It was in the early 70s, when the environmentalist Edward Abbey had coined the World Environment Day slogan:
"Growth for the sake of growth is the ideology of the cancer cell"
Amit Bhaduri's article (Economic & Political Weekly, April 19, 2008) on India's Predatory Growth (Hat Tip: A Reader's Words) is a good exposition of this principle. It also shows how in recent two decades years, India's Economic Growth has been happening at the expense of India's Economic Development.
The full text of the article can be found here
"Over the last two decades or so, the two most populous, large countries in the world, China and India, have been growing at rates considerably higher than the world average... (leading to) a clever defence of globalisation by a former chief economist of IMF...
...ordinary people are not persuaded by statistical mirages and numbers, but by their daily experiences. They do not accept high growth on its face value as unambiguously beneficial. If the distribution of income turns viciously against them, if the opportunities for reasonable employment and livelihood do not expand with high growth, the purpose of higher growth would be widely questioned in a democracy. This is indeed what is happening, and it might even appear to some as paradoxical. The festive mood generated by high growth is marinated in popular dissent and despair, turning often into repressed anger...
A central fact stands out... that the growth in output and in inequality are not two isolated phenomena... This pattern of growth is propelled by a powerful reinforcing mechanism... by which growing inequality drives growth, and growth fuels further inequality...
...in contrast to earlier times when less than 4 per cent growth on an average was associated with 2 percent growth in employment, India is experiencing a growth rate of some 7-8 per cent in recent years, but the growth in regular employment has hardly exceeded 1 percent. This means most of the growth, some 5-6 percent of the GDP, is the result not of employment expansion, but of higher output per worker. This high growth of output has its source in the growth of labour productivity. According to official statistics, between 1991 and 2004 employment fell in the organised public sector, and the organised private sector hardly compensated for it. In the corporate sector, and in some organized industries productivity growth comes from mechanization and longer hours of work...
The manifold increase in labour productivity, without a corresponding increase in wages and salaries becomes an enormous source of profit, and also a source of international price competitiveness in a globalizing world. Nevertheless, this is not the entire story, perhaps not even the most important part of the story. The whole organized sector to which the corporate sector belongs, accounts for less than one-tenth of the labour force... the remaining 90 per cent of the labour force also contributes to the growth in labour productivity... Growth of labour productivity in the unorganized sector... comes from lengthening the hours of work to a significant extent, as this sector has no labour laws worth the name, or social security to protect workers. Sub-contracting to the unorganized sector along with casualisation of labour on a large scale become convenient devices to ensure longer hours of work without higher pay....
Ruthless self-exploitation by many of these workers in a desperate attempt to survive by doing long hours of work with very little extra earning adds both to productivity growth, often augmenting corporate profit, and to human misery.
However inequality is increasing for another reason... The increasing openness of the Indian economy to international finance and capital flows, rather than to trade in goods and services, has had the consequence of paralysing many pro-poor public policies... India’s comfortable foreign reserves position, crossing 230 billion U.S dollars in 2008, is mostly the result of accumulated portfolio investments and short term capital inflows from various financial institutions. To keep the show going in this way, the fiscal and the monetary policies of the government need to comply with the interests of the financial markets... Similarly, the idea has gained support that the government should raise resources through privatisation and so-called public-private partnership, but not through raising fiscal deficit, or not imposing a significant turnover tax on transactions of securities. These measures rattle the ‘sentiment’ of the financial markets, so governments remain wary of them... the burden of such policies is borne largely by the poor of this country. This has had a crippling effect on policies for expanding public expenditure for the poor in the social sector. Inequality and distress grow as the state rolls back public expenditure in social services like basic health, education, and public distribution and neglects the poor, while the ‘discipline’ imposed by the financial markets serves the rich and the corporations...
...According to the Forbes Magazine list for 2007, the number of Indian billionaires rose from 9 in 2004 to 40 in 2007, much richer counties like Japan had only 24, France had 14 and Italy 14... This 60 per cent increase in wealth would not have been possible, except through transfer on land from the state and central governments to the private corporations in the name of ‘public purpose’, for mining, industrialisation and special economic zones (SEZ). Estimates based on corporate profits suggest that, since 2000-01 to date, each additional per cent growth of GDP has led on an average to some 2.5 per cent growth in corporate profits. India’s high growth has certainly benefited the corporations more than anyone else.
...India of the twenty first century has the distinction of being only second to the United States in terms of the combined total wealth of its corporate billionaires coexisting with the largest number of homeless, ill-fed, illiterates in the world...
