The Tribune, Chandigarh, India

EDITORIALS

Powell’s foot in mouth

MOST Americans suffer from a seemingly incurable ailment called self-importance. It is not their fault. It is the US Administration that encourages its citizens to consider themselves a million cuts above those of other nationalities. Those who are ignorant about American arrogance born out of ignorance of global issues should call for the transcript of the statements issued by US Secretary of State Colin Powell during his visit to India and Pakistan. He said that “Kashmir is on the international agenda”. It may be pertinent to use an expression that he would understand as a hard-boiled American. Who gave him this nutty notion that Kashmir was open to being played around by the global community? The expressions he used for putting across the US Administration’s position on the Indo-Pak tension would make any self-respecting Indian seethe with rage at the undisguised attempt to talk tough to India while overlooking the patronage and support that Pakistan continues to provide to terrorist organisations active in the valley. Mr Powell needs to be told firmly, not necessarily politely, that every American has been given a heavy dose of the despicable trait called self-importance and every Indian believes in protecting his self-respect from being trampled upon by anyone. Kashmir never was and will never be allowed to become a dispute for the global community to poke its nose in. Mr Powell should be told to look at his own country’s track record in causing global tension before using the pretext of the military build-up on the Indo-Pak border for justifying unwarranted American interest in the region.

Had the USA been fair in dealing with the heavy civilian casualties in Iraq and now Afghanistan as a result of its operations in the two countries, it may have had some justification to justify its interest in the developments in Kashmir. Does he remember the Bhopal gas tragedy that continues to claim lives and cause infirmities among the victims nearly 20 years after the world’s worst industrial disaster? The USA must play fair on all fronts to raise the level of its acceptability as an honest peace broker. Warren Anderson, the then CEO of Union Carbide, wanted in India for the gas disaster, continues to lead a life of comfort. The US Administration has consistently ignored India’s request for the extradition of the main accused in the Bhopal gas tragedy case. It is not difficult to see the duplicity in the position the USA has taken on the stand-off between India and Pakistan over the status of Kashmir. Pakistan is central to its gameplan in the region. Combating global terrorism is just an excuse for heavy American presence in Pakistan and the virtual takeover of Afghanistan. It is indeed true that India after September 11 responded to the American call for a relentless campaign against all forms of terrorism in any part of the world. However, US intervention was sought to make Pakistan stop aiding and abetting cross-border terrorism in Kashmir. Mr Powell is too seasoned a global player not to know the difference between the offer of cooperation for combating terrorism and the bilateral nature of the Kashmir tangle. India will continue to back American efforts to stamp out terrorism. But it will never allow America or another country to poke its nose in the Kashmir dispute by arbitrarily placing it on the global agenda.

Proliferating white-collar crime

THAT many counterfeit goods, ranging from currency to fertilisers, medicines to auto parts, are in circulation in the country is all too well known. Yet the magnitude of the multi-state racket involving the sale of fake revenue stamps is astounding. For how long the racket has been going on is not yet known, but the Maharashtra Government has levied a penalty of Rs 2,200 crore on the Pune-based gang leader for causing revenue loss to the government in the past three years. Whether it manages to recover it is another matter. The seizure of counterfeit stamps worth Rs 2.10 crore in Chandigarh on Sunday took everyone by surprise as the City Beautiful has comparatively been free from white collar-crime and the police has also been taking it easy. No one yet knows for how long a few gangsters from Delhi had been operating from an office in the city. The Pune police arrested the kingpin 15 days ago and the gang is believed to be busy winding up its operations in various cities. While the loss caused to the exchequer is understandable and its exact assessment will take some time, the scandal has raised issues that will have to be resolved. What will be the status of properties sold or bought with fake stamps? Will these be recognised as valid? If not, will the parties who bought counterfeit stamps in good faith be asked to pay stamp duty again? The sale/purchase of properties and other transactions involving the payment of stamp duty may not be limited to one or two cities as the gang was operating at many places in the country, Ludhiana and Chandigarh among them.

The police in India is yet to gear itself up to meet the challenge of white-collar crime. The emphasis has to be specifically on preventive measures before culprits dupe innocent people. Training the police in the use of various electronic gadgets now available becomes vital and lack of funds should not come in the way considering the devastating loss caused to the exchequer. In this age of computers and the Internet, it should not be difficult to keep updated records of crime and criminals at the national level. An online interaction of the police departments of various states can ensure a speedier flow of relevant information leading to quicker disposal of cases. There is need to upgrade the age-old functioning style of the police and modernise it to meet the demands of the 21st century. A semi-literate baton-weilding policeman can be no match to a smart, English-speaking, mobile phone-carrying, go-getter criminal. Economic offences — like the menace of fake currency, piracy, spurious pesticides, substandard seeds, stolen vehicles, evasion of taxes, etc — are increasing alarmingly. Since the devastating effects on the economy are seldom realised, white-collar crime has not yet received the attention it deserves.

