to take less responsible actions than if my payout is principally in terms of shares which are blocked for say 5 years after I depart the company?

Dr Huang also says that all-cash contracts appear to be on the rise. If so, that appears to be a research finding worth having, does it not? True, but it would be more valuable if there was some accompanying analysis of WHY all-cash payouts are increasing when they are against both commonsense and research findings such as Dr Huang's.

Not to attack Dr Huang's research too much, I should point out that her research covered a sample of S&P500 CEO severance agreements between 1993 and 2007, and examined whether and how the existence and structure of severance agreements influences subsequent firm performance, CEO investment behavior, and the likelihood of CEO turnover. Her research shows that while firms with severance agreements tend to perform worse than firms without severance agreements, the structure of severance agreements also affects performance significantly.

Surprisingly, her research suggests that executives with severance contracts are more likely to be forced out of their firms - in her view because severance agreements, rather than promoting incentive alignment between CEOs and shareholders, actually exacerbate agency problems which lead to overinvestment and poor subsequent firm performance. She does not seem to examine whether companies whose value-set leads them to provide cash-only severance contracts are also companies whose value-set leads them to more rapidly dismiss CEOs (so should anyone really want to work as a CEO for a company which has such values?)

In another surprise, she finds that CEOs who are provided a cash-only severance package tend to "over-invest" in research. Over-invest? In research? Now that would be worth researching! Sphere: Related Content

Pope joins movement to ban the death penalty

Up to now, the Pope and the Roman Church have maintained a conservative stance on ethical matters.

Now they may have started down the slippery slope, with the Pope (and presumably the Church) now committed to opposing the death penalty.

From the point of view of most people who oppose the death penalty, life and death are of no ultimate value, so they seem to be against the death penalty mostly for sentimental reasons.

So the question to ask, from the viewpoint of society, is: does abolishing the death penalty for people who have undoubtedly committed murderer have any disadvantages?

Here are two:

1. because murderers are normally locked up for many years, jails become filled to overflowing; and

2. taxpayers have to pay for the food, exercise and security involved in looking after murderers for the years and years that murderers are in prison - and in a time of decreasing employment prospects, murdering one person and ensuring that you are caught can become an easy way of ensuring that you are looked after for many years (perhaps for the rest of your life) at the expense of taxpayers :)

Of course laws need to be reformed in relation to those accused of murder, so that only individuals where the evidence for murder is overwhelmingly clear are given their deserts.

Meanwhile, ironically, the most organised "death industries" (the suicide-help industry, the abortion industry, and the so-called "defense" industries - better described as the war industries) carry on their ever-widening and ever-more-profitable activities.

Few of these so-called liberals are willing to commit themselves to fight against organised death-mongering by the suicide industry, the abortion industry and the war industries. Sphere: Related Content

Tuesday, December 06, 2011

Brazil’s rapid growth shudders to a halt

As anticipated in my analysis, with which readers will be familiar:

The same was predicted for Russia and China - and for commodities; even worse for other emerging markets.

For India, I had anticipated that there would be a slowdown, but not to the same extent as in Brazil, Russia and China - unless the Indian government did something stupid. So far the government has resisted that temptation. Sphere: Related Content

Friday, December 02, 2011

Why are those who study economics less philanthropic?

Just over a month ago (on October 29, to be precise) I had posted a piece arguing that the addition of business ethics courses by themselves cannot reverse the systematic brainwashing of students in anti-human values done by business schools; what is needed is systematic examination, critique and reform of the values taught by business school courses, and even by the existence of expensive and elitist business schools:

As you probably know, there has been research underway for some time on the question of why economics students donate less than those who do not study economics.

According to the latest published piece of research, if someone who is not a major in economics takes an introductory course in microeconomics, that reduces the likelihood of her/his donating money to nonprofits by 2 percent; to make matters worse, if that sort of person takes an intermediate course, the likelihood of her/his giving to nonprofits goes down by 3.7 to 7.9 percent.

That's in an article by Yoram Bauman and Elaina Rose of the University of Washington, published in the Journal of Economic Behavior & Organization, volume 79 (2011), pages 318-327: Sphere: Related Content

Tuesday, November 29, 2011

A shock for everyone interested in brands

Havas Media, the global media network of the French company, Havas, conducted another annual survey, this time involving online panels with 50,000 consumers, in the period March to June 2011, in 14 markets – France, Spain, UK, Germany, Italy, USA, Mexico, Brazil, Colombia, Chile, Argentina, China, Japan and India.

The results are, if not shocking, at least eye-opening:

* For the 4th year running consumer expectations of companies’ responsible behaviour continue to rise

* Nearly 85% of consumers worldwide expect companies to become actively involved in solving these issues (an increase of 15% from 2010)

* Those prepared to reward responsible companies by choosing to buy their products is up 11% from last year to now more than half of all consumers (51%)

* Those who would pay a 10% premium for a product produced in a responsible way is up once again, also now to more than half – from 44% last year to 53% in 2011

* The percentage of consumers who would punish irresponsible companies has also increased to 44% (from 36% in 2010)

* Only 28% of consumers worldwide think that companies today are working hard enough to solve our social and environmental challenges

* Only 20% trust companies when they communicate about their social/environmental commitments and initiatives

* For the second year running: most people would not care if 70% of brands ceased to exist.

As a response, Havas Media has launched “Meaningful Brands,” a global framework that offers a new index, analysis and proprietary tools to measure and build brand value in the context of changing consumer expectations.

The Meaningful Brands index(MBi)connects brands with our quality of life and well-being by measuring the perceived impact of brands on our health, fitness, happiness, values, social relationships, financial security, lifestyles, communities, societies and the environment.

The MBi's ten top brands are: Ikea, Google, Nestlé, Danone, Leroy Merlin, Samsung, Microsoft, Sony, Unilever and Bimbo.

I must confess that Leroy Merlin and Bimbo surprise me. Leroy Merlin is French, and we might suspect a slight French bias there, but Bimbo is Mexican.

The next ten are also interesting: LG, Philips, Apple, P&G, Mars, Volkswagen, L’Oreal, Wal-Mart, Carrefour, Coca-Cola.

The surprises here are Apple and Coca-Cola.

Apple because it is so far below Google and Nestlé, and only just above a chocolate manufacturer and a household products company (both relatively old industries).

Coca-Cola because it pips Pepsi here - and I am interested to learn that it really adds to the sum of human well-being. Sphere: Related Content

Poem written some two years ago, on approaching my 60th birthday

published at: Sphere: Related Content

What are the prospects for business in the first half of 2012?

One indication might be that American Airlines decided yesterday to file for bankruptcy. Though that is of course a very general indication in relation to a specific airline

Here is another: Swiss has announced special (cheap or discount) fares to the following destinations, which might indicate that bookings are looking low to and from at least these destinations in relation to Switzerland:

Hong Kong
New York
Sao Paulo
Tel Aviv
Tokyo (NRT)

That seems to me like almost everywhere except India...
Sphere: Related Content

Poem written in April 2011, on a visit near Lucknow

Available at: Sphere: Related Content

Monday, November 28, 2011

investment/ loan opportunity

Investment/ loan opportunity for proposed new branch of King's Kurry in Altstetten Zurich:

an information meeting will be held on this coming Wednesday (Nov 30) and Thursday (Dec 1, 2011), from 1145 to 1300h, at Badenerstrasse 575 (the futuristic building is at the crossing with Flurstrasse, right by the Bus and Tram Stop called Käppeli)

Entry is free, and no reservation is needed. Sphere: Related Content

More and more impressive: Forward Press magazine (Delhi) Sphere: Related Content

Friday, November 25, 2011

What is the TPP - and should it be welcomed?

The first question is easier to answer than the second.

So, first, what is the TPP? It is the Trans-Pacific Partnership – a new free trade community being negotiated by ten countries (Australia, Brunei, Chile, Japan Malaysia, New Zealand, Singapore, Peru, the US, and Vietnam). Initially signed in 2005 by Brunei, Chile, New Zealand and Singapore, it came into effect in 2006. The other countries are negotiating to join.

The TPP hit the world's attention almost without preparation because President Obama lifted it from obscurity, at the recent APEC summit, by suddenly announcing that the TPP is the keystone of his economic programme.

He even called it a "next-generation" trade agreement and suggested that the nations involved commit to concluding it in 2012.

That brings us to the second question: Should the TPP be welcomed? I guess we could take the cue from President Obama and ask the related question: is the TPP a next-generation trade agreement?

Well, the TPP is actually an advance on most current multilateral trade agreements, in the sense that it not only seeks to immediately start reducing tariffs but also to remove them by 2025. However, that sort of thing is normal in free trade agreements. What is “next generation” is that TPP encourages governments to improve market regulation and internal competition, improve market transparency, root out corruption, create a level playing field for private and state-owned companies, allow foreign companies to compete for national or state projects, curb the use of subsidies and credit to support domestic industries – and give companies (not merely governments) the right to seek legal action against unfair practices. Most important, TPP puts in place a requirement for labor rights and environmental protection.

While all that is revolutionary, and takes the TPP to a level far above that of the WTO, the question arises whether, by going beyond the WTO, it does not create a clash between them – for example, WTO specifically prohibits environmental and social considerations from being taken into account. However, if the WTO is going to fall by the wayside, as seems likely or at least possible at present, then TPP provides a much better blueprint for the sort of global organization which should replace that.