The growth dynamics in operation is being fed continuously by growing inequality. With their income rapidly growing, the richer group of Indians demand a set of goods, which lie outside the reach of the rest in the society (think of air conditioned malls, luxury hotels, restaurants and apartments, private cars, world class cities where the poor would be made invisible)... more than 3 in 4 Indians do not have a daily income of 2 U.S dollars. They can hardly be a part of this growing market. However, the logic of the market now takes over... Its logic is to produce those goods for which there is enough demand backed by money...
The production structure resulting from this market driven high growth is heavily biased against the poor... We have state-of-the-art corporate run expensive hospitals, nursing homes and spas for the rich, but not enough money to control malaria and T.B. which require inexpensive treatment. So they continue to kill the largest numbers. Lack of sanitation and clean drinking water transmit deadly diseases especially to small children which could be prevented at little cost, while bottled water of various brands multiplies for those who can afford it. Private schools for rich kids often have monthly fees that are higher than the annual income of an average unskilled Indian worker, while the poor often have to be satisfied with schools without teachers, or class rooms.
There are insidious consequences of such a composition of output biased in favour of the rich that our liberalised market system produces. It is highly energy, water and other non-reproducible resources intensive, and often does unacceptable violence to the environment. We only have to think of the energy and material content of air-conditioned malls, luxury hotels and apartments, air travels, or private cars as means of transport. These are no doubt symbols of ‘world class’ cities in a poor country, by diverting resources from the countryside where most live. It creates a black hole of urbanization with a giant appetite for primary non-reproducible resources. Many are forced to migrate to cities as fertile land is diverted to non-agricultural use, water and electricity are taken away from farms in critical agricultural seasons to supply cities, and developmental projects displace thousands. Hydroelectric power from the big dams is transmitted mostly to corporate industries, and a few posh urban localities, while the nearby villages are left in darkness. Peasants even close to the cities do not get electricity or water to irrigate their land as urban India increasingly gobbles up these resources....
The composition of output demanded by the rich is hardly producible by village artisans or the small producers. They find no place either as producers or as consumers; instead, economic activities catering to the rich have to be handed over to large corporations who can now enter in a big way into the scene. The combination of accelerating growth and rising inequality begins to work in unison... The vocal supporters of industrialisation never stop to ask why the very poor who are least able, should bear the burden of ‘economic progress’ of the rich.
It amounts to a process of internal colonisation of the poor, mostly dalits and adivasis and of other marginalised groups, through forcible dispossession and subjugation. It has set in motion a social process not altogether unknown between the imperialist ‘master race’ and the colonised ‘natives’. As the privileged thin layer of the society distances itself from the poor, the speed at which the secession takes place comes to be celebrated as a measure of the rapid growth of the country... If this process of growth continues for long, it would produce its own demons. No society, not even our malfunctioning democratic system, can withstand beyond a point the increasing inequality that nurtures this high growth..."
Sunday, May 25, 2008
It was in the early 70s, when the environmentalist Edward Abbey had coined the World Environment Day slogan:
Tuesday, May 13, 2008
This article by Michael T Klare is worth a reading...
Since it is a long article, I have edited it substantially (the full text is available here)
...Less than a month ago, the United States... lost its claim to superpower status when a barrel of crude oil roared past US$110 on the international market, gasoline prices crossed the $3.50 threshold at American pumps, and diesel fuel topped $4... an ex-superpower-in-the-making.
That the fall of the Berlin Wall spelled the erasure of the Soviet Union's superpower status was obvious to international observers at the time... The relationship between rising oil prices and the obliteration of America's superpower status is, however, hardly as self-evident. So let's consider the connection.
The fact is, America's wealth and power has long rested on the abundance of cheap petroleum..... Abundant, exceedingly affordable petroleum was also responsible for the emergence of the American automotive and trucking industries, the flourishing of the domestic airline industry, the development of the petrochemical and plastics industries, the suburbanization of America, and the mechanization of its agriculture. Without cheap and abundant oil, the United States would never have experienced the historic economic expansion of the post-World War II era.
No less important was the role of abundant petroleum in fueling the global reach of US military power. For all the talk of America's growing reliance on computers, advanced sensors, and stealth technology to prevail in warfare, it has been oil above all that gave the US military its capacity to "project power" onto distant battlefields like Iraq and Afghanistan. Every Humvee, tank, helicopter, and jet fighter requires its daily ration of petroleum, without which America's technology-driven military would be forced to abandon the battlefield. No surprise, then, that the US Department of Defense is the world's single-biggest consumer of petroleum...