Changing the protocol

DEPUTY Prime Minister L.K.Advani’s readiness to review the table of precedence on inviting Chief Ministers to the President’s swearing-in ceremony has not come a day too soon. His gesture needs to be appreciated in the context of the controversy raised by Tamil Nadu Chief Minister J.Jayalalithaa who could not attend the swearing-in ceremony of President A.P.J.Abdul Kalam in the absence of an explicit invitation. On the face of it, Ms Jayalalithaa cannot be faulted for having recorded her protest to the Centre, especially because she is the Chief Minister of a state from which the President hails. All the same, she is not justified in politicising the issue. For functions such as the swearing-in ceremony of the President and the Prime Minister, Chief Ministers of all states need to be invited as a matter of principle and courtesy. In fact, their participation would give them an opportunity to interact and establish personal rapport with the new incumbents, so essential for effective governance. The practice of extending invitations to dignitaries that has been in vogue for the last 50 years reflects the old mindset and the overbearing bureaucratic attitude. In this context, Union Home Secretary Kamal Pande’s communication to Tamil Nadu Chief Secretary, just before Mr Advani’s expression of regrets to Ms Jayalalithaa, that the state’s Resident Commissioner in New Delhi had not sought an invitation for the Chief Minister and, therefore, wasn’t given one, is unconvincing and does not stand the test of scrutiny.

Now that Mr Advani has expressed his willingness to examine the table of precedence with a view to avoiding unsavoury controversies in the future, the Centre would do well to look into greater detail problems such as lack of space in the Central Hall of Parliament and a common controlling authority for extending invitations to dignitaries. In addition to suitable changes in the warrant of precedence, what is needed is a single controlling authority like, say, the Union Home Ministry (and not the President’s Secretariat or the Prime Minister’s Office as well) to prevent bureaucratic bungling and procedural delays at their end. Similarly, the problem of space management can be effectively handled if there is a more rational and constructive use of the balconies in the Central Hall of Parliament. The Deputy Prime Minister’s statement on Sunday will hopefully end the controversy and help evolve new norms for such historic occasions. The Chief Ministers apart, the Governors too deserve a thought.

OPINION

Global corporate meltdown
Market, the world’s fallen angel
Praful Bidwai

AN unprecedented crisis of corporate capitalism is ripping through Wall Street and other major capital markets, wiping out trillions of dollars in “shareholder value”, gutting savings and livelihoods, and destroying investor confidence even in blue-chip companies. Ever since the Enron scandal burst upon the world last November as history’s greatest-ever corporate bankruptcy, a powerful tidal wave has pulled the West’s capital markets down to almost one-fourth the level which prevailed just two years ago.

The crisis seems unending as giant after corporate giant is being humbled: Tyco, Adelphia, WorldCom, Global Crossing, Vivendi, QWest, Invensys, and now Xerox, Merck, and Halliburton, besides K-Mart and Kaiser Aluminum. Company bankruptcies in the USA are growing by the week — 113 publicly traded companies so far this year, which have assets of $149 billion. (Last year, 255 companies went under, worth $260 billion.) These “fallen angels” of the first half of this calendar year — 34 in America alone — may be joined soon by Alcatel, Ericsson and Fiat in Europe. This series of mega-scandals involves, above all, some of the most high-profile “New Economy” or information-based companies, which became the market’s cult figures in recent years.

The present downturn is not just another recession or a passing bearish phase. It follows a huge decline in global corporate profits after the artificial share-price boom of 1997-2001. It involves large-scale skulduggery: despicable cooking of books to pad profits, price fixing, insider trading and other malpractices. And it has dented the credibility of all institutions of corporate governance and regulation, and even of political leaders — as President George W. Bush’s own involvement in the Harken Energy scam shows.

The stock rout this year has erased $2,400 billion in “market value” from countless stocks. This represents almost one-quarter of America’s gross domestic product, or more than Germany’s GDP, and seven times India’s national income! The present crisis of investor confidence, says the conservative pro-business Fortune magazine, is the gravest since the Great Depression. It encompasses corporate “leaders”, much-lauded Superstar CEOs (chief executive officers), and heads of top accountancy firms and regulatory bodies.

