Renaissance: Insights for Action in Today's World

The current state of robotics in Japan

2012-01-26T08:15:00.000-08:00

Readers may recollect that I had publicised, some years ago, the year 2012 as the date on which Japan would start releasing the next generation of "intelligent robots" (some of which I previewed in those posts).

I don't see any sign that any spectacular release is planned for this year, though it could be that the releases may happen without much fanfare - or that the launch has been delayed by the crisis which started in 2007. However, there is lots going on the robotics industry in Japan.

Japan is biggest producer of robots in the world. For example,some 290,000 industrial robots were operating in Japan last year, 60% more than in its closest competitor, North America. Japanese companies are more active in certain fields than in others - e.g. houcsecleaning and nuclear sites have not been among their priorities so far. However, at the Fukushima Daiichi nuclear plant, it was Japanese robots that entered the No. 2 reactor building (while American ones entered building no. 3). The Japanese robots, called Quince, were developed by the Chiba Institute of Technology. Not only is Japan the overall leader, but it is also launching new initiatives to become the world leader in segments, verticals and niches where it is not yet number one.

While Japan anticipates going into the red in terms of its trade balance this year, I anticipate that it will move back into the black as soon as the new generation of intelligent robots is properly in the market.

The most interesting robots produced recently include:

1. The Wedding robot:
The wedding of Professor Satoko Inoue and Satoko Shibata was presided over by I-Fairy, a 4-feet high robot, valued at 6.3 million yen and made by Kokoro Co. Ltd. I-Fairy is able to recognise people and imitate natural movements while reciting pre-recorded lines.

2. The Singing and Dancing Fashion Model:
Fashion designer Yumi Katsura chose Miim, a 5-foot 2’’ robot to model a wedding dress on the catwalk as the finale for her design showcase. Miim is walks the catwalk and pauses at the end. She not only talks, walks, claps, waves, smiles, frowns, sings, exercises, and dee jays, she can even hold her own in a press conference!

3. The Perfect Companion:
Created by computer specialist Le Trung, Aiko is a pretty robot who can cook, clean, do the accounts, read newspapers and speak 13,000 sentences in English as well as Japanese.

4. The Sommelier:
NEC System Technologies and Mie University developed a ‘wine-bot’, a 2ft robot sommelier that can ‘taste’ wine and provide customers with accurate identification of the wine. Apparently, the robo-sommelier can be programmed to provide personalized wine recommendations.

5. The Dental Patient:
Simroid is a robot designed by Kokoro and Co. Simroid looks like a small Japanese woman and has a full set of teeth with sensitive virtual nerves. Designed for dental patients to practice on, Simroid is able to yelp if the dental students touch any nerves.

6. Kobot is a three-wheel single-seat electric scooter that responds to a smart phone and, for example, folds itself into a space of about one cubic meter for storage.

7. The Hairdresser:
Panasonic created a hair-washing and drying robot with 8 fingers and a 3-motor mechanism.

8. The Actress: Geminoid F is a robot actress that has performed in a play directed by Japanese director Oriza Hirata, alongside human actress Bryerly Long. Geminoid F was created by Hirohoshito Ishiguto and is scarily lifelike

9. Dual home cleaning/cinema:
RIDC-01 is a $85,000 robot designed to clean houses. Once finished, RIDC-01 has a projector and can be converted into a home cinema to project DVDs.

10. The Ladder-Climber:
Osaka-based industrial equipment maker Muscle Corporation and a few other Japanese companies have developed a humanoid that can climb up and down ladders all by itself. The so-called “Dream Robo” was initially showcased during the Shanghai Expo 2010. Now it stands 1.4m high, weighs about 30kg and moves with the help of five motors that are built into its body.

11. The Farmer:
You may not believe it, but robots are being sent in to try and save Japan's ravaged agricultural production. After the 9.0-magnitude earthquake and subsequent tsunami that devastated Japan in March 2011, the government is planning to spend $52 million in the next 6 years to place robots on farmland decimated by floodwater from the tsunami. The robots will work the fields and then box the crops after harvest. Whether anyone will want to buy and eat what is boxed is a different kind of question.

Apologies

2012-01-26T08:14:00.000-08:00

I apologise for having been "off" for a bit but I was travelling, and my computer was on the blink.

The idea is to resume some service as of today, and full service on Feb 1.

What happens to philanthropy during a recession?

2012-01-23T08:01:00.001-08:00

Interestingly, IN THE USA, it goes UP!

http://www.bauer.uh.edu/rexdu/how%20economic%20contractions%20and%20expansions%20affect%20expenditure%20patterns.pdf

The above link takes you to the text of an article based on results of a substantial study (6000 households over 20 years - 1982 to 2003 - which experienced three recessions).

The article is published in The Journal of Consumer Research, by Wagner A. Kamakura (Ford Motor Company Professor of Global Marketing, Fuqua School of Business, Duke University) and Rex Yuxing Du (Hurley Professor of Marketing, C. T. Bauer College of Business, Houston University).

What does the data show? That: recessions shrinking US GDP by 2% caused some US consumers to increase charitable giving by 32% (!!!), while others increased their tobacco consumption by 16%.

As regular readers of my Blogs will know, I have followed philanthropic giving for some time, and this finding is astounding.

Americans really are rather special people.

If interested in textiles from India

2012-01-21T19:53:00.001-08:00

On my visit to India this year, in the cold of Delhi, I am reminded that one of the most honest and reliable exporters of wollens, carpets, etc from India is Mr Om Prakash Kalia, whose office is very near the Golden Temple, telephone: +91 9988 245 000.

I have known him for some decades, and can call him a real friend. And I suppose I should make it clear that I have no share in his business, and benefit financially from it in no way.

Assessment of Global Risks 2012 by the World Economic Forum

2012-01-13T12:17:00.000-08:00

If you have not yet read the WEF view for this year's Global Risks, I encourage you to read it: http://reports.weforum.org/global-risks-2012

Here are the top five clusters of risk (which they call risk-related Centres of Gravity):

•Chronic fiscal imbalances (economic)
•Greenhouse gas emissions (environmental)
•Global governance failure (geopolitical)
•Unsustainable population growth (societal)
•Critical systems failure (technological)

I am surprised to find "unsustainable population growth" included here, as it is fairly clear that global population growth will start declining shortly. The biggest societal risk is surely the rise of a worldwide "me" generation, that cares little for wider society and does not want to get involved in politics, leaving the first field to a few do-gooders, and the second field to liars, thieves and murderers.

The Druid forecast versus mine for 2012

2012-01-01T05:45:00.000-08:00

A cheerful bit of news from a local newspaper in the UK apparently says: “2012 will be a great year... Druids... have high hopes after the Sun shone on Stonehenge, in Wiltshire, yesterday to mark the Winter Solstice.”

The friend who sends me the above says: "THANK YOU, DRUIDS! We could all do with a great year".

Yes, we could indeed all do with a great year.

But if what is meant by a great year is a great year financially or economically, you'll have to wait to see whether the Druids are right, or I....

Meanwhile, the really good news is that money isn't everything. It isn't even signify a lot. Money is merely a necessity or convenience. What matters is what one does with the money one has, however little that may be.

Do good to others. Spread cheer to the people you come across. Reach out to the poorest and most miserable folk that you may not even know personally, through people you trust. That way, whatever is happening in global economics and politics, the year will be a great one for you and yours.

Forecast for 2012

2011-12-30T13:47:00.000-08:00

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.

My first American Christmas celebration

2011-12-30T13:19:00.000-08:00

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.

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

2011-12-19T23:35:00.000-08:00

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?

Global framework for financial services finally looks set

2011-12-19T07:36:00.001-08:00

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: http://online.wsj.com/article/SB10001424052970204058404577106643689193010.html?mod=dist_smartbrief

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.

“ABOUT TURN! … ATTENTION! … DISMISS!"

2011-12-18T08:57:00.000-08:00

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!
UNDER ORDERS TO TURN THE OTHER CHEEK?

(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.

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

2011-12-09T20:07:00.000-08:00

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.

What are the advantages and disadvantages of Twilk?

2011-12-07T20:48:00.000-08:00

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.

Why I am a Devolutionist

2011-12-07T12:29:00.000-08:00

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.

Do we really need such research?

2011-12-07T07:40:00.001-08:00

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!

Pope joins movement to ban the death penalty

2011-12-07T06:33:00.000-08:00

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.

Brazil’s rapid growth shudders to a halt

2011-12-06T23:17:00.000-08:00

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

http://link.ft.com/r/IOCBMM/GDNVDG/NGUK/HYQ233/YBAJ5N/7V/t?a1=2011&a2=12&a3=7

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.

Why are those who study economics less philanthropic?

2011-12-02T20:43:00.000-08:00

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: http://prabhuguptara.blogspot.com/2011/10/role-of-business-schools-in-promoting.html

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: http://ideas.repec.org/a/eee/jeborg/v79y2011i3p318-327.html

Science and technology in the ancient Indian scriptures the Vedas

2011-11-30T19:56:00.000-08:00

Available at: http://guptarasindia.blogspot.com/2011/11/science-and-technology-in-vedas.html

A shock for everyone interested in brands

2011-11-29T21:38:00.000-08:00

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.

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

2011-11-29T21:31:00.000-08:00

published at: http://guptarasindia.blogspot.com/2011/11/poem-written-some-two-years-ago-on.html

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

2011-11-29T21:14:00.000-08:00

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:

Beijing
Boston
Cancun
Chicago
Dubai
Hong Kong
Johannesburg
Montreal
Muscat
Nairobi
New York
Sao Paulo
Shanghai
Tel Aviv
Tokyo (NRT)

That seems to me like almost everywhere except India...

http://booking.swiss.com/web/Offers/from-Zurich-ZRH-to-Beijing-BJS.html?i=W2G1&g=1&WT.mc_id=NLCH1148&WT.sect=INTRO&WT.rem=WINTER-SPECIALS_WW&country=CH&lang=1?WT.mc_id=NLCH1148

Poem written in April 2011, on a visit near Lucknow

2011-11-29T20:06:00.000-08:00

Available at: http://guptarasindia.blogspot.com/2011/11/poem-written-in-april-2011-on-visit.html

investment/ loan opportunity

2011-11-28T05:56:00.000-08:00

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.

More and more impressive: Forward Press magazine (Delhi)

2011-11-28T05:55:00.000-08:00

http://guptarasindia.blogspot.com/2011/11/more-and-more-impressive-forward-press.html

What is the TPP - and should it be welcomed?

2011-11-25T22:44:00.000-08:00

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 http://tppwatch.org/2011/09/04/human-rights-commission-rejection-of-trans-pacific-partnership-audit-latest-blow-to-democratic-process

There are other considerations too – for example, on health-related considerations, see http://www.ip-watch.org/weblog/2011/07/12/trans-pacific-partnership-agreement-did-us-move-threaten-public-health

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.

The new China that is ahead

2011-11-25T22:29:00.000-08:00

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.

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

2011-11-19T09:27:00.000-08:00

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.

my post on Zhong's research relating cheating to deliberation

2011-11-18T08:00:00.000-08:00

is posted today 18 November 2011 as "Cheating, Rationalism, Rationalisation and Rationality" at my Indian blog http://guptarasindia.blogspot.com/2011/11/cheating-rationalism-rationalisation.htmlhttp://www.blogger.com/img/blank.gif

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

2011-11-15T02:16:00.000-08:00

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:
http://ideas.repec.org/a/sej/ancoec/v771y2010p776-794.html

Unemployment in the USA

2011-11-15T02:07:00.000-08:00

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:
http://e.mckinseyquarterly.com/12077cb8alayfousubpclaliaaaaaa7vxpx3srfmlpuyaaaaa

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

Is there an IMF warning on China?

2011-11-15T01:27:00.000-08:00

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?

Support for my view on the US economy?

2011-11-15T01:21:00.000-08:00

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
http://www.bloomberg.com/news/2011-11-15/manufacturing-america-s-new-middle-class-henry-r-nothhaft.html

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

Raymond Learsy on Oil and Finance

2011-11-12T03:56:00.000-08:00

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.

Secularist Censorship in the USA

2011-11-09T08:20:00.000-08:00

Tony Carnes, Publisher & Editor, A Journey through NYC religions (www.nycreligion.info) 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."

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

2011-11-07T18:33:00.000-08:00

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 DOING YOUR WORK AS WELL AS POSSIBLE
- A HUNGER FOR THE OVERALL GOOD OF THE COMPANY
- 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!

So what was the 1st point? ESTABLISH YOUR CREDIBILITY BY AT LEAST PERFORMING TO EXPECTATIONS, AND IF AT ALL POSSIBLEBY OUTPERFORMING THOSE EXPECTATIONS.

What was the 2nd point? RAISE YOUR VISIBILITY – ENSURE THAT PEOPLE INSIDE AND OUTSIDE YOUR COMPANY, BUT SPECIALLY YOUR BOSS, KNOW WHAT YOU ARE CONTRIBUTING TO THE COMPANY.

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
2ND? RAISING VISIBILITY
3rd? ADDING VALUE
4TH ENHANCING REPUTATION

And now we can come back to where we started, the 5th and most important thing: TRANSFORMING YOUR INDUSTRY, AND INDEED EVENTUALLY ALL INDUSTRY AND ALL COMMERCE (IF YOU ARE IN THE PUBLIC SQUARE, THEN ALL PUBLIC SERVICE AND ALL GOVERNMENT SERVICE) SO THAT IT BECOMES MORE ETHICAL, MORE JUST AND MORE SOCIALLY AND ENVIRONMENTALLY RESPONSIBLE.

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.

Robots that teach themselves...

2011-11-07T10:37:00.000-08:00

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?

Further nonesensical research

2011-10-31T13:45:00.000-07:00

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?

The Role of Business Schools in Promoting Values in Business

2011-10-29T13:41:00.000-07:00

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?
and
- 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

Should we sometimes be sad when a book is republised?

2011-10-29T11:57:00.000-07:00

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.

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

2011-10-24T12:20:00.001-07:00

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 http://www.catholicnewsagency.com/news/vatican-council-proposes-a-global-financial-authority/ and http://www.reuters.com/article/2011/10/24/idUS264245887020111024

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.

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

2011-10-21T07:35:00.000-07:00

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.

Second response to my article on Eliminating Black Money in India

2011-10-19T19:44:00.000-07:00

Someone based in a European country writes:

"Thought provoking and absolutely novel approach"

Response to my article on Eliminating Black Money in India

2011-10-19T19:42:00.000-07:00

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
decisions".

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.

My proposals for Eliminating Black Money in India

2011-10-19T13:01:00.000-07:00

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.

On Financial Incentives versus Social Norms

2011-10-19T07:21:00.001-07:00

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: http://opower.com/uploads/library/file/1/allcott_2011_jpubec_-_social_norms_and_energy_conservation.pdf

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.

"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

2011-10-18T05:28:00.000-07:00

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 (www.revelationmovement.com), my Blog (www.prabhuguptara.blogspot.com) and the website of Relationships Global (http://www.relationshipsglobal.net). 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.

Should the new global IMF-based rescue plan be welcomed?