....When it came to reliance on imports, the United States crossed the 50% threshold in 1998 and now has passed 65%.... this represented a significant erosion of sovereign independence... transferring such staggering sums yearly to foreign oil producers, who are using it to gobble up valuable American assets.....
...the United States is importing 12-14 million barrels of oil per day. At a current price of about $115 per barrel, that's $1.5 billion per day, or $548 billion per year....
....at a moment when credit is scarce and economic growth has screeched to a halt, the oil regimes... are depositing their mountains of accumulating petrodollars in "sovereign wealth funds" (SWFs) - state-controlled investment accounts that buy up prized foreign assets in order to secure non-oil-dependent sources of wealth. At present, these funds are already believed to hold in excess of several trillion dollars; the richest, the Abu Dhabi Investment Authority (ADIA), alone holds $875 billion.
The ADIA first made headlines in November 2007 when it acquired a $7.5 billion stake in Citigroup, America's largest bank holding company. The fund has also made substantial investments in Advanced Micro Systems, a major chip maker, and the Carlyle Group, the private equity giant. Another big SWF, the Kuwait Investment Authority, also acquired a multibillion-dollar stake in Citigroup, along with a $6.6 billion chunk of Merrill Lynch. And these are but the first of a series of major SWF moves that will be aimed at acquiring stakes in top American banks and corporations...
....Foreign ownership of key nodes of our economy is only one sign of fading American superpower status. Oil's impact on the military is another.
Every day, the average GI in Iraq uses approximately 27 gallons of petroleum-based fuels. With some 160,000 American troops in Iraq, that amounts to 4.37 million gallons in daily oil usage, including gasoline for vans and light vehicles, diesel for trucks and armored vehicles, and aviation fuel for helicopters, drones, and fixed-wing aircraft. With US forces paying, as of late April, an average of $3.23 per gallon for these fuels, the Pentagon is already spending approximately $14 million per day on oil ($98 million per week, $5.1 billion per year) to stay in Iraq. Meanwhile, our Iraqi allies, who are expected to receive a windfall of $70 billion this year from the rising price of their oil exports, charge their citizens $1.36 per gallon for gasoline.
When questioned about why Iraqis are paying almost a third less for oil than American forces in their country, senior Iraqi government officials scoff at any suggestion of impropriety. "America has hardly even begun to repay its debt to Iraq," said Abdul Basit, the head of Iraq's Supreme Board of Audit, an independent body that oversees Iraqi governmental expenditures. "This is an immoral request because we didn't ask them to come to Iraq, and before they came in 2003 we didn't have all these needs."
Needless to say, this is not exactly the way grateful clients are supposed to address superpower patrons.
Certainly, however, our allies in the region, especially the Sunni kingdoms of Kuwait, Saudi Arabia, and the United Arab Emirates (UAE) that presumably look to Washington to stabilize Iraq and curb the growing power of Shi'ite Iran, are willing to help the Pentagon out by supplying US troops with free or deeply-discounted petroleum. No such luck....
...As far as they're concerned, we're now just another of those hopeless oil addicts driving a monster gas-guzzler up to the pump - and they're perfectly happy to collect our cash which they can then use to cherry-pick our prime assets...
Worse yet, the US military will need even more oil for the future wars on which the Pentagon is now doing the planning... the future US war machine will rely less on "boots on the ground" and ever more on technology.
... To put this in perspective: The average GI in Iraq now uses about seven times as much oil per day as GIs did in the first Gulf War less than two decades ago. And every sign indicates that the same ratio of increase will apply to coming conflicts; that the daily cost of fighting will skyrocket; and that the Pentagon's capacity to shoulder multiple foreign military burdens will unravel. Thus are superpowers undone.
The rest of the article goes on to describe the rise of Russia since the fall of the Berlin Wall, and ends with:
....Whether we know it or not, the energy Berlin Wall has already fallen and the United States is an ex-superpower-in-the-making.
Sunday, May 04, 2008
Last week was the 60th Yom Hashoah - the Holocaust Remembrance Day...
...And since there have been a couple of puzzles about the Holocaust, at least to me, therefore this posting (also, because there is much to learn from the past to make sense about what is happening in the present!)...Issues that have puzzled me are:
So why/how did the rest of the world just sit impotently and watch these crimes taking place?
Contrary to the contemporary understanding, actually the rest of the world - the "civilized world", the "international community", the "West", etc. of that era - not only turned a blind eye to these developments, but in a way cheered, or subscribed to and supported, the Nazi's way!!!... After all, it took more than 50 years, when The Vatican apologised to Jews in 1998on behalf of the entire Roman Catholic community, for failing to speak out against the Nazi holocaust.