I do have one caveat: labour rights are not the same as human rights. While labour rights can be under- or over-protected, human rights are fundamental. President Obama’s avoidance of this issue is worrying. For the New Zealand government’s blockage of this consideration, see

There are other considerations too – for example, on health-related considerations, see

I conclude that the TPP will be a good thing for the countries concerned. The questions regarding it are whether it will override or be overridden by the WTO, and whether the TPP will sufficiently guard human rights, health and related concerns. Sphere: Related Content

The new China that is ahead

I have been thinking about President Hu's comments at the recent APEC summit, in which he seemed to say that the new generation of Chinese leaders are committed not only to a greater liberalization in the Chinese economy, but also to transform the government so that it is bound by the rule of law and genuinely serves the people.

On the last matter: there is little doubt that, in spite of all the corruption there is in the Chinese system, the system has tried more or less successfully, to serve the people at least at some minimal level.

But I wonder whether the new generation of leaders will really be able to submit themselves to the rule of law. Historically, in Chinese culture, with very few exceptions, law is what the rulers have made for others to be subject to - not for themselves to be subject to...

Premier Wen went further when he promised that the State would retreat from spheres that should be regulated by the market, by civic groups, by industry groups or by trade groups.

These are most encouraging statements. However, in Chinese culture, what is said for public consumption is not necessarily what is really going to happen. So let us be thankful that at least the sentiments at this time are in the right direction. But we have to wait and see what the new generation of Chinese authorities, who take over in 2012, actually do.

If they deliver on these sorts of sentiments, then China will have finally started moving in the direction of being, not merely a country that plays fast and loose according to whatever benefits itself, but a country worth counting as a modern civilized nation which will do what is right even when it is costly to itself.

Civilization is built only when people stop looking at what is in their own short-term interest, and start being willing to pay the cost of doing what is right. Sphere: Related Content

Saturday, November 19, 2011

Is the Future of the Euro now in doubt ...and is the US dollar now doubly secure?

Following reports in the press and on the grapevine this week, I have changed my view of the future of the Euro.

I used to think that the chances of the Euro breaking up were 10 for a breakup versus 90 against. Now, I think the chances are 50:50

If Chancellor Merkel really believes that the Euro cannot bring the markets to heel, then the markets will certainly not be brought to heel - and that means the slow or rapid disintegration of the Euro project.

Not guaranteed, of course, because a week is a long time in politics and in monetary history - and anything could happen to drive the recalcitrant Euro-periphery and other countries into the line that is necessary for greater economic and financial integration in the Eurozone - and that is in turn necessary for the Euro to be healthy.

In any case, a breakup is not something that is going to happen tomorrow (though things do move much more swiftly nowadays). In "normal" times, one would expect the disentanglement of the Euro to take place over some years.

Whether slow or rapid, it remains true that the breakup of the Euro will bring enormous costs for all Eurozone countries: Germany will be hit as its exports become more expensive because a revived Deutschmark or equivalent, released from the burden of the rest of the Eurozone will shoot up in value. German exports will also be hit because demand from the rest of the Eurozone (which will be badly hit by the breakup) will dry up. So will demand from most other countries - indeed, we should expect all export oriented countries to be further hit, and expect commodity prices to fall.

All that will, in turn, will provide a fillip for the fortunes of the US dollar (as well as for the UK Pound, which should anyway begin its swing back in the next 12 to 18 months). The question is how far the upswing will go. Sphere: Related Content

Friday, November 18, 2011

my post on Zhong's research relating cheating to deliberation

is posted today 18 November 2011 as "Cheating, Rationalism, Rationalisation and Rationality" at my Indian blog Sphere: Related Content

Tuesday, November 15, 2011

Nods, winks, peer pressure and boss pressure: their role in the current crisis

My view is and has been that the current crisis could not have come into being had the existing rules been followed.

I have publicly stated that nods and winks on the part of elected officials "steered" people in responsibility towards taking their responsibilities less seriously than they might have done - ffor example, laying the cultural and market basis for the repeal of the Glass-Steagall Act.

I see that Justin M. Ross of Indiana University's School of Public and Environmental Affairs has demonstrated the role of political influence in what might seem, at first glance, to be the "objective" domain of the assessment of the value of property: Sphere: Related Content

Unemployment in the USA

Now that youth unemployment in the USA has reached similar levels to the "Arab Spring" countries, you might find it interesting to note the following:

"Increasingly long periods of high unemployment have followed the US
recessions of the last two decades. From 1945 to the 1980s, employment
rebounded roughly six months after GDP did. But in the wake of the
1990–91 and 2001 recessions, it recovered 15 and 39 months,
respectively, after GDP had returned to the prerecession peak. At recent
rates of job creation, the lag this time will be upward of 60 months". To
learn more, click:

In my view of course, the US recovery will be far swifter - provided the US adopts the right policies. Sphere: Related Content

Is there an IMF warning on China?

Though various headlines today suggest there is an IMF warning on the Chinese economy, regrettably the IMF has chosen to whitewash the prospects for the Chinese economy.

If you read the report, you will see that the IMF is sanguine about the Chinese economy even if its growth rate falls to 4%.

This is simply idiotic.

At present, the IMF does not see any real estate bubble, any over-investment in infrastrucure, nothing to worry about in the bad loans in the banking sector....

All the IMF wants China to do, in order to avoid whatever little danger it sees even in the case of the most extreme imaginable financial crisis scenario, is to simply liberalize its financial sector - and, presto, no one needs to worry about any problems in the Chinese economy any more!

Is that a rat I smell? Sphere: Related Content

Support for my view on the US economy?

readers who enjoyed my post titled "A Final Chance?: The Economic Crisis and the Future of the USA", will be interested in the following post from Bloomberg today

You might like to keep in mind that you read about the revival of US manufacturing here first. Sphere: Related Content

Saturday, November 12, 2011

Raymond Learsy on Oil and Finance

OIL AND FINANCE is the title of Raymond J Learsy's second book, which has been published recently.

His first book was titled OVER A BARREL, published in 2007. In that book he set out how the US became addicted to oil, and why geopolitics makes that dependence dangerous. Exploring the social, economic, and political effects of oil discoveries on the major oil producing countries, he suggests an inverse relationship between the "oil countries" (my term), and their incredibly repressive regimes with consequently low rates of political participation, and slow development of a civil society, so that these countries are virtual time bombs waiting for revolution or the birth of the next bin Laden. That is because these countries have developed systems whereby a few at the top enjoy incredible wealth, while vast corruption and repression is the fate of most people. While the elite indulge in degenerate Western lifestyles at Monte Carlo, Geneva, London and New York, they finance Wahhabism as the opiate of the masses in order to forestall modernity and keep their populations locked in feudalism. Having sold our collective soul to such dislikable and unsustainable regimes, we are stuck with the unpleasant fact that part of the profit from every gallon of petrol one buys is likely to end up helping to finance some extremist group or the other. Learsy concludes by proposing solutions including: renewing a focus on nuclear power, busting OPEC, taxing big oil’s profits, and investing in bio-fuels and other alternative forms of energy.

In his second book, Learsy brings together his blog entries from The Huffington Post over the period 2006 to 2010, organised chronologically under headings that reflect the concerns of his first book.

The first section is "Enemies Foreign" - in which the culprits, are, principally, OPEC in general, but specifically the Saudis and the Russians, as well as the US elite which has found its way to entrenching its interests in the country's political system.

The second section therefore turns to "Enemies Domestic", excoriating policymakers and the big oil companies, attacking the proponents of Peak Oil as the witting or unwitting agents of Big Oil, and relating all this to the current global financial and economic crisis.

In the third section "How we can fight back", he argues for the right use of the Strategic Petroleum Reserve, pleads for us to reduce our consumption of oil, and encourages us to invest in alternative energy production (including nuclear).

The book's "real-time commentaries" on the events of the last five years are a useful record. Chronicling "the corruption of a commodity that is essential to the world's economic well-being", Learsy asks us to wake up to what lies ahead as other "core commodities" such as food products are subjected to "political, monopoly, marketing and financial manipulation". He is clear that prices are manipulated through "glaring speculation on our trading exchanges", through "the lack of oversight by our regulatory agencies; and the abject opportunism of our financial sector, especially of large banks abetting and grossly profiting from rising oil prices much to the detriment of households struggling with escalating heating bills and gasoline costs".

Americans, particularly, will be interested to know that he is most concerned by "what has become... the greatest threat to our nation and to the world - the transfer of literally trillions of dollars ... to oil interests and terror-sponsoring despots (who) have helped to destabilize today's world, lubricating the clash of civilizations and ... radicaliz(ing) the young and vulnerable in all corners of the globe with the destructive ethos of jihad and intolerance".

Altogether, OIL AND FINANCE documents and condemns the continuation of a system "that is barely functioning, responsive not to the general weal nor to the basic economic laws of supply and demand but rather to the influence, lucre and access of the few and their special interests".

Observing that President Obama, having promised to change things, has been no more effective in bringing the oil lobby to heel than was President Bush, Learsy raises a chilling question on the last page of this book: "Could it be that corruption and complacency are now too deeply entrenched to be reversed?"

