Wednesday, November 13, 2013

Rabindranath Tagore was the first Indian to win the Nobel Prize - a hundred years ago

A hundred years ago, the very first Indian to win the Nobel Prize was - Rabindranath Tagore.

In commemoration of that centenary, I am reading through some of his work before the end of this year (my ambition is to read all that is available in English, but....)

His collection of poems, titled Gitanjali, has what is undoubtedly his most famous poem in English:

Where the mind is without fear and the head is held high

Where knowledge is free

Where the world has not been broken up into fragments

By narrow domestic walls

Where words come out from the depth of truth

Where tireless striving stretches its arms towards perfection

Where the clear stream of reason has not lost its way

Into the dreary desert sand of dead habit

Where the mind is led forward by thee

Into ever-widening thought and action

Into that heaven of freedom, my Father, let my country awake.

While India rocks between holding its head high and being numbed with fear, one can only turn to such profoundly spiritual poems, in Gitanjali, as this one:

When thou commandest me to sing it seems that my heart would break with pride; and I look to thy face, and tears come to my eyes.

All that is harsh and dissonant in my life melts into one sweet harmony---and my adoration spreads wings like a glad bird on its flight across the sea.

I know thou takest pleasure in my singing. I know that only as a singer I come before thy presence.

I touch by the edge of the far-spreading wing of my song thy feet which I could never aspire to reach.

Drunk with the joy of singing I forget myself and call thee friend who art my lord.

However, right now, I am finding most moving the following poem, from Lover's Gift and Crossing (London: Macmillan, 1918); I take this poem too to arise from his encounters with God:

Crossing 16

You came to my door in the dawn and sang; it angered me to be awakened from sleep, and you went away unheeded.

You came in the noon and asked for water; it vexed me in my work, and you were sent away with reproaches.

You came in the evening with your flaming torches.

You seemed to me like a terror and I shut my door.

Now in the midnight I sit alone in my lampless room and call you back whom I turned away in insult.

It reminds me of the poignant close of Mahatma Gandhi's autobiography, where he says "I have searched for Truth all my life, but I have not found it".

In each case: what sensitivity, what talent, what commitment - and yet they missed the Way, the Truth, the Life!

At least on this earth....

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Friday, November 08, 2013

How many ways can they cheat you...

Two days ago, at a Currency Exchange shop at Seattle airport, a friend of mine felt really confused.

He wanted to know the rate for the dollar-euro exchange rate.

The published rate was based on $600, "but the 600 was in small print, so stupid and deceptive. Why can't it just say how many euros I would get for a dollar?".

The friend called his daughter to ask her to check on the official rate. She told my friend that the rate, for the 550 USD he wanted to exchange, should be 371 euros.

Well, the offer from the Currency Exchange shop at Seattle Airport was 331 euros, so he declined the offer.

When my friend got to Frankfurt, he found that the offer was even lower: 319 euros.

When he arrived in Dublin, my friend asked his host there to take him to the best bank for exhanging money and the result was 356.14 euros.

Following that very frustrating experience, he says that, in one European country, the Currency Exchange shops "turn numbers around, rearrange them into different columns and then play with buying and selling rates and emphasize no commission, but in the end the traveler is cheated".

Thinking about the alternative of paying with credit card, he says: "I would rather pay with credit cards and know that the international banks should be doing the exchanges right...but how do I know that the big banks aren't skimming or manipulating?. And then there are the credit card fees per transaction....So what is truly more or credit card? With cash you get cheated on the exchange; with credit card do you get cheated after the exchange?"

Any views?

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Thursday, November 07, 2013

Universities, Civil Society and Social Engagement - text of speech at the 100th anniversary conference of the Association of Commonwealth Universities

Here is the text of my plenary speech on the topic “Universities, Civil Society and Social Engagement" on the 17th of October 2013 at the Centenary Conference of the Association of Commonwealth Universities, held in London, U.K., on the theme “Future Forward: Taking charge of change”:

It is an honour to be asked to speak to so many Vice-Chancellors and senior educational administrators. Most of you are certainly far more competent to speak on such a subject! However, as you are generously willing to listen to a mere academic interloper such as myself, let me set to my task.

The structure of my presentation is quite simple. I will define the terms before attempting to pose the question about social engagement sharply. Next, I will ask why nations do not achieve what I call “the Minimum Level of Prosperity”. I will then explore (extremely briefly!) the social or worldview aspects that cause poverty, and then suggest the main steps that can and should be taken by universities to address such key issues, if the term “social engagement” is to have any meaning.

So let me define my terms. I take the term “universities” as agreed among us. By “civil society” I mean the aggregate of organizations, institutions and individuals who are independent of the government and are working for key principles that make up a democratic society, such as an independent judiciary, an unbuyable executive, a wise legislature concerned about the future of at least of the nation (if not the future of the region and the world), an informed citizenry, and the enablement of the free expression of the opinions and will of citizens. There is one other essential element involved in a democractic society, to which I will turn towards the end of my presentation.

But before I proceed with that, I ought to acknowledge that it is entirely possible that you disagree with my definition of “civil society”; if so, I will be happy to discuss this during the time that has been set aside for the purpose in the programme immediately after my presentation.

I have not forgotten that, in order to complete my definition of terms, I need to define the term “social engagement” and, if you don’t mind, we’ll come to that by and by.

Do let us consider, first, that we all surely believe that education is possibly the most significant shaper of our civilisation – with a necessary time-lag, while our alumnae and alumni establish themselves in the structures of power and influence. Naturally, the question arises: in what ways have the philosophies, approaches and values we have taught (or failed to teach) shaped the world in which we live currently? For example, to what extent is the education we have offered responsible for the global crisis that has been upon us since 2007? How far have the philosophies, approaches and values we have taught in our courses in accountancy, economics, psychology, administration, political science, international relations, business and finance been responsible for creating the increasing greed and lawlessness of our global elite? Has our “value-neutral” approach to teaching science and technology played into the greed and lawlessness of the global elite? How come we have been participants in creating a global system which is willing to spend billions of dollars on scientific and technological projects such as space exploration which benefit primarily the elite? How come we have a global medical system in which perhaps 95% of the total R&D expenditure is focused on the diseases of the 10 or 20% of the world that is rich, while hardly anything is focused on the diseases of the poor, who constitute something like 80% or 90% of the world?

