Some global implications of India under the New Prime Minister, Modi

Even if you do not normally follow India, it is the largest democracy in the world, and the 2nd largest country in the world.

So you may want to invest a few seconds in understanding the latest on the situation there.

That is because India has a newly-elected Prime Miniter, Modi.

There are therefore new threats and opportunities for global politics as well as for the global economy.

You can deduce these from:

http://guptarasindia.blogspot.ch/2014/05/can-tiger-ride-elephant-or-future-of.html

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On the rigging of High Frequency Trading (HFT) and the likely impact of Michael Lewis's book Flash Boys

Michael Lewis has exposed to the public what was always known to people of any intelligence or experience in the financial industries: in spite of all the efforts at promoting transparency and level playing fields, financial markets are still, with the connivance of politicians and government agencies, rigged by the largest players.

For an illuminating though short discussion of all this, see: http://www.nytimes.com/2014/04/04/opinion/flash-boys-for-the-people.html?hp&rref=opinion&_r=1

The particular field that Lewis has now exposed to public scrutiny, High Frequency Trading or HFT, may seem esoteric but its impact is huge.

In fact, HFT is so huge in volume that, you may recollect, some 4 years ago, it caused the famous "Flash Crash" in the entire global economy (that is of course the event to which the title of Lewis's book refers).

If HFT was banned, global trading volumes would be cut in half. In other words, HFT is HALF of ALL global trading in listed shares...

However, the issue MUCH bigger than the rigging of the HFT market, is the IMPACT of the very existence HFT - in terms of shortening the time-horizon of investment decisions and stakeholder-considerations on the part of EVERY company that is listed in the stock market.

Therefore I am in fact for banning HFT entirely. What we should have, instead, is a new structure for companies, globally (see the book recently published titled "Transforming Capitalism from Within").

Meanwhile, we must focus on eliminating the evils within HFT (i.e. the rigging of the market by the large players to the disadvantage of average players)

That can only be done if the US Department of Justice probes the current structure of HFT as "restraint on trade". To be effective, that must be coordinated with the SEC and the FBI. My fear is that these US agencies will either say the market isn't rigged after all (unlikely) or is so advantageous overall that we should leave it as it is (which is what all the big institutions and their paid hacks will now argue in the press and on TV).

Overall, the most likely effect of Michael Lewis's book is that the US agencies will do the usual "face saver" and agree to restrict some irrelevant parts of HFT, or target marginal things - e.g. limits on some types of activity, opening up some minor channels to level the playing field, and other such superficial stuff.

In terms of disadvantaging the average player, we also must not forget that the process (so-called "club deals") of how Wall Street allocates the shares and even the secondary offerings of "hot IPOs" actually creates, for average investors, very much more disadvantage.

So it is Club Deals that need to be fought at least as much as High Frequency Trading.

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A beautiful philosophy of life

As some of my readers know, I was recently asked to Chair the Relational Thinking Network (see www.relationalresearch.org and related sites) and, in pursuance of one of my duties (to spread the word about the Network), I invited a small group of friends and acquaintances who don't know the Network, to have an initial discussion of its philosophy and policies.

Today, I received the following message from one of the participants:

"I see this life as a wonderful present to each of us. I like this world as it is and I feel no need to change it."

Does that not seem like a beautiful philosophy of life?

But there are some kinds of beauty which are dry.

And his response seems to me remarkably like the response of the rich young aristocrat to the invitation of Jesus the Lord, as described by Matthew in his biography of Jesus, chapter 19.

Here is what I actually wrote to my acquaintance who participated in the discussion:

Dear XXX

My father died when I was 8, so we went from an upper middle-class lifestyle to being literally on the streets.

I was able to go through school and college only because a few people wanted to change my situation and made scholarships available for me.

I studied for my first university exam by candlelight because we had no electricity at home.

If a kind stranger from Edinburgh (I found out many years later) had not created a special scholarship for me, I might never have passed my university exams. If I would be alive at all, I would certainly be living in a slum in Delhi.