In fact, corruption and complacency can be reversed, as I have argued through the example of the work of William Wilberforce and other reformers who were fighting corruption and complacency that were much more deeply entrenched in their own societies, which had the additional disadvantage, from the reformers' point of view, of being more like today's "oil countries" than like today's democracies. However, cultural transformation does take huge cultural and spiritual resources, as is documented in Vishal Mangalwadi's THE BOOK THAT MADE YOUR WORLD. Certainly, books such as this one, analysing the malaise will not be enough. It will require today's cultural gatekeepers in the US and Europe to accept the kind of resources Mangalwadi documents if corruption and complacency are going to be fought once again in our modern world. Sphere: Related Content

Wednesday, November 09, 2011

Secularist Censorship in the USA

Tony Carnes, Publisher & Editor, A Journey through NYC religions ( kindly gives me permission to reproduce the following long excerpt from his latest message to subscribers:

"Last summer, high buzz was generated in the city's literary circles with the publication of Alfred Kazin's journals. Kazin, who held forth at The New Yorker & elsewhere as the most powerful reviewer in America, had a secret life that was now going to be made public. The unexpurgated sections of the journals revealed that Kazin's hidden life was...religion.

"'From adolescence onward, Kazin was engrossed in a spiritual and sometimes mystical inner life that he never talked about, 'wrote the reviewer for New York Review of Books. 'None of his friends or lovers seems to have been aware of it.' It was far more hidden than his sex life.

In the late Twentieth Century, secularity in the city was so powerful that even the powerful hid their religious impulses. Whenever Kazin dared to write on his religious notions he did so pseudonymously through others. "Much of what he had to say in his essays about other people's religion was secretly about his own...The journals make clear that his long introduction to The Portable Blake (1946) was disguised self-portrait, with Blake's Christianity standing in for Kazin's Judaism."

We have stumbled forward out of that secularist stupor, but we still have a long ways to go. Perhaps, one reason A Journey strikes a chord with many people is that it allows people to explore hidden inner religious impulses that they can't do among their friends. For some A Journey is a place to heal from bad religion without giving up hope for good religion. Some of our secular friends see A Journey as an antidote to "secularism" that is a sort of illness of the intellectual faculties that make one unable to realistically and empathetically understand "religious others." Sphere: Related Content

Monday, November 07, 2011

The text of my talk at the Indian Institute of Foreign Trade, on "Surviving and Succeeding as a Business Executive"

Your Excellencies, Professor Dr Mrs Vijaya Katti, Professor Dr Ravi Shanker, Mr R K Mitra IFS, Dr Biswajit Nag, Honoured Representatives of Foreign Embassies and High Commissions, other Distinguished Guests, Respected Faculty, dear Participants in the IIFT programmes, and Comperes Mr Rajiv Mishra and Mrs Kanupriya Saigal:

My thanks to you, Kanupriya, for that kind introduction, and my thanks also to the Committee that has organized this event, especially to Mr Mukesh Kumar who has I guess led the team, for the invitation to speak here today. I am always delighted when I discover "initiatives for good" undertaken by anyone in our society, and especially if the initiative is taken by people such as you, who are already leaders in your fields and want to grow further as leaders.

My topic today is “Surviving and succeeding as a business executive”, which has certain similarities to surviving and succeeding as an entrepreneur (I know that some of you are executives and some are entrepreneurs – but I will leave you who are entrepreneurs to work out what applies and what does not apply to you, and the many additional aspects there are to being a successful entrepreneur).

May I start my talk by asking if you know what recruiters look for in possible employees? And what we should look for in employees?

You know of course that first comes technical or professional competence. If you have a Second Class degree from IIFT, you are unlikely be selected in preference to someone who has a First Class degree from IIFT.

The second thing that you look for is relational competence – is this applicant the sort of person who will fit into the team? Will they even contribute to the team? Between two candidates, both of whom have First Class degrees, the one who is perceived to have more relational competence will be more likely to be chosen.

The final, and most important consideration when selecting an employee at the managerial or executive level is this: is the candidate HUNGRY? DOES S/HE WANT TO GO PLACES? Is he/she a SELF-STARTER? Does he/she have INITIATIVE? Even LEADERSHIP? We want people with FIRE IN THEIR BELLY – there are various expressions that are used to indicate the quality that is looked for – but let’s settle for HUNGER.

SO, if you want to make an impact in the marketplace, you need to have:
- A HUNGER FOR PERSONAL EXCELLENCE – notice: NOT merely ambition for as much money as possible as quickly as possible…

Well, folks, I don’t know what you are like, but when I go to a conference, I am happy if there is one key thought that I can go away and think about and apply, if I have two such key thoughts that’s great, and if I have three that’s like a banquet – and I really can’t cope with more than that!

So, it may be that God has already given you the key thought that you need to hear – but that’s what you need to be listening out for, not how incredibly stupid or sensible, dull or entertaining I am….

On the other hand, it is possible that you haven’t yet got your key learning from this session, so let’s press on.

Let’s imagine that you have been able to convince the recruiters and the company executives that you are technically competent, that you are right for their team, and that you are keen, enthusiastic, hungry, with fire in your belly and the rest.

So you have been selected, and you have received the congratulations and blessings of family and friends, and celebrated, and so on.

Now you are just headed to your first day at work.

What should be your first goal?

It is to establish your credibility! How do you do that? Through reliability, being on time, performing to budget, to quality. And, if possible, OUTPERFORMING on timing, budget and quality. THE ABILITY TO LOOK AND SOUND GOOD MAY GET YOU INTO A JOB, or even into tasks within a company, but it is only your ability to keep delivering to time, budget and quality that will keep you in your job – and, if you want to have a career and grow in your company, focus on outperforming (not the others in the company) but outperforming on the criteria of time, budget and quality.

I guess that point quite simple: The first thing is to establish your credibility!

What’s the 2nd thing? RAISE YOUR VISIBILITY. Once you have established your credibility, if your company is any good, it will be looking for good workers, workers with potential, to train and use at higher levels in the organization. ASK QUESTIONS, RAISE CONCERNS, PROPOSE SOLUTIONS, TAKE LEADERSHIP WITH OTHERS IN ORDER TO DO WHATEVER NEEDS TO BE DONE, WHETHER IT IS ORGANISING A BIRTHDAY PARTY FOR A COLLEAGUE, OR A SPECIAL GIFT FOR SOMEONE WHO IS IN DIFFICULTY, OR CREATING A TEAM TO MANAGE AN OFFICE OR WORK CRISIS.

Raising your profile also has to do with ensuring that others in the company, and specially your boss, know what you are doing and what you are contributing to the company, including your thoughts and concerns and questions, AND that you always have an up to date CV so that you are ready to move departments or companies in case you are fired – yes, bad things do happen to good people, and the Scout Motto is: Be Prepared!



Once you have established your credibility and are raising your visibility, your 3rd task is before you: ADDING VALUE TO THE COMPANY.

There are actually two main ways in which you can add value to a company, either CUTTING COSTS or CREATING REVENUES. Cutting costs is easier, not that any thing is easy, but it is relatively speaking easier in the current climate. Look around you to see how work could be more efficiently organized without compromising quality – actually, it might even enhance quality. Are there steps in the work flow that are redundant or could take place in parallel? Would reorgansing the workspace produce things in less time? Would having an ice machine or a coffee machine increase interaction and informal discussion and therefore improve teamwork, specially across divisions or department?

Of course you might retort that there’s been so much cost-cutting in my company that its easier to grow revenues! Well, so much the better – any company is always looking for new ideas to increase revenue. But there’s a bit of a catch here. You will always increase revenue most sustainably when you identify customer needs that are not met, and find a way of serving those needs. So don’t THINK “revenue” or you will go down the wrong road, as so many companies do. THINK “unmet customer needs” and you will then no doubt figure out a reasonably good way of increasing revenues with it.

So what is the first thing you have to do to be able to impact the marketplace? Establish Credibility.

The second? Raise Visibility.

The third? Add Value by cutting costs or serving unmet customer needs.

Now we come to what is nearly the most important thing you can do for a company: ENHANCING REPUTATION AND BRAND VALUE.

Brand value is the premium that is attracted to a brand from customers who are willing to pay extra for it.
• The Brand Finance plc. Global Intangible Financial Tracker League Table (GIFT) is a 10 year study of the intangible asset values of all public stock exchanges worldwide
• GIFT is released in January each year but due to the exceptional economic conditions it has been updated as of 24th August 2011
• Further panic in world stock markets has resulted in a 25% ($6.3 tn) reduction in intangible asset values.
• Despite the fall recorded in GIFT, this update of the Brand Finance Global 100 brands shows that there has only been a 2.4% drop in their combined value! That’s ONE TENTH of the average drop in brand value!

How much are these top 100 brands worth anyway? Roughly 25 trillion USD, or nearly the total value of goods and services produced in the entire United States over TWO years!

That’s only the top 100 brands!

So you can see that reputation is worth a lot. A good name, a good reputation is worth a lot. And it isn’t built by advertising, though that helps. A reputation is built by being clear WHAT reputation you are trying to build - and then crafting, aligning, monitoring, controlling, refining and reorganising all the systems and procedures, all the policies and incentives, and everything else, to make sure that the company consistently and continually delivers on what it promises.