Mr Bush, one of America’s most unabashed pro-corporate Presidents, admits that companies have been “cooking the books, shading the truth and breaking our laws”. He says the business pages of US papers now “read like a scandal sheet”; and yet “more scandals are hiding in corporate America” which are undermining “the confidence of our people and the momentum of our markets”.

Clearly, the God of neo-liberal market-fundamentalism has failed. Rather than growth, wealth and prosperity, it is producing recession, sleaze, crime and destitution. Some of the basic premises — e.g. elementary trust, managerial honesty, and accountability to shareholders — on which corporations are meant to be run have been undermined. Greedy executives have been swindling shareholders by giving themselves fabulous bonuses — not for real, physical, performance, but for artificially raising share prices.

The origins of the present crisis lie in the restructuring over the past decade or so of corporations and their managements on a very specific American model. At the centre of the model is “shareholder value”. This dictates that companies are to be run for the benefit of shareholders, to the exclusion of the interests of workers, customers or local communities. Management would be remunerated with huge incentives in the form of bonus payments typically linked to stock options.

This model’s apparent early success created a bubble-boom. In support of this, it was claimed that US corporations possess a “superior” flexibility in harnessing technology, and audaciously exploiting new markets. Enron and WorldCom were seen as the most spectacular examples of the model’s success. This model and “shareholder value” philosophy were spread through Europe by US in investment banks which emerged as the dominant players in the global finance capital game.

Former World Bank chief economist — and 2001 economics Nobel winner — Joseph Stiglitz has sharply attacked the “shareholder value” model. He says: “By this means, corporate officers could ensure that they were extremely well paid, without at the same time taking out anything from the corporation’s bottom line. It was almost too good to be true: while executives were receiving millions, no one seemed to be bearing the cost.” But this was a mirage: in reality, “shareholder value was being diluted.”

CEOs ran scams by jacking up stock prices artificially: “what mattered was not long-term strength but short-term appearances”. The commonest trick was to create phantom companies that buy a corporate’s stock at absurdly high prices to generate huge profits, which were then used to inflate share prices. These “gains” went straight into the CEO’s remuneration. Huge incentives and bonuses led to “the massive misallocation of resources, the consequences of which America is now suffering. Over-inflated prices have led firms to over-invest”, says Stiglitz. The over-investment bubble is now bursting.

Today, a historic disconnect has opened up between the real economy and market transactions of the corporate world, driven as much by skulduggery as by “irrational exuberance”, or excessive, but genuine, speculation. A vicious cycle of criminalised capital accumulation now stretches from boardrooms to high government offices, and from financial companies and accountancy firms to the IMF the World Bank and the WTO — themselves the authors (with the US Treasury Department) of the “Washington Consensus”, or US-style “free-market” neo-liberalism.

Earlier, formulas derived from the “Washington Consensus”, were prescribed to some 120 different Third World countries too. Common to all was “market fundamentalism”, the blind faith that markets are the most efficient allocators of resources and should be the sole arbiter of economic transactions, with unfettered freedom for corporate capital. Countries like Brazil, Chile, Ghana, Indonesia and, most of all, Argentina, were cited as proof of the success of the neo-liberal model. Many economists warned that neo-liberalism is “both bad economics and bad politics”. They were pooh-poohed.

Then, last December, came the biggest peacetime economic collapse the world has witnessed — in none other than Argentina. This free-fall process remains unended despite destroying half of Argentinian livelihoods and devouring numerous presidential careers. The neo-liberals cannot even begin to explain why this happened. Nor why the “developed” countries which have faithfully practised market-driven agendas have failed to lick long-standing problems of slow growth, industrial excess capacity, and high unemployment. Today’s global recession is itself market-driven and market caused.

Now, even the OECD, representing the world’s 30 most “developed” countries, has signalled growing concern about “policy failures” associated with the “regulating reform agenda”, implicitly admitting that markets don’t work adequately. In Western Europe, there is popular disillusionment with the privatisation of water, power and healthcare, and talk of re-nationalising public services — e.g. Britain’s railtrack and France Telephone.

This failure of the Market-as-God model calls for comprehensive alternative solutions. Mr Bush has just announced some minor measures such as expanding powers of the Securities and Exchange Commission, and stiffer punishment for corporate fraud. These don’t address the root-causes of the malaise. Other steps have been advocated, including enforcing corporate transparency, and separating consultancy and accountancy firms, and investment and commercial banks, which have a conflict of interest. Also important are disincentives against distortions of public policy, and incentives to rectify “market failures”. These include banning “revolving doors” between private and public offices.