Life is indeed a gift, but only those people can really enjoy it who have money and health.

Oh yes, health - were it not for people who gave their life to discovering medicines because they wanted to change things, we would be living much shorter and more physically painful lives.

If everyone took your point of view, there would be no reduction in ignorance or misery in the world.

As it is, we who have the gifts of health and money have responsibilities; and if we decline our responsibilities, we reduce our humanity.

The invitation of the Network is an invitation to discovering the living beauty and joy that comes from seeing change and indeed transformation not only in the world as a whole but also in the lives of individuals and in our own relationships.

Kind regards

Prabhu Sphere: Related Content

Germany’s Constitutional Court: Extraordinarily Unconstitutional Tactics

On 7 February, Germany's highest court, its Constitutional Court, decided that it wanted to consult another court, and this one not in Germany! The court to be consulted is the European Court of Justice (ECJ) in Luxembourg.

The question on which the German Constitutional Court feels itself unqualified to rule is the constitutionality of Mario Draghi’s Outright Monetary Transactions (OMT) scheme.

Is the Constitutional Court so stupid that it does not know the OMT violates the German Constitution? Basically, the OMT allows the European Central Bank (ECB) to monetise fiscal deficits - and that is not allowed by the generally highly-sensible and conservative German Constitution.

The truth is that Germany's Constitutional Court is hardly stupid, even if it is composed of politicians rather than judges or lawyers.

So if the Members of the Court know that something is against the Constitution of their country, why don't they want to say so?

Of course, because they are politicians! They do not want to say that the move is unconstitutional because they are afraid that such an announcement will undermine the delicate progress that is taking place in the European economy.

So, instead of doing what they are sworn to do (uphold the Constitution), they have taken the strange decision to undermine their own Constitution in the interests of the short-term health of the economy. That is how the dangerous slide into lawlessness starts in any country. We have seen this sort of thing in countries such as Pakistan and Bangladesh and Zimbabwe....

The ECJ normally takes up to 24 months to handle a case, and the German Constitutional Court will then have to consider whatever the ECJ says in order to reach its own decision (which could take it another two years).

I suppose the hope is that, by then, Europe’s economy will be swimming along well, so that this will have become a non-issue by then.

Or, if the Eurozone economy does not recover by then, no doubt the Constitutional Court can ask for the advice of the top court, in turn, of many other countries :)

Why not go next to Afghanistan?

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How Governance Became Unethical – and what to do about it (speaking notes for the Lecture delivered at the New Hampshire Institute of Politics, 10 February 2014)

Distinguished guests – and, Dr Kuehne, many thanks, for that kind introduction. Neil Levesque and Ann Camann, my thanks to you for the kind invitation and all that you have done to help with the practical arrangements!

I want to thank you all, first, because I am from India, and not many Americans are happy to hear non-Americans speaking about America (I should say, not many Americans are prepared to tolerate non-Americans speaking about America!).

However, this talk is really in a global context, because the US is still the world’s largest economy (roughly a third, actually of the world economy as a whole!) and whatever happens here impacts the world.

Second, my thanks because I am at this Institute, which is hosted by St Anselm’s, while I am a Hindu follower of Jesus, and Hindu followers of Jesus tend to be very anti-christian. So I am especially appreciative of St Anselm’s which is prepared to tolerate someone like me who is quite critical of its allegiance! However, though I may not be an ally, I am certainly a co-belligerent against many common opponents, as I think you will discover as we go along.

The Relational Thinking Network, on whose behalf I am partly speaking today, certainly has Roman Catholics among its members, supporters and sympathisers, along with Protestants, Eastern Orthodox Christians, Jews, Hindus, Muslims, Buddhists, people of other religions, as well as atheists and agnostics, not to mention people who are from the Right as well as the Left of the political spectrum.