2011-10-14T04:29:00.000-07:00

For details, see:

http://www.ft.com/intl/cms/s/0/9a69e06a-f5bf-11e0-bcc2-00144feab49a.html#axzz1akqhzhwB

Yes, such a plan should be welcomed, and I do welcome it.

However, the question is whether, by the time comes to implement the plan, emerging countries such as China, having their own problems with which to deal as a result of the current crisis, will have enough money spare to put in.

No the recession ahead is NOT likely to last 30 years

2011-10-14T04:03:00.000-07:00

Apparently, investors are rushing to buy 30-year US debt: http://link.ft.com/r/2SRI11/KQNXOA/8QX8/ORR0UH/DWIOW8/E4/t?a1=2011&a2=10&a3=14

Usually there is a rush to such a "safe haven" only if a storm is expected.

So we could reach two conclusions: first, a lot of the smart money is now on a recession; second, the recession is expected to last 30 years. The first conclusion would be right, the second would be wrong. However, it does indicate that such investors expect a long-term recession.

But we can expect a restructuring of the global economy, if the US plays its cards right: we can forget all the talk about this being an "Asian century".

That may happen but, if so, it will start happening several decades out.

Meanwhile, expect Asia to decline, and the US to rise (as well as the EU, if it can set its house in order).

As capital flows back to the US (not for any good reason, but simply because other markets look even worse than the US!), expect the US economy to recover - specifically manufacturing to recover.

The question is: will the new US growth be on a wise, sustainable and humane basis?

Wise: thoughtful, well-organised, sensible (not merely casino-style, or wild-west-style, as in the last 30 years)

Sustainable: taking environmental and other long-term matters into account

Humane: can the poor be taught to be (and learn to be) more responsible, and can the rich be generous about paying not for "Obamacare" but for the sort of basic human quality of life that every citizen ought to be guaranteed?

By "basic" I mean shelter from the elements, two pairs of clothes, one square meal a day, education appropriate for the intellectual ability and interest of each person, transport and physical infrastructure that works even for the poor, and ensuring treatment of common diseases and preventable physical suffering.

If one of the richest countries in the world can't organise itself for this, it ought to be ashamed of itself - and God will condemn it for its irresponsibility.

If it does take seriously its responsibilities outlined above, then God will bless it.

How can I dare to say this? Because the Bible - and history - make this clear.

"The four principles of Indian spirituality"

2011-10-14T03:18:00.001-07:00

A friend sends me a beautiful set of powerpoints, propagating "the four principles of Indian spirituality": (1) whomsoever you encounter is the right one
(2) whatever happened is the only thing that could have happened
(3) each moment in which something begins is the right moment
(4) what is over is over"

I was forced to respond as follows:

"Dear ....

As most Indians are totally unaware of the history of Indian spirituality, we make things up as we go along (that is the challenge with a culture that has deliberately turned its back on history and truth, to take to myths)

the four principles that you state are, actually, Buddhist principles, not "Indian"

if you are interested in INDIAN spirituality, that is rather more complex, more interesting, more exciting, more worthwhile, as well as more challenging

meanwhile, you might like to consider that if "whatever happened is the only thing that could hae happened", etc, that gives us no basis on which to resist evil or struggle for the good, the beautiful and the true, no basis on which to grieve or celebrate

such a belief would enable us only to accept fate - which is what has historically kept most countries poor, diseased and without hope

we would have no basis on which to resist Hitler or fight disease or environmental disaster

all hope, and all progress, can only happen if such false beliefs are rejected and we accept the pain of making moral evaluations and then struggling sacrificially for what is right".

Dr Vishal Mangalwadi's lecture tour of Australia

2011-10-09T02:23:00.000-07:00

I have just received the following News Release:

‘Truth and Transformation’ Tour: 8 - 16 October 2011
India’s C.S. Lewis, Dr Vishal Mangalwadi, to visit Australia

Dr Vishal Mangalwadi is a philosopher from India, at present based in the USA. He will be holding his first Australian media conference at the NSW Parliament on Monday 10 October 2011 at 12 Midday. Dr Vishal Mangalwadi is a prominent international professor, speaker across 36 countries, a regular media commentator in the States and author of 14 books. His latest title is ‘The Book that Made Your World’.

Vishal is a man with a prophetic voice and a compassionate heart. Some have called him the “CS Lewis of the East”. Born in India in 1949 he studied philosophy at universities, in Hindu ashrams, and at L’Abri Fellowship in Switzerland. In 1976 he turned down several job offers in the West to return to India where he and his wife, Ruth, founded a community to serve the rural poor. Vishal was put in gaol by corrupt provincial officials for his stand for the poor and for the truth. Undeterred, Vishal continued his involvement in community development, serving at the headquarters of two national political parties, where he worked for the empowerment and liberation of the poor and lower castes.

Dr Mangalwadi’s current focus is ‘The Decline of the West’ where he relates that when the Bible, as the moral compass of our Western culture, is removed as a positive influence on society, there is a moral decline. In his talks he poses the question, ‘Must the Sun Set on the West?’ He accompanies this with some observations on other social topics such as the questionable integrity of our national leaders, the decline of innovation, education concerns, the family, finance and justice.

In Australia

Dr Mangalwadi has been invited to speak to a variety of audiences on the values that made Australia great. He is the speaker at the inaugural William Wilberforce Luncheon to be held at NSW Parliament House, Macquarie St, Sydney from 12:30pm – 2pm on 10 October 2011. Dr Mangalwadi will be part of some presentations to honour NSW Parliamentarians for their stand for life, family, faith and freedom. His new release, “The Book that Made Your World” will be part of the presentation.

Dr Vishal Mangalwadi is in Australia from 8 – 16 October for the “Truth and Transformation Tour” which has been organised by the Australian Christian Values Institute. During the tour Dr Mangalwadi will be speaking in Federal Parliament, Canberra, NSW Parliament, Queensland Parliament and also in Sydney, Wollongong, Brisbane, Adelaide and Canberra. Dr Mangalwadi is also the keynote speaker for the Australian Christian Lobby National Conference being held in Canberra 14 - 15 October.

Dr Vishal Mangalwadi is available for media commentary.

Media Conference Details

NSW Parliament House, Sydney 12 Midday on Monday 10 October 2011.
Location is near fig tree in The Domain at rear of NSW Parliament.
NOTE: In the event of rain Media Conference will be held in the Dining Room where Dr Mangalwadi will be speaking for a William Wilberforce Luncheon from 12:30pm – 2pm.

Truth and Transformation Tour Schedule

Sat 8/10 – Sydney
Sun 9/10 – Sydney
Mon 10/10 – Sydney
Tues 11 – Canberra-Press Gallery
Wed 12/10 – Brisbane
Thurs 13/10 – Adelaide
Fri/Sat 14-15 – Canberra
Sun 16/10 – Woll/Sydney

Media Enquiries: Warwick Marsh [M] 0418 225212 [E] warwick@webshield.net.au
___________________________

Truth and Transformation Tour Schedule
8-16 October 2011
Saturday 8 October 2011
6PM – 9PM Dinner/Lecture
“The Book that Made Your World”
L'ABRI FELLOWSHIP AUSTRALIA
10 River Rd, Elderslie Camden NSW 2570
Phone: (02) 4658 0227
Web Site: www.labri.org
Email: australia@labri.org
5:30 for 6pm start.
RSVP 5th October: Suggested minimum donation of $20 towards costs and Vishal’s ministry.

Sunday 9 October 2011
9AM Service
“Truth Transformation”
LIFE CENTRE Sydney
19 Dowling St (entrance from Kembla St)
Arncliffe NSW 2205
Sydney Australia
Tel: 02 9567 8133
Email: mail@lifecentre.org.au

3:30PM Service
“The Book that Made Your World”
New Life Community Church
Unit T/10-16 South Street Rydalmere
Sydney
Phone: 02 9680 0439
Email: enquiries@newlifecc.org.au

8:30PM Live Syndicated Radio Interview:
“Open House” with Leigh Hatcher
Played all across Australia
Studio Complex
2 Leabons Lane, Seven Hills, NSW, 2147
Phone: 02 9854 7000
www.openhousecommunity.com.au
www.hopemedia.com.au

Monday 10 October 2011
12:30PM
William Wilberforce Luncheon
“Standing for the Truth in the Public Square”
NSW Parliament House Dining Room
Parliament House
Macquarie St, Sydney
Cost : $75.00
Bookings Warwick Marsh 0418 225 212
RSVP: 4PM Wednesday 5 October 2011

Tuesday 11 October 2011
Breakfast Meetings with Parliamentarians (TBC)
Parliament House Canberra, ACT
(Meetings in Parliament House)

Monday 10 October 2011
12:30PM
William Wilberforce Luncheon
“Standing for the Truth in the Public Square”
NSW Parliament House Dining Room
Parliament House
Macquarie St, Sydney
Cost : $75.00
Bookings Warwick Marsh 0418 225 212
RSVP: 4PM Wednesday 5 October 2011
7PM –9PM
“Big Ideas: how Christian thinking can rebuild society”
Nexus Church
151 Flockton St
Everton Park Brisbane
(Love Offering taken)
For more Information contact
Cindy McGarvie 0425 308 219

Book on Facebook at below Link:
http://www.facebook.com/event.php?eid=274430725915150#!/event.php?eid=274430725915150

Wednesday 12 October 2011
7:30 – 8:30AM
Bi Partisan Parliamentary Prayer Breakfast
Queensland State Parliament
Brisbane
Meetings with Parliamentarians in Morning

12 – 2PM
William Wilberforce Luncheon Seminar
“Truth and Transformation”
(Plus Short Lecture to Baptist Bible College Students afterwards TBC)
Queensland Baptist Centre
53 Prospect Rd Gaythorne.
Cost for this event is $25.00.
RSVP by 12.00pm 11th October –
Wendy Francis: 0411 431 141
wendy.francis@acl.org.au

Thursday 13 October
10:00 AM to 12:30 PM
“Transforming Our Culture Seminar"Seminar followed by a light lunch.
Edwardstown Baptist Church
Cnr Rothesay Ave & Dorene St, St Marys Adelaide
Price Early Bird: A$25.00 - for payment by 29 September 2011
Full Price: A$30.00 - for payment by 10 October 2011
For more information phone Family Voice Australia
Ph: 1300 365 965
Email: office@fava.org.au
www.fava.org.au
Night Webinar “Amazing Truth” with Family Voice Australia (Invitation Only)

Friday 14 October 2011
ACL Intern Christian Values Roundtable
10AM – 12:30PM

Australian Christian Lobby
National Conference 14-15 October 2011
“Putting Kids First”
Hyatt Hotel
Commonwealth Avenue
Canberra, ACT
Numbers are limited so please register early to avoid disappointment.

6:30PM Friday 14 October
Dinner with Dr Vishal Mangalwadi
Dinner Cost $100.00 Book online
www.acl.org.au

Sat 15 October 2011
8:30AM – 4:30PM
ACL Conference
Cost $150.00
For more Information
ACL National Office
Canberra ACT
Phone: 02 6259 0431

Sunday 16 October 2011
9:30AM Service
“Truth Transformation”
Shellharbour City Community Church
500 Shellharbour Rd
Shellharbour NSW 2529
Phone: +61 02 4297 3549
E-mail: info@sccoc.org.au

6PM Service
“Truth Transformation”
Christian Community Church
20 Park Rd
Wallacia NSW (Western Sydney)
For more Information Ps John Carroll
Mobile 0418 291 449
Email: lambking@optus.com.au

http://www.youtube.com/watch?v=6ZV1Y24Nafk&utm_source=RevelationMovement+Main&utm_campaign=5dacffb87a-_Vishal_s_Truth_and_Transformation_Tour&utm_medium=email

http://www.youtube.com/watch?v=a7NNj4tG6GU&utm_source=RevelationMovement+Main&utm_campaign=5dacffb87a-_Vishal_s_Truth_and_Transformation_Tour&utm_medium=email

ENDS

President Obama - correct, but not adequately

2011-10-06T23:15:00.000-07:00

For a brief account of President Obama's response to the anger of the US public on rising inequality in the US, see http://www.reuters.com/article/2011/10/06/us-obama-idUSN1E7950UK20111006

As I recollect, it is a VERY long time since Americans have protested about economic inequality, because of the dominant idea that "anyone can make it if they work hard enough and have a sensible lifestyle". This has been true for much of America's history, but has been less and less true in the last few years: income inequality is not only rising but is also becoming more entrenched - and the scandals since 2007 about privatising gains and socialising losses haven't helped.

Now that there are demonstrators on the streets, President Obama has responded. Mainly by defending the Dodd-Frank Act and financial reform in general (which he should) and by defending his USD448 billion "jobs package" (though that is only a kind of band-aid and, as I have argued earlier in this Blog, the President needs to rethink his position on world trade if he's going to make any substantial impact on unemployment in the USA).

Accusing the President of "class warfare" isn't going to get the Republicans far with the public, because the public perception is that it is the rich who declared, actually several years ago, class war on the poor and indeed the middle class - and that the consequences of that class war are only now becoming apparent.

Consensus economists views versus my view

2011-10-04T23:44:00.001-07:00

For a good summary of the current views of consensus economists see: http://www.reuters.com/article/2011/10/05/us-economy-outlook-idUSTRE7940M720111005
economics

Why are theee consensus views wrong?

Because the models they use to understand what is going on and to make their forecasts do not take three things into account:

1. Deleveraging: we have had some decades where we have had the benefits of over-leverage, and we are now in a phase where we must deleverage. That will not take days or weeks or months, but at least a few years.

2. The current money wars: we have had some decades where currencies (excuding the Chinese Remnimbi or Yuan) appreciated and converged. We are now in a phase where every country, in response to the Chinese position as it has become increasingly damaging to other economies, are all in turn trying to weaken their currencies and keep them as low as possible. That is what explains at least a part of the logic for Quantitative Easing, and for the reluctance of European authorities to rescue Greece et all too quickly or definitively.

3. Asset overvaluation due to too much money sloshing around the world: asset values will have to come down, and a lot of paper money will have to be effectively destroyed, before asset prices diverge again to reflect the real risks involved in each class of them, and the different phases of boom and bust in which each class of assets is.

When I am convinced that the models of consensus economics take the above three factors into due account, I will be more inclined to trust them.

Isn't it tiem to simplify overly complex US regulation?

2011-10-04T23:35:00.000-07:00

I see from today's news stories that the "U.S." is considered to have "won" three cases that even the courts described as "exceedingly complex": http://www.reuters.com/article/2011/10/05/us-tax-shelters-idUSTRE7940KU20111005

As you can read all about them at other places on the Internet, I won't bother to summarise them here, beyond saying that they represented THREE cases where some of the best-educated and most-experienced experts from some of the largest US commpanies thought they were doing something legal (so convninced that they were willing to spend the huge amounts of money and time that are now necessary to take a case to court in the US), which turns out not to be legal.

That should alert Americans to how difficult the entire system of law has become in the USA.

If the US could start simplifying the law and making it more clear and reliable, it would improve business confidence no end - specially at present, as the US has a window of perhaps three years in which to rebuild itself, or it will lose the chance for at least a generation.