In order to make the point differently, let me take you along a slightly different route: you will no doubt recollect the wonderful presentation made yesterday by Dr Ata-ur-Rahman – if so, a question that ought to worry us is why it is that we produce so few people of the calibre of Dr Ata-ur-Rahman?

Further, in relation to his presentation, you may recollect that when Dr Ata-ul-Rahman was asked why the impact of all the wonderful contributions he made had not countered the rise of non-democratic forces (e.g. the Taliban), he answered that countering the rise of non-democratic forces is a process that takes longer than the 5 or 6 years during which he had positions of responsibility in the Pakistan Government.


But what about institutions that have had a much longer time in which to influence the country?

I want to switch, at this point - because I don’t want to be thought to be merely picking on a neighbouring country with which India has not always had good neighbourly relations – I want to switch to India, and indeed to my own alma mater.

St. Stephen's College, founded on 1 February 1881, is the oldest college in Delhi. First affiliated to Calcutta University, and later to The University of the Punjab (at Lahore), which received its charter more than a year after the founding of St. Stephen's College, the College naturally became one of the first two institutions affiliated to the University of the Punjab. Finally, with the establishment of Delhi University in 1922, St Stephen’s College became one of its three original constituent colleges.

St Stephen’s is undoubtedly the most prestigious college of the country. Nationwide surveys by publications such as India Today and The Week consistently describe the college as, if not the best, at least as one of the best colleges in India for both arts and sciences. C F Andrews (who resigned from teaching at the College in order to become Mahatma Gandhi’s trusted lieutenant) was one of the many students, staff and faculty who were active in India’s freedom struggle, and “Charlie” as he was called by Mahatma Gandhi, was in fact named Deenbandhu (or 'Friend of the Poor') by Mahatama Gandhi himself on account of Charlie’s work with the needy as well as with the trade union movement. Hanging even today in the St Stephen's College Principal’s office is a portrait of C. F. Andrews by his close friend Rabindranath Tagore who completed the English translation of Gitanjali while he was a guest of the College – you may recollect that Gitanjali is the work that was cited when Tagore was awarded the 1913 Nobel Prize for Literature. After independence in 1947, St. Stephen's continued to produced alumni and alumnae outstanding in politics, the media, scientific research, industry, entertainment, the military, sports, civil service, and literature (indeed, there is even a “St Stephen's tradition or School of Literature”). The college is perhaps the only Indian institution that counts among its alumni the heads of state of three different countries: India’s own Dr. Fakhruddin Ali Ahmed, Pakistan’s Gen. Muhammad Zia-ul-Haq, and Tanzania’s Salim Ahmed Salim (who was also prominent in the Organisation of African Unity). Estimates suggested that, by the 1970s, two-thirds of all top-level (so called “Secretary-level”) positions in the Indian Administrative Service were occupied by Stephanians, and there have been (and there are today) a number of Stephanians at Ministerial or Cabinet level in the Indian Government. So the College has undoubtedly played an important role in creating the ethos of the country as a whole. However, that ethos has, as you know, been increasingly marked by corruption. Naturally, the question arises, how come the College has not produced a plethora of alumnae of outstanding moral excellence and social commitment? There have, of course, been a few. But how few!

That is particularly surprising as St. Stephen's College describes itself as a religious foundation drawing inspiration from the life and teachings of Jesus Christ the Lord, an institution which “aims at helping its members realise spiritual and moral as well as intellectual and aesthetic values”. Well, if the College has not done too badly at developing intellectual and aesthetic values, how come there is such a failure in the development of spiritual and moral values? The College was established by a Christian mission from Westcott House, Cambridge. The Founder and first Principal of the College was The Rev. Samuel Scott Allnutt, whose death anniversary is still observed every year as Founder's Day on 7 December. The College has a Chapel, which is open to all members of College for worship and meditation. Not only is instruction from the life & teachings of Jesus Christ the Lord given to first year Christian students, there is a morning assembly for all first year students. The College motto is Ad Dei Gloriam, Latin for To the Glory of God. The College badge is a martyr's crown on a field of martyr's red, within a five-pointed star, edged with Cambridge blue. Around the five-pointed star, which represents India, is the Cambridge blue border, representing the impact of the Cambridge Mission to Delhi. The ground is coloured red to represent Saint Stephen, the first Christian martyr and patron saint of the Anglican mission in Delhi, in whose memory the College is built; on that ground, as you see, stands the martyr's crown in gold.

However, in spite of its remarkable origins, motivations and intentions, the College has failed to analyse and challenge rising corruption in our country as a whole, including the minor corruption of mere individual careerism. In fact, the College has even failed to challenge traditional caste values in its own faculty. As a new member of the faculty in 1970, I was asked which of the College Societies I wished to serve as faculty advisor, and I thought that the defunct Social Service League was worth reviving, so I put in for that. On hearing of this, my Professor of Sanskrit (he had taught me at College while I was a student) shouted at me in public, in front of the students, that I was undermining the whole foundation of of Indian culture by challenging the hold of karma and reincarnation and caste – in the traditional Indian view, people who are suffering today, are suffering because of their misdeeds in a previous life, so the justice which is being meted out to them, in the form of their suffering today, shouldn’t be interfered with – at least that was the viewpoint of my former professor and then-fellow-faculty-member.

St Stephen’s is not the only College that has failed to make a moral impact, and India is not the only country in which there has been such failure, whether by “Christian colleges” or others. We could undoubtedly say the same of universities throughout the world.

The issue raised by my story about my professor is as follows:

Cultural diversity is good, but it has its limits if you want to have institutional character – I am of course referring to the excellent concluding chapter, written by our Secretary General, Dr John Wood, to the book that was launched and indeed discussed here in this room yesterday (Universities in a New World: Making a Global Network in International Higher Education, 1913-2013, edited by Deryck M. Schreuder, published by Sage). In that chapter, Dr Wood raises the question of whether it is possible to have agreement on values in our institutions – and we do need clarity on values if we are to be socially engaged.