Allow me to start with a quote from Alexis de Tocqueville

*SLIDE 2* the well known 19th century French observer of American society, whose book

*SLIDE 3* Democracy in America, published in 1835, is still widely read – indeed, if you haven’t read it, I recommend it to you as something that is essential reading for anyone who wishes to take an intelligent interest in the world.

Tocqueville travelled through what was then the New World observing, from the perspective of a detached social scientist, America’s burgeoning democratic order, the market revolution, and Western expansion.

The quote from Tocqueville to which I want to draw your attention is the following:

*SLIDE4* “There are many men of principle in both parties in America, but there is no party of principle”

Perhaps some of you may feel that part of Tocqueville’s statement

*SLIDE5* “there is no party of principle” in the US is still valid!

And, I don’t know, but perhaps some of you may feel that Tocqueville’s statement

*SLIDE6* “there are many men of principle in both parties” is less true than it used to be!

If so, may I suggest that your gut feeling that the number of people of principle has declined, may be partly due to your disappointment with some people who you thought followed good old American principles but turned out to have had those on as a mask to hide their real motivations, and your gut feeling may have partly to do with your disappointment with some other people who may have really believed in those principles but who made the wrong choice at one point or another.

However, it is also possible that your gut feeling about the increasing lack of principle in today’s politicians may be partly a mere perception – it may be that, not THAT many politicians LACK principles, it may be that they follow DIFFERENT principles than yours!

In other words, there has been a colossal values-shift among American politicians and indeed in American society over the generation or two even since the 1960s – which I guess dates most of us in this room.

That shift in US values was multi-dimensional.

Allow me to attempt to describe some elements of it, even in the very brief time that we have together.

*SLIDE7* Early US values could be considered to be an outcome of at least a 3-way conflict: there were the values of Native Americans, there were the values of those whom I may, without intending to indicate cattle ranching, and I hope not entirely inappropriately, colloquially call “Cowboys”, and there were the values that ruled in the Puritan and other Settlements, which were indubitably Protestant, Reformed, Biblical…

*SLIDE8* By the 19th century, when Tocqueville was travelling through America, it is clear that the influence of Biblical values was widespread, though there was an impending clash with two new forces.

The first and obvious clash was with the values of the slave-owning South (much of which justified its slave-owning with stray texts from the Old Testament).

However, even though it required huge sacrifice to counter this threat, the threat of the slave-owning South, the far more insidious threat was from the canker, the rot, forming at the heart of Puritan and Protestant values in the Settlements – the rising orientation, particularly among the rich - due to the inevitable temptation of the rich to pride, arrogance, and a degenerate lifestyle – as initially few and then larger numbers therefore oriented themselves towards towards Rationalism and Deism (EXPLAIN, IF NECESSARY).

At this stage, however, if one does not examine the philosophy but examines the morality or ethics, you will find that most Deists and Rationalists had an understandable emotional attachment, however nominal or superficial, to basically New Testament values, even if they had no intellectual basis for such values in their own philosophy.

However, as always happens, prosperity produces, in the second and third generations of the wealthy, an even greater tendency towards pride, arrogance, and a dissolute lifestyle. By the 1880s, Deists and Rationalists found New Testament morality too constraining, and started patronising, in more or less organised fashion, the old idea of Evolutionism (in its new avatar of Darwinism) to use as a battering ram against organisations, institutions and individuals that promoted trust in the Bible and faith in God.

That attack was only marginally successful till the 1960s, when the GI Bill (EXPLAIN, IF NECESSARY) and the incredibly massive expansion in the number of universities and, within existing universities, in the number and size of educational programs, provided to Rationalists and Evolutionists an opportunity to ensure that the academics in all these universities were, as far as possible, also Rationalists and Evolutionists.

The 1960s and 1970s therefore saw the culture-defining battle between faith and Evolutionism, even though the wider body of Christians seem to have been entirely unaware of that, principally because they had been too preoccupied, since the turn of the twentieth century, with trying to defend their own churches, denominations, and other institutions from the depredations of Rationalism and Evolutionism.

*SLIDE9* THIS slide suggests the nature of today’s situation in terms of values.