The current currency wars and Republican treason

2011-10-04T23:14:00.001-07:00

If the US has any laws agains treason, the Republican leader John Boehner should be tried under those immediately.

At least ince 2005, it has been clear that one of the major causes of economic instability around the world is the value of the Chinese currency, the Yuan or Remnimbi, which is deliberately kept low by the Chinese government.

It is well documented that the US elite has betrayed the interests of the people of the United States ever since Nafta was signed, and then the WTO agreement,and then the bringing in of the Chinese into the world trade system without any safeguards or meaningful guarantees.

All measures to bring the Chinese into line with their own commitments have been systematically thwarted by the US elite of both parties.

And now the latest attempt to bring the Chinese into line is being opposed by none less than the leader of the Republican Party in the House of Representatives!

He does not seem to understand that we are in the middle of a currency war and that, following the refusal of the Chinese to strengthen their currency (attempts have been made to persuade them to do so since before 2005) EVERY country is trying its damndest to weaken its currency.

If we don't understand that, then we don't understand an important part of the logic for Quantitative Easing around the world, and we don't understand the logic for the decisions regarding whether European authorities wish to rescue Greece et al.

If China were to allow its currency to strengthen, it would create room for all currencies to strengthen and we would have space to move beyond our current currency wars.

Having said that, I do understand that Chinese authorities may feel that this is not be the right time for China to allow its currency to strengthen, given that it is beginning to face a crisis that has been a long time coming. China should really have taken the opportunity to allow its currency to rise when it was in a strong position. But even now is not an impossible time for China to move to making the sorts of structural changes that are necessary if the country is to prosper. Otherwise, like Japan from the 80s, China may find that it has now reached the limit of its rapid rise in prosperity.

Sustainable Investing conference, 10 & 11 November 2011, London

2011-10-04T02:15:00.000-07:00

Please note that I have no commercial, financial or even personal link with this conference, but am drawing attention to it solely because you might be interested in sustainable investing, though my own view of the most sustainable investing remains that of investing in small businesses that you know and can check on personally:

Banking and NGO professionals will discuss the problematic relationship between commodities investing and basic human needs - and there will be four Roundtable discussions, with the following speakers: Remy Briand, Managing Director, Global Head of Index and ESG Research at MSCI Inc. - Switzerland, Sabine Schels, Senior Director, Head of Fundamental Commodity Research at BofA Merrill Lynch - United Kingdom, Julia Balandina Jaquier, Founder of 3P Capital Partners - Switzerland and Ewoud Goudswaard, General Manager at ASN Bank - The Netherlands.

Some of the Workshop Speakers: Richard Mattison, Trucost - United Kingdom, Christopher McKnett, State Street Global Advisors - USA, Alexia Zavos, SRI Manager, Cazenove Capital - United Kingdom and Mariana Bozesan, Founder and President of AQAL Investing - Germany.

10 & 11 November 2011, London. For full details: http://www.tbliconference.com/

Are we at the brink of financial collapse? Will we pull back in time?

2011-09-30T23:43:00.000-07:00

Having shared with someone the text of my 1998 speech "The Role of Law and Ethics in a Globalised Society"***, I received the following response:

"your article is based on an assumption which I am in doubt of, namely that Man is willing to give up getting more for himself in order to let others have their piece of the cake. Whereas I agree fully with your assessment that we are at the brink of disaster, I still see nothing convincing pulling us back from jumping!"

The response is based on two assessments. The first relating to humman nature, and the second relating to our current financial crisis. On the second, you read often enough on this blog

For the first, there are two (and only two) possible assumptions about human nature.

(a) that humans are no different from animals and will always act in their self-interest only. This view is observably false (nearly all humans operate right now philanthropically, and have always done so). Moreover, holding and propagating such a view makes it impossible to build any practical legal, social or political system. Acting on this assumption erodes and eventually destroys any possibility of civilised life. In other words, this assumption is both false and destructive.

(b) though indiivduals do act selfishly and to the detriment of others from time to time, such individuals lower the level of humanity and are to be held in contempt; most individuals are, most of the time, capable of rising, do rise, and should rise, above mere selfishness, to care for the common good. Those who do so most self-sacrificially we consider the heroes of humanity, whether Mother Teresa or Martin Luther King or Mahatma Gandhi or Mahatma Phule or Jesus of Nazareth. We actually increase the possibility of building beneficial law, society and politics as we hold up such ideals before humanity, which always has to choose between evil and good. Holding such an asuumption is the only way of preserving, let alone building up the possibility of any civilised life. In other wordss, this assumption is both true and construcive.

And what has all this to do with the current financial crisis?

If you hold the first assumption, you are bound to be negative and to be bearish, and so will contribute to the collapse of the system - with all the negative consequences for everyone including yourself.

On the other hand, if you hold the other assumption (which is sometimes considered "naive"!!!), you will contribute to preserving the system and even try to help reform it.

*** the text of the speech (at the Conference on The Role of Law and Ethics in a Globalised Economy, organised by the Max Planck Institute for Intellectual Property, Competition & Tax Law, co-sponsored by The European Academy of Sciences and Arts as by The Bavarian Ministry of Economic Affairs, Infrastructure, Transport and Technology; held at the Bavarian Academy of Humanities & Sciences, Munich, Germany, May 22-23, 2008) was published as a chapter in the Proccedings of that conference, Springer, Germany, edited by Professor Joseph Strauss.
This was a version of material that had been presented initially at The Club of Budapest conference in 2004, and arose out of material initially presented in 1998 as "Life, Work and Careers in the 21st Century" at a meeting of the Career Innovation Group and published by them as a Discussion Paper in 1999 and, in a related form, as a chapter "Managers' Lives, Work and Careers in the 21st Century" in Leadership and Management in the 21st Century (edited by Cary L. Cooper), Oxford University Press, December 2004, pages 107-138.

So are we finally going to have a Transaction or "Tobin" Tax?

2011-09-29T01:54:00.000-07:00

Delighted that the European Union is finally taking this seriously - and that even the Financial Times has come out in support of it.

The simplest explanation of the Tobin Tax is at: http://en.wikipedia.org/wiki/Tobin_tax

John Plender's column in the Financial Times: http://www.ft.com/intl/cms/s/0/39051e9c-e83c-11e0-9fc7-00144feab49a.html#axzz1ZKZm1Jz5

Unethical BBC interview with trader who would like to panic people into abandoning the euro and thereby make money from it

2011-09-27T08:02:00.000-07:00

Traders, by definition, cannot be unbiased commentators, because they hope to make money from a bet they have placed.

It is in their financial interest to swing public opinion in their direction so that people bet with their money alongside them, and so move the market in their direction and thereby increase their chances of winning the bet.

It is like asking an intelligent and totally selfish arms trader or weapons manufacturer, in an uncertain situation, if he thinks there will be a war. He will know that the more emphatically and persuasively he says that war is likely, the more he will persuade people to act as if there will be a war, and will thereby make war more likely - and guarantee his profits.

The BBC has been highly unethical in broadcasting this interview, and I have complained to the BBC.

'A Final Chance?: The Economic Crisis and the Future of the USA'

2011-09-24T14:26:00.000-07:00

If you live in the Phoenix AZ area and would like to be at my talk on the above subject, which is scheduled to be held on 16 October 2011 from 7-9pm, please email me: the event is free of cost but by invitation only.

What game is Pakistan's Foreign Minister playing?

2011-09-22T23:27:00.000-07:00

The Pakistani Foreign Minister has apparently told the US it could ‘lose an ally’ if it continues to cajole Pakistan about how little it is doing to eliminate terrorism IN the country and being exported FROM the country. Instead of responding by saying something like "Pakistan is doing all it can do, and will do even more in the future", all that she could say was that the US ‘can’t afford to alienate Pakistani people’ and that 'Pakistan is the first one to suffer because of terrorism, because of militancy. Pakistan is doing it for itself. You don't need cajoling on that, that is in our national interest.': http://www.reuters.com/article/2011/07/23/us-asean-usa-pakistan-idUSTRE76M1BT20110723

Unfortunately, as is evident to everyone, except apparently the Foreign Minister, Pakistan does not seem to pursue very vigorously what she claims is in Pakistan's own national interest. Or, if it is pursuiing that interest, Pakistan does not seem to want that to be known.

Even Pakistan's younger generation (the FM is 34, apparently) is quite bound by the country's Muslim "honour-shame" culture. She needs to grow up, just as the culture as a whole needs to mature, into dealing with issues as issues rather than on the basis of honour and shame: if you point out to me that something is going wrong, I should have the maturity to examine that statement on its merits rather than as an insult.

As expected: Asia down, Eurozone up

2011-09-22T23:06:00.000-07:00

As readers of my blogs should have expected, Asian stocks continue to slide while the Eurozone is to be strengthened (see http://link.ft.com/r/4RNQTT/DWIRDB/DFEV/ZGB0JQ/MSN3SZ/XL/t?a1=2011&a2=9&a3=23
and http://link.ft.com/r/4RNQTT/DWIRDB/DFEV/ZGB0JQ/C4DY40/XL/t?a1=2011&a2=9&a3=23)

Further, commodities are down while the US dollar is up (see: http://link.ft.com/r/4RNQTT/DWIRDB/DFEV/ZGB0JQ/L9FNSR/XL/t?a1=2011&a2=9&a3=23 and http://link.ft.com/r/4RNQTT/DWIRDB/DFEV/ZGB0JQ/5V7MVB/XL/t?a1=2011&a2=9&a3=23)

China has not yet admitted that its growth rate has declined but expect the truth to come out one or another sooner or later. In my view, the real growth rate is not roughly 9% sa the Chinese claim but, so far as I can work out, closer to 4%.

While the FT regards yesterday's sharp selloff as evidence that the fundamental trading pattern of the financial crisis has been "Risk-on risk-off’, the FT does not relate that to excess liquidity (too much money) in the world http://link.ft.com/r/4RNQTT/DWIRDB/DFEV/ZGB0JQ/16V2O6/XL/t?a1=2011&a2=9&a3=23. However, liquidity is being squeezed out of the global market, and must be squeezed out, so expect over the next 5 years or whenever the world returns to balance, risk-appetite to be off (that s not to say that it will never come "on" during the next 5 years or whatever, just that the trend will be in the direction of risk "off")

US stocks are over-valued at present, so don't rush to buy, but expect US stocks to rise in comparison to other stocks in the next 5 years or so, though US stocks are apparently low at present:
http://link.ft.com/r/4RNQTT/DWIRDB/DFEV/ZGB0JQ/5V7MVB/XL/t?a1=2011&a2=9&a3=23

How high/ low will oil go?

2011-09-22T09:32:00.000-07:00

Two stories in today's FT characterise the bullish view: "Oil rises back above $112 a barrel after the US government reports a big decline in domestic stocks"
http://link.ft.com/r/S4XZQQ/U1G60H/3K7L/AM75LS/KQRQBC/VU/t?a1=2011&a2=9&a3=22

and "Oil takes tight turn on Libya shortfall: Brent for immediate delivery is trading at a strong premium to forward months, another sign of physical tightness (right now)
http://link.ft.com/r/S4XZQQ/U1G60H/3K7L/AM75LS/8Z4ZSX/VU/t?a1=2011&a2=9&a3=22

Shell's CEO Peter Voser can only say that we are in an era of energy volatility (we have been in this era ever since the first oil crisis!)
http://link.ft.com/r/S4XZQQ/U1G60H/3K7L/AM75LS/U1B1ZM/VU/t?a1=2011&a2=9&a3=22

But the question for the future is: HOW MUCH volatility?

As far as I can see, oil is unlikely to go beyond 110 now, nor below 50 for any extended period. I expect the average price over the next 5 years to be somewhere around 70. Some conservative companies I know are planning on the basis of an average price for 2012 of 85. They may be right, but I expect lower.

Expect Asian stocks to continue to fall for the foreseeable future

2011-09-22T08:20:00.000-07:00

http://link.ft.com/r/S4XZQQ/U1G60H/3K7L/AM75LS/NJ3J6F/VU/t?a1=2011&a2=9&a3=22

India will suffer the least of the Asian countries because it is the least dependent on exports.

The real rate of growth in China, inspite of official claims, I take to be something in the region of 5%.

Expect therefore huge problems in the whole of south-east Asia and other emerging markets as repeatedly stressed by my postings.

Anti-euro propaganda now switches from being Greece-centred to being Spain-centred

2011-09-22T08:11:00.000-07:00

See: http://link.ft.com/r/S4XZQQ/U1G60H/3K7L/AM75LS/WT8TMA/VU/t?a1=2011&a2=9&a3=22

However, every reasonably-intelligent observer knew that the eurozone consists of a relatively solid centre, and a relatively soft periphery.

That was exactly what caused people such as me to be skeptical of it when it was launched. With the crisis that started in 2007, it was also clear that some of the soft peripheral countries (e.g. Greece) are too small to matter on their own, and that the battle over their future has primarily a symbolic significance. Once that battle is won (or lost), the battle will move to each of the peripheral countries.

So expect this to be a continuing tussle till the euro is demolished (the less likely result, because of the enormous cost to each of the eurozone countries as well as related countries such as Switzerland and the UK) or, more likely, the euro is finally established as being solid because of internal changes in each of the soft peripheral countries as well as the determination of the Germans to keep the euro going.

How much austerity, for whom?

2011-09-22T08:03:00.000-07:00

Surprisingly, after four years of the current crisis, the UK's "officials are nervous that slow growth appears persistent and the (UK) government might have to prolong or deepen its austerity drive" http://link.ft.com/r/S4XZQQ/U1G60H/3K7L/AM75LS/FKEKUH/VU/t?a1=2011&a2=9&a3=22

Meanwhile, as we all know, Greece is unveiling further adrastic usterity measures, including massive cuts to pensions and public sector salaries
http://link.ft.com/r/S4XZQQ/U1G60H/3K7L/AM75LS/R3L3V6/VU/t?a1=2011&a2=9&a3=22

What we do not yet know is what austerity measures are going to be required by the public sector in all middle-income countries as their growth stalls.

China and other export-dependent countries are going to be badly hit.

Commodity producers and exporters are also going to be hit.

It is only the rich who will carry on regardless - but only if rising taxation does not catch up with them.

That is why the rich all over the world are watching tax-related developments with keen interest - as they should. Much wealth built up over the last two decades or so because of the decline in taxes collectable from the rich.

Now you can praise something for being bad if you are transparently told that its bad!

2011-09-22T07:56:00.000-07:00

From the start of the current crisis in 2007, collateralised loan obligations have been labelled "toxic".

But the rating agency called Moody's has just raised the ratings on these, arguing that they they have performed ‘exactly as marketed’.

This is like a shopkeeper saying "You should buy this snake because it looks beautiful and if it gets anxious or angry its going to bite you": http://link.ft.com/r/S4XZQQ/U1G60H/3K7L/AM75LS/U1B1Z1/VU/t?a1=2011&a2=9&a3=22

How badly have hedge funds performed?

2011-09-22T07:54:00.000-07:00

On average, pretty badly.