Consider, for instance, some of these under-reported facts/events of history:
By 1938, about 150,000 jews had fled from Germany. This was creating a major refugee problem in other countries. With the annexation of more European countries, this was likely to amplify into a "humanitarian crisis". Since many countries were affected, US President Franklin D. Roosevelt convened a conference at Hotel Royal, Évian-les-Bains, France in July, 1938 to discuss the problem of "Jewish refugees".
32 countries - including US, Great Britain, Canada, France, Belgium, Australia, Sweden, Switzerland, New Zealand, Norway, and many latin American countries - attended the conference.... and nothing came out of it.
Apparently, before the Conference, the US and Great Britain had made a deal: the British would not bring up the fact that the US was not filling its immigration quotas, and the Americans will not mention that Palestine can be a possible destination for the refugees.
The outcome of the Conference was summed up by the The Time magazine (18 July 1938, p16):
"Evian is the home of the famous spring of still and unexciting table water. After a week of many warm words of idealism and few practical suggestions, the Intergovernmental Committee on Political Refugees took on some of the same characteristics... Two days of stalling went on before a President was elected. No delegate wanted the post, each fearing that his nation would then be responsible for the conference's all-too-probable failure... All nations present expressed sympathy for the refugees but few offered to allow them within their boundaries."
Dr. Chaim Weizmann, who later became Israel's first President in 1948, later remembered the Conference:
"The world seemed to be divided into two parts – those places where the Jews could not live and those where they could not enter."
No country wanted to rub Germany on the wrong side - it was after all, a booming economy and military super-power - and so, no resolution condemning the persecution of Jews was passed in the conference: a fact, that was later widely used by the Nazi propaganda as an endorsement of their policy - which in away, it was!
A detailed description of the Evian Conference is available here, which starts by a quotation by Annette Shaw:
"I wrote about the Evian Conference because I felt people should know the part the allies played in appeasing Hitler and giving him the green light to believe he could do whatever he wanted to the Jewish people as nobody wanted them and this resulted in genocide. By their refusal to take Jewish refugees the countries who attended the Evian Conference condemned them to torture, inhumane treatment and a horrible death."
Made into a motion picture The Voyage of the Damned in 1976, this perhaps was one of the most tragic trans-atlantic journey anyone would have taken.
This was just before the WW-II. In May 1939, SS St Louis, sailed from Hamburg to Havana/Cuba carrying about 930+ Jewish refugees, who were seeking asylem. It was only on reaching the port, they found that under Cuban government of Federico Laredo Brú, they had to pay a disembarkation fee of $500/refugee. For people who had fled a country which had confiscated their property, this was hardly an option. A couple of suicides later, the ship turned to Florida for seeking a refuge... Again to be denied a landing. As Wikipedia reports:
"On 4 June 1939, the St. Louis was also refused permission to unload on orders of President Roosevelt as the ship waited in the Caribbean Sea between Florida and Cuba. Initially, Roosevelt showed limited willingness to take in some of those on board despite the Immigration Act of 1924, but vehement opposition came from Roosevelt's Secretary of State, Cordell Hull, and from Southern Democrats — some of whom went so far as to threaten to withhold their support of Roosevelt in the 1940 Presidential election if this occurred... The St. Louis then tried to enter Canada but was denied as well."
And so, St Louis sailed back to Europe. On the way back to Europe:
"...first stopping in England, where 288 of the passengers disembarked and were thus spared from the Holocaust. The remaining 619 passengers disembarked at Antwerp. 224 were accepted into France, 214 into Belgium and 181 into Holland, safe from Hitler's persecution until the German invasions of these countries."
Well, it wasn't a happy ending really. To quote:
"... Having crossed the Atlantic Ocean twice, the passengers' original hopes of freedom in Cuba and the U.S. turned into a forlorn effort to escape sure death upon their return to Germany. Feeling alone and rejected by the world, the passengers returned to Europe in June 1939. With World War II just months away, many of these passengers were sent East with the occupation of the countries to which they had been sent."
Apparently, the "hidden hand" of the free market was well in actions. Under Hitler, Germany had seen a turnaround, and was actually a "business-friendly" destination. Contrary to an impression, that the Nazis controlled all aspects of Germany's business economy, Hitler actually believed in "self-regulation" by business, and encouraged a nexus between business and the Reich. In 1934, after coming to power, the government of Nazi Germany created an advisory body called the National Economic Chamber (the NEC), whose purpose was to formulate the socio-economic policies for the Reich. This was a private association, with membership of the large businesses, trusts and cartels - and strictly excluded the labour and consumer representatives. This network also gave vast influence to large indutries in the Reich's policies.