So, from all the above, the question for us this afternoon is: what ideas, what initiatives, what moves, can you think of that would add to the reputation of the company, its good name? What can you suggest, and more important, eventually actually DO to ensure that quality, reliability, precision, value for money, ethics, customer satisfaction, environmental concern, social justice or whatever other values your company wants to stand for - are firmly associated in the customer’s mind with your company?

So what was the first thing you have to do in any job? ESTABLISHING CREDIBILITY


That is easier to do in some cultures than in others. Easier to do in North European and North American cultures than in almost any other culture in the world. But of course the reality is that it has become more difficult than it used to be thirty years ago even in Northern European and North American cultures, while it has become more easy here in our culture than it used to be thirty years ago. Why has it become more difficult in Northern Europe and North America – and why has it become easier in India? Because we have come more into line with international standards as a result of globalization influenced by standards that derive eventually from the Bible rather than from any other source, while Northern Europe and North America are already suffering the cultural consequences of their rejection of Biblical values – and those consequences will come here too, unless we are careful.

But those are broader questions than we have time for right now – though you may want to take up such matters in the question and answer time that we have before us.

Meanwhile, I hope that I have provided some food for thought.

Thank you. Sphere: Related Content

Robots that teach themselves...

Further to my earlier blogs on the subject of the latest developments in robotics and the economic, social and political threat they represent to humanity as a whole:

For the first time in the world, Tokyo Institute of Technology's Associate Professor Osamu Hasegawa, has developed a system that allows robots to look around their environment and combine that with research on the Internet, enabling them to "think" how best to solve a problem.

Naturally, we expect robots to process and perform the tasks they are preprogrammed to do, but the Self-Organizing Incremental Neural Network, or "SOINN," is an algorithm that allows robots to use their knowledge to infer how to complete tasks they have been told to do but NOT programmed to do. By the way, that includes learning and performance in relation to objects they have never encountered earlier.

Self-learning in relation to material objects will soon be followed by self-learning in relation to some (and then all) aspects of animal and human behaviour....

How long before these self-learning robots teach themselves to decide to do tasks they are not asked to do? Sphere: Related Content

Monday, October 31, 2011

Further nonesensical research

Would you have guessed that postponing motherhood leads to an increase in women's earnings of 9% per year of delay? That's a genuine finding, as a result of research by Amalia R. Miller of the University of Virginia.

Let's see. So what does that suggest? Basically that young women should put off childbearing.

Presumably, in order to maximise earnings, best not to have children at all.

But such research doesn't ask any of the really important questions: Is it as easy to have a child at 21 as at 40? Does the chance of having an unhealthy baby increase with the mother's age? What is the cost of the "mother-satisfaction" denied to the mother? What about the economic, social and cultural cost to a society of not having enough children? Sphere: Related Content

Saturday, October 29, 2011

The Role of Business Schools in Promoting Values in Business

I have only just had the time to finalise the text of my presentation at The Global Ethics Forum, Geneva, 30th June to 2nd July 2011, on the topic: "The Role of Business Schools in Promoting Values in Business".

Here it is:

Mr Chairman, many thanks for that very kind introduction, and do allow me to jump straight into my presentation, starting with the caveat that I have a large topic, in relation to which we have of course only a tiny amount of time, and that will have certain consequences, meaning some exaggerations and distortions, rather than reaching for the ideal of academic precision - at least to start with – though I hope that we can jointly aspire to that, in the time available for interaction in this room after the presentation, and we can of course continue more informally afterwards for the duration of the Forum.

I should also say, in the interests of transparency, openness and due disclosure so you can assess my biases that, having been an atheist, I am now a Hindu follower of Jesus the Lord. He was anti-religious; I am anti-religious too, but also specifically anti-Christian: so far as I can see, Christianity is a systematic attempt to distract attention from the person and teachings of Jesus the Lord, by distrorting and subverting him and his teachings. In order to get any true idea of Him, one needs to throw out all the rubbish that has been put about by churches and priests, and read the Gospels and indeed the rest of the New Testament for oneself.

So to our topic, which consists of two parts:
- what is the proper purpose of business schools?
- insofar as business schools may be agreed to have any role in promoting anything, what values might be involved?

I take it that, given the presentations that are scheduled, it is not intended for me to focus on the first debate, about the role of business schools. I will therefore take up the second question, regarding values.

It appears to me, and not only in relation to business schools, but in our dominant global cultures as a whole, that two key issues are dodged.

The first issue is: WHAT values are we talking about? A Muslim is granted permission to have up to four wives, in addition to concubines and “temporary wives”, and the ideal is as many male children as possible. By contrast, a modern secular materialist (typical of today’s elite, whether male or female) wants as much sex as possible, perhaps with as many different desirable partners as possible, but does not want even one spouse OR child! I could of course draw many other such contrasts. When confronted by facts like these, some people say: “No, no, by values we don’t mean that sort of thing at all, we mean values such as honesty”. I guess it is these sorts of folks who search for a “Global Ethic” on which people of all backgrounds can agree, and Hans Küng and others have at least come up with some lists of “values”, such as “honesty” to which they feel that the majority of the important religions (however defined) can agree.

However, the problem with lists of such words as “honesty” is that the words mean something different to a traditional Hindu, a traditional Muslim, a traditional Christian, a traditional tribal, a modern or post-modern atheist, and so on. For example, to a follower of Jesus, honesty is a more or less absolute value (I say “more or less” because some of us see extreme circumstances in which it may be necessary to tell an untruth in order to save another individual’s life or even the lives of groups of people; I reject this position, but I quite understand and sympathise with those who take this, shall we call it, more generous position. By contrast with that absolutist or generous position in relation to honesty, however, is the fact that a Muslim is permitted by the Koran to tell lies to advance the cause of Islam, and the moment someone achieves “spiritual enlightenment”, according to the dominant Hindu traditons, he (or nowadays also SHE) is released from earthly moral considerations such as honesty because he or she is considered to have ascended to a higher level where morality does not matter (that is the principal reason why our gurus have such lavish and immoral lifestyles, and their devotees continue to be loyal to them though know about those things; specifically, in addition to fraud and of impropriety, the discipline of Tantra urge you to undertake what most people would consider sexually immoral behaviour in an attempt to transcend the bounds of individuality, morality and reality).

But if you were to take the sorts of “global statements of ethics” that are developed by Hans Küng, by assemblies of dignitaries from the Abrahamic Faiths, and so on, you will find a startling and uncomfortable fact: the actual ethical basis of these, as well as of international business and (increasingly) of international politics, is the ethics of the New Testament without its supernatural basis.

So let us call this «universalist» ethics by its proper name: «denatured New Testament ethics» or, if you like, «humanitarianist ethics derived from the New Testament, but which insists not only on avoiding acknowledging its debt to the Bible, but also on attacking the Bible»

That apart, is there any other problem or challenge that arises as a result of smuggling Biblical ethics into a humanitarianist context? Well, let me put one challenge like this: we ignore or deny the problems that are created for practicing Biblical ethics in non-Biblical cultures. It is of course hugely difficult to practice Biblical ethics in any non-Biblical culture, as any business executive or political leader knows – and the kind of sleight of hand represented by “global ethics” provides no guidance regarding how this kind of “denatured Biblical ethics” is to be actually practiced successfully in cultures that may be dominantly tribal, Muslim, Hindu, Chinese and so on.

The result is that we have the quite proper observation, and indeed objection, that whole non-Biblical cultures are being measured internationally by extraneous Biblical norms (e.g. by then Prime Minister Mahathir Mohamed of Malaysia when he said that the UN Declaration of Human Rights was “a Christian document” and should not be imposed on Muslim countries such as his; or, this week, by Premier Wen of China on his visit to the UK, telling them to stop bothering him about human rights in China, because Westerners don’t understand Chinese culture. That is of course quite true, because the West still has some sort of commitment to human rights, whereas Chinse traditions have historically had no human rights, only rights for rulers.

So that is the first issue (WHAT values) which is usually dodged in discussions of values in business schools or indeed in the dominant discourses about values.
The second issue that is dodged is: Can values be values if they don’t cost you anything?

I don’t know how many so-called “business ethics” courses you have taught or audited, or how many discussions you have participated in about business ethics courses, but I have found a remarkable dearth of mentions of ethics costing you a lot in business. And when such stories are offered, how often are such stories praised, and how often they are slighted (on one ground or another)? Usually you hear drivel about how ethics helps you in business! Honesty is sometimes called the best policy - but that, of course, is nonsense. If honesty is only a policy that helps you in business, then you will change the policy when it stops helping you in business! So, honesty only moves from being a policy to being a value if you are prepared to lose business because of it, to go bankrupt for it.

If the first issue that is dodged in discussions of business ethics is that of WHAT ethics, and the second issue that is dodged is whether values can be considered values if they don’t cost you anything, the more important issue, the most fundamental issue is that “business ethics” itself is dodged by B-Schools, because it is treated as if the problem is one of «ignorance», so that the remedy proposed is that of information or discussion. The information communicated is usually pretty superficial, at least in my assessment of it, and the discussion can be summed up as “the bland leading the blind”, “a sharing of feelings” and “You’re all right, mate, and I’m certainly all right”.