Arrowgrass is considering closing its equity fund
http://link.ft.com/r/S4XZQQ/U1G60H/3K7L/AM75LS/8Z4ZS7/VU/t?a1=2011&a2=9&a3=22

Paul Donovan and Julie Hudson's FROM RED TO GREEN (Earthscan, UK, just published)

2011-09-21T07:42:00.000-07:00

Donovan and Hudson apparently set out to show "how the financial credit crunch could bankrupt the environment".

But they conclude that there are actually two separate but intertwined crises, that of finance and that of the environment.

Having provided an excellent, thorough and highly-readable analysis of the two crises, they do not offer any solutions beyond what I call "hope for the sake of hope": "If policymakers have the wisdom to listen to both economists and environmental experts, we should be able to keep the bailiffs at bay".

Now if policymakers HAD had the wisdom to listen to environmental experts (or, for that matter, to financial experts), we would not be in the messes that we are in!

For transparency, I ought to say that Paul and Julie are ex-colleagues of mine (they are still with UBS, I retired in March - though I don't know either of them well).

The relationship of religion to inequality versus the relationship of religion to wealth

2011-09-20T03:51:00.000-07:00

A friend draws my attenton to an article putting forward the view that the prevalence of religion in any country is related to the degree of inequality: http://tinyurl.com/693v8ao

I'm afraid that only exposes the superficiality of thinking among Christians. If they knew their Scriptures, they would know that extreme inequality is reprehensible but is not the explanation for the prevalence of relgious belief.

The correct explanation is that belief in the existence of God is universal, but the pride of the rich inhibits that belief.

We can expect the rich to tend to be unreligious, and we can expect the educated rich to tend to be anti-religious.

In every country and culture.

Of course, in every country and culture, there is no correlation between religion and genuine commitment to seeking after God, since religion is basically a systematised attempt to innoculate people against God - or, to provide an alternative metaphor, to anaesthetise people against any sensitivity towards God.

ETFs, the UBS debacle and other concealed and impending disasters

2011-09-20T03:31:00.000-07:00

The case of the UBS employee who hid some $2billion in losses from 2008 has been hitting the headlines for the last few days while I have been travelling.

Some analyses suggest that the financial instrument at the centre of the fraud, Exchange Traded Funds (ETFs) started "simple and transparent" and that was fine, but the problems commenced when ETFs became "complicated and obscure".

While there is some truth to such analyses, they miss the essential point that anything that starts without any underlying "real assets" is very quickly, by that very fact, going to move into "complicated and obscure" territory.

Where there are underlying stocks, bonds, commoditiees or at least alternative assets, those assets will keep the instrument, to a certain extent, from becoming too "complicated and obscure", though of course even real assets cannot prevent such a development entirely as seen by the way in which mortgage-backed securities developed. However, in the absence of any tangible backing, even that little constraint is absent.

The worrying thing about the UBS case is this: the "rogue trading" existed from 2008 and it has only just come to light, so how many other such fraud cases exist in banking? When will they come to light?

And we must be clear that such frauds are not merely "failures" on the part of an individual manager or institution, such frauds are endemic to investment banking because of the huge time-lag between deals and the issuance of the relevant documentation.

Indeed, investment banking is based to a very large extent on trust, and that trust-environment was created by Protestantism in the West. With the decline of Biblical belief, investment banking is by its very nature more and more exposed to such fraud. In boom times, any fraud that might exist can be easily covered up, but such frauds emerge sooner or later in times when the economy, as currently designed, is going through one of its predictably-frequent recessions.

Jose Ramos-Horta on Palestine and Israel (with reflections on India-Pakistan)

2011-09-19T22:51:00.000-07:00

Jose Ramos-Horta, 1996 Nobel Peace Prize laureate and President of Timor-Leste, has just published an article taking the position that "the Palestinian issue is one the Israelis have failed to manage in a wise and pragmatic manner".

It appears that the Nobel Laureate does not have any friends, relatives or enemies.

If he did, he would know that one cannot "manage" friends or relatives, let alone enemies.

Moreover, he (along with most other supporters) seems to think that the Palestinians are already one people.

Rather, their situation is like the situation of India in the 1930s or early 40s: there were competing philosophies of what the state should be, ranging from "fundamentalist Hindu" to "fundamentalist Islamic" to secular. In Palestine, the range is from "fundamentalist Islamic" to "moderate Muslim" to secular.

Once the Palestinians have sorted out their internal differences on such basic matters and have a Constitution ready to go, then it would certainly make sense for the world to re-evaluate the situation.

Otherwise, the world will be faced by one more failed state, like Pakistan, where they cannot sort out their own internal differences and so end up killing each other.

Unfortunately, we do kill each other in India as well but, in spite of much geater differences on all levels, the worst of the internecine killing that happens in India IN A YEAR is far less (on a comparable per-thousand-inhabitants basis) with the internecine killing that happens in Pakistan IN A WEEK.

I repeat: Palestine is likely, if it is recognised now, to end up being a failed state. If we wait for recognition, till basic differences among the Palestinians have been sorted out, we are much more likely to get a viable state.

What's happening with the Euro?

2011-09-13T03:06:00.000-07:00

In my view, EU leaders will pursue brinkmanship because they want the Greeks to agree certain conditions, otherwise the EU will be issuing a blank cheque

Equally, Greek leadets will pursue brinkmanship because they don't want to accept intrusive EU rules and personalities

Ultimately, however, neither party wants the euro to be broken up.

Breaking up the euro would be far more costly than staying in!

See the calculations published by UBS, which have been widely reported – e.g. by the Wall Street Journal at http://blogs.wsj.com/economics/2011/09/07/costs-of-euro-zone-breakup-underestimated

Therefore expect slow and painful political consolidation within the euro zone.

And consider buying the euro as well as suitable european shares (after due diligence!) as they are both undervalued at present.

This is not the right time for recognition of a Palestinian state

2011-09-08T13:07:00.000-07:00

A friend asks why I believe that the time, and the terms and conditions, are NOT right for recognition of a Palestinian state right now.

Here is the text of my response:

Dear ...

I could write a long mail in answer to that question!

But, to be brief:

1. It is clear, objectively, that a 2-state solution is the only one that is fair. However, a majority of Palestinians oppose a 2-state solution. On the other side, a majority of Israelis are not convinced that a Palestinian State would be governable by any reasonable political party: they are concerned that a so-called Palestinian State would amount to, not a settlement of the Palestinian issue, but a launching pad for further attacks against Israel. Considering the "moderate" Erdogan's statement today that he will send convoys with armed ships NOT to the place designated by Israel for the receipt of humanitarian supplies (Ashdod) but to Gaza, this clearly shows that even "moderate" muslims are more intent on provoking Israel to war than to helping Palestinians with humanitarian assistance.

2. Most of the money that has gone to assist Palestine has come from Europe, and very little of that has gone into actual humanitarian assistance - it has either been corruptly siphoned off for personal benefit, or gone into the acquisition of guns and rockets. That certainly does not create confidence in the ability or willingness of Palestinians to govern themselves.

3. If we take the Oslo peace process as a starting point, that was based on Israel enabling Palestinians to run their own politics and economics, in exchange for Palestinians renouncing violence and promoting peaceful co-existence (including recognition of Israel). Neither side delivered fully on its commitments - though in my assessment, the Israelis did perhaps a little more than the Palestinians. For example, in 2005 Israel withdrew substantially from the Gaza Strip, but that did not lead to any reduction of violent attacks against Israel. Today, while Fatah claims to be willing to foster co-existence in the context of a 2-state solution, they have leaders such as Mahmoud Abbas who publicly state that Israel should not exist at all. In any case, Fatah is clearly the minority party at present among Palestinians, and the majority party, Hamas, is by its very nature opposed to Israel's right to exist (its charter itself makes this clear, and that is the essence of what makes Hamas different from Fatah).

4. The Arab Peace Initiative is a comprehensive proposal, and the two sides have discussed it off and on - though the Israelis of course have some disagreements with it, I think it could have a chance of success. Clearly, Erdogan and others are concerned precisely by the fact that it might succeed and are determined to torpedo any discussion between the two sides.

5. In my view, the Palestinians have the worse quality of life (compared to Israelis) so of course we sympathise with them. However, they are simply being used as pawns by extremist Islamists, who do not want Israel to exist at all. The Arab world has plenty of money and could easily have looked after their brother Palestinians if they had wished to do so.

6. In any case, the questions in relation to the 2-state solution are basically:
(a) Can Israel contain its extremists? (Answer: yes, and it does so whenever it wants to)
and
(b) Can the Arabs contain their extremists? (Answer: no, even when they do want to do so).

Conclusion: A 2-state solution can only be reached if a (preferably united) Arab force is able and willing to commit itsef to containing its own extremists. That does not appear to be the case at present.

I hope the above is enough for a short answer

Of course, you and others are free to disagree with my view, as there is no shortage of points of view in this matter.

Warm regards

Prabhu

So the Swiss Franc has fallen and is no longer as much of a safe haven

2011-09-06T23:17:00.000-07:00

The move of the Swiss National Bank to effectively link the Swiss Franc to the Euro should be seen in the context of the currency wars that started in the 1970s with the US delinking from gold and starting to print money in unconstrained quantities - encouraging everyone to follow suit.

As anyone who has even elementary economics understands, this naturally led to much faster growth but much more volatile growth. When the Chinese starting printing more money (I mean that not only literally but also figuratively - there are many sorts of money), it resulted in the export boom which has benefited China over the last few decades. As that started hurting the American economy, the Americans instead of going for sensible global trade rules, asked the Chinese to revalue their currency. This the Chinese refused to do. Americans, instead of going for sensible trade rules, decided to devalue their currency further. I have mentioned only the US-Chinese ding-dong, but hardly any country stayed outside the competitive devaluation of currencies, except Switzerland (which has also tried once or twice to devalue its currency, but without any conviction or effectiveness till now).

Finally, Switzerland has also joined the world in devaluing its currency.

But this game cannot go on forever. Competitive devaluation of currency is a fool's game, with temporary gains and long-term damage to the global economy. When this fool's game reaches its limits, there are only two further games possible: protectionism and war. The alternative was always stable currencies and sensible global rules.

I was wrong on how far the US markets fell yesterday

2011-09-06T23:05:00.000-07:00

I thought Americans were a little more rational, but apparently not - so the US market stabilised less than I thought it would

Whether they were really worried by Eurozone matters is doubtful, as they have never earlier displayed more concern for Europe than Europeans themselves!

And were they really spooked by the foreseen link between the Swiss Franc and the Euro, which actually helped the Euro?

If so, we should expect the markets to be completely upset by the decision which is expected from Merkel and co tomorrow (Thursday) announcing a rescue package for Greece

But don't expect markets to be roiled by the decision, expect the euro to stabilise - whether America will fall further, as Americans and others switch more money to the euro is difficult to say

In the medium term, I continue to expect the dollar as well as the euro to stabilise and strengthen, as against emerging market currencies (excluding the Indian rupee which should continue strong)

Expect gold to continue stabilising and coming back into line with reality, unless President Obama's jobs speech disappoints too badly (it is expected to disappoint somewhat anyway as there's not really much he can do about that without changing global trade rules in line with environmental and human responsibility)

Following SNB announcement, expect the Euro to stabilise today and to strengthen from Thursday or Friday

2011-09-06T03:30:00.000-07:00

As I expected (and mentioned in my Twitter and Blog over the last several days), the Swiss National Bank (SNB) has now announced that it is prepared to buy "foreign currencies" (read dollars and euros) in “unlimited quantities“ as “the current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk" of deflation.

This efffectively sets a ceiling to the franc’s strength and aims "for a substantial and sustained weakening of the Swiss franc”.

Whether the SNB's interventions will be effective remains to be seen - but, I expect, that combined with the marginal effect in stabilising the euro and strengthening of the dollar (the latter was going to happen anyway, even without support from the SNB, but will now happen the more effectively).

Briefly, expect the Swiss Franc to stabilise and perhaps weaken a bit; and expect SNB intervention to help stabilise the euro and strengthen the dollar.

Shadow-fighting between sheepdogs and sheep

2011-09-05T22:41:00.000-07:00

US regulators have now moved to try to calm markets: http://www.ft.com/intl/cms/s/0/3602091a-d7e0-11e0-a5d9-00144feabdc0.html#axzz1X76F4SXC

This is classic shadow-fighting. Announce a legal action after markets close on a long weekend, and then, before that long weekend itself closes (i.e. just before midnight last night UK time) announce that the suit MIGHT be settled out of court, and for something like a tenth of the value of the original action.

Certainly, this should calm markets today - whether it does so remains to be seen, because this is merely a public statement about a possible deal, whereas the legal action is already underway, so how the markets will respond depends on the chances they assign to the deal going ahead versus the legal action going ahead.

Equally clearly, FHFA has the upper hand, though the banks are no doubt lobbying as hard as they can against the legal action, and negotiating as hard as they can in relation to the possible deal. My guess is that the deal will be reached, and on terms not too unfavourable to the banks - though the key is not only the terms of the deal but more crucially WHEN the deal is reached.

The impact on the markets today? NOT as severe as I wrote last night - we have pulled back from Armageddon, at least so far this source of trouble is concerned. So watch the Eurozone problems much more carefully, because the Eurozone will therefore get that much less relief from the opening of American markets later today. In other words, we may still get close to Armageddon between now and the Thursday rescue package that I expect from Merkel.

Damned if you do, and damned if you don’t

2011-09-05T14:37:00.000-07:00

Following the substantial losses in the Euro markets today (Monday), and in view of the anticipated fall in American markets tomorrow (Tuesday), Asian markets will probably take a beating when they open tomorrow.

The question is: how much of a beating.

The more of a beating they take, the more of a beating we can expect the Euro markets to take when they open, and the more of a beating we can expect American markets to take when, in turn, they open (though the dollar and T-bonds should strengthen as a result).

Meanwhile, American propaganda is attacking Euro markets as hard as it can. Some are attacking Merkel for not providing enough “leadership” (i.e. to provide support for Eurobonds, and for unconditional support to Eurozone periphery states). Others such as Alan Brazil at Goldman Sachs have apparently gone on the record to attack the Euro on the basis that the euro, "may weaken if additional financial support packages or stimulus measures ARE passed by European governments" (emphasis mine).

In spite of the loss of prestige associated with Merkel’s party suffering yet another defeat in a local election, the fact is that Merkel intends to push through a rescue package for Eurozone periphery countries on Thursday.

If so tomorrow will be a good day to buy Euros (I bought Euros 2 days ago, and am suffering the consequences temporarily; I expect to say a very loud “Ouch” tomorrow; however, I expect to recoup my losses and to make a bit by next week).

Further on sheepdogs biting sheep

2011-09-05T12:26:00.000-07:00

Well, the damage across the Asian and European markets could be seen today.

Tomorrow, we will see further damage across not only Asian and European markets, but much more across American markets (assuming that Euro exchanges don't freeze first - if they do, the damage worldwide will be catastrophic).

The reason for anticipating a huge American hit is that the majority of bank sued by the FHFA are American.

Someone in the financial markets responds to me: "But I think the FHFY case is week. The banks are professionals underwriting mortgages, and are saying they didn't know the risks. So it will be settled".