However, the best solution would be to recognise the foundational difference between the Anglo-American model of capitalism, and other models such as the Japanese, the Asian “Tigers” (reliance on prudent state intervention), and the Continental European (involving a sizeable public sector and intervention by financial institutions). The second model must be preferred. The first model relies solely on the stockmarket for finance, on minimal regulation, on blind faith in managers, with little unionisation or job security, and poor-to-non-existent social services. The second, “social market-economy”, model involves directed investment, extensive regulation and well-developed social security.

The first model is extremely dualistic and inequality-enhancing, the second compatible with a degree of distributive justice, egalitarianism and social cohesion. The world is witnessing the bursting of the myth that the neo-liberal model is the sole (and in any case, the best) route to growth. Western Europeans are already chafing at the totally negative consequences of the US model’s adoption. The collapse of France’s Vivendi group — the biggest “American” success story — strengthens the case for radical change.

India must draw some lessons from this. Markets can fail even more disastrously than governments. Liberalisation of excessive regulation, with greater competition, is one thing. Wholesale deregulation, mindless globalisation, and insensate privatisation, especially of well-managed, profitable, technologically sound, core-sector enterprises is quite another. Our ministers are viciously attacking the public sector with privileged information — thus lowering its stock value, which they are meant to raise. They rave about the limitless virtues of disinvestment, and sing hosannas to neo-liberalism even as it bankrupts the world’s people. This must change. We must oppose privatisation of the core-sector and public services. The time to do so is now — before all the Navaratnas, especially our world-class petroleum companies, get wantonly sold off.

REALPOLITIK

BJP: more conflicting signals
P. Raman

DEVELOPMENTS in the BJP since the last month’s drastic organisational shakeup do not hold out any good omen. It began with a reassuring note. A set of young leaders with fresh ideas volunteering to work for the organisation is some thing very rare these days. But as was warned in these columns, now it transpires that it has not been a smooth changeover — like the one in the CPM — led West Bengal.

The transfer of power in the BJP was originally conceived as part of its Goa plan to rejuvenate the party. A set of ‘young turks’ with the blessings of L.K. Advani had argued that the only way to remove the stagnation was to effect a thorough shake-up both in the government and the party. This should be followed by a change of the ruling party’s entire mindset which, they warned, was responsible for a string of electoral defeats. Apparently, their target has been Vajpayee’s inertia.

It is time to replace the present lethargic setup by those with full of ideas. Jana Krishnamurthy could hardly inspire the party ranks. For the government, their real target has been Vajpayee himself. The ailing leader had lost all initiative. In a series of unpublicised post-Goa conclaves, the pro-changers argued that if the present setup continued the party would face total rout in the next elections. Hence they sought to foist L.K. Advani as Deputy Prime Minister with the aim of gradually assuming for himself all virtual powers of the ailing Prime Minister.

Initially, we were all carried away by the myth that it was George Fernandes, who had persuaded Vajpayee to give Advani the new post. Now Venkaiah Naidu himself reveals the details of what looked like a first rate political coup d’etat to tame the Prime Minister. Naidu and others pressed Vajpayee to shed some of his functions in favour of Advani. It was at this stage that Fernandes’ services were sought to ensure that none from the NDA would take exception to giving the special status to Advani.

The pro-changers had assured Vajpayee that the new role for Advani would not create a parallel power centre. The latter would not do anything without prior consultation with the PM and would act only on his behalf. Another component of the agreement has been that the new party chief would be reasonably free to run the organisation without the day-to-day consultation with the PMO. This virtually meant the party’s delinking from the PMO and its attaching with Advani.

The PM camp alleges that on both these counts their worst fears have now been proved true. The swelling crowds of power-seekers — business as well as political — stand testimony to Advani’s growing clout. His repeated public assurances on government matters have become an irritant. At times the PM camp discretly made it displeasure public. One was an assurance for a Cabinet review of the railway minister’s decision on the east zone headquarters. Before this, Advani had put his weight with the railway minister. Probably, the PMO deliberately wanted to snub this. Hence when Mamata Banerjee issued a bigger threat, the Prime Minister himself came out with a similar assurance. The message was clear.