Let me now change gear and draw attention to the scandalous truth that is usually ignored: what most business ethics courses don’t do is to challenge the very specific set of values – WRONG values, or lies – that are systematically inculcated by the mainstream curriculum. These might be called the “hidden agenda” of the business school. What is this hidden agenda, this miasma of lies, that is systematically inculcated by the business school, what are these lies that are communicated and must be adhered to by our students if they are to make a “success” of their time with us?.

Here are a few:
- Greed (which we refer to politely as «profit maximisation») is good
- There is no such thing as society
- Everybods looks after, and everybody should look after, only Number One (and be suspicious of do-gooders)
- Society will look after itself if markets are left free
- Technology will solve all problems
- Corporations should have the same rights as individuals, in addition to the privileges they already have as companies
- Morality and law are necessary inconveniences around which I should find as efficient a way as possible, while I focus on making as much money as I can, as quickly as I can, without considering the context or consequences too much
- Don’t even think about questioning the system; focus on getting to the top of the system – you can, if you really want to, start thinking of questioning the system when you retire; but, even then, what is recommended and even admired is if you simply do one or two small things to reduce the worst effects of the system.

How come we are so successful in shrouding the minds of otherwise bright, thinking,knowledgeable, critical people with such a miasma of lies?

Precisely because these lies are rarely taught, they are mostly caught - because they are implicit in the curriculum by what is included and what excluded; as well as in the structure off the B-School as a phenomenon.

Our participants come to us because we are expensive and prestigious institutions to come to, so they make an expensive investment of time and money to learn how to enhance their earning power and position, not in order to learn to serve society better.

That raises, naturally, the question of whether there is any “system” to which we consciously or unconsciously adhere, and to which we expect our b-school participants to adhere.

Here are some key characteristics of “our system” that cannot be questioned or even thought about, however negative the consequences of these systemic features:
- Fiat currencies (i.e not backed by anything real like gold, a basket of products, or the GDP itself)
- Usury (the use of money to make more money)
- High-frequency trading
- short-term-oriented stock exchanges
- the shadow financial world bigger than that recognized by the regulatory bodies and outside the reach of the regulatory authorities
- Regulatory bodies designed to be ineffective, and then weakened from on high by nods, winks and specific instructions – which are what have created bust after larger bust
- The ascription of these busts to “business cycles” rather than to the effects of morally wrong practices which finally come home to roost (I am not arguing that there are no such things as business cycles, rather that the busts are ascribed 100% to these, and the role of hubris and over-reach, which are moral matters, is rarely addressed – and, when it is, as after the current crisis which started in 2007, it is still extremely difficult to get any movement on the moral matters involved.

Mr Chairman, so I come to my conclusion: Till we articulate what values we stand for and what we are against, till we articulate what values we are prepared to encourage businesses and business leaders to pay a price for, till we are prepared to identify and debate the real values that are implicitly and explicitly communicated by business schools, all the fuss that is made about “business ethics courses” and “ethics teaching in business schools” will continue to be so much lukewarm air.

Thank you.

ENDS Sphere: Related Content

Should we sometimes be sad when a book is republised?

I see that Randy T. Simmons' 1955 book, BEYOND POLITICS: THE ROOTS OF GOVERNMENT FAILURE has just been republished - sadly!

Don't I love books? If so, why should I be sad when ANY book is republished?

I am sad to see a book republished when the original argument of the book is no longer relevant: the book should be allowed to lie peacefully somewhere on a dusty shelf for historians to do their work on it in future.

But such is the fury with which Right and Left are fighting it out in the USA that this old nag of a book has been pressed back into service.

The book's basic argument is that "public interest goods" (schools, jails, the defense forces, consumer protection, trade...) do not need to be provided by government, and can be provided by the "free market".

Instead, Simmons's "public choice theory" approach attempts to demonstrate that government inevitably produces political myopia, economic stagnation, and public distrust.

Of course, Simmons is no idiot, and acknowledges that there are indeed "market failures" as well as "government failures" - but he prefers "market failures" to "government failures".

The republication (albeit in updated form) is a sign of the inability or unwillingness of some American intellectuals to break free of yesterday's battles.

They are still fighting the Left from the Right, just as many people are still wanting to "protect national interests".

But there is no longer any realistic or meaningful way in the long or even medium term of "protecting national interests" in isolation from global interests.

Similarly, we should all be able to see, if we are at all open minded, that the categories of Left and Right do not make sense in today's globalising economy.

Around the world, we all want to have all the advantages of free markets without the distortions that have transformed free markets into "robber capitalism" or "casino capitalism" in the last 30 years.

Moreover, we all want to see some minimal social and environmental responsibility - organised not through Big Bad Government, but through the implementation of the right kinds of laws in a free market.

Regretfully, books such as Simmons's simply delay the coming of the good day when we can have the right kind of capitalism, globally. Sphere: Related Content

Monday, October 24, 2011

Why every sensible person should OPPOSE the Vatican's plan for global financial reform

I see headlines being created by the call for the creation of a global financial authority, issued by The Vatican's Council for Justice and Peace.

This is a repetition (though also an expansion of) what the Pope himself said some months ago, as well as of calls by various other world politicians along similar lines.

I thought I had commented on these in my Blog some time ago, but now can't find the text, so I guess I should pen to paper.

Interestingly, I can't find the actual text of the Vatican proposal on the Internet yet, but there are several websites where you can find some outlines of the proposals, for example and

Many of the proposals supported by the Council (e.g. to tax financial transactions) are sensible and have been publicly espoused by me for years.

However, the idea of a “global public authority” and that of a “central world bank” to rule over financial institutions is fundamentally misconceived. One can also throw in the idea of a global currency, which is sometimes touted for very similar reasons.

Of course, we should expect the Vatican to support such ideas because they are in line with the authoritarian mind-set of the Roman Church.

But how can I argue against such proposals when it is clear that these would make for efficiency?

It is true each of these might make for efficiency (though, as with all bureaucracies, that is not guaranteed - or even likely).

However, each of these ideas would certainly lead to huge concentration of power - with the accompanying potential for abuse.

Each of these ideas would therefore end up being a disaster for freedom and for civilization.

Every sensible person ought to oppose such proposals.

What we need are competing institutions, competing currencies and competing national currencies, within a system of global RULES governing global trade, finance, economics and business.

We already HAVE a sufficient number of global institutions (e.g. the UN, the WTO, the Bank for International Settlements, the World Bank, and so on).

We need to understand why these do not work, and then propose the specific changes that are going to make these work better. For example, the WTO regime does not work in a way that is to the benefit of humanity because WTO rules do not embed social and environmental responsibilities. The UN admits as members countries such as China which sign the UN articles without any intention of keeping to UN standards, declarations or norms. The Bank for International Settlements is too captive to current economic orthodoxies, when it is precisely those orthodoxies that have led to the current crises - indeed, to the whole global system we have now with its volatility and vulnerability. I have written about such matters extensively in this Blog, and have referred to some of the scholarly literature in these fields.

So, if I had the opportunit, what would I say to the Vatican?

I would say: please stop pretending that you are coming up with new ideas; thanks for your support for the ideas which are already in the marketplace which will make for human flourishing; and do see if you can move beyond your current simplistic thinking, to fight against centralising and authoritarian tendencies worldwide - even though, given your DNA, I know that you will find it difficult to do so. Sphere: Related Content

Friday, October 21, 2011

Mahbubani: "What can save our world? The social contract!"

Professor Kishore Mahbubani, the Dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, has an article in today's Financial Times, arguing that "Two words can save our turbulent world: social contract. The social contract of the last three decades has died. We need to create a new one"

He does not tackle the questions: What caused the social contract to exist (primarily in the West) in the first place? And why has it declined?

The best book to provide information on the basis of which these questions can be answered is: Vishal Mangalwadi's The Book That Made Your World: How the Bible Created the Soul of Western Civilisation

Though Mangalwadi does not go on to cover Mahbubani's specific points, I think he would say that as the Bible has been rejected in Western society, so the social contract has declined.

My view is that the social contract has existed in various societies and at various times, often as a direct or indirect result of the influence of the Bible, but sometimes also as a result of nationalism, Marxism, tribalism, and so on.

However, it is true that the longest-lasting and most-durable social contract existed as a result of the influence of the Bible, and it is doubtful if the modern world can recover the social contract on any basis other than that provided by the Bible. Individuals can be more or less socially responsible, on any and all sorts of bases. But society needs more than a few whimsical individuals if there is to be a social contract of any sort.

Of course, Mahbubani does not address the question of WHAT SORT of social contract. Traditional Indian society had the social contract of the caste system. Traditional Chinese society had the social contract of Confucianism. Traditional Japanese society had the social contract of Shintoism. Traditional African society had the social contract of tribalism. And so on. But of course Mahbubani is not referring to these sorts of social contract. He is referring, I am pretty sure, to the sort of "modern social contract" by which free individuals in free societies voluntarily took responsibility for society - something that started only with the influence of the Bible from the sixteenth century with Luther, Calvin, and the Radical Reformers - and the influence of the "modern social contract" has declined with the decline of the influence of the Bible. Specifically, the decline of the influence on the Bible in Protestantism (Roman Catholics and Eastern Orthodox have been the majority of Christians since the Emperor Constantine transformed the persecuted followers of Jesus the Lord into state-protected Christianity at the cost of reducing the influence of Biblical teaching).