I agree that it will be settled, but not because the argument above is valid, rather because of the damage being caused to markets will be unbearable.

So the question is: how damage the FHFA action will cause to markets before the settlement is reached - whenever it is reached.

My view is that the FHFA was totally right to want to launch a suit, but totally irresponsible in launching a suit of this magnitude at this stage in the global crisis.

The consequences of sheepdogs biting sheep

2011-09-03T23:32:00.000-07:00

If world governments do not take pre-emptive action this weekend, or by Monday morning at the latest, as the US is closed on Monday, expect Japan and the rest of Asia (with probably least impact on India) to take the first hit, and then expect Europe to be hit once that opens.

All currencies will fall relative to the USD. On Tuesday, when the US opens for business, expect the USD to strengthen further.

However, expect shares to tank right around the world. Expect commodities (excluding gold) to be hit.

Though bonds should strengthen, we are starting what will be the worst phase so far of the crisis which commenced in 2007.

Politicians have the responsibility to announce as soon as possible what steps they are going to take to address this.

Pray hard, and do everything in your power to keep attention away from nationalisations and from protectionism, and focus on promoting world trade and world growth - preferably in ways that strengthen care for the environment and for the poorest - who will, as usual, be hardest hit.

So the sheepdog has turned and bitten the sheep!

2011-09-03T23:31:00.001-07:00

I seee that the Federal Housing and Finance Authority (FHFA) has launched mortgage-related lawsuits, worth nearly USD 200 billion, against 17 US and European banks - including JPMorganChase, Royal Bank of Scotland, Countrywide Financial, Merrill Lynch, Deutsche Bank, Credit Suisse, Goldman Sachs and Morgan Stanley.

This is ironic, considering that it was the US Government's Dept of Housing and Urban Development (HUD) which invented sub-prime securitisation and pushed it and persuaded banks to go in for it even when it was arguably illegal to do so! The practice remained technically illegal (even though "everyone was doing it") till the 1999 revocation of the Glass-Steagall Act - so the Administrations (from both Democrat and Republican parties, in turn) first encouraged breaking the law, and then changed the law in 1999

And it was the FHFA's predecessor body, the Office of Federal Housing Enterprise Oversight (OFHEO - an Agency within HUD!!!) which, if it did not actually cajole FannieMae and FreddieMac into going into sub-prime securitisation, at the very least signally failed in its official duty of ensuring the capital adequacy and financial safety and soundness of FannieMae and FreddieMac...

If the 2 FMs had not gone in the direction they did, it is doubtful that the housing bubble would have happened

Of course the housing bubble was only one of the many bubbles that was around at the time that the current crisis started (2007). The puncturing of that bubble I put down firmly to the speculation that drove the price of oil so high that the consequent rise in transport and commodity costs made it impossible for sub-prime mortgage holders (who were doing fine till then) to continue to maintain their mortgage payments, thus triggering the crisis.

Well, whatever the history, and however ironic it is, expect more fun and games to result from this suit, as the share price of banks (not only of the 17 targeted by FHFA) is hit by this action, which will have domino effects on their need for recapitalisation, and will create further uncertainty regarding the legal environment for finance and business - and, in the medium term, not only in the US.

The gold bubble

2011-08-24T23:12:00.000-07:00

Readers will recollect that a short while ago I warned against putting money in gold, and there is now the clearest possible evidence that gold is a bubble: the price of gold dropped by $160 an ounce in just the last two days - its largest 48-hour absolute fall in more than three decades.

Why the drop?

At present, the drop is due to expectations that the Fed will announce some moves to shore up the economy. If those do not materialise at a level that satisfies the speculators, then expect gold to leap up again, and beyond the price level 2 days ago; however, if the Fed does move in a manner that satisfies speculators, then expect speculators to sell gold and lower the price even more, and buy equities thus raising those prices.

My guess: the Fed will announce some moves, but those will be inadequate for the speculators; the gold price will therefore stabilise, and equities will rise marginally.

But my guess is as good as yours.

In general, expect this kind of yo-yo-sideways-yo-yo-sideways movement for the foreseeable future of the global economy, declining gently or swiftly for the next decade.

Unless something serious is done by global leaders, or unless there is divine intervention.

Buenos Aires as a "European" city

2011-08-17T02:55:00.000-07:00

Buenos Aires (BA) is sometimes considered the most European of the cities in the Americas.

I know very few cities in the Americas so am not in a position to say whether or not that is true.

But BA is certainly very European. In some ways, it has the feel of an Italian city (mixing latest architectural styles with unkempt traditional buildings). In other ways it is quite Spanish (for example, in language - though its version of Spanish is quite distinct not only from Spanish itself, but also from other South American forms of Spanish). Yet it also has people who have settled here from Africa (some 4% of the population), not to mention Russians, Ukrainians, Latvians, Germans, Greeks, Dutch, Arabs, Armenians, Jews, Gypsies, Chinese, and some hundreds of Indians (if one excludes the thousands of Indian IT and other "temporary" workers).

The most interesting aspect of Argentina is its British (or, more precisely, Scottish) connection. Though only some 100,000 people of Scots origin live in Argentina now, that connection subtly imbues a lot of things in Argentina.

For exmaple:

My wife and I have been here a week and we've had only one warm sunny day, the rest has been cold, grey with rain. We even had giant hailstones one mid-day, but we had got off the bus in the centre of BA - 40 mins on the "rapido" from where we are staying - and were in a cafe eating interesting Argentinian snacks and watching the hail stones on the tv, when we met an older Argentinian twosome who recommended the vegetarian "tart" and started talking with us in English. Towards the end of our meal the man, Sanchez, asked if we liked coffee after lunch. I agreed, so he invited us to a very English shop with a surprise behind it. The window held English-style trousers, jackets and caps, cuff-links, etc and we went through the first part which then went on to displays of pipes, tobaccos, and then a whole wall display of different cigars. But the area then opened into a comfortable "gentleman's club" lounge where we sat and chatted while drinking coffee as Sanchez smoked a cigar and, when my wife declined coffee, looked hard at her and then offered a port. Well, said my wife: yes, please! Interesting, as she had just been looking round the room and thinking, this is where one would drink port! And she had not had one for years. Though she told me that it wasn't as rich and aromatic as those from Portugal. The room had a corner full of small wooden cupboards with keys where members kept their favourite cigars in their own humidors. Not sure whether that was the way things were in London in the 17th to 19th centuries...

That afternoon we took the subway to visit the Natural Sciences Museum which had a good display of Argentinian birds, of which there are many - in fact, more species than any other area in the world. Very interesting and beautiful. In the city itself, 2e have seen bright yellow fly catchers, "oven birds" with their clay "oven" nests, and a red cardinal - that that last was in a cage hanging on a tree in the street outside a house... My point was only that from museums to gentleman's clubs, the city is still influenced by the few Scots more than most Argentinians (or, for that matter, even the Scots themselves!) realise.

As for the English, their legacy survives in many place names (though other, more obviously British place names were changed following the Falklands War). The legacy also survives in the Anglican churches here as well as in the work of the South America Missionary Society, in the popularity of football and polo, and so on.

In some ways sadly, though probably only to be expected, the Scots and English communities are now fully integrated into Argentina, and even the English Club has disappeared.

Visit to the Universidad San Andres (University of St Andrew) in Buenos Aires

2011-08-17T02:14:00.000-07:00

Here is a small university (total students: roughly two thousand, more or less evenly divided between the undergraduate and the postgraduate) with an extremely high standard.

They managed to get substantial donors before starting, and so attracted world-class Argentinian professors, offering salaries comparable to industry.

Interestingly, they search for exceptionally intelligent youngsters in poorer areas of the country and provide them special academic assistance so that they are not penalised when compared with bright youngesters who have had top quality secondary education, both academically and socially. When those from the poorer regions outperform their richer peers, the University offers them special recognition!

Most universities in this country don’t seem to have much space or sports facilities or even libraries.

By contrast, here there is a feeling of space, the buildings are generously proportioned and beautiful, the grounds well maintained, and San Andres has one of the biggest libraries in the country, with over 70,000 volumes.

I was particularly impressed with the work of their librarians who are systematically collecting and conserving old maps, manuscripts and books relating to Argentine history and literature.

No wonder that, academically, the University outperforms all the other universities (which are very much larger) in the social sciences, law, economics, humanities, mathematics and education.

Why the world has an unstable, vulnerable and volatile money system - and what to do about it

2011-08-15T01:49:00.000-07:00

Roger Lowenstein explains why the Gold Standard was immorally abandoned by the main party (the US) which engineered it, as well as the consequences, positive and negative, in an easily-readable piece:
http://www.businessweek.com/printer/magazine/the-nixon-shock-08042011.html

As I have stated publicly, verbally as well as in print, I find it extraordinary that no christian minister, priest or evangelist, was willing to denoouce the unilateral breaking of an international treaty.

Nor was anyone prepared to condemn Nixon for a public sin that had been condemned as long ago as by the prophets Moses, David and Isaiah (Leviticus 19:35, Deuteronomy 25.15; Isaiah 1.22, Amos 8.5, Micah 6.11, and so on).

That public sin is the reason why we have the global system of money which is so unstable, vulnerable and volatile.

Naturally, it is difficult to get back to the gold standard or the silver standard. But it would not be difficult to arrive at a stable system of money creation where only that much money can be produced in a country as the GDP of that country (I know this is difficult to assess, but it is far easier to assess than dollar flows). Also, GDP can be judged fairly accurately in retrospect and there could be a method of smoothing out all inaccuracies in measuring GDP by having a 3-year rolling average for the production of new money.

Ministers plan removal of UK rioters’ benefits

2011-08-15T00:54:00.000-07:00

According to news reports, plans are being drafted to remove welfare allowances from those who are convicted of rioting.

This will satisfy public anger at such rioting, expressed for example by an apparently widely-supported public petition.

However, such political sops will exacerbate rather than address the root problem which led to the rioting - and that is the feeling of hopelessness and helplessness on the part of people who have fewer and fewer public benefits and feel excluded from the explosive growth in private wealth since the policies of Mrs Thatcher were put in place (and there has been no retreat from such policies, whichever party has been in power).

Till that root problem is addressed, we can expect to see even greater disaffection leading to MORE such incidents, because while it is just to punish rioters for rioting, it is not just to take away what little possibility they have of living a human life.

President Obama's role, if one understand the current crisis as it really is: a cultural crisis

2011-08-07T23:05:00.001-07:00

Dr Mangalwadi argues in his latest publication, THE BOOK THAT MADE YOUR WORLD, it was essentially Biblical values that built up the US and North European countries.

He does not say this, but one of the central Biblical values is loving your enemy and accepting what is true, right or beautiful in what s/he says.

With the elimination of Biblical values from public life in the US over the last several decades, we have had the rise of a radical RIGHT which, in Paul Krugman's words, is "prepared to create repeated crises rather than give an inch on its demands". Many of the demands of the right are entirely sensible, but they want the cost of the demands to fall entirely on the middle classes and on the poor.

By contrast, what was apparently a radical LEFT has turned out (e.g. in Clinton and Obama) to be soft and accommodationist.

If President Obama wants to change the world and change the USA, he will have to see change in himself first. Then he will have to lead not only financial and legislative change in the country but also political and cultural change.

So far, he has not proved equal to the few battles that he has taken on. The question is whether he will grow sufficiently in stature in the next few weeks to be able to take on the even larger challenges that he must if he is to leave any sort of positive legacy.

What President Obama needs to do to win the next elections

2011-08-06T10:50:00.000-07:00

The US economy will strengthen over the next few weeks.

Therefore President Obama has a window of opportunity right now.

Will he use it well?

That is what will determine whether he wins the next election.

What might it mean for him to use the opportunity well?

It will mean showing that he (and the US) have the ability and the will to lead the world to a new level of globalisation.

That involves incorporating minimum standards of health, safety, living standards and environmental care into global trade rules.

Paradoxically, doing that will help job creation, and therefore the economy as a whole, even in the US.

In fact, incorporating such rules into global trade is the only way the US economy can revive (otherwise, US manufacturing will constantly be undercut by China's).

Getting the economy motoring, and restoring the US to global leadership, is the only way President Obama can hope to renew his mandate.

The alternatives for the US economy

2011-08-04T22:29:00.000-07:00

Official US economic growth data suggest that the US economy nearly stalled in the first half of the year.

The US Congress debt deal comes with drastic spending cuts in an economy already sluggish, suggesting that the deal may tip the economy into recession.

In any case, the US cannot help its economy, as long as it does not revive its manufacturing industry, and it cannot do so as long as China continues to produce and sell goods in the US and the rest of the world at unnaturally low prices.

The US supported Chinese membership of the WTO in the hope that China would play the game by the rules. In fact, however, Chinese finance and economy are opaque, making it impossible to ascertain how much money the Chinese are really printing, how much subsidy is being given to which manufacturers, and so on.

The US has only the following alternatives:

(a) The US can try to bring China to book so that it is forced to play by WTO rules (the US has signally failed to do anything of that sort, even at the height of its comparative power vis-a-vis China).

(b) The US can withdraw from the WTO and go its own way, so that the US is not constrained by WTO rules.

(c) The US can begin to offer global leadership to integrate ecological and social considerations into WTO rules - which would have the effect of creating a global level playing field, on which the US could in fact compete (unlike the current "tilted" playing field in which the US cannot compete).

(d) The US can offer its companies targeted incentives to re-start manufacturing (specifically in new technologies). Any such move will produce loud howls from China and perhaps from the EU, but that is a problem that can be faced.

There is no other alternative if the US wants to revive its economy.

Not God's Type

2011-08-04T07:33:00.000-07:00

That's the title of a beautifully-written autobiography by Holly Ordway, an English Literature Prof, and competitive fencer.

I don't much care for fencing but, apart from that, I found the book a touching, moving, and profound exploration of atheism (though her atheism was mature, quite unlike my own child-atheism).

I have never written properly about my journey, while she is an excellent chronicler of her two-steps-forward-one-step-sideways-one-step-backward spiritual journey.

Much like mine, however, was the shock involved in discovering that the irrational position is that of the atheist.

Discovering too, then, what God is really like, was sweet and strange for her (as it was for me).

A short book, it can be read easily and quickly - though it merits savouring.

Published by Moody Publishers, USA, last year (2010).

increasing tensions in East Asia

2011-08-03T23:13:00.001-07:00

In case you have not been watching this region:

Following China's massive spending for several decades on its military, navy and air force as well as its ventures in space, its neighbours have been getting increasingly worried.

Now China has warned the US to stay out of the region, chased a US unmanned reconnaisance plane out of international air space, threatened to ram a Philipppine survey ship, and called "irresponsible" a Japanese defense paper that draws attention to China's naval threat and "overbearing" behaviour. In other words, China wants to decide where anyone can go, even in international airspace and waters, and China wants to censor any expressions of concern about what it is doing.

Expect more temperature-raising moves by China in the South China Sea (or, more correctly, East Asian Sea) area, but expect, as I have said earlier, if there is to be a major war launched by China, it will be against India as it has the weakest umbrella from the USA, and is therefore the weakest country bordering China.