The challenge of clarity regarding our institutional values is related to the forms and channels by which our intellectual work is shaped. Is there, in fact, any such a thing as pure knowledge? Does it make sense to divide knowledge up by “faculties” and “departments”? We analyse things, separate them, study smaller and smaller divisions of material and thought, till we can be sometimes accused of seeking to know nearly everything about nearly nothing. When and how do we being to put everything together again? Specifically, how do we begin to put everything together again in such a way as to serve the most under-served human needs?

I said that I was going to pose the question sharply, so here it is: how come even the most morally- and socially-inclined of our institutions have failed to produce people who are outstanding for their morality and social commitment, without which of course all talk of Civil Society and Social Engagement is mere hot air?

I don’t pose that as a merely rhetorical question. Rather, I pose that as a substantial question, in answer to which here is something worth thinking about:

Stephen Marglin is a Harvard economist, whose book THE DISMAL SCIENCE points out that thinking like an economist undermines community. He was a Visiting Scholar at Wolfsberg, at my invitation, and in public discussion there, widened his critique of money-oriented thinking to include subversion not only of community but also of family and nation. We did not talk of universities specifically, but I am sure he would have agreed wholeheartedly with the proposition that commercial- or business-oriented thinking, which has come to so dominate our universities, eats up collegiality and even the disinterested pursuit of knowledge.

Why have we academics been so slow to see, let alone articulate and denounce, the capture of our universities by money values? Is it because we don’t wish to bite the hand that feeds us? If so, the capture of our universities by the state, by the global elite, by money values is already complete and we can write off the bulk of our universities in terms of being able to produce anything like the engagement which some of us were holding up as an ideal yesterday.

It is not only that we have been unable or unwilling to question the domination of the spirit of money – and remember Jesus said you cannot serve God and Money – or, if you want to put that in secular terms, you cannot serve society and money, or, you cannot serve knowledge and money – because we cannot serve two masters.

Let me put it more simply: we have failed to challenge or even engage with the dominant values of our societies, whether money values in the West with the rise of crony capitalism here since the 1980s, or the pre-existing tribalism in Africa - or indeed caste (with its related philosophies of reincarnation and karma) in my own country, India.

May I consider the issue by widening the focus a little, and suggesting three axioms for us to consider:

The first axiom is that every nation should be able to arise at least to what I call the “Minimum Level of Prosperity”, which I define as:

- the value of the country’s physical resources

- divided by its population.

Of course, there are ancillary questions that need to be considered (such as: are the resources extractable and at what cost) but we leave those aside in the interests of time.

The second axiom is that most nations have never reached their Minimum Level of Prosperity throughout history. That is so self-evident that I think you will agree it does not require immediate discussion.

The third axiom is that a few nations have succeeded in far surpassing the Minimum Level of Prosperity – whether by colonialism or trade – or by a consistent stream of innovation (or some combination of those with the right kinds of immigration policies).

In the case of countries that have far surpassed the Minimum Level of Prosperity, there are of course all sorts of ancillary questions that can be asked (such as: How sustainable is that achievement? Or, how can that achievement of surpassing the Minimum Level of Prosperity be sustained?) but we will leave aside those questions in the interests of time too, to move on to a consideration of *why* nations do not achieve the Minimum Level of Prosperity.

It is fairly evident to any objective observer that poverty has been caused throughout history, and is cause, primarily by cultures, values or worldviews: the key reason why nations do not achieve the Minimum Level of Prosperity are simply looting and stealing by the country’s elite. The only way to counter such corruption is the institution of the Rule of Law, which implies that every citizen, no matter how poor or powerless, has the protection of the law - and equally that every citizen, no matter how rich or powerful, is subject to the law.

When you study the process by which the new ruling elites of decolonised countries deconstructed the relatively good model of governance that was bequeathed by Britain to its former colonies at independence – for example in Nigeria or Guyana - you see that one essential was subverting the rule of law, which stands in contrast to the idea that the rulers or the elites are above the law, for example by sheer wealth, or access to power, or to some concept of divine right or religious law. Trying to elude the rule of law is the reason why so many kings ascribe either divine descent, or divinity, to themselves – and why contemporary elites find it useful to employ religious and political ideologues for their purposes.

In discussing the rule of law, we must attend to the distinction between a "thin" or formal definition of the rule of law, and a “thick” or substantive definition. “Thin” or formal definitions of the rule of law do not consider the "justness" of law itself, but focus on merely procedural matters. “Thick” or substantive conceptions of the rule of law go beyond procedural issues, and consider as basic or fundamental certain principles and rights. If a culture does not believe in some super-arching value, principle or personality (such as God), that culture has the possibility only of a “thin” understanding of the Rule of Law, whatever that country’s formal Constitution may say. In other words, it is not only ignorance or unwillingness to implement best policies and best practices that impedes progress, a people’s belief-system can torpedo the possibility of progress much more effectively. Most countries are caught between “thin” and “thick” understandings of the Rule of Law, so it is worth considering that most countries have traditional (and many have modern) structures of oppression that create hopelessness, apathy, cynicism and paralysis. Any more detailed analysis must of course encompass such structures of oppression.

However, if the rather superficial analysis that we have undertaken so far has any merit, it is evident that, in order to achieve, let alone, surpass the Minimum Level of Prosperity, it is essential to eliminate corruption, looting, stealing, and murder – especially of the sort legally organised by the elite, for example through structures of oppression. That can only be done if a new culture is instilled that will lead to prosperity, which enables a culture to struggle systematically against apathy, fatalism, complacency, pride and arrogance.

Is that possible? Indeed it is. Time fails me to draw your attention to the case of what happened with the European Reformation in the sixteenth century, or in Japan from the eighteenth century, or in Japan after World War II, or in Singapore from 1965 – on some of which I have written, as you can easily find by even a cursory search on the Internet.

What is necessary is to put in place justice and the rule of law (though a free press helps to make change sustainable). Jesus the Lord said that his teachings could certainly be debated but we’d find out if they really led to life fulfilment only if we practice them. Jesus was speaking in both institutional and individual terms. Mahatma Gandhi put that message in his own words, though in relation to individuals, when he said: «BE the change that you want to see».

