Pope calls for a new economic order

July 7, 2009

Pope Benedict XVI has called for a new financial order, a new way of understanding business enterprise, that respects the dignity of workers and looks out for the common good by prioritizing ethics and social responsibility over dividend returns, according to a report by the Associated Press.

The text of the enyclical titled “CARITAS IN VERITATE” or “Charity in Truth” can be found here on the Vatican web site.

The Pope in this third encyclical of his pontificate has addressed squarely a myth that has surrounded modern capitalism and economic growth. Most often this mythology has attempted to perpetuate the dominance of the rich classes.

This mythology has as its key theme that for capitalism to thrive, trade unions must be weakened or non-existent, that profits have to be maximized even if it goes hand in hand with worker layoffs and lower wages, sometimes achieved through offshore outsourcing.

The profit motive is worthy, but it need not be exhorbitant profits at the expense of the worker. Both the capitalist and the workers can have a share in the wealth of a company.

On the other hand, the government does not exist for the investor but for the people, understood as workers, investors, and other classes of people on the margin of society.

It is the responsibility of the government to spend on development, on education, on healthcare. The private sector cannot be expected to deliver in these sectors in a manner that delivers services that are affordable to the poor.

There will be those who will argue that competition reduces prices. Competition will not however reduce prices beyond a point where they do not meet the high profitability requirements of the private sector. Don’t expect the private sector to insure the poor sick….those will be on the streets if the government cannot foot the bills.

Competition in private sector education may lower costs, but not as low as a government-run and subsidized schools. The private sector wants a share of the subsidies by offering to deliver services better than the government. The pet line goes: if poor kids can’t afford private schools let the government pay the fees for them. But the government can have far more kids educated at the fees private schools charge.

One of the greatest challenges facing the economy is to achieve the most efficient use, and not abuse of natural resources, based on a realization that the notion of ‘efficiency’ is not value-free, the Pope wrote.

The Pope said that the drive to outsource work to the cheapest bidder had endangered the rights of workers, and demanded that they be allowed to organize in unions to protect their rights and guarantee steady, decent employment for all, according to the AP report.

Pope Benedict is concerned about the inhuman conditions for factory workers in outsourcing hubs in China and south-east Asia. The move to outsource at the lowest cost has led to workers working in sweat shops, under inhuman conditions, as has been documented by Naomi Klein (No Logo) and other writers.

Some writers like nobel laureate Paul Krugman have argued that sweat shops are an improvement over the current lving conditions of people in some Asian countries. But the Pope cannot take the clinical (if cynical) view of an economist. His concern is the pain, the dehumanization of people worldwide.


India’s economic boom is lopsided

June 26, 2009

It is fashionable among India’s new business elites to talk about the boom in the economy, but a lot of it has been awfully lopsided.

About 600 million people, or 60 percent of India’s population, live off the land, according to CNN. Majority of farmers depend on rainwater for crops — irrigation, electricity are a luxury.

Yet presumably in a bid to attract investors, Indian business and investment analysts have trumpeted India’s economic boom. Their comments often reflect a divide in urban/rural perceptions, a lack of knowledge about what goes on outside the cities.

Rather than provide a counter-balance to such skewed perceptions, the Indian media has by-and-large gone along with the urban point of view.

The same business classes are also planning to get the private sector into education, healthcare, and insurance, little realizing that private services are not a substitute for government. If government services are bad, fix it…….let’s not talk about privatization as a panacea.

The few instances of privatization in these sectors in India have shown that the costs of the new privatized services are way beyond India’s poor who are not only in its villages but also in towns.

The boom in India, which has been largely confined to its cities, and particularly in its outsourcing, retail, and telecom industries has created a new class that demands the best in schooling for its kids, the best in food, the best in healthcare, quite regardless of the price.

But these schools, hospitals, and other services are beyond the reach of the poor both in the cities and the towns, further accentuating the huge economic divide in the cities. School fees in some of the better private schools would add up to over US$3000 a year. That is a cost that is way beyond a woman working as a maid in the city who would earn less than US$500 a year, at the peak of her career.

The moves to have private services in education and healthcare and other areas are therefore designed to serve the new elites, and cannot compensate for government action.