The Socio-Economic Roots of Poverty

2011-08-03T22:26:00.000-07:00

AT the Geneva Institute of Leadership and Public Policy, I was recently asked to speak on this subject. Here is a summary.

I started with my theory of the EXPECTED NATIONAL LEVEL OF MINIMUM PROSPERITY (ENLMP) – the value of the physical resources of a country divided by the population of that country.

In order to achieve the ENLMP, countries need to eliminate looting/stealing/murder - that is, they need to have a culture that identifies and weakens structures of oppression/exploitation, which can only happen if the culture succeeds in minimising pride, arrogance, and corruption.

Different societies have different worldviews, and some worldviews are more likely than others to lead to prosperity.

The colours below are meant to have no pejorative connotations; rather, to help to remember the worldviews, and the differences between them.

A "black" worldview is one in which the fear or respect of nature/gods/fate discourages change but of course allows great sustainability. Many tribal societies have this kind of a worldview.

A "white" worldview considers the next life more important than this one, leading to possibly to great spirituality and certainly to great sustainability, but again, little progress. Examples are traditional Buddhist, Jain, Hindu, Eastern Orthodox and Roman Catholic cultures.

A "yellow" worldview is dominant in empires and dictatorships, where the leadership needs to display sufficient power to prevent threats to their position. There can sometimes be great material progress, but challenging questions are discouraged – the current arrangement is considered in everyone's best interest and is presented as the only one that will work. This includes not merely ancient empires but also, for example, the Russian and Chinese empires today. It also includes current Anglo-American capitalism where, if you question the basic assumptions of the global economic and financial system, you are excluded and punished.

The "green" worldview wishes to balance environmental and human concerns, individuals and society, tradition and progress. The Green worldview originates in the Jewish scriptures, and is mediated to our world primarily as a result of the Protestant Reformation, which liberated individuals from the overwhelming importance of family, clan and society (but made individuals responsible for society). That liberation had an INTELLECTUAL component (the freedom to read and to think and to debate and to come to one's own conclusions), a PRACTICAL component (as this world is regarded as important, the intellect was not merely free to speculate, it was also expected to engage with this world), a SOCIAL component (freedom cannot exist if there is military, economic, political or spiritual oppression - which is why it was essential to deconstruct at least a part of the Holy Roman Empire), a MORAL component (the work ethic for everyone, and an ethic of responsibility for everyone but specially for the rich) and an EMOTIONAL component (loving strangers and even one's enemies). Inspired by Jesus and the Bible, individuals therefore worked to reform society. Secularised versions of Reform were then unleashed as European thought and progress impacted an increasing number of peoples around the world. We could say that the modern world itself has been formed as a result of the impact of the Reformation, whether in Biblical or in secular versions. In Europe itself, from the 16th century, incredible progress resulted, lifting Northern Europe from being one of the poorest parts of the world throughout history, to becoming as rich as any part of the world by the 18th century, and becoming the richest part of the world by the 19th century - in other words, far above the ENLMP. Sadly, wealth often leads to arrogance, and the European elites adopted Rationalism and Evolutionism as battering rams to liberate themselves from the spiritual, emotional, social, intellectual and practical demands of the Green worldview.

The result was the "red" worldview, epitomised by modern America, which thinks that rationalsm, evolutionism, science and technology can solve all of the world's problems. Morality and law are of course therefore considered what I term "necessary inconveniences" which one should find as efficient a way around as possible, while one makes as much money as possible. This red worldview has led to unprecedented material progress, but also to the biggest gap between the rich and the poor in history, and unprecedented damage to the environment.

Today, all countries have a mix of these worldviews. It is up to you to identify in what parts of your country, in what age-groups, and at what levels of their hierarchy in your country, which worldview dominates.

Then you will be able to understand the roots of poverty in your country, and you will be able to identify some key matters that you may not have considered till now, if you want to enable your country to become prosperous.

The causes of Poverty

2011-08-03T08:46:00.000-07:00

We need to find and change the root causes of poverty rather than simply treating
the symptoms, said Mr Mohan Philip, of the Adarsh Rashtriya Party, at the Geneva Institute of Leadership and Public Policy.

According to him, one part of poverty is due to poor political leadership, or a case of those in power only looking outfor themselves.

Another part of it is simply the nature of organizations – an institution may begin with good intentions, but people with vested interests will soon take over, leading to corruption.

Then, when there is rampant oppression of the poor, they might even become willing to start armed revolution.

That can only be prevented if the leaders provide justice that is equitable, distributive, and restorative.

So the US has raised its debt ceiling, as I predicted; what's next?

2011-08-01T23:00:00.000-07:00

Readers will recollect that I predicted, in contrast to many doomsayers, that the US would indeed have a deal on raising its debt ceiling.

Expect therefore a burst of confidence for a short while.

Then reality will set in and the real debate will start, regarding how to reduce the level of unemployment in the US, and how to boost the economy.

Expect, therefore, yet more money to be printed (Quantitative Easing III).

The stimulus effect of that will shore up confidence for a while.

When that wears out, the US will have to finally face the fact that it can no longer duck the real issues that have been facing it for some time now: is it going to lead the world through responsible financial, monetary, economic and ecological policies, or is it going to initially lose global leadership and, soon after, become irrelevant globally.

Is war ahead?

2011-07-30T12:49:00.000-07:00

Very difficult to say when and where, but don't neglect this possibility in your thinking about the future.

Consider: Just this week it was revealed that two Chinese Sukhoi-27 fighter jets "pursued" a US U-2 reconnaissance plane, reportedly crossing into Taiwan's airspace in late June. According to the Taiwanese Defence ministry, this was the first time that Chinese jets have breached its airspace since 1999. Two Taiwanese F-16 fighters intercepted the Chinese jets near the central line across the 113-mile wide Taiwan Strait, and the Chinese then desisted. The public position of the Taiwanese is that the incident was an "accident". However, China has long objected to US reconnaissance of its coastline, especially since a US plane crashed into a People's Liberation Army jet in 2001 near Hainan island, killing the Chinese pilot. The crew of the US plane was detained for 11 days, creating a diplomatic row. Admiral Mike Mullen, the chairman of the US joint chiefs of staff, told reporters in Washington that the US would "not be deterred from flying in international airspace... These reconnaissance flights are important". Later, it was "clarified" he was not referring to the alleged incident, but to the general principle of the US flying surveillance planes in the region.

So what is there to consider? Well, the game of shadow-boxing (what happened? what is its significance?) goes on all the time, and not only in relation to superpowers. So why has the incident been announced by the Taiwanese somewhere between a month and two months after it occured? My guess is that they did not want to report the incident immediately because it would have increased the temperature to do so. However, they want the world to be aware of the incident, and of their response, so they announced it late enough for it not to have the effect of increasing the tension, but not so late that no one pays the announcement any attention.

Further, US reconnaisance planes listen in to Chinese communications from international air space, just as Chinese and Russian (and other) airplanes do. For the Chinese to chase
a reconnaisance 'plane is unusual, and shows that they have the confidence to do so, and feel the need to do so.

Expect the Chinese to do more and more of this sort of thing. And other nations. Each nation is positioning itself for or against the possibility of war, and these are "necessary posturings".

However, such posturings are dangerous. It only requires one party to do something stupid for war to break out, specially given economic tensions caused by the competitive devaluation of currencies - which is the last thing that nations can do in defence of their economies before resorting to economic protectionism and/or war.

War may or may not be a long way off but, unless the Chinese and the Americans can come to their senses, we are now on the road to it.

So don't ignore such stray reports as the Taiwanese have released. Pay attention. Follow the rise and fall of international tension, because your investments and indeed your life will be impacted.

US debt crisis, devaluation and the looming shadow of war VERSUS reviving the US economy

2011-07-29T02:34:00.000-07:00

A meeting of The Performance Theatre about 3 years ago was the first time I spoke about this, and I recollect that everyone pooh-poohed me then.

I have never minded being pooh-poohed because I have always considered that part of one's life if one wants to live with anything like intellectual honesty and integrity.

What one does when one is pooh-poohed is to check one's facts again.

And the facts are that whenever there is overproduction, there can only be "Creative destruction" and there are only three alternative ways of doing this: (a) limitation of production by some arbitrary means such as quotas or interest rate increase, (b) competitive devaluation of currency, and (c) war.

The first is one of a standard means of "cooling" an economy (i.e. deliberately trying to reduce production).

The second was tried when the Americans tried to get the Chinese to restrain the growth of their economy (e.g. by revaluing their currency - which, having failed to do, the US has been busy deliberately lowering the value of their currency).

If there is indeed a crisis in the USA over the debt ceiling, that is the last weapon in the armory of the US in terms of what it can do short of officially devaluing the US dollar.

So we will have what amounts to a de facto devaluation of the dollar.

IN response to that, then, we should expect moves by other countries to try every method to devalue their currencies.

If those games result in no solution satisfactory to the various key national interests, then war is not very far away.

That is what I said at The Performance Theatre (since then repeated at several places).

And I am repeating that now.

However, I hope that the US will still be sensible and, instead of setting the world on the road to war, will raise its debt ceiling.

If it does so, there will be a worldwide sigh of relief, though it will last only a short while, because the question which follows immediately is: what does the US need to do to stimulate its economy, create jobs, and so on.

The solution being mooted is Quantitative Easing III (that is, a third great burst of printing money).

If the US does proceed with QEIII, as I very much hope it will, that will also create a sigh of relief, and that sigh of relief will last a little longer than the relief produced by the raising of the debt ceiling.

In the longer term, there is no solution to the US's problems apart from revising the global rules of the game in a sensible way, as I have argued earlier = specifically revisiting the rules of the WTO and iether withdrawing from the WTO or embedding sensible rules regarding health, safety, minimum living standards, environmental care, and so on.

The moment that is done, the US economy will start reviving.

Not otherwise.

ENDS

How to completely wreck trust in a public transport system

2011-07-23T05:34:00.000-07:00

The public transport system, built up so well under Evangelical influence in Victorian England, has been completely wrecked by Thatcher and her followers since then (whether belonging to the Labour Party or belonging to the Conservative Party).

There are "competing" rail companies, all operating trains on the same set of railway tracks, but with different fares for the same route - and even different fares on the same route for the SAME rail company, depending on what time you travel.

But few trains now run on time and they are almost always overcrowded (if one travels Second Class).

And, to make it really difficult, tickets valid for a train operated by one rail companies may not be (usually ARE not) valid for trains run by other rail companies!

To illustrate: I have just checked the possibility of travelling from London to Peterborough.

Depending on the time you want to travel, the price for the ticket varies from £8 to £23.

Let us imagine that you buy at ticket for a journey scheduled to leave, let us say, at mid-day, but your train is late. It is not inconceivable that the previous train (run by an entirely different company) is also late, but arrives at "your" platform almost exactlz at mid-day. Unless you are extremely careful, you are likely to take this train, and to incur, as a result, a huge fine.

The above is not a merely hypothetical example.

The UK is full of gossip about little old ladies and gallant old men who have been caught out.

Train travel, instead of being frequently serviced, safe, reliable and cheap, is now not only infrequently serviced and expensive but also unreliable (at least so far as timings are concerned) and unsafe (think rail accidents).

No wonder the roads are more crowded than ever. With more delays and accidents than ever.

Thanks to Thatcherism and all the other experiments that have been indulged in by the British ruling class over the last few decades, Britain is now a rather nasty country in which to live, though thank God it still has many redeeming features - at least when compared to many other countries which are in an even worse condition.

But what a fall compared to being the leading country in the world, which is what Britain was in Victorian times - which elitist modernists, who have destroyed the country, of course still systematically malign.

Freedom of thought and expression in China

2011-07-21T04:08:00.000-07:00

Readers will be aware that I regard Christianity as hopelessly corrupt (along with all religion). However, I do recognise that even within organised religion there are particular organisations or individuals who truly attempt to find and follow God.

Here is the story of one such organisation. I do not know it personally. But all that I have read about it, by enemies or by more or less objective observers, confirms this to be the case.

I am publishing the following, because the last mention that I can track of this group in the general press is from a while ago.

Shouwang is but one of numerous rising house groups in China. But its story may have shown how an originally obscure Bible study group could not only survive in a (seemingly) hostile environment but also thrive and go on to make a big difference to ever more individuals and the wider world

The Meaning of Shouwang
by Promise Hsu

Towards the end of his lifetime in this world, Peter Drucker famously said more than once, "The most significant sociological phenomenon of the first half of the 20th century was the rise of the corporation. The most significant sociological phenomenon of the second half of the 20th century has been the development of the large pastoral church - of the mega-church. It is the only organization that is actually working in our society."

When Drucker, often called “the father of the modern management”, made the observation at the turn of the century, his eyes were largely on the United States. A little more than ten years later, the two most significant sociological phenomena Drucker highlighted are becoming increasingly - perhaps quite surprisingly - evident in the world’s largest economy behind America.

Since the late 1970s when China initiated the reform and opening-up policy, companies have become one of the most significant parts of the Chinese society that touch plenty of people’s lives. To a considerable extent, the rise of the corporation - both state-owned and privately held enterprises - contributed to the rise of China.

The private sector is even more notable. It has accounted for most of China’s economy. However, in the early stage of the reform and opening-up era, private businesses were still not universally recognized. Before that, China’s government had not allowed private firms to exist at all for most of the time since the People’s Republic of China was founded in 1949. Anyone would risk one’s life if he or she did private enterprises.

If the spectacular growth of private companies in China was beyond the expectation of many people, the development of large pastoral churches came as a much bigger surprise. Private companies were once viewed by China’s government officials as what belongs only to what they call “capitalism” or “the Western capitalist countries”. Now, they have regarded the private economy as an “important component” of the socialist market economy. Compared to private businesses, large pastoral churches seem even more foreign to China. Are they really growing in popularity in China?

The answer is yes. Indeed, from early April 2011 on, Shouwang Church, a large pastoral church in the Chinese capital of Beijing has begun dominating the international headlines. Almost all the major global media have been following what was unfolding concerning the church. Among them are Reuters, The Associated Press, Agence France-Presse, BBC, CNN, NPR, The New York Times, Wall Street Journal, The Washington Post, Time, The Daily Telegraph, Guardian, Al Jazeera, South China Morning Post, and both the Chinese and English versions of the Global Times, a daily newspaper operating under the official Chinese ruling Communist Party newspaper, the People’s Daily.

Over the past few years, there have already been various reports about the rise of Christianity in China. A classic is Jesus in Beijing: How Christianity is Transforming China and Changing the Global Balance of Power. It was first published in 2003 when David Aikman, its author and former Beijing Bureau Chief of Time magazine, wrote that “the number of Christian believers in China, both Catholic and Protestant, may be closer to 80 million than the official combined Catholic-Protestant figure of 21 million.” In contrast, some estimates show that there were only about 800-thousand Christians in China in 1949 and some two million in the late 1970s.

In 2011, it is still hard to know for sure how many Christians in China. An official census published in 2010 reckoned the number was approximately 23 million. Other calculations have ranged from 40 million to 130 million. According to God is Back: How the Global Revival of Faith is Changing the World, China probably has close to 100 million Christians and will soon have the world’s largest Christian population. The book, published in 2009, was written by John Micklethwait, Editor-in-Chief of The Economist, and his colleague, Adrian Wooldridge.