It is time to turn more directly to what universities have to do, and can do, in relation to civil society and social engagement. Is the social engagement of universities to be confined to mere “volunteering” or participation in voluntary associations, trade unions and the like? Is social engagement merely a matter of what we do in terms of “outreach”? Is social engagement really to be defined as a matter of toeing a government’s or funder’s line in order to get money?

Ladies and gentlemen, dear colleagues, I implore you to explain to me how social engagement, whatever else it is, can be anything worth the name if it does not identify and engage with the most pressing issues in society, such as I have raised in this short presentation – e.g. the issue of the roots of the current crisis, or why most medical research is irrelevant to the needs of the poor mass of humanity, or why most technological research is similarly concerned with high-faluting questions that serve the commercial interests of the elite.

Why do our universities not produce social justice or even intellectual engagement with the real issues of our peoples? Because the governance of our institutions is in the hands of precisely those elites who typify and sustain the culture of oppression. Is it possible that are our universities themselves are part of our world’s structures of oppression?

Dear colleagues, I would like to conclude with a another question: please raise your hands if your university has, at the top of its governance structure (Senate or Court and whatever) official or ex-officio representatives of Civil Society - organisations such as the Red Cross/ Crescent/ Shield of David? Or perhaps Christian Aid or Salvation Army or World Vision or Tear Fund or Oxfam or Greenpeace or Amnesty International?

Yes, I see a few hands - and am encouraged by them.

It is not till the voice of civil society is brought to bear on scrutinising what we call knowledge that universities will produce anything like the knowledge we need in order to address the challenges of global warming, global poverty, global financial instability, and so on. It is not till civil society is enabled to insist on universities instilling the kind of values which nurture and enable genuine social justice, that humanity can flourish. Dear colleagues, let us not short-change the calling of universities by talking of mere volunteering and outreach and social engagement. Let us keep firmly before us the high calling of the university, which is to create… civilisation.

Thank you.

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Wednesday, November 06, 2013

The Current Global Economic Crisis: What does the future hold and how will it affect my family

Notes of the talk by Professor Prabhu Guptara, titled "The Current Global Economic Crisis: What does the future hold and how will it affect my family", Organised by Riviera Partnerships, at the Cannes-Mougins Golf Club, near Nice, France, on 18 October 2013

Mr Chairman, Ladies and Gentlemen

It is an honour to be asked to come and present this short talk to you.

We have not recovered from the global crisis which started in 2007 (some people date it from 2008, for various academic reasons). Though it may not feel like it to you and me, it is in fact one of the worst global financial crises in history. We have tried to address the crisis mostly by printing money and keeping interest rates low, hoping that growth will return. But the crisis was itself caused by too much money too easily available, so this is like trying to treat a drug addict by giving him or her more drugs.

The result is that we are in a world where the global economy is no longer based on any fundamentals but rather on whim and momentum – and no one knows what the effect of any decision, economic or political, is likely to be. The end of tapering is announced, or the end of the US government shutdown is announced, and we have no idea whether the dollar or yen will go up or down. What will gold do? What will happen to stocks or oil or emerging markets?

The current situation can be compared to a patient who has been released from an Intensive Care Unit and the doctors would like him to exercise, but the moment he starts exercising he shows signs of abnormal increases in heart-rate and blood pressure, so the doctors must ask him to stop because they’re afraid he’ll collapse again.

Here are some facts: World output increased by 2.7% last year, this year we think it'll grow 3.1% and, if everything goes well, is expected to grow by 3.6% next year – which is not stellar, but is not bad. When we look at advanced economies, we have gone from growth of 0.9% last year to expectations of 1.8% this year and forecast 2.1% next year – even less stellar in terms of growth but, with advanced economies, it is an open question how much growth we should have. Anyway UK had zero growth last year but is expected to do 2% in 2013-14. The consensus for the Eurozone is no growth between 2012 and 2014, but my view is that a positive surprise should be expected.

Inflation can be expected to remain low and to rise gently to 2% in advanced economies.

Commodity prices should head gently down in US dollar terms.

Let me turn my attention to short term risks.

One key risk is back-tracking in the Eurozone – but this is in my view trumpeted by those who do not understand that the Eurozone is a political project, and we must understand the reality that politics always trumps economics. The Eurozone project has a history going back to 1951, and is a so-far successful attempt to build a peaceful Europe after centuries of war. So the Euro is not going to break up, and we can expect Germany to continue to pay for the continuance of the Euro, partly because that benefits German exports to the rest of Europe (that’s one key advantage of a single market), partly because it is less expensive to pay for the continuance of the Euro than to break it up, and partly because the consequence of reversing the Euro project will eventually be a return to war in Europe.

A second key risk is US budgetary problems which have, like the challenges exposed by the global crisis, simply been kicked down the road. The next deadline is February 7. My guess, which is only as good as yours or anyone else’s, is that US lawmakers will dither and shout, but will eventually kick the can further down the road, because that is ultimately the best political option before the US.

A third risk is tightening of financial policy in the US and/or other countries – but I do not see any chance of that happening at present, as the global economy as a whole is closer to stasis than it is to any chance of taking off and creating huge inflation – though that is a threat that needs to be constantly borne in mind.

A fourth risk is a cut-off in financial flows to emerging markets – and that is a question ultimately of how defensive the US, Europe and Japan wish to be. At present, there is too much money sloshing around the global system and a certain proportion of that will continue to be willing to take the risk of investing in emerging markets such as China.

The final most important risk is a rise in oil prices – and that is a question primarily of speculation and of geopolitics. We all know that oil is not that expensive to extract (in spite of the challenge of peak oil) and that the price you and I pay depends not on the cost of extraction but on the taxes that are slapped on it, as well as on oligopolic control and speculation.

From short-term risks, if we turn to medium-term risks, I guess we should mention four:

1. Will China’s attempt to transition from export-driven growth to consumption-driven growth succeed in time, and will it succeed in addressing its debt pile up, industrial overcapacity, environmental degradation and social tensions? I am a bear on China but I hope I am wrong.