The whole story is told much more fully in books such as *SLIDE10* Vishal Mangalwadi’s The Book That Made Your World, *SLIDE11* George Marsden’s The Soul of the American University: From Protestant Establishment to Established Non-Belief, and other works by *SLIDE12* Nathan O. Hatch (such as The Bible in America, The Democratisation of American Christianity, and Methodism and the Shaping of American Culture) and, probably most important of all, books by *SLIDE13* David W. Bebbington, such as Baptists Through the Centuries, and The Dominance of Evangelicalism.

In any case, allow me to sum up the transition in American values down to our day in the following way:

*SLIDE14* There have been incredible transformations of the dominant consensus in the US, which took us from no State establishment of any religious denomination (and therefore competition between the various varieties of Puritanism and Protestantism), to a new situation by the inclusion of the large numbers of Eastern Orthodox and Roman Catholic immigrants to the US from the 1880s so that the new amalgam was referred to as “Christian”. From that, there was a transition to the term “Judeo-Christian” by the immigration of Jewish people from around the 1900s. From the 1960s, there was a complete revolution, to the beginnings of what was called “secularism” (the banning of prayer in public schools, the removal of the Ten Commandments from public places, and so on). In the last few years we have seen the prominence given by the media to anti-theists.

The result has been the rise, among today's young people, of what I call a “Whatever-culture”, which has three characteristics:

- first, the idea that there is nothing which is in its essence sense right or wrong, typified by the widespread propagandising of the slogan “everything is relative” (when it should be quite clear to anyone with the slightest bit of sense that everything is not relative – for instance neither a mile, nor an acre, nor a pint, nor a gallon is “relative”).

So the first mark of today’s “Whatever culture” is the foolish idea that “everything is relative”.

The second is that the future does not matter – with all the consequences of such an attitude not only for individual and family wellbeing in the long term, but also for national and global survival - given the environmental challenges that we all now face.

The third is the sort of Buddhist attitude that the present is what it is and can be, to you, whatever you want it to be.

People of my generation sometimes refer to this “Whatever culture” as “apathy”, but it is rather a plague that has spread throughout the USA - a disease that would be called, in classical terms, the sin of “spiritual sloth”, or neglecting what God has said, and being physically, emotionally and volitionally inactive. The sin of sloth refers to the waste that is consequent upon lack of use, in relation to a person, place, thing, skill, or ideal that requires maintenance, refinement, or other effort to continue to exist. Classical definitions of the sin of sloth focused on it as either refusal or carelessness in the performance of one's obligations, especially obligations which are spiritual, ethical and legal (such as political participation in a democracy).

Whether you consider it an America-wide plague of sloth, or mere apathy, the practical *SLIDE 15* result, at the level of governance, was the injection of high-growth hormones into the economy. By the 1970s, the US government could dare, and the public and the media was willing to be complicit, in the immoral act of breaking an international treaty by unilaterally DELINKING THE DOLLAR FROM GOLD (enabling, first, American debt due to the Vietnam War to be repaid in debased dollars, but also so as to manipulate the value of the dollar more freely in the interests of American growth but at the cost of increasing volatility and vulnerability not only in the US but around the world). By the 1980s, as natural demand started drying up, our monetarist friends could stimulate demand by artificial means, including putting in place particular mechanisms that were more or less effective (such as FREDDIE MAC, FANNIE MAE) but these sorts of mechanisms created the long term challenges for the economy from which we have suffered in the last few years. From the 1990s, demand picked up worldwide as the result of the COLLAPSE OF THE BERLIN WALL AND THE OPENING OF RUSSIA, CHINA AND INDIA, making the whole world capitalist, with two and a half billion consumers and producers being added to the global economy, so we would have had historically unprecedented growth anyway, but various ways were invented of boosting that growth even further. Many of these ways were unsound and dangerous (which we will look at with the next slide). Any economy designed as ours is at present goes through booms and busts, and the greater the growth, the greater the booms and busts – so with these new mechanisms, the bust when it came was going to be one of the biggest yet – and that is what happened starting in 2007.