Yet, as Aikman pointed out in Jesus in Beijing, “in numerical terms they were still a small minority...but they were being noticed, and they kept turning up in the most unexpected places.” The Christians Aikman met across China were farmers, businesspeople, students, scholars, artists and even government officials.

Now, it is not only that Christians could be found from almost all walks of life in China but that like private companies, the non-state-owned churches - what is called “house churches” - many go to are beginning to grow into an “important component” of the Chinese society. According to Li Fan, Director of the World and China Institute, a Beijing-based non-governmental think tank, house churches have become the most powerful non-governmental organization in China. Li Fan reckoned that all over China, house churches had nearly one million worship and meeting places where the participants might account for 1/3-1/2 of China’s NGO population.

Shouwang Church is only one of those numerous house churches scattered across China.
Since April, more than 30 house churches in Beijing alone have declared to show their solidarity with Shouwang by holding prayer meetings. Some of them are also large pastoral churches. And on May 11th, pastors or co-workers of nearly 20 house churches in six Chinese cities delivered their signed petition to the National People’s Congress, China’s top legislature to investigate the government’s crackdown on Shouwang Church based on the country’s Constitution that enshrines the liberty of faith. But the story of Shouwang may have shown how an originally obscure Bible study group could not only survive in a (seemingly) hostile environment but also thrive and go on to make a great deal of difference to ever more individuals and the wider world.

The current global media spotlight centers around the worship or meeting place of Shouwang Church. Since April 10th 2011, the church has been forced to worship outdoors for twelve consecutive Sundays. Before that, the Shouwang congregation of about one thousand people had gathered in a conference hall of the Old Story Club in the northern urban area of Beijing for more than a year. But according to Shouwang Church, the owner of the rented venue was under mounting pressure from the government. In March, Shouwang planned to rent a conference hall of a hotel in the northwest of the city. However, the church said some relevant government agencies again interfered and prevented it from renting the new premises.

During the past thirteen Sundays, numerous uniformed and plainclothes police officers were sent to a public square at Zhongguancun, known as "China's Silicon Valley", in Beijing’s northwestern district of Haidian. That is where Shouwang worshippers were supposed to gather. Hundreds of people of the Shouwang congregation were detained. The time ranged from a few hours to 24 or 48 hours. They worshipped, including reading the Bible, singing hymns and praying, after being loaded on to buses or put into police stations. Some people who were free went to the local police stations waiting for the release of their fellow Shouwang congregants. Many others have been under house arrest for various periods of time. Almost all the church’s main co-workers have been under house arrest for the whole or much of the time since the evening of April 9th. Some church members have lost their jobs or rented homes or both. Some others were threatened to lose either one - or both. Many of them are young professionals in different fields, for example, in companies, NGOs and universities.

Easter Sunday April 24th 2011 was the third time the Shouwang parishioners held outdoor worship. More than 30 people were rounded up and herded onto buses or police cars when they worshiped in or near the square at Zhongguancun. Like the first two Sundays, they were then sent to local police stations. They were asked to leave their names and contact information and give a guarantee of not attending the outdoor worship again. Some declined to make any pledge and some others simply told the police that they would continue to worship outdoor next Sunday. Some of them have been detained two or three times. More than half were released later in the day. But the rest, all in the eastern district of Chaoyang, gained freedom after having to stay at the police stations for 24 or 48 hours.

On May 1st, over 30 people including two children and their mothers were detained when they were at Zhongguancun for outdoor worship or taken away from their homes. The children and their mothers were released later in the day and so were other ten people. Once again, the rest of them were freed after 24 or 48 hours.

On May 8th, at least 15 people were taken to about ten different police stations across Beijing. All except one got freedom later in the day or by the early next afternoon. Hu Jian, a Shouwang church member, was not released after 48 hours in custody. The police station said he was sent back to his Hukou (household registration) place. They refused to say where he was. The Hubei provincial office in Beijing said they did not know this. The central Hubei Province is where Hu Jian’s household is registered. After previous detentions, 26-year-old Hu Jian had already been forced to quit his job as an instructor at KindyROO, an international school for children under three years old. He also lost his place to stay because he lived at the school office.

Later on May 10th, a roommate of an apartment Hu Jian stayed at for a couple of weeks before May 8th received a phone call from Hu Jian. He said he was sent to an office of Hubei’s capital of Wuhan in Beijing from the police station earlier that day. The office was asked by the police officers to buy a train ticket for Evan's return to Hubei. They could not get a ticket and will try and buy one the next day. The police officers confiscated Hu Jian's identity card and told him later that they could not find it. They asked Hu Jian to go to Hubei to apply for a new one.

Hu Jian later told one of his English fellowship co-workers of Shouwang Church on the phone (a Wuhan office worker's) that he wanted to go and see his parents and his maternal grandmother and also wanted to get a rest after a month when he attended all the five Sunday outdoor worships and was detained four times. He, with an almost-60-year-old police officer who is a section chief of Wuchang(a district of Wuhan) Public Security Bureau based in Beijing's Wuhan office, took a train to Hankou Railway Station in Wuhan at about 9:10 in the evening of May 11th. More than 20 Shouwang congregants were at Beijing West Railway Station to see Hu Jian off. They prayed hand in hand and sang a hymn at a waiting hall of the railway station. Hu Jian and the police officer arrived in Wuhan the next morning. The Wuhan's Beijing office bought two hard sleeper tickets for them. They later went to Jingzhou, Hu Jian’s hometown in Hubei. After having lunch, the police officer returned to Wuhan. Hu Jian said he might be back to Beijing and try to find a new job in about a month. It was the first time that the authorities sent a Shouwang congregant back to the hometown because of attending outdoor worship. Two local police officers visited Hu Jian’s home asking about the basic information of his family on May 16th, four days after he returned home. He was back in Beijing in mid-June and was detained for a few hours after attending the June 12th outdoor worship.

On May 15th, some 13 Shouwang parishioners were taken to police stations. They were freed later in the day or the next day. On May 22nd, at least 27 people, including an elderly woman in her 8os and a two-year-old child, were detained. Most were released in the same day except one who was not able to return home until the next afternoon. On May 29th, 22 congregants were detained. Like the previous Sunday, most were freed later in the day and one got freedom on Monday. On June 5th, 20 people were detained including two from other churches with one from the Three-Self’s Haidian Church. 16 were released later in the day and the other four were freed by the next noon. On June 12th, 17 people were arrested. Among them, three were taken to the basement at a Haidian police station where they wanted to visit a Shouwang member who was already detained. Police officers accused two of them of stealing. All got freedom in the same day except one who wasn’t released until the next afternoon. On June 19th, 13 Shouwang congregants and a member of New Tree Church were imprisoned and all were freed before the midnight. On June 26th, 15 people were detained and all were released in the same day.

On June 27th, Wang Chuanliang, a Shouwang member, was sent back to his hometown in the eastern province of Shandong by Haidian’s Dongsheng Police Station and the Shandong provincial office in Beijing. It was the second repatriation since Shouwang began the outdoor worship on April 10th. It was the same Dongsheng Police Station that sent back Hu Jian, another Shouwang parishioner, to his hometown in the central Hubei Province in May. Hu Jian returned to Beijing almost a month later and continued to attend outdoor worship and thus was detained every Sunday since then.

At about 5 o’clock in the afternoon of June 27th, three police officers from Dongsheng Police Station and Haidian Public Security Bureau detained Wang Chuanliang in a market where he was getting a mobile phone fixed. He was handed over to a Shangdong office based in the capital and was sent back to his hometown in the evening. The Shouwang parishioner was forbidden to use his mobile phone.

Only in the next morning was he able to send a text message to his fellow church members about his expulsion. He was sent to his parents’ home at noon. His identity card was confiscated and he was warned not to return to Beijing before July 1st, which is the 90th anniversary of the founding of China’s ruling Communist Party. Local village officials were asked to watch over him.

In a weekly bulletin about outdoor worship issued on June 28th, Shouwang Church lodged a protest against and condemnation of the eviction. It considered “the forced expatriation by Dongsheng Police Station and Haidian Public Security Bureau has constituted a complete contempt for and a flagrant violation of the law in effect depriving a citizen of any guarantee of the most basic of foundational existential rights.”

On July 3rd, 19 people were detained. Most were freed later in the day but a couple were held at Longyuan Police Station in the northern district of Changping till the early hours of the next day. Also in the early morning of July 4th, two other Shouwang congregants were forced to move out of their newly-rented apartment rooms because of the mounting pressure on the landlord from Balizhuang Police Station in the eastern Chaoyang District.

Over the past thirteen Sundays, many other Shouwang members were confined to their homes. On the Easter, a young couple asked the police to drive them to the Zhongguancun square. The police agreed. They sang hymns, read the Bible and prayed in the police car. They also gave the police officers a copy of the Bible and an autobiography about how a Chinese biologist became a Christian and his views about Christianity and science. The police car moved around the square. After the young couple finished worship, the police officers drove them home. The young couple shared their experience with fellow Shouwang members through the church’s online forum, which was shut down in mid-April but resumed later. The forum was closed again in the second week of June. Many Shouwang congregants resorted to Google buzz, a micro-blogging site, for keeping informed.

Into the seventh week since the outdoor worship began, local police officers asked some church members not to attend Shouwang’s evening prayer meetings, which have been held on weeknights at a rented place of New Tree Church at Zhongguancun. Pastors and other co-workers of New Tree Church and a number of other house churches in Beijing and some other cities of China shared their sermons in the evening prayer meetings. Into the ninth and tenth week, some Three-Self Church people were sent to police stations asking the detained parishioners to leave Shouwang Church and join them or put an end to the outdoor worship. In its weekly bulletin on outdoor worship issued on June 14th, Shouwang’s governing committee quoted the apostle Paul’s letter to the Romans in the New Testament, “Who are you to judge someone else’s servant? To his own master he stands or falls. And he will stand, for the Lord is able to make him stand.” (Romans 14:4)

It was not the first time that Shouwang Church made global headlines. In November 2009 when the US President Barack Obama just wrapped up his first visit to China, The Wall Street Journal ran an opinion piece entitled “The China President Obama Didn't See”. It was about Shouwang’s first indoor worship after having to meet outdoor for two
successive Sundays. That was the first time the Shouwang congregation held an open-air service. They were evicted from an office space in northwest Beijing’s Huajie Mansion that the church had rented for three and a half years. On November 1st 2009, about five hundred people worshiped near the gate of a suburban park in northwest Beijing during a snowstorm, which was the earliest to hit the Chinese capital in more than two decades. A week later, some seven hundred worshipers met at the same place. But the chief pastor was prevented from going there for giving a sermon.

The chief pastor is Jin Tianming. In 1993, he and his bride began a Bible study group in their small home. A year later, they rented a room of a house near the west gate of Tsinghua University in northwest Beijing. In 1991, Jin Tianming graduated from Tsinghua, a leading institution of higher learning in China. He became a Christian the previous year when he was invited to attend a worship meeting. That was a year after the 1989 Tian’anmen Square democracy movement crackdown, which turned out to be an unexpected help in Jin Tianming’s spiritual journey where he eventually lost faith in any worldly wisdom. At that time, he was named Jin Yongkui who was born into an ethnic-Korean peasant family in northeast China’s Heilongjiang Province in 1968. His new given name of Tianming means “the coming of dawn”.

In 2002, 34-year-old Jin Tianming was ordained as a pastor by Pastor Xie Moshan or Moses Xie, a Chinese house church leader who died on June 30th, 2011 and had been imprisoned for more than 20 years between 1950s and 1970s because of refusing to join the government-owned Three Self church. By the year 2005, Shouwang, which means “watching”or “to keep watch”, had more than ten fellowships. At that time, the church decided to apply to register with the government. But in 2006, authorities rejected Shouwang’s application asking it to join the Three-Self.

Also in 2005, Shouwang Church began to rent office buildings for the Sunday worship. And a year later, Shouwang started forming an integrated church out of different fellowships across the city. According to an open letter issued by the church in mid-April 2011, “these were part of Shouwang’s efforts to become a transparent and open church and also a mega-trend of the house church growth in China in a new era.” In another letter to the congregation issued in late March 2011, the church’s governing committee also made it clear that “under the leadership of the vision of ‘a city on a hill’, Shouwang Church has gradually grown into a holistic Christian community that is open to the general public.”

But by 2007, Shouwang remained almost unknown to the broader society. It was already arguably one of the largest house churches in Beijing. That year, it began publishing Xing Hua or Almond Flowers, a quarterly church magazine. One of its earliest issues had a special report on Shouwang’s registration process publicizing all the major documents about it. That gained attention from other house churches and those who were following China’s Christianity. The Almond Flowers magazine - “an almond tree” in Hebrew shares the same pronunciation of “watching” in Hebrew (see Jeremiah 1:11-12) - have gradually become well-known among house church readers.

It was the issue of worship or meeting place that has given rise to Shouwang Church being known in the general public. Like almost any other house church, the Shouwang congregation has faced the issue of survival from the moment it was established. The most serious direct crackdown came on May 11th 2008 when the armed forces broke into Shouwang’s Sunday worship in a rented office space. They ordered the church to put an end to the worship. But it continued. All the three services from morning to afternoon were held as usual. Many worshippers were asked to leave their names and contact information. It came in the run-up to the Beijing Olympics. That was also just a day before the massive earthquakes struck Sichuan and neighboring regions in southwest China.

Shouwang amazingly survived the clampdown. Yet, the church realized that the pressure on the landlords of the facilities it rented was a weak point in both the survival and further growth of the congregation. It had been forced out of the previous rented venues. And in 2008, it faced another eviction. The church established a group in an effort to solve the problem by purchasing a permanent place for worship. Then, the church’s governing committee came up with a blueprint for purchasing a permanent worship site. After the church’s main co-workers and the representatives of the church members approved the blueprint, Shouwang formally launched the purchasing project in March 2009.

In late October that year, Shouwang moved out of the Huajie Mansion. During the ensuing period of time when the two Sunday services were held outdoors, the church handed in a letter to Beijing’s religious affairs authority. It made a proposal to solve the problem of worship place by resorting to putting the premises on record. The authority once again asked Shouwang to turn to the Three-Self church.

By the end of 2009, Shouwang paid about 27 million yuan or some four million US dollars for the second floor of the Daheng Science and Technology Tower in northwest Beijing’s Zhongguancun area. The fund was from the offering of the Shouwang congregation and other contributors to buy a permanent worship place. Authorities once again interfered and the property developer has refused to hand the key over to the church.

Before that, Shouwang’s governing committee agreed to the government representatives’ promise to allow the church to return to indoor worship. In a further statement about outdoor worship issued in mid-April 2011, the governing committee explained that they “believed the wish that it would be good for the government to have more time in solving the problem of worship place.” After that, Shouwang went through a number of difficulties having to change worship facilities. The change of premises came to a halt in early 2010 when Shouwang began to rent a conference hall at the Old Story Club, which is a part of the state-run broadcaster, China Central Television. Yet, authorities kept on interfering. In early April 2011, like before, Shouwang moved out of the leased venue. And the rest is history.