2. Will Japan’s reflation drive succeed sufficiently? I think we must all be cautiously hopeful about this, as a whole generation has now grown up since the bursting of the real estate bubble and consequent stasis in the economy there since 1991.

3. Will the Eurozone continue to have 20 million or more unemployed for the foreseeable future, and what will be the socio-political consequences of that? My view is that, as long as the European welfare model holds, this challenge will be containable – though I am, as I have written, extremely uncomfortable about the introduction of robotics into white-collar and high-skill jobs, because that will undermine everything in Europe.

4. Will there be continued low growth in US and Japan for so long that it leads to pressures for debt repudiation? Well, this is the sort of risk that would be cataclysmic - and there is no way of thinking about this which is at all helpful, so all we can do is pray.

Let me now turn away from risks, whether short-term or longer term, to the trends that I see actually before us.

I see China plateauing – in fact, China has clearly come to the end of its growth model, so if we are interested in China, as we should be, we need to watch carefully what comes in a few weeks from the next meeting of the leadership of the Communist Party of China, under (China’s still-new) President Xi Jinping.

India has national elections due at the latest in this coming May, so we can’t expect any great moves, though I am impressed with what all has been done recently, and is being done. You will see a lot of depressing talk about India in the next few months. Do take it with a pinch of salt. I am betting that India’s economy will continue to improve, though the result of the national elections will be that NEITHER of the main contenders, Mr Rahul Gandhi of the Congress Party and Mr Narendra Modi of the BJP will become Prime Minister – I expect a totally fresh face (though I don’t know who).

Brazil and Russia will probably continue to do more or less as well as they are doing, though their fortunes are closely tied to commodity prices and energy prices respectively.

So it is the USA which will drive growth for the foreseeable future. In my speech at the Arizona Council on Economic Education almost exactly two years ago, I forecast that the US economy would continue to pick up gradually, provided US politicians did nothing too stupid. At that time, I was in a minority of one to hold that position, as far as I know, but that forecast has proven correct – and I still stand by it.

The Eurozone too, once it has sorted out its internal problems, will start driving global growth again. I have been giving the time-frame of 18 months for this to happen – for some years now! Progress has been very slow because everyone is fire-fighting rather than focusing on resolving Europe’s issues, such as fiscal, monetary, budgetary, banking and foreign policy harmonisation – but progress is being made on these and, if the global economy can be held steady now, I expect that at least the most important of these (excluding foreign policy) will really be resolved in the next 18 months.

That brings me to the essential question of how all that affects us as businesses, as individuals and as families. For businesses, the message is simple: as far as possible, cut risks; accumulate and deploy cash intelligently; prepare for continued volatility over the next several years – there will be no return to stability till excess cash is squeezed out of the system (which will be a long and painful process) and till we have prudential regulation appropriate for a global economy – for which, the steps that are necessary are known, but a combination of partisan lobbying and the current vulnerability in the economy have combined to prevent most of those steps from being implemented with any great vigour so far.

For individuals thinking about careers: focus on creativity and innovation (whether through technology or in other spheres), focus on logistics as supply chains will continue to be adapted to our very volatile world at least for your lifetime, focus on marketing, and focus on making the world better.

For families: expect continued and indeed increased stress on your family life, as that will be increasingly threatened by volatility and money values. It is only a laser-clear focus on values and on meaning which will hold your family together.

Which brings me, Mr Chairman, ladies and gentlemen, towards my conclusion: the world is in economic crisis because we are in a values crisis. We have gone, within a few decades, to take just the example of the USA, from “Protestant” values, to “Christian” values, to “Judeo-Christian” values, to “secular humanitarian” values, and now to aggressively “anti-religious” values - if the last is not a self-contradiction. And that transition and clash is particularly interesting because the US is, second only to India, still the most religious country on earth, where 78% of people say they believe in God and as many as 34% claim to be “born again” or evangelical Christians, but the dominant leadership of the USA exhibits little except a fixation with power, fear and greed.

The essence of the problem in the USA is a values clash, just as the essence of the problem around the world is a clash of ethics between those who would like to build a global system which simply benefits the elite (these are followers of philosophers such as Ayn Rand) and those who would like to build a global system that genuinely benefits the whole of humanity.

I hope you see that the question of values ("What is it all FOR?") is central to the challenge of the current global crisis, just as it is central to the challenge we face as families and as individuals.

Thank you.

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What is the meaning of CSR for companies today?, talk at the launch of Abhati, University of St Gallen, Switzerland, 5 November 2013

Here is the text of my talk, titled "What is the meaning of CSR for companies today?", at the launch of Abhati, held at the University of St Gallen, Switzerland, yesterday, 5 November 2013:

My thanks to Anju and Divya for the kind invitation to speak at this auspicious launch of Abhati. And thanks to everyone in whose heart it has been to support it up to this point, without which Abhati could not have been born. So may I start by giving my very best wishes for the success and global impact of Abhati.

The topic that has been given to me for our event together is: “What is the meaning of Corporate Social Responsibility for companies today?”.

I guess, as I have been given 30 minutes for the talk, you want an answer detailed enough to fill something like 30 minutes but, as you know, the long message sometimes gets lost.

So let me give you the short message, the short answer to the question, right at the start so that you can’t forget it. Your take-away from this event, what I’d like you to think about, or rather what you need to think about, is this: The meaning of CSR impossible to understand except as a TREND.

Before the late 1960s, very few people talked about anything like CSR, and whatever happened in the field was driven by the beliefs, feelings and values of individuals.

For example, at the turn of the 19th century/ start of 20th century, there were people such as Carnegie and Ford in the US who, having made plenty of money, whether by right means or wrong, devoted part or all of the money they had made to social causes. The Carnegie Endowment and the Ford Foundation may be better known because of the power of the US media, but right here in Switzerland we had people such as Bircher, and the Raifeissen movement, and the founders of Migros and Coop, who made money by rather more ethical means (at least as far as I can see), and devoted part or whole of their profit to social purposes. In India, the country of origin for people such as myself and Anju and Divya and Satya and some others in our event today, we did not have this sort of thinking as part of our culture – whatever we gave, away from the family or the clan, was given only to gods and priests and monks.