• *SLIDE 16* Here are the other high-growth hormones which, as a result of the new orientation of governance, were either added or greatly expanded in scope since the 1990s.

Allow me to discuss them in reverse order to that shown in the slide.

About *High Frequency Trading*, I will say only that it should be obvious that High-Frequency Trading strengthens the trend towards short-termism, and militates against long-term thinking, by all stock-exchange quoted companies.

• Another high-growth hormone was the *encouragement of speculation*. Politicians, regulators and market players together conspired (and the media and the public, whose role in any democracy, is to guard their freedoms, did nothing to oppose), the subversion and systematic violation of the Glass-Steagall Act, till the Gramm-Leach-Bliley Act was able to be practically smuggled in, in a midnight-session in 1999. The Gramm-Leach-Bliley Act added “safe money” (your savings, your pension money, the money of municipalities, and so on) to the “hot money” (of rich individuals and large institutions) with which speculation (or large-scale gambling) had earlier been allowed.

• Another high-growth hormone added to the economy was so-called *Securitisation* – one of these wonderful names which indicates the opposite of what it is; and, partly because of the name, but also for other equally insubstantial reasons, the attitude induced by securitisation was “where’s the risk?” when it was absolutely clear to any normal-headed person that risk does not go away when it is widely distributed, it just makes system instability more likely when anything goes wrong.

• The last of the high-growth hormones that I want to mention (there were and are others!) is *leverage* - with idiocies such as mortgages available to most people at 120% of the value of the object being hypothecated but, if you were rich, you could speculate in the millions of dollars while, if you were a major global bank, you could gamble in the billions of dollars through companies such as LTCM which (as some of you may be too young to recollect but which the older ones among us may recollect), nearly brought the global economy to a grinding halt in 1998, when we were only half an hour away from total collapse, and it required quite illegal means to rescue the global economy.

Such high-growth hormones together led, then, to the current economic crisis which started in 2007, as well as the current political deadlock in the US.

*SLIDE 17* The political gridlock is, of course, not one of policies, even though that is the appearance that is given to the deadlock, because that suits both the Democrats and the Republicans. Rather, the political gridlock is really a gridlock of interests. We don’t have time to explore that any further right now, but if you are interested in looking into that, there are plenty of books which will provide the facts to you, such as Jeff Faux’s THE GLOBAL CLASS WAR, which documents how America’s bipartisan elite has betrayed the people of the USA.

In any case, in view of our topic today, the point to which I would like to draw your attention is that *SLIDE18* Politics always trumps economics: something that I did not understand at all when I first came across that statement as a student at university, but as I started working, and compared what was happening in my own country, India, with what was happening in other developing countries, as well as in other developed countries, I began to understand the crucial importance of the right policies.

However, political renewal requires cultural renewal (cultural renewal must either precede or accompany political renewal – (GIVE EXAMPLES OF 19TH CENTURY ENGLAND AND THE WORK OF WILLIAM WILBERFORCE, AND LEE KUAN YEW AND CONTEMPORARY SINGAPORE).

For cultural renewal, Relational Thinking has much to offer everyone – whether ordinary Democrats, Republicans, or Uncommitted Citizens.

*SLIDE 19* The first thing that Relational Thinking offers us is a comprehensive analysis of the challenges facing us, which form an interconnected web EXPLAIN TWO OR THREE

*SLIDE20* The 2nd thing that RT offers us is a comprehensive vision for the future (if you don’t like the word “Biblical”, that simply indicates where it comes from and, if you don’t want to know that, please change it to “Relational” or “Human” or whatever else you like)

*SLIDE21* The 3rd thing that RT offers us is a clear view of how the world should look, and will look, if we move towards this kind of cultural and social, and therefore economic and political renewal.