I should also point out that Mahbubani's dates are a bit wrong. The social contract was not "of the last three decades"; rather, it was decimated in the last three decades. Sphere: Related Content

Wednesday, October 19, 2011

Second response to my article on Eliminating Black Money in India

Someone based in a European country writes:

"Thought provoking and absolutely novel approach" Sphere: Related Content

Response to my article on Eliminating Black Money in India

From a friend who is at present based in New Zealand:

Nice one Prabhu!

It is very telling that so many periodicals refused to publish your
article, especially as it is a such a "garam alu". It was a good move
to state who these organisations were at the end of your article.

In NZ there is a Serious Fraud Office. The point you make of the need
for total independence for the organisation dealing with these crimes
is vital.

I note the following about the SFO:
"The Government minister responsible for the SFO is the Minister of
Police. However, under the Serious Fraud Office Act 1990, the Director
of the SFO has complete independence when it comes to operational

On another topic - one thing I often think about is a government
structure that could replace what we have. We need democracy but we
need to get beyond party politics, where the governments become so
self-serving during their short terms of office in order to ensure
getting voted in again. Too many of our politicians are voted in by
ignorant voters due to popularity and good marketing rather than their
skills and experience.

I think we need a performance-based system where a CEO-type PM is able
to stay in power as long as a list of KPIs are being met. They could
then plan 10 or 20 years ahead.

I've got a few more ideas but I need to think further about them. Sphere: Related Content

My proposals for Eliminating Black Money in India

My proposals for eliminating black money in India have been turned down by Civil Society, Economic Times, The Hindustan Times, Indian Express, Mint, Tehelka, and The Hindu.

But I am glad to inform you that The International Indian magazine (published from Dubai) has published them - please see pages 54-57 of this month's magazine - click here

I will be glad to respond to questions or suggestions, and indeed to discuss my proposals further. Sphere: Related Content

On Financial Incentives versus Social Norms

Which do you think is more effective in changing behaviour: financial incentives or social norms?

If modern notions of human beings are correct (that is, if human beings are profit maximisers) then financial incentives should be more effective.

Actually, it turns out that in even such an individualistic and materialistic society as the USA has become, financial incentives are less effective at changing behaviour than social norms.

Research by Hunt Allcott of MIT studied the effect of telling homeowners how their electricity use compared with their neighbors' use. This had the effect of cutting energy consumption by the same amount as the impact of an 11% to 20% increase in prices:

For those who like "evidence-based" research even when common sense should be enough, this demonstrates that modern economic theory is based on false assumptions about human nature.

However, though this does not rise from the above, false theories do affect human nature, and if they are sufficiently propagated and accepted in any society, do change human behaviour in line with those theories.

In other words, we become what we accept is wiser, better, more rational, more acceptable or more right as the basis for choice, depending on which criteria is propagated in society.

Thus the importance of what is thought, what is taught in schools and universities, what is disseminated through the mass media, and most importantly what is valued and nurtured by families, churches, associations, clubs, political parties, and other social groups - both formal or informal. That's a lot of influences, you say, so which are most important? Those to which you have greater affiliation. Sphere: Related Content

Tuesday, October 18, 2011

"A Final Chance?: The Economic Crisis and the Future of the USA." Text of the talk given to the Arizona Council on Economic Education, 16Oct2011

Mr Chairman, many thanks for that very kind introduction, and I am grateful to you President Bill Hicks, to Executive Director Debbie Henney, and to your Board Member Dr Bill Weldon for your kind invitation for me to speak here this evening. May I say how delighted I am to see so many people taking time of a weekend evening to be here. I guess that shows that the subject is close to your concerns at the moment.

Allow me to start by mentioning that I am a Hindu but I was partly educated at a Christian school, and always regarded the Bible as being Incredible, unbelievable, and even silly, because it said things such as “People are like sheep”, and “all human beings are morally flawed, sinful, imperfect”.

Flawed? Imperfect? Some people no doubt, but most people I knew were most of the time generous and kind and truthful. And people like sheep, mindless, herding, I thought?! Maybe, some people, but not intelligent, university types like us!

Well, the more I have lived, the more I have experienced the varieties of human nature, and got to know more specifically my own nature, the more I have realized that that old book has much more wisdom than I had given it credit. I became, in fact, a follower of Jesus the Lord - but that is by the by, the point I want to start with is the record in the Bible of the behavior of a small group of Jews in an otherwise unknown place called Berea - when the famous, great Saul of Tarsus, who had by this time been renamed Paul, came to Berea, you know the guy who wrote more than half the NT– when he came with new information which was completely outside their understanding of the world and even their worldview, these Bereans checked it out – they were not willing to simply go along with one of the best-educated and most famous and stimulating rabbis of their age, in fact they were not willing to accept anyone’s say-so, they were interested in the facts – and for that reason, the Bible calls these Jews from the small insignificant town of Berea, the Bible calls these Berean Jews, and I quote, it calls them “more noble” than the Jews in the previous place where Paul had just given his lectures, the large and sophisticated city of Thessalonica.

Why does the Bible call the obscure Bereans more noble than the sophisticated Thessalonians? Because the Bereans didn’t simply reject things that offended their prejudices and preconceived notions, nor did they simply accept the say-so of the great Saul of Tarsus – no, no, unlike the Thessalonians, the Bereans were committed to checking the facts, however uncomfortable they might be - and from however great or however unlikely a source they might come.

So, dear colleagues, my first point: I am unlikely source for any information or ideas about the USA because I am not American, I do not specialize professionally in the USA, I was not educated here, I have even visited fewer places your great country and spent less time here than many tourists. So you will notice huge gaps in my understanding of the USA, and I probably have lots of things wrong! As I say, a most unlikely source of information on anything to do with the USA. And what I do have to say will most likely cut clean across your prejudices and even your views about your own country. But I would ask you to consider the facts, and nothing but the facts, with an open heart and mind, because it could be, it could just be, that an outsider with all the deficiencies that he has in terms of detail, MAY, just MAY, see some things that you don’t because you are too close to the detail. And it could also be that cultural or political taboos, and perhaps self-interest, prevent your own people from expressing some of the truths they see.

I think it was Churchill, Winston Churchill, who said that courage is the first of all human qualities, because courage is the quality which guarantees all the other qualities. Courage to tell the truth, to say what is possible, and what is not possible.

So my first point: please have the generosity to overlook, for your own sakes, the gaps, the holes in what I am about to tell you – even if there were no gaps, no holes in what I am about to tell you, limitations of time mean that I cannot cover everything, so please ignore the gaps, the holes, and focus on the substance of what I am about to say.

My second point is that American discourse and discussion is conflicted because America itself has become a deeply conflicted society, and it is now extremely difficult to have a civilized discussion about anything to do with US politics or economics, because each American is convinced not only about the “truth” of her or his own opinion (that is only natural) but is also convinced that any person holding another point of view must be not only wrong but an idiot!

Moreover, people tend to move in self-contained social circles which reinforce their own opinions. Channels of public information tend to be owned by one party or the other – and where they allow debate, tend to put forward polarized opposites for dramatic and entertainment value, which are designed to generate, and do generate, more heat than light.

Kindly extend to me the generosity of accepting that I am not an entertainer, and more important, that I have no political axe to grind, I am neither a Republican nor a Democrat, and if I sometimes seem to take a position close to either Republican or Democrat, it is only because that position seems to me to be true.

*I* am, and I hope we are ALL willing to be, like the Bereans, after the facts, the truth.

So to the substance of what we have to discuss.

Let me summarise, characterize and perhaps caricature each of five interesting perspectives on the economic situation.

One view focuses on three key words: entitlements, unsustainability, and uncertainty.

In the area of entitlements, this view focuses, for example on pensions – and on pension expectations. This view draws attention to the fact that many Americans don’t understand that there needs to be a relation between what was paid in and what can be received. People who hold this view like to debate who should be covered by what kind and level of healthcare. They like to point out that Medicare (for retired people), Medicaid (for poor people), Pensions and Social Security commitments cost a whopping $1.3 trillion a year now, and the commitments already made in these areas are just starting to ramp up! Where will the money come from? Who should pay for all that? The uncomfortable fact is that no one wants to pay for it, and everyone wants to benefit, say the proponents of this view.

Of course, Medicare, Medicaid, Pensions and Social Security are not the only areas where there is an entitlement mentality. One could look at R&D subsidies, industrial subsidies, and farming subsidies (whether for conservation or for avoiding undesirable production), and so on – but I think the point is sufficiently made for the moment. The first watchword in this view is Entitlements.

The second key word in this view is unsustainability. We should look at what is happening to America’s national debt, they say. If one looks at the national debt as a percentage of GDP, in 2010 it was already 93%, by the end of June 2011 it was estimated to be $15.003 trillion, which was 99% of GDP, and is expected to go up to 120% by 2020 and, unless something drastic happens, is projected to be 200% by 2035. National debt growth as a percent of GDP has shot up 35% in the last two years. As certain entitlements that are baked into Federal expenditures, the servicing the national debt alone could take up to $1 Trillion per year.