But towards the end of nineteenth century, primarily because of the example and impact of Western missionaries who pioneered this sort of thinking in our country, our own thinking began to change when our leaders, such as Swami Vivekananda and, somewhat later, Mahatma Gandhi, accepted and started incorporating into our thinking the teachings of Jesus in this matter of social responsibility.

The most outstanding in our country, in India, were the Tata family – they belong to the Parsi community, and this community was the first to become thoroughly de-traditionalised because of the impact of the teachings of Jesus. However, Indian culture as a whole is still not sufficiently imbued by a sense of responsibility – as you noticed, I hope, by the facts and figures presented to you in the Abhati video at the start of our event, because of which we still have the problems to which Abhati is drawing our attention, and which Abhati is trying to address.

Now we mentioned people such as Carnegie and Ford in the West. They were the most startling exceptions because they did all they did publicly and, if you may allow me to put it that way, they did it loudly, but the mass of company owners and indeed ordinary individuals in the West did whatever they wanted to do in this matter of social responsibility quietly, because they followed Jesus’ instruction about not letting even your left hand know what your right hand does philanthropically. Just as, in His teaching, one is supposed to pray and fast without blowing a big trumpet about it, one is also supposed to do one’s philanthropy in secret. Social responsibility and philanthropy was part of the fabric of how you lived in the West – at least from the time of, or in those parts of the West, which were influenced by the Protestant or European Reformation.

With the decline of faith and allegiance to Jesus in the West (we can argue about when that decline started, and how far it has proceeded, and whether faith in Jesus is even reviving today), but in any case with the rise of corporations in the USA particularly since the 1950s, some aspect or the other of the necessity for corporations to abide publicly by some values has come to the fore, whether we call it corporate citizenship, corporate conscience, social performance, sustainable business, Triple Bottom Line business, or whatever.

Actually, aspects of CSR came more and more into prominence from the late 1960s when many multinational corporations started using the term “stakeholder” to describe those people who were NOT shareholders but on whom a company’s activities had a direct or indirect impact.

Ever since then, there has been an academic debate about whether or not companies make more long-term profit by operating with a CSR perspective: critics (most famously Milton Friedman) propounded the then somewhat strange idea that CSR distracts from the financial focus which, in their view business should have. Friedman, in a famous article put it this way: “The business of business is business” – or, as we may put it to make the idea more clear, “The business of business is nothing but business”. That is a right-wing view.

On the other hand, left-wing critics argued, and still argue, that CSR is merely window-dressing (the environmental part of which is dismissed by them as “greenwash”) because, in the left wing view, CSR attempts to pre-empt the role which government has, and should have, to keep a proper watch over corporations: unless there is proper legislation and regulation, a few companies will pretend to do the right thing, but the mass of companies will, under the cover provided by these few companies doing the right thing, the mass of companies will get away with as much as they can.

Both the right wing attempt to escape the notion of CSR, and the left wing attempt to condemn CSR, are increasingly discredited, especially since 2008, when Denmark became the first country in the world to adopt legislation requiring the 1100 largest Danish companies to include information, in their annual reports, not only on their CSR policies and practices but also on the RESULTS of those policies and practices AS WELL AS MANAGEMENT’S EXPECTATIONS OF THE FUTURE IMPACT OF THOSE POLICIES AND PRACTICES. Note that CSR itself is still entirely voluntary, according to this legislation – you may, if you wish, choose to do absolutely nothing! – but whatever you do or don’t do, you have to provide information to the public on how you position yourself with respect to social responsibility. In other words, you have to defend your decisions before the bar of public opinion. So guess what has happened! Yes, all these companies have in fact done a lot in the field of social responsibility.

That landmark legislation was followed by the UK, Australia and many other countries – so if is not so already - I expect that to become the initial global norm in this field. If you want to keep an eye on that whole area, keep a watch on the United Nations Global Compact.

Anyway, that Danish legislation remained the pioneering legislation in the field, as Australian, Brazilian, Canadian, Chinese, French, Irish, Japanese, South African, and Spanish legislation has followed, and increasingly even US and impending European legislation seem set to follow.

This year, however, India stepped ahead of that sort of legislation by introducing mandatory CSR spending of 1% of profit by all companies in India which have a net worth of Rupees 500 crore or more (that’s roughly USD 100 million) or turnover of Rupees 1000 crore (that’s roughly USD 200 million) or a net profit of Rupees 5 crore (that’s roughly USD 1 million).

Now the important matter is this: I have no doubt that India’s legislation will be followed by other countries, and that the amount required to be spent will also tend upwards: 1% is a sort of meaninglessly small quantity in boom times, though in crisis times (such as we have had around the globe since 2007), even 1% is probably considered onerous by many companies.

Today, except in the “sin industries” (tobacco, alcohol, weapons, casinos and gambling, prostitution and drugs) – except in such industries, CSR should really be considered an aspect of corporate governance, integrated into your business model by which you monitor and ensure your business's compliance with such laws, ethical standards and international norms.

CSR essentially takes ethical responsibility for a company’s actions so as to encourage a positive social and environmental impact – for example on communities, employees, consumers, stakeholders and all other members of the public. In other words, CSR goes beyond compliance, to furthering social good rather than short- or even medium-term profit maximisation.

There is now a recognised international standard for CSR: ISO 26000, and the United Nations has developed Principles for Responsible Investment as guidelines for organisations and individuals which have investments. So, if you now choose to do nothing about CSR and are asked about it in public, you have the choice of either appearing ignorant or appearing inhuman!

But, positively, what can CSR do for you if it is properly integrated into your company?

Well, it can help you in achieving and implementing your mission, by articulating the values for which your company stands and by which it intends to do business, and ensuring that those are in fact upheld in your investment decisions, your purchasing, your processing, everything that happens inside and in relation to the land and buildings you occupy, the way you treat employees and customers, your sales and marketing, the externalities your business creates (e.g. the impact on the environment) and so on. And that is what I want to turn to now: what approach can you take in practice towards implementing CSR in your company? I want to suggest that there are three elements that you need to think about.