While there is no objection to the elites pampering themselves like their counterparts in the U.S., there is a case for the government to set up more of its services. In these sectors there is case for more government.

The poor also have their aspirations for a better quality of life, and if that is not satisfied by government, it will find other avenues, in some cases in increased loss of faith in the system and criminality.

If the political class, corrupt and suspect, have already contributed to an erosion of faith in the system, self-serving prescriptions from parvenu Indian elites can only increase the alienation.

Coming up for air

June 25, 2009

I am back…..and this time I don’t care if millions of people don’t read this blog.

I am blogging again to keep my sanity in a world where we are indundated each day by marketing hype, cant and bluster in a world where truth has become like the plasticine, the clay our children play with.

It is a world where executives of banks that have taken TARP bailouts are using their company jets for private excursions, according to the Wall Street Journal.

It is a world where the gods of the financial Mount Olympus believe they should get a bail out, and they do get it courtesy US President Barack Obama, if only to save the economy.

A world where the new regulations for the finance industry proposed by Obama sounds like a lullaby, rather than a warning against future misbehavior. It won’t put speculators to sleep, but maybe all of us until the next bubble bursts.

It is a world where corruption and doublespeak continue not only in Iran or China but in democratic countries like the US, Europe and India.

It is a world where norms of decency and civility are fast dying out, and getting replaced by individualism and anomie.

I need to blog, to come up for air.

Nandan Nilekani: a dangerous flirtation

June 25, 2009

Nandan Nilekani is the best among India’s businessmen. But just because he has run a company well, it does not translate into core competence to do a government job well, more so when the job is in welfare.

India’s elite and the media will predictably welcome the move to induct people from the IT industry into government, and from that standpoint Prime Minister Manmohan Singh may score a big point with some of the urban intelligentsia.

Unfolding however is a far more dangerous trend, that of hard core free-marketers, who have made their fortunes from private enterprise, wriggling their way into government, and trying to influence policy. Their prescriptions are almost always built around privatization of vast swathes of the economy, of the education sector, of healthcare, and probably even the air we breathe.

It is the only language a businessman knows. It is also the most fashionable political ideology which many educated people thoughtlessly spout. But it is not an ideology that addresses the needs of the teeming poor. It is a self-serving ideology of the super class.

That the IT industry introduced stock options and high salaries does not reflect its social conscience, but again a high market demand for engineers which pushed up their salaries and perks.

Free market ideology cannot solve a country’s problems as the current economic crisis in the US and Europe has shown.

The country needs as leaders not business people, but people who know how the masses think and feel, and who are also accountable to those masses for those votes. Handpicked technocrats, particularly of the free market variety, will not do.

Like traditional aristocracies, the elite in the IT industry is trying to perpetuate their prominence beyond business, and beyond retirement, by selling the myth that IT professionals can bring a new and positive perspective to government.

Instant Happiness

September 5, 2007

Fie those who don’t change with the times; who will cling to their youthful dreams and precepts, who still worry about the meaning of life, about the disappearance of the decent and civil in human society, about ennui, about……..

For change is upon you, a change begotten, we are told, by the magic of capitalism and materialism. Too long has your soul, your real soul, been starved of experiences that matter, of personal music on an iPOD, of instant access to people and things the world over, of jungle trips in five-star luxury, of the opportunity to travel the world in safety and luxury organized by your travel agency.

So drop your antiquated dreams that served you badly, only generating anxiety and an existential angst, drop those authors like Sartre, Camus, Marx, or Heidegger. They have had their time. They never changed the world. It was capitalism that changed the world. It was capitalism that made jeans – that symbol of counter-culture protest in the 1950s and 1960s – an expensive perk of corporate success. So what if they changed the meaning of the jeans from a counter-culture protest to a more manageable and colorless symbol of something casual to wear with your Nike shoes ?

Let your hair down and enjoy the fruits of the revolution laid out for you by Madison Avenue. You are no longer into buying goods but experiences, and life styles. If your existential concerns still nag you, you could take a shot at instant spirituality. You don’t have to leave your job, or forego your expensive car, and it is exotic. And by the way, your heart need not bleed for the poor, to go to heaven. That was a Marxist hangover, in fact a proof that Marxism never outgrew its Judaic Christian messianic roots.