For now, it is not known when the outdoor worship will end. Shouwang stated that “as long as the church has a guaranteed worship space, the premises it has already purchased in particular, the church will immediately return to worshiping indoors just like it was in November 2009”. In his pastoral letter sent on April 23rd 2011 that was the Easter Eve, Pastor Jin Tianming, who has been under house arrest, reaffirmed the stand on outdoor worship: “The ‘outdoor’ in the outdoor worship is not a means to an end but a stand: it is a stand when we face our Lord of glory and the authorities, I believe the stand itself is a kind of worship before the only true God who is the only head of the church, and in this particular period of time, it is a worship that is even more precious than any hymn or sermon and would much more please God.”

This Easter Sunday also marked the 100th anniversary of Tsinghua University, Pastor Tianming’s alma mater and also the Chinese President Hu Jintao’s. The pastor was supposed to attend the 20th anniversary reunion with his Tsinghua classmates on Good Friday, which Christians remember as the day that Jesus Christ was crucified. But the police forbade him to go. A day before Good Friday, Pastor Tianming went to a hospital with an escort of four police officers. A less-than-two-year-old daughter of the young couple who are also Shouwang Church members fell from a high-rise early that day and died after being rushed to hospital. Another pastor, Zhang Xiaofeng, also asked to visit the couple but was refused.

In an article published on Google buzz, later that day, Elder Liu Guan wrote about his response to the unexpected death of the toddler. He said he once again choked with tears when he prayed with his son in the evening. He also recalled how a recent mid-night prayer had helped him overcome his fear of leaving his wife, his children and his aged parents if he was put into prison. He came to believe more than ever that God would surely take good care of all his loved ones. He said in that night he finally keenly understood what it meant by “I have been crucified with Christ and I no longer live, but Christ lives in me.” (Galatians 2:20)

Elder Sun Yi also has been under house arrest. He is the chief editor of Shouwang’s Almond Flowers magazine and a professor at People’s University, another leading institution of higher education in China. In an article sharing with his magazine co-workers, Sun Yi said three fellow church members came to see him on a mid-April Saturday afternoon. Since they were not allowed to enter Sun Yi’s home, they met and chatted with the elder on a corridor.

Then, somewhat to the elder’s surprise, the three visitors suggested praying together. Beside them were a police officer and three other men who were sent to stand guard over Sun Yi. They prayed for the church. And they prayed for the people who were just on the watch. When finishing the prayer, Elder Sun Yi opened his eyes and saw one of the four guards smiling at him and the three visitors. “Though three other people’s eyes buried in the newspapers, I know their hearts have already been touched”, wrote Sun Yi. Later that day, Pastor Jin Tianming and another pastor, Li Xiaobai, were taken to the police stations. Elder Sun Yi heard the news and sensed he might be taken away in the same night. But thanks to the afternoon prayer, he felt huge relief. After that prayer, he said he had emerged from the shadow of any potential threat. More police officiers did not come that night. He remained under house arrest.

The two pastors were released later. Pastor Tianming returned home the next morning. Pastor Xiaobai and his wife were freed at midnight. Before becoming Christians, the couple were engineers working at some leading global IT companies. During the first outdoor worship in April, they were detained at a local police station and were not released until 48 hours later.

During the first three Sundays since the outdoor worship began, Pastor Xiaobai has sent his Sunday sermons to his fellow Shouwang members. The latest was on Easter. He continued with the Book of Esther in the Old Testament to illustrate God’s unfailing salvation of his people. Towards the end of his Easter sermon, Pastor Xiaobai said the ground for faith and hope and love remained in the Lord Christians trusted in: “Jesus Christ is the same yesterday and today and forever. Do not be carried away by all kinds of strange teachings. It is good for our hearts to be strengthened by grace”. (Hebrew 13:8-9)

The choice of Esther for giving Sunday sermons in the period of outdoor worship is symbolic. Prior to being forced out of the previous rented premises in early April, Shouwang’s Sunday sermons had been around the Acts of the Apostles for a few months. That is about the beginning and expansion of the Christian church. And Shouwang was planning to plant churches in other parts of the city or the country. The Book of Esther tells a story of how God delivered the Jewish people from a genocide in Persia plotted by the empire’s highest official. The immediate reason for the plot was that a Jew in the Persian capital refused to kneel down and pay honor to the highest official.

In the case of Shouwang, the issue of worship place is a reflection of a deeper struggle over the legality of the non-state-owned church in China. The government under the atheist Communist rule of course does not want any independent religious organization to exist and expand. But more than 30 years after the reform and opening-up policy was put in place, it looks impossible for the authority to control everything. It has considerably shifted its ground on economy having to allow the non-state-owned companies to exist and expand. Now, it is increasingly faced with the continued rise of the non-state-owned churches, which it has long considered only belongs to “the Western culture”.

Will there be an Esther who can help deliver Shouwang and other house churches from the crackdown? If history is any guide, the possibility is not unreal despite both who and how could be anyone’s guess. Even more than a decade into the reform and opening-up era, the Chinese government was still chained to its ideology that market economy was restricted to “the Western capitalist countries”. It was Deng Xiaoping, China’s de facto leader in the 1980s-90s who admonished his colleagues to halt splitting hairs over “whether it is surnamed socialist or capitalist”. He said “the policy is okay if it works”. His insistence on the economic reform paved the way for the further expansion of private enterprises and the official recognition of private property. In fact, this has gone on to help grow house churches making them possible to rent or even own places for worship.

If the current government leaders could carry on with this part of Deng Xiaoping’s theory, they would probably help usher in the continued rise of China. They would see a newer China where some truly respected schools, universities, research institutes, hospitals and philanthropic foundations could grow out of house churches or those church-goers, like it has been in the global church history. In fact, Shouwang Church has planned to open a theological seminary. Pastor Song Jun, who is a historian of the Christian church and ancient Chinese religions, was supposed to be responsible for the institution. Currently, Shouwang has already had a Sunday school. For many years, it has helped educate hundreds of children of Shouwang members. It’s Li Enping, the wife of Pastor Tianming, who has been in charge of the school.

Apart from publishing the Almond Flowers magazine, Shouwang has its own library. Its director is Elder You Guanhui, who was in the same class with Elder Sun Yi when they pursued their PhD studies of Christianity in the late 1990s at Peking University, another top institution of higher learning in China. Elder Guanhui leads a publishing company that has helped introduce to the Chinese readers a series of Christian classics, including John Calvin’s Institutes of the Christian Religion, Augustine’s The Harmony of the Gospels, and John Foxe’s The Book of Martyrs. Even after the outdoor worship began in April, the company continued to publish the Chinese translation of more books with G. K. Chesterton’s Heretics and Orthodoxy and D. H. Williams’ Retrieving the Tradition and Renewing Evangelicalism: A Primer for Suspicious Protestants coming out in May and June respectively.

If the rise of private companies means creating and producing ever richer material products and services without the interference from the government, the rise of house churches could mean creating and producing ever richer spiritual products and services without the interference from the government. For top management thinkers like the late Peter Drucker who was also a Christian, the free enterprises and pastoral churches combined could help people find a fuller meaning as human beings whom, according to the Bible, God created in his own image. It seems hard for the Chinese government leaders to thoroughly ignore the fact that the growth of both private businesses and house churches in China had taken place long before it was known when they would gain official approval. This might indicate that the growth of both institutions came from a deep and universal longing for becoming free, creative, caring, connected, humble and responsible beings. Once their country starts opening up, they would keenly learn to do it, sometimes at any price.

For now, it seems crucial for the Chinese government to make more sense of what the church is. On the bright side, numerous detentions and arrests of the Shouwang Church congregants might have provided golden opportunities for the police officers and their leaders to know more about Christians and their faith at first hand. They might have found it strange when they read a Shouwang’s Q&A fact sheet like this one: “What if the police arrest me because of my participation in outdoor worship? Do not resist, let them take us away, just like a lamb to the slaughter. In our hearts, we know that we gather here to worship; and for the sake of worship, we will pay the price. We believe in what the Lord has said: ‘Blessed are those who are persecuted because of righteousness, for theirs is the kingdom of heaven.’ ”

Once they detain or arrest those Christians, they would see and hear how those people behave and speak. A police told a Shouwang co-worker who visited a police station in the east Chaoyang District where a church member was detained for 48 hours that he and his colleagues were taught not to hit back when beaten and not to answer back when insulted. The church co-worker said that was what God asked his people to do. A deputy chief of the Olympic Village police station told a Shouwang parishioner who was detained on May 15th that he would believe in Christianity after retired. The Shouwang member gave the police officer a copy of a booklet entitled “Why I Live” and was freed later in the day.

Another Shouwang member is a pianist of the choir. She was under house arrest for more than two weeks after being detained for a number of times. On a rainy night, a police officer knocked on her door asking if she could leave the door open so that he might hear the music. A little more than 20 minutes later, other listeners joined the police officer, including his wife, their son and daughter-in-law. The pianist and her mother sang hymns for them. After seeing them moved by the songs, they briefly told them how to read the Bible. Whenever the police officer was on duty, the pianist would give him and his family members some copies of the hymnal and sang hymns for them. One night, the police officer again knocked on her door. The pianist said the piano pedals did not work so that she could not play that night. “No playing?! Feel that something is lost...”, said the police officer disappointedly outside. At times, the police officer and his family members would ask, “Is there God? Where is God?” The pianist responded, “But why is it that you felt the hymns very pleasant? Didn’t you feel that your heart was moved? That’s just what God placed in your heart!” They fell silent and seemed lost in thought.

Of course, it might be equally significant for the house church members to further figure out what the government officials think and do. After ever more communication, they might develop a better understanding of why the government was still so hostile to the house church and if possible, what could be done to help them change their views. Some Shouwang parishioners said the police officers knew almost nothing about the church. Some police officers did not say “Shouwang Church” but “Shouwang Religion or Shouwang Sect”. Some claimed Jin Yongkui was “the Founder of Shouwang Religion” and he wanted to own the place Shouwang had bought. On such occasions, Shouwang congregants would help the police officers correct the mistakes saying Shouwang was a Christian church and Jin Tianming (Jin Yongkui) was the founding pastor of Shouwang Church. For his part, Pastor Jin Tianming reaffirmed his stand in his May 22nd sermon sent to Shouwang members by emails that the enemy of the church was not the government nor anyone else of “flesh and blood” but “the spiritual forces of evil in the heavenly realms”.

A few weeks or months might be still too short to solve the decades-old problem. As a matter of fact, there have been different opinions about the Shouwang governing committee’s decision to worship outdoors even within the house church. Some people held that the church could worship as separate groups indoors (since Shouwang currently has dozens of family Bible study groups and fellowships) and some others warned that it was too sensitive to hold outdoor services at present when what was called “Jasmine Revolution” was spreading from North Africa to Asia. On May 31st, the Shouwang governing committee sent emails to church members announcing Pastor Song Jun, Minister Jiang Lijin, Deacons Ji Cheng and Yuan Yansong left Shouwang Church due to disagreements over outdoor worship. For more than once, the Shouwang governing committee has issued open messages explaining the outdoor worship decision. In a letter, they said, “we ask the Lord to preserve the unity of our church, that despite of our different viewpoints, we may still be able to submit to and bear with one another.”

As for how long the outdoor worship will last, Shouwang Church said that if the problem of worship place could not be solved, they would continue to worship outdoors until Christmas 2011. They would reassess the situation and devise new plans for the coming year. That means Shouwang seems to have been prepared for a longer road ahead. In the history of the Christian church, a year or even a decade would not be a long time. But the next few months or even the next few weeks might witness another turning point for the church in a country whose ancient name is, surprisingly, “God’s Land”.

The irrelevance of "bank resolutions" and "surcharges"

2011-07-20T05:58:00.000-07:00

One should ignore the consultation paper issued by the FSB (Financial Stability Board) on how the large banks could be dissolved in case of a crisis.

Note that the FSB likes to avoid using the word "dissolved", and prefers to use the weasel word "resolved" - a very good instance of modern American double speak.

But why should the FSB paper be ignored? Because its implementation is set so far in the future that it is irrelevant to the problems that are going to engulf the global economy well before then.

Equally irrelevant is the FSB scheme to apply a "surcharge" starting somewhere between January 2016 and the end of 2018 to twenty eight "globally systemically important banks" (G-SIBs), identified on the basis of "scores" that may be fixed some time by January 2014 which, in turn, will enable national laws to be framed by something like January 2015. In any case, the scheme requires the approval of the G20 - and if that does approve the scheme at its summit in November, the scheme will not become fully effective till the end of 2018 (!). So we can be sure that the FSB, the Bank for International Settlements and the G20 anticipate no crisis for the next seven years!!!

Anyway, why is this "surcharge" scheme irrelevant? Not merely because the FSB is not going to "charge" anything (let along "surcharge" anybody) - it is only going to require these 28 big banks to hold slightly more capital than they do at present (and that is what is called, in inflammatory language, a "surcharge").

No, the reason why the "surcharge" is irrelevant is because there is no evidence that holding capital of between 1 and 2.5% more than that currently required is going to "stabilise" these banks at all.

Recall that UBS (the bank for which I worked then) had MORE than that as an additional capital buffer at the time it ran into trouble due to the global crisis.

I cannot argue that the extra buffer did not help at all, but the fact remains that the extra buffer did not prevent UBS from getting into a desperate situation where the combined efforts of the Swiss government and Singaporean and other wealthy institutions were required to rescue it.

Has the FSB has done any homework on why, at the time of the crisis, UBS was not helped by having a buffer of MORE than that they are now thinking of requiring of these G-SIBs? Not to my knowledge....

Nor am I aware of any other research on which the so-called "scores" are based, and which determine the banks are to be classified as G-SIBs. The score consists equally of five factors: size, cross-border activity, interconnectedness, complexity and substitutability. The five factors do make sense. But does it make sense to weight them all equally? Who knows?!

Worse, no one seems to care, in the rush to placate two opposed lobbies: on one hand, taxpayers who continue to bear the liability of bailing out these massive banks when they fail, and on the other hand, the owners and managers of these banks who resist having any additional capital while continuing to have state guarantees in exchange for paying the state absolutely nothing.

Ahy 28 banks rather 20 or 30? Or 10 or 50? Again, the number is based on no research. Merely political fudgery.

To console us, we are told that a wider sample of 73 large banks will be kept under review. Is 73 some sort of magic number? Or is the number based on some research? No, it isn't. Political fudgery again.

BTW, the FSB is anxious for us to know that a one percentage point increase in capital at the big banks will dampen economic growth by 0.17 to 3.17 basis point per year over a four-year implementation period. Note that the FSB does not tell us whether the capital increase will make for any stability.

Why is the FSB so keen to tell us the effect of its "surcharge" on growth (something which is not its responsibility)? Why is it not at all keen to discharge its responsibility and tell us the degree to which its proposals will actually stabilise the financial system? Because it can calculate the former (or have it calculated), while it has no means of calculating the latter. The FSB simply does not know and cannot know whether its proposals will make a blind bit of difference to global financial stability.

That is why the FSB and all its works so far are a sham.