First, of course, the absolute minimum that you can and must do is compliance with CSR laws such as I have mentioned. But it is only very short-sighted companies which will limit themselves to what the law is today. Once you understand that CSR is a global trend and that we are moving more and more in that direction, and if you keep in mind that it takes time in any company to embed any good practice or idea, any intelligent manager will try to keep ahead of the law by trying to understand how international norms and expectations of business are changing around the world. Now, even if you stick just to this first element - that is, compliance - you will find that it has considerable impact on your operations and even your strategy. For example, you will need to think about the environmental and social impact of each aspect of your current and future operations, and you will need to think especially of your company's view regarding what is encompassed by and constitutes operational risks. You will also think differently about how and in what areas you relate to investors, employees, sellers, customers, external communities and other stakeholders.

If the first element is compliance with existing law and emerging norms and expectations, the second element is corporate philanthropy. Now, you may choose to give away a little money or a lot of money in the form of donations, sponsorships and scholarships - whether you do that is up to you as a company – but you must, in today’s world, at least think of whether the skills that are in your company can be provided to help the disadvantaged in our world. For example, some companies expect every employee to donate a day a month, or a week a year, or a month every few years, to a registered charity of your employee’s choice: your employees donate their time, but the company pays their salary for that time. Other companies encourage those who are in their final few years of service before retirement to give an entire year. And the idea is not for your employee to go and work as an unskilled labourer, the idea is to provide the business skills of that employee to the NGO or non-governmental organisation in question, whether as an analyst, strategist, finance person, marketer or whatever. Now, it should be made clear that NGOs are not necessarily dumb organisations, they often have more clever and more highly skilled staff than companies – but the needs that NGOs are trying to cope with around the world are overwhelmingly huge, so any skilled assistance is highly needed and most welcome. In this context, there is one other matter to keep in mind: donating your employees’ time will not result only in helping the NGO, it will result also in your employees learning new things about management in a totally different kind of organisation (an NGO), and indeed they will learn new things about the world as a whole, which they will bring back to your own company. If you know how to, and can, utilise that new learning on the part of your employees, your company will itself reap a good harvest from your time-investment in corporate philanthropy.

Now, if the first element in any CSR orientation in your company is compliance, and the second is corporate philanthropy, what’s the third? It is the creation of what has come to be called “shared value”. While the second element, corporate philanthropy, may or may not necessarily or immediately have any visible strategic or operational impact, the third element, “shared value creation”, will certainly do so.

This requires creative and innovative thinking in relation to your company’s entire business model.

What is meant by “shared value”? Briefly, it is the creation of social value in such a way that it also benefits your business, or, the creation of business value in such a way that it also benefits society at the same time.

An example might be helpful, and I take Godrej, India’s best-known conglomerate in the field of white goods, high-tech engineering, and consumer products (Godrej is also, as it happens, Parsi-owned). Its concept of shared value is “policies and operating practices that enhance the competitiveness (of Godrej) while simultaneously advancing economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress. The concept rests on the premise that both economic and social progress must be addressed using value principles, with value defined as benefits relative to the costs, not just benefits alone. Godrej’s sustainability strategy, called “Good & Green”, is driven by the desire to identify shared value opportunities, which address social and environmental problems (e.g., low skill levels of work force, unmet basic needs of people at the bottom of the pyramid, climate change, high dependence on non-renewables, etc.) while at the same time strengthening Godrej’s drivers of competitiveness (e.g., innovating new products, improving talent pipeline, streamlining operations, etc.)".

As part of Good & Green, the Group aspires to create a more employable Indian workforce, a greener India, and innovate for good and green products, so that its goals for 2020 are:

• Giving one million rural and urban youth employment-related skills

• Achieving zero waste, carbon neutrality, positive water balance while reducing Godrej's specific energy consumption and increasing the proportion of renewable energy resources

• Ensuring that a third of Godrej's portfolio revenues consist of good and/or green products and services – defined as products that are environmentally superior or address a critical social issue (e.g., health, sanitation, disease prevention) for consumers at the bottom of the income pyramid.

You can see that Godrej is not being at all soft; it is bringing hard-nosed business thinking and applying it in a hugely and staggeringly ambitious way to itself for its own benefit as well as the benefit of the world.

While Godrej’s second and third goal, relating to zero waste and green products, could be taken up by any company even without any particular commitment to CSR, I want to draw your attention particularly to their first goal: giving to one million rural and urban young people skills that will make them employable.

You know that one of the reasons India lags behind in development is the availability of skilled labour. In fact, one of the reasons that Indian IT companies have been sourcing their employees from outside India, from Philippines to Eastern Europe and now even the US and Nicaragua, is that India simply does not produce enough skilled people. In fact, according to a recent report, assessment tests administered by the National Association of Software and Services Companies, the top trade grouping of such companies in India, found that 75% of technical graduates and more than 85% of general graduates are unemployable by India's high-growth global industries, including information technology and even simple call centres ( last accessed 5nov2013 0630 CET). I like to put it exaggeratedly in this way: our educational system is so intellectual that most of our engineers are unable even to change an electrical fuse around the house.

By contrast, if you think of Switzerland, where we are right now, probably the average Swiss is no more intelligent, though of course on average no less intelligent, than the average Indian, so how come Switzerland has been able to become one of the richest countries in the world? If you want anything like the full answer to that, you need to read Vishal Mangalawadi’s book, THE BOOK THAT MADE YOUR WORLD, but for the moment let’s put it like this: while Switzerland has only one or two educational institutions which make it to the top of the global rankings, such as ETH, and the University of Zurich, and the University of St Gallen, the AVERAGE level of education in Switzerland is, if not THE highest, certainly one of the highest in the world. Switzerland is one of the world’s leading countries in terms of innovation, of course not as high as Israel in terms of per capita innovation, but still one of the most innovative countries in the world, because of its high level of education for the average citizen.

Or let me put the point more strongly by means of the following illustration: even an uneducated and unskilled foreign immigrant, such as the lady who helps my wife with cleaning at home for a couple of hours a week, because the lady makes it a full-time job by helping different homes in the neighbourhood, is able to earn enough with her husband, who is rather better educated than her but doesn’t, for various reasons, actually make that much more than her - they are together able to have a very reasonable quality of life in what is one of the most expensive countries in the world, and are even able to take their family for a holiday abroad each year. The point is that Switzerland has been able to create system advantages, not merely advantages for a few individuals as in the case of India.