Applying the Relational Proximity Model to your family life and personal relationships, and to NPOs or other organisations with which you may be involved, enables you to begin to see not only the particular strengths of your relationships, and the areas for improvement, but also specifically how you might improve them.

*SLIDE22* Relational Thinking is buttressed by academically solid research through the non-profit organisation, Relational Research, which is able to undertake research on behalf of Think Tanks, NonProfits, Foundations, Political Parties, Governments, and companies and other business-oriented organisations.

In addition *SLIDE 23* there is the for-profit company, Relational Analytics. Though a part its profits go to the investors in the company, they are aware that a part of the profits also go back into the work of Relational Research. Relational Analytics offers a set of audit tools for companies not only to measure Relational Risk but also, as a consequence of the audit, to prescribe ways of addressing *relational risk*.

Then there is the Relationships Foundation which is involved with policy work.

Between the work of such specialist parts of the Relational Thinking Network, and the national movements, such as the USA’s own rWorld (SIMON, WHERE ARE YOU? If you have questions about the national movement which has just started in the USA, please contact Simon Fowler). Anyway, between the work of the national movements, which are not only in the USA but also in the UK, South Africa, Hong Kong, Singapore and Australia, and the specialist parts of the Relational Thinking Network such as Relational Research and Relational Analytics, the Relational Thinking Network offers you one important means of cultural renewal, which I am happy to commend to you.

Naturally, there are other organisations also working for societal resurgence, and you may be perhaps already working with one of them.

I hope so.

Meanwhile, let me summarise my message: Governance has become more and more unethical since the 1980s because of increasing abandonment by Americans of Truth and spirituality that lead to morality and responsibility. The route to cultural, social, economic and political recovery undoubtedly lie in re-commitment to Truth, morality, and responsibility by each of us in this Auditorium and by the many millions of Americans around this nation. If you do not turn to Truth, morality and responsibility, then America as a nation will continue to decline. Nations not only rise, nations have also fallen into decline and oblivion; think of the Roman Empire, the Greek, the Assyrian, the Persian, that of Chengiz Khan, and so on.

But I am hopeful that a better prospect is ahead – if we and others in the USA will turn to Truth, goodness, modesty, mercy, and indeed to genuine and sacrificial love for each other, for your nation, and for the still-globalising world in which we all now live.

Thank you.

ENDS Sphere: Related Content

New English words needed to indicate grand-parents' relationships with each other

I think we need to invent at least two new words in English.

That's because children have (normally) two paternal grandparents as well as two maternal grandparents.

So what is the paternal grandfather to the maternal grandfather, or vice versa?

No single word for the relationship exists in the English language (so far as I am aware).

So what about saying that they are "grand-fellows" to each other?

If that suggestion is acceptable, that leaves the question of the grandmothers: what is the paternal grandmother to the maternal grandmother, and vice versa?

Unfortunately, no exact equivalent to "fellow" exists for women.

Suggestions welcome!

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Indian traditions - and a surprising British occurence

I am infamous in the family for going on and on about how life used to be in India when I was a child, specifically the open houses where friends and family walked in and out - and anyone could stay as long as they wanted.

My favourite incident is about an uncle of mine, who walked in without warning for tea one afternoon, and stayed for over six months.

Not surprisingly, for British friends or those who know England well, I draw a parallel with the Clapham Circle, whose communal lifestyle was very similar to my childhood one in India.

But today I have learnt something that tops it all:

The "father of English hymnology", Isaac Watts, was once invited for a week to stay with friends in Hertfordshire.

He actually stayed till he died - 36 years later!

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Reflections on the current state of the Chinese economy

The moderation in Chinese economic growth in September was not a blip. That is confirmed by the December macro-economic data now available.

As retail sales and manufacturing investments remained stable, the main reason for the continuing slowdown appears to be less infrastructure investment and (more worryingly) slower export growth.

Further, since November, liquidity has been tight, and credit growth is expected to slow further in 2014.

So the PBoC was forced to inject funds into the market ahead of Chinese New Year.