It is not just the debt that is unsustainable, say the proponents of this view, even US defense expenditure is unsustainable. The official score for national defense expenditure is $692 billion (but, when all the defense-related expenditures are factored in that should be factored in and are not due to the way facts are fudged nowadays in the US, the real expenditure on defense is actually, all in, $1 Trillion per year). Now, you can of course regard that as the cost of being a global peacekeeper and therefore the necessary cost of being a superpower, but the proponents of this first view, think that it is not necessary or even useful to be a superpower or a global peacekeeper, and would like to cut down defense expenditure because it is – you got it – unsustainable.

In any case, in this view, the current government consumption is 25% of GDP, and should return to the historic norm since WWII of 18-19%, so the 45% increase in the last two years needs to be trimmed back, by something like 4-6 billion per year.

So we come to the third key word in the first view that I am presenting: Uncertainty.

The uncertainty is caused by the flood of new laws, regulations, policies, and short-term spoon-feeding. They are particularly disturbed by attempts to reform the financial system through the Dodd-Frank Act, through Obamacare, and through new regulations emanating from e.g. the Environmental Protection Agency.

The U.S. Small Business Administration estimates that the cost of all these is $1.4 Trillion or 10% of GDP at Federal level alone. When you add the cost of the regulatory burden at state, regional, and local level, it is simply too much. Ken Langone, the co-founder of The Home Depot published an OpEd in the Wall Street Journal about a year ago, in which he said that if he and his partners, Bernie Marcus, Arthur Blank, Pat Farrah, tried to start Home Depot today, “it's a stone cold certainty that our business would never get off the ground, much less thrive”.

However, I think it is fair to say, that in this view, regulation is regulation, and if there is heavy regulation, it applies to everyone, so we may not like it, but it becomes simply the cost of doing business. If it reduces profits, it reduces profits for the whole of that industry, and investors can decide whether to be in that industry or not.

But what’s most paralyzing is uncertainty. That is what is the enemy of investment. I am told by a Member of the Board of one of the five largest banks in the US, that there is $2 trillion of cash available in the banking system in the US, which is not being drawn upon by companies, but they don’t want to invest at present because of the confusion and uncertainty regarding legislation, regulation, policies and the rest.

What is being offered by the current Administration is short-term spoonfeeds: reducing employment tax for six months or a year doesn’t address the huge problem of unemployment but merely confuses the situation (the current official unemployment rate is around 9%, but that only includes people who have applied for a job within the previous four weeks. the Department of Labor's "U-6" number of 16.5% that has received increasing attention lately because it includes people who have given up looking for work within the past year, plus people who have been cut back from full-time employees to part-timers. When you also consider the labor-force participation rate and the so-called "birth-death series" that measures business starts and failures, the real U.S. unemployment rate is now 20%).

So let me sum up the first view. What we need to solve America’s problems are: withdrawal from theatres of war where we have no chance of winning, reduction of unnecessary expenditures on every kind of entitlement, a return to small government, and tax cuts to stimulate growth.

That is the essence of the first view. Another view responds to that view by asserting that there is no correlation between tax and growth (there is only one thing that real growth correlates with, and that is innovation). So far as tax and growth is concerned: Sweden has been a high tax country for something over a century, and that does very well thank you, while Switzerland has historically been a low tax country and also does very well thank you. So we should not focus on taxation, we should focus on innovation, which is what leads to growth – though of course taxation OR subsidies can help or hinder that, but let’s focus on innovation, not on raw tax rates for the general population.

If you want to do that, say proponents of this second view, the tax laws dealing with private pools of capital, such as hedge funds, gives tax breaks to the already wealthy while the poorer people in society are not granted such luxuries. (If the amount of tax revenue lost to private equity firm managers is equivalent to that lost with hedge funds, then the combined amount would be $12.6 billion per year).

In this view, far more important than tax or subsidies is the flight of manufacturing capital as well as of knowledge that has taken place from the US since NAFTA was signed and the WTO was created – the elite benefited at the expense of jobs and prosperity in the USA, so that the middle class inside the US has been decimated, while enriching the elite and growing something of a middle class in other countries such as China and my own country India.

So a key question for the US is the return of manufacturing capital, and more important, the return of manufacturing to the USA.

In this second view, a godless, intelligent, sophisticated and amoral Ayn Rand-ist post-WWII elite delinked the dollar from gold, struck down the Glass-Steagall Act, licensed uncontrolled speculation through the legislation which replaced Glass-Steagall (that is, the Gramm-Leach-Bliley Act of 1999) and which enabled unprecedented amounts of money to be made available for theoretically unlimited and, in practice, unprecedented leverage, to usher in the most high-growth period in world history, at the cost of volatility, vulnerability, a huge and fast-growing gap between rich and poor, and enormous environmental damage. That is why BOTH political parties have talked fiscal responsibility, but have spent and spent.

Now, as I say, you can agree or disagree with parts or whole of that second view, but it does seem to me to be the second view of the US in the context of the current crisis.

The third view, and I want to put it briefly in the interests of time, though we can pick it up during our Q&A if you wish, is what might be called the international view of the US at present: to outsiders, the US seems to be exhausted and paralyzed, widely if imperfectly copied (or at least aspired to) in its good points, but without any fresh ideas with which to resuscitate itself. Of course, that is not true, there may be some exhaustion and paralysis - and we will certainly come back to that in a moment – but, while it is true that the gap between the US and other countries has been reduced by other countries copying (or at least aspiring to copy) the best features of the US, it is clearly not the case that there are no new ideas – rather, it is the case that such new ideas as are around have not yet garnered sufficient public support to be policy options that are widely debated or considered.

So we move from the first view I presented (that of small government) to the second view that I presented (that of moving the discussion to growth) to the international view, and now to the Tea Party view.

The Tea Party is mocked in certain quarters, but I take it quite seriously. It is of course a heterogeneous party, but its single focus is on balancing the books. In this, it is quite close to the small government or first view that I presented, but we may take it as a more extreme form of that view, and held by a larger number of ordinary people – that is, people outside the political elite that usually discusses such matters.

The counter to the Tea Party is of course the recent Occupy Wall Street movement, which also tends to be mocked, just as the Tea Party does. Occupy Wall Street is a bit of fun and games, we are told. These guys are enjoying free pizza as long as the sun is shining, but just wait till the weather turns cold, these guys will beat a retreat and disappear. Occupy Wall Street is just about class envy, coveting the riches of others, these guys don’t realize that entrepreneurship is hard, and they are in any case economically illiterate.

The riposte to that is of course that it was the economically LITERATE that created the global crisis, starting with Fed Chairman Alan Greenspan, and not excluding the top executives of the world’s largest financial institutions and corporations, most of which are based in the US, but many of which are also based in Europe and China and India and the Middle East.

It is not clear to most observers why the US resists financial sector reform, wanting to undo the Dodd-Frank regulations and the Volcker Rule. Does the US really not want to get back to capitalism from the sort of casino-ism that the US has created in the last few decades?

In my view, the Occupy Wall Street movement has only just begun, and we should expect it to spread more. Is it here in Phoenix or Arizona yet? I’m afraid as I’ve been chairing another conference, please excuse the fact that I haven’t been able to keep up with your local news. The Occupy Wall Street movement is in over 100 cities in the US, and you can see it from London to Frankfurt to Sarajevo in Bosnia, to the Philippines, Australia and even usually conservative and shy Japan! Just yesterday, the demonstrations in Rome became violent, just as they had earlier, in the summer, in the UK.

So much for the five views that I wanted to portray.

Meanwhile, the US is deadlocked politically, and no one with whom I have spoken expects any resolution of that before the next national elections.

My own view is different. I sympathize with aspects of each of these five views, but am probably the most optimistic person in the world that I know about the US economy and its prospects in the next year or so.

Can the US really grow? Can it really create the 20 million new jobs that it needs by 2020? That cannot happen unless manufacturing returns to the US, so: can and will manufacturing return to the US?

The first reason I am optimistic is because the free trade agreements with Colombia, Panama, and South Korea have just been passed by Congress. You may wish to argue the merits of these treaties, you may think some or many or most or even all of the provisions are right or wrong, but my point is beyond all that. My point is that your political process is not totally stalled! Of course it is true that the US is not even at the table for 160 free trade negotiations, and the suspicion is that this is due to the fact that President Obama’s election campaign cost $700 million, of which $453 million was from the trade unions, so it is the trade union type of mentality that is preventing the US from going into these negotiations. Well if trade union type jobs are to be preserved, that is a good strategy, but the question the US needs to ask itself is whether those sorts of jobs should be preserved or whether real jobs need to be created or preserved. And if you are after the creation and preservation of real jobs, the US cannot accomplish that if it does not embed environmental and social concerns into these treaties, whether they are bilateral or global. Why will lack of attention to environmental and social considerations in such treaties continue to take jobs out of the US? Because, without those, you are not competing on a level playing field. Investment decisions, whether about manufacturing or about innovation, will continue to take more and more jobs to other countries which have lower wages, lower costs of real estate, and lower investment costs because they ignore human rights, exploit workers, do not provide for pensions, and abuse the environment. Anyway, the first reason I am optimistic about the US is that your political process is not stalled, and because I think that you will soon begin to move on free trade treaties that do integrate environmental and social concerns.