In order to create system advantages, countries need, for example, an apprentice system such as Switzerland has. And in the absence of a national system of apprenticeships, the Godrej goal of giving skills to a million Indians is not merely laudable, it is the best possible contribution to the nation, by which not only their own company will benefit (clearly, they will not be able to employ anything like a million skilled people, so other companies in the country will benefit too), but indeed the whole nation will benefit.

I hope the idea of “shared value creation” is at least a bit clearer.

So, as I am coming to the end of my time, let me summarise my talk: CSR is a trend that you cannot escape, even if you don’t believe in it. You are not paid to be a manager in order to ignore realities, but in order to negotiate realities - and, if you are to be an intelligent manager or indeed an intelligent businessman or businesswoman, you will negotiate the reality of CSR by being ahead of the game, by ensuring that your business is in compliance with legislation as well as with emerging global norms and expectations. Beyond that, you need to think about how much of your business portfolio is going to committed to corporate philanthropy (because you will certainly need to do at least a little of that) and you will need to think about how much you want to incorporate what elements of CSR and shared value in your business model.

Abhati has decided not only to be sustainable and responsible in its entire value chain from purchasing to production to employee welfare and sales and marketing, but even to give away 50% of its profits. You might want to do less than that, or more than that. King's Kurry, one of the companies of which I am a Director, is by its constitution mandated to give away 10% of its profit. Whatever you decide to do, the meaning of CSR for companies today is that you certainly can’t ignore the three elements that go into CSR: philanthropy, compliance, and shared value.

Thank you.

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Monday, November 04, 2013

Uighurs score propaganda victory by first-ever attack in Beijing?: Questions raised by China's dismissal of its General in Xinjiang following crash at Tienanmen Square

China's version of what happened in the case of the recent "suicide attack" in Tienanmen Square is highly dubious.

The world has been told that, in a crash incited by Islamist separatists from the East Turkestan Islamic Movement (ETIM), five people died when a car ploughed into a crowd in Tiananmen Square last Monday, killing three occupants and two tourists, and injuring 38 visitors and security officers.

Obfuscation is normal in such matters in China: in the absence of a free press and independent investigation, all one can do is point out some of the things that are puzzling:

1. China claims that the incident, when "a car ran into a crowd", was a suicide attack. But suicide attacks don't have two passengers alongside a driver (and one of the occupants was the driver's mother). Moreover, how can a suicide attack vehicle have been spotted before the attack? (The car was clearly being chased at the time it crashed and caught fire, though it is unclear how long the car had been chased. Why WAS it being chased?)

2. Was the car fire was accidental, deliberately set off by the occupants, or caused by any gunfire from the car chasing the crash vehicle?

3. In the case of a suicide or terrorist attack, any regime would want to ensure that it collects all possible evidence. However, China moved very quickly to eliminate all possible photos by the public, news, discussion, etc. The crash site itself was cleared remarkably rapidly. No doubt this was at least partly for political reasons, as Tienanmen Square is a highly public and sensitive political location, not far away from China's top leadership compound Zhongnanhai; the timing of the "crash" was also awkward, given that it is in the run-up to one of the most important Communist Party meetings in history, which is supposed to unveil the path ahead for the Chinese economy, including long-awaited reforms after President Xi Jinping - who ascended to power in theory a year ago - takes full control. But the speed with which all trace of the "crash" was removed suggests official cover-up of whatever happened.

4. Today, I have just seen news that China has now not only removed its General in Xinjiang (General Peng Yong) but has also stripped him of his post as a member of the Standing Committee of the Xinjiang Communist Party. This is not how any regime can be expected to react to a mere suicide bombing or even a terrorist attack. This is not even how any regime reacts to perceived weakness on the part of a military man responsible for keeping a lid on a troubled region. This is a most severe and public rebuke, short of a court martial (which may of course follow, but we have no way of knowing that). The Chinese humiliation of the General raises questions about whether the Uighurs' East Turkestan Islamic Movement has infiltrated the Chinese establishment up to a very senior level - though possibly short of the General himself. Unless of course there is some entirely different explanation, and ETIM is merely a convenient whipping boy.

5. Chinese state media said the attack was the work of eight suspected Islamist militants who had collected 400 litres of fuel, weapons and 40,000 yuan (£4,100; $6,600). It is not clear whether the 400 litres of fuel were inside the SUV - if so, that's a lot of fuel to be carrying alongside a lot of money. Would you expect suicide bombers to be carrying this much money?

6. While an estimate of the amount of fuel and any weapons in the car might be expected following analysis, China's official machinery moved to make the rather specific announcement of these things remarkably quickly. We know the Chinese are efficient. But that efficient?

7. It was particularly clever of the Chines to have identified from the remains of the car the amount of money in it: the Yuan may be a very strong currency today, but are Yuan notes so strong as to resist fire?

8. Even if we grant that Yuan notes, thanks to the magical power endowed on them by the Communist Party, are in fact totally fire-resistant, what explanation is there for the "flag with extremist religious content" supposedly discovered by Chinese authorities in the burned vehicle: was that flag, presumably because of Islamic magic, totally fire-resistant too?

9. Following the crash, Chinese authorities were apparently trying to trace "four number plates from Xinjiang". How come?

10. They were also trying to trace at least one non-Uighur (or mainland Chinese) man: again, how come?

If the attack is indeed either a suicide attack on the part of the Uighurs, was it terrorist action or merely a desperate act on the part of people who "could not find solutions to their problems and were forced to take extreme actions" as one post on Chinese social media is reported to have said?

In case it was a terrorist attack, the Uighurs have an unprecedented propaganda victory for having staged the first known Uighur action right in the centre of Beijing.

On the other hand, if it was a case of desperation, it highlights the need for China to give ordinary Uighurs the possibility of seeking redress for injustices they suffer under Chinese rule.

Interestingly, on the social media, the incident raised Chinese concerns about society getting increasingly violent and unsafe. As one post put it: "This happened in the most heavily guarded place in China. So is there any place left that is still safe?"

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