Money market rates may therefore calm down next month, though financial reforms and the PBOC's bias towards tightening will probably mean volatile interbank rates - volatility may be great for day traders but is also not good for the economy as a whole.

And more regulations on shadow banking are expected in 2014; there may or may not be a major crackdown, but there could be an improvement in regulatory supervision - at least I hope so.

Meanwhile, the risk of defaults in shadow banking has risen, and I fear that there may be systemic risk.

What all that means is that the slowdown (possibly catastrophic) that I had expected to hit the Chinese economy last year, only started hitting it last year, and its full impact is going to start being felt this year.

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The current tide of anti-corruption efforts around the world

A friend who is at present in a developing country, writes to me today as follows:

I am not sure whether or not you remember, but we met the first time when you gave a presentation about bribery and corruption. Very often, I think back to that time and your presentation. Being now in (country xxx) with the new leadership and their anti-graft campaign, I see a lot of change. Also, in (company YYY), we all have been subject to very, very strict integrity and compliance rules as well as the related monitoring. What was possible and even acceptable a few years ago is now strictly banned. It is amazing to see how fast the world is changing in this regard – and I think in a very positive way!

Another friend writes from another developing country:

As you certainly know, we had the probably most prominent case of corruption and abuse of power in modern history in our municipality.... The raise and the fall of (person ZZZ) have been an impressive lesson about (how the country is changing). Having met ZZZ a couple of times personally, this case had my full attention.

India has seen the astonishing spectacle, in the capital, of a political party which did not even exist a year earlier, having formed the government, principally because of its high-profile commitment to fighting corruption.

China has seen the same kind of rising sentiment, partly of course because of the economic situation, which seems to be slowly deteriorating, as I forecast (though I had thought it would already start happening by the middle of last year).

In the West, the sort of rise in corruption which has taken place over the last generation, seems also to be in abeyance at present.

Historically, such trends have lasted a few years and then abated (with the exception of the Protestant Reformation, whose impact over a couple of centuries was so deep that Protestant countries still remain the least corrupt overall). As an example of the short-lived nature of most anti-corruption drives, consider Japan after WWII, China after Mao's rise to power, India under Gandhiji's leadership, Russia after the October Revolution, East Africa and uhuru, and so on.

So the question is whether the current global mood will deliver results, and whether it will last.

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

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

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

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

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

Where knowledge is free

Where the world has not been broken up into fragments

By narrow domestic walls

Where words come out from the depth of truth

Where tireless striving stretches its arms towards perfection

Where the clear stream of reason has not lost its way

Into the dreary desert sand of dead habit

Where the mind is led forward by thee

Into ever-widening thought and action

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

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

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

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

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

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

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

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

Crossing 16

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

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

You came in the evening with your flaming torches.

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

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

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

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

At least on this earth....

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How many ways can they cheat you...

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

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

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

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

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

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

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

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

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

Any views?

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

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

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

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

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

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

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

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

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

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

True.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

- the value of the country’s physical resources

- divided by its population.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thank you.

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

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

Mr Chairman, Ladies and Gentlemen

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

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

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

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

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

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

Commodity prices should head gently down in US dollar terms.

Let me turn my attention to short term risks.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thank you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

You know that one of the reasons India lags behind in development is the availability of skilled labour. In fact, one of the reasons that Indian IT companies have been sourcing their employees from outside India, from Philippines to Eastern Europe and now even the US and Nicaragua, is that India simply does not produce enough skilled people. In fact, according to a recent report, assessment tests administered by the National Association of Software and Services Companies, the top trade grouping of such companies in India, found that 75% of technical graduates and more than 85% of general graduates are unemployable by India's high-growth global industries, including information technology and even simple call centres (http://online.wsj.com/news/articles/SB10001424052748703515504576142092863219826 last accessed 5nov2013 0630 CET). I like to put it exaggeratedly in this way: our educational system is so intellectual that most of our engineers are unable even to change an electrical fuse around the house.

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

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

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

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

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

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

Thank you.

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