The second reason I am optimistic is that I think you will soon complete export reforms and the transpacific transportation agreement which will provide an enormous boost to your economy.

The third reason I am optimistic is that you have an intellectual property protection regime that is better than that of most countries, and that superiority will continue to draw innovations from around the globe to the US. I should make it clear that I am not a proponent of the current sort of intellectual property regime that we have in the world, I think it is in need of fundamental reform as I argue in more detail in a moment, but as long as we have the current sort of intellectual property protection, it will continue to advantage the US.

Next, I am optimistic because I think you are going to move on energy policy. The Gulf spill caused not merely a cutback in domestic production but a reassessment of the whole of energy policy in the US. You are blessed with good quality coal and new coal technologies will I think give you a huge advantage, as will the new possibilities in oil (including shale) and renewable energies and, particularly, energy-efficient technologies. By the way, the US seems to me to still not have discovered the existence of an ancient technology for energy efficiency. It is called the OFF switch. I do not understand why you have a national addiction to cold water and to ice (which by the way have health disadvantages, and may contribute to some of your national diseases). And I do not understand why you need air conditioning when you have relatively clean air available in so many parts of the US for free, for example here in Arizona. Of course you need to keep your homes and offices cool here, but that could be achieved much more cheaply by the use of proper insulation and by introducing a new taboo on suits and jackets!

Anyway, the next reason I am optimistic is because your Judeo-Christian tradition teaches you that self-control is essential to free enterprise - and gives you the advantage of the work ethic, the punctuality ethic, the sensible lifestyle ethic, and so on. Though the influence of the Judeo-Christian traditions has been massively eroded since World War II leading to widespread succumbing to self-indulgence, consumerism and the debt culture, I believe that Judeo-Christian influence will revive as Americans come to understand, for example through books such as Dr Vishal Mangalwadi’s THE BOOK THAT MADE YOUR WORLD: HOW THE BIBLE CREATED THE SOUL OF WESTERN CIVILISATION, that the economic and political advantages you have enjoyed come only from that tradition and that, if you want national reconstruction, that can only be done if you rediscover the Bible and explore how its teachings on economics, politics, society, family and individual life apply in and to a globalizing world. If you are interested in exploring that, I recommend to you Dr Mangalwadi’s website (, my Blog ( and the website of Relationships Global ( The question for the US is the following: Since the Second World War, you have increasingly abandoned your historic path, will you now discontinue that abandonment and return to your historic path? As I have indicated, I believe you will return to it.

The next reason I am optimistic about the US is that you still have the largest middle class in the world. I know that you have attacked and decimated it in the last 30 or 40 years, but you can easily build it back – and, even if you don’t build it back, if you simply stop demolishing it, you will continue to have an advantage due to it for several decades till other countries catch up with your middle class in terms of quantity and quality.

The seventh reason that I am optimistic about the US is that you are still a largely mobile society. I don’t mean geographical mobility, too much of which I think is rather a disadvantage, but I mean economic mobility – across classes – that is, someone who is rich today can easily become poor in the US because of unrealistic investments, and someone who is poor today, can become rich because he or she brings some useful innovation to the table which can be much more easily funded and brought to market in the US than in any other country in the world. So the fact that people can and do move in and out of poverty and wealth is a huge advantage to the US.

But all the reasons that I have mentioned above could also have been mentioned before the start of the crisis in 2007. Is there any new reason to be optimistic about the US right now?

I believe there is. A renewed flight to safety in currency markets is helping the dollar gain ground against a broad range of currencies. The euro as well as emerging market currencies are declining because nervous investors, including hedge funds and real money accounts, are withdrawing from them. I expect more gains for the dollar as the environment will continue to be risk-averse. The Swiss authorities have effectively closed the Swiss franc as a safe-haven at least for the present, so the dollar has become the last refuge for risk-averse investors seeking to exit slowing global growth and the social and political challenges that are resulting and will result. The Economist points out that, for the last couple of weeks, there have been positive developments, for example in industrial production, consumer sentiment, and employment growth. American equities are up over 10% since October 4th, which is a remarkable recovery – major indices have climbed from the depths of near bear-market conditions to enter positive territory for the year. Major indexes have climbed from the depths of near-bear-market despair to positive territory for the year. Government bond yields are rising from record lows, indicating an appetite for risk and greater expectations for growth in the US. The trade deficit and unemployment already show improvements. The overall gains are of course modest at present, and will go back and forth, but I expect there to be a continued trend to improvement in the foreseeable future, unless some disaster happens or the US does something extremely stupid. Euro-area concerns will be sorted out by the end of this month, and though few will believe they will be effective, you will see them taking effect and improving things in the medium term. And, in the medium term that will also be good for the US economy.

May I, however, return to an important point for the future of the US and remind you that you need to focus on innovation and investment. In the past, when it was much easier to identify the winning infrastructural and other technologies, it was Federal investment that led to the development of the railroads under Abraham Lincoln and to the federal highway system under Dwight D. Eisenhower. Nuclear technologies, leading to the wide-scale use of nuclear power, were developed in government labs and initially deployed by the U.S. Navy and the Atomic Energy Commission. Investments in education, computer science, and infrastructure through programs like the GI Bill, National Defense Education Act, and Apollo space program laid the foundation for the emergence of whole industries such as aerospace, computing, and information technology. The United States Department of Defense (DOD) initially funded, and was an early adopter of key technologies - radios, semiconductors, computers, software and, most importantly, the Internet. It was Federal investments in health research through the National Institutes of Health that enabled scientists to map the entire human genome, making way for path-breaking advances in biotechnology – with all the pros and cons of those.
The point to keep in mind is that all these investments were not simply “sunk”. In education and technology, federal investments have been repaid many times over in greater economic growth, increased tax revenues, and high-paying domestic jobs. According to a Congressional report, every dollar invested in education by the GI Bill following World War II produced just over $5 in greater economic growth and $1.83 in greater tax revenues over the following 35 years alone. Economist Robert Solow received a Nobel Prize in economics in part for demonstrating that over 80 percent of economic growth in the first half of the 20th century was driven by advances in technology, and later economists confirmed that technology innovation played a similarly outsized role in economic progress in the latter half of the century. For these reasons, I believe that all research, globally, should be publicly funded (note: I said “publicly funded” not “government funded”) and therefore publicly owned – but with much greater competition in applications and products than we have now (no patents and intellectual property protection for products). However, as long as that model is not globally adopted, my view is that governments should pull out of research entirely as it is more and more difficult for governments to identify “essential” or “winning” technologies. Instead, 100% of research funding should be written-off from tax. In cases where R&D expenditure exceeds the income of the organization concerned, they should be able to reach arrangements whereby other entities can co-fund the expenses in exchange for tax write-offs. This will ensure healthy and non-monopolistic competition in research, while keeping in line with the American genius, spirit and tradition – which has been called “the idea of the US” – small government, creativity, innovation, a “can do” attitude, entrepreneurialism, and a chance for anyone and everyone to make it – which is the last and most important reason that I am optimistic about the immediate future of the US. Sixty five per cent of parents want their children to be entrepreneurs, and the recent Gallup Student Poll found that, in grades five through twelve, forty-five percent said they intended to start their own businesses.

Let me sum up: the US needs to stop the debilitating debate on tax cuts (you do need them, but get on with them and get them out of the way as soon as possible – a few billions here or there really do not make any difference to the US economy as a whole). Alongside cutting costs, you do need to at least temporarily raise taxes on the rich – it won’t kill them and it won’t kill your economy. Get that done as quickly as possible, and switch attention instead on what will produce more wealth for everyone (rich and poor), which is renewed economic growth. Encourage science and technology investment specifically to get clean technologies manufacturing going in the country, primarily through small and medium-sized businesses (from whom comes 70% of job creation, while employment in the large companies is declining and will probably continue to decline). The US needs to do that alongside getting the right kind (not the wrong kind) of free trade agreements whether bilateral or global, and putting tremendous emphasis on modernising your infrastructure (not merely financing the municipal unions) and, of course, the cultural key: education. A discussion of that quickly takes one to the heart of the malaise in the US, which can only be addressed by returning to a philosophical commitment to truth, and to an ethic of probity and public service. Your healthcare system needs to be thoroughly reviewed with a focus not merely on providing basic care for everyone but primarily on reducing its quite incredible costs. Finally, you need to consider whether your political system is still serving you well. From my outsider’s perspective, the key to the future health of the US is political reform: ban union funding as well as corporate funding of political parties, move to proportional representation so that you have more than two political parties, and encourage devolution of decision-making by discouraging centralized tax collection systems and giving more responsibility to the local, regional and state levels.

So I come to my conclusion: my subject has been the current economic crisis and the future of the USA, but the title of my talk asks whether the US has only “A Final Chance”. Frankly, I do not know. What I do know is that what the US is being given right now is the chance of at least a generation. As far as I can see, the US is being given this chance, not as a result of anything great or even right that it has done. The US is getting this chance because other countries have been even more stupid and wrong than the USA. You could say that the chance that the US has now is a supernatural chance, a gift of grace. If you miss this chance, as I say, that will be the end of any possibility of the return of US economic growth for at least a generation. The question is whether the US – that is to say, YOU - will grab that chance and run with it.

Thank you. Sphere: Related Content