The PM camp is at pains to explain that the Vajpayee has not parted with any new portfolios to Advani after he became Deputy Prime Minister. The former continues to call shots on economy, foreign affairs, national security and high level appointments. But it is unhappy over the way the ‘other side’ had handled the Gujarat issue. The differences in this regard have got wide media coverage. Vajpayee’s view that the elections in the strife-torn state should be deferred until tempers cool down, has been lost in the loud official campaign for holding immediate polls. He avoided embarrassment by keeping away from Parliament during the debate and leaving the conduct of the BJP’s parliamentary party meeting to Advani.

The two sides hold divergent views on several basic political and strategic issues. Even if the NDA faces stunning setbacks, Vajpayee would like to continue with the coalition experiment because he does not find any alternative. He takes the position that the BJP alone could not wrest a majority even if it goes back to the full-fledged Hindutva programme. Thus as a matter of principle, he would like to nurse the coalition partners and strive hard to improve the government’s image on which alone it could win the election.

On the other, the Advani side perceives coalition only as a means to achieve the ultimate goal of the BJP’s own majority. Strategically, the BJP need not go out of the way to appease the NDA parties. They are with the BJP not due to admiration or ideology but because of their local political compulsions. In any case, the Advani camp argues that the party should not lose sight of its own interests and programmes to please the allies. The best way to tackle parties like the Trinamul is to firmly convey to them the government’s helplessness. Once they know the BJP means business, they will relent. Therefore, while striving to keep up the coalition, the Advani camp also would simultaneously like to keep open other options like a return to the hard Hindutva.

Handling the BJP organisation is another bone of contention. Vajpayee side considers the successful survival of the government as supreme. The role and function of the party should be to give support to the governmental endeavours. Advani and the group of young leaders want to rely more on the organisation. Even if the government does an excellent job, the party cannot return to power without the backing of a well oiled machinery. The party should not remain a mere appendage but should watch and guide the government.

The most crucial schism is on Hindutva vs coalition. The new BJP leadership does not any more want to be apologetic about Hindutva. Strategically, they too will not force Hindutva policies on others or try to defreeze the three contentious issues. But it should not also miss the opportunities like Gujarat even at the risk of displeasing the allies. Significantly, apart from the portfolios under Advani, the BJP organisation is also now under his full control. Once the dismissals and appointments are complete, the organisation will launch new provocative programmes.

The post-Goa tussles within the BJP have brought about new equations and alignments. Apart from Advani’s unstoppable ascent, leaders like Murli Manohar Joshi have fallen by the way side. Once a strong candidate for the second rank, he has now been pushed to fourth or fifth rank — only after Pramod Mahajan, Naidu and Jaswant Singh. The strength of the last is his proximity to Vajpayee. But he lacks support in the RSS and the BJP. Apparently, Mahajan is the man to watch.

Politically shrewd and dangerously bold, he was once Advani’s blue-eyed boy. For the past one year, he has been adopting independent postures even if they led to temporary jolts. He had masterminded most of the recent decisions like settling for Kalam as President, Manohar Joshi as Speaker, tilting the balance for Bhairon Singh Shekhawat and picking up pracharak Governors. His capacity to push things ahead has made with sides to yearn for his support to turn the table on others.

SPIRITUAL NUGGETS

One should always please the world by words that can captivate the heart. Even the man who gives away wealth in charity terrifies the people if he uses harsh words.

The wise man even if he be oppressed, should not use such words by which men feel pain as if pierced at heart.

Pleasant words ought to be used whether to good men or to enemies. The man who is popular speaks sweet words like the notes of the peacock.

The voices of the drake red with passion, the cuckoo and the peacock are not so attractive as those of the good and the wise.

Those who speak pleasant words and wish good deeds are praiseworthy and prosperous, in short, they are gods in human form.

There is no such art of subjugation in the three words as Mercy, Friendship, Charity and sweet words.

— The Shukraniti, chapter I, 331-342

One should make his talk with few words but of much significance for the accomplishment of his object and should not give out his own opinions without (fully) understanding (the subject matter)

The wise man should never talk to persons with whom words, good or bad, are equally fruitless, as musicians do not sing to the deaf.

Through harsh words even friends who have been maintained since birth and who have been served with gifts and honours become enemies instantly as it is impossible to extricate from the mind the string of crooked words.

— The Shukraniti, Chapter III, 122-123, 460-461, 466-468

Words should be weighed and not counted.

— A Yiddish proverb

Buffaloes are held by cords, man by his words.

— A Malay proverb

All our life is crushed by the weight of words; the weight of the dead.

— Luigi Pirandello, Henry IV