Correspondingly, Germany under Hitler became a capitalists' paradise. Trade unions were abolished, work-week was 60-hours, wages were low, and right to quit did not exist. Germany's expansionist ambitions, and public investments, galvanised business activities. It also had some positive effects, e.g., between 1933 and 1939, its unemployment numbers had gone down from 6mn to barely 0.3mn.. (Needless to say, there was also some creative accounting involved in this turnaround of the economy - as is true, even today. For example, women were not included in the unemployment figures - neither were the Jews, who had lost their citizenship...)
In any case, Germany was a happy hunting ground for making profits, and there were many takers, e.g.:
- Ford Motor Company: Henry Ford was one of the most admired figures in the Reich (for reasons which will be mentioned later in Part-II of this post). In 1938, he was awarded - and accepted - the Grand Cross of the German Eagle, the Nazi regime's highest honor (The same year when the Time magazine judged Adolf Hitler as the Man of the Year!). Ford had established its presence in Germany in 1925, and had opened its plant in Cologne in 1931 as a wholly-owned subsidiary. Ford of Germany had close ties with the Reich, and with the advent of WW-II, it specially prospered since its sales increased by more than a half time during 1938-43. The boost came following the German invasion of Poland, when Ford Germany became the largest supplier of vehicles to German army. By 1941, Ford Germany had stopped manufacturing passenger vehicles, and shifted to manufacture trucks for the army; of the 350,000 trucks used by German Army, about one third were Ford.
In 1942, after the US entered the war, German Ford was restructured and named Ford Werke, with a German board (though it was never nationalised by the Reich). Ford Motors of US continued to own 52% of its equity (which it maintained during the WW-II), and was also paid the dividends after the war was over in 1945.
- General Motors: Like Ford, General Motors was the other beneficiary of the booming German economy, and its 100% owned subsidiary Opel plant was a key component in Germany's war efforts. As one report mentions: "General Motors was far more important to the Nazi war machine than Switzerland. Switzerland was just a repository of looted funds. GM was an integral part of the German war effort. The Nazis could have invaded Poland and Russia without Switzerland. They could not have done so without GM."
GM's Opel's Brandenburg factory was Opel Blitz, which was considered the best of the German army's 3-ton trucks. Once the WW-II started in 1939, Opel converted its largest factory to warplane engine production. "When American GIs invaded Europe in June 1944, they did so in jeeps, trucks and tanks manufactured by the Big Three motor companies in one of the largest crash militarization programs ever undertaken. It came as an unpleasant surprise to discover that the enemy was also driving trucks manufactured by Ford and Opel - a 100 percent GM-owned subsidiary - and flying Opel-built warplanes."
GM of USA, of course, later denied any connections with Opel's work during the WW-II, on the grounds that during the war it had no connection or control over the German plant's activities (this has been a standard refrain of all companies that they had no control over their German subsidiaries under the Nazi, though all of them controlled through some other European subsidiary, to which the German subsidiary reported). However, GM did apply for, and received, $32 million by the U.S. government for damages sustained to its German plants during the war!!
- IBM: Collecting, seggragating, classifyin, trasporting and submitting to different treatments, required huge data management capabilities. As Edwin Black's book IBM and The Holocaust mentions:
"To Nazis, Jews were not just those who practiced Judaism, but those of Jewish blood, regardless of their assimilation, intermarriage, religious activity, or even conversion to Christianity. Only after Jews were identified could they be targeted for asset confiscation, ghettoization, deportation, and ultimately extermination. To search generations of communal, church, and governmental records all across Germany--and later throughout Europe--was a cross-indexing task so monumental, it called for a computer. But in 1933, no computer existed... However, another invention did exist: the IBM punch card and card sorting system - a precursor to the computer. IBM, primarily through its German subsidiary... using its own staff and equipment, designed, executed, and supplied the indispensable technologic assistance Hitler's Third Reich needed to accomplish..."
IBM's technology was also handy in managing the efficiently transport Jews out of European ghettos along railroad lines and into death camps, "with timing so precise the victims were able to walk right out of the boxcar and into a waiting gas chamber." Nazi Germany became the largest IBM customer outside US. Later, IBM has maitained that it has no records of that time for its German subsidiary, the book does site documents, and how the German operations were conducted with full knowledge, support and instructions. You can read excerpts here and here
- Standard Oil (later Exxon): This quote summarises the role of this Rockfeller company:
"...without the explicit help of Standard Oil, the Nazi air force would never have gotten off the ground in the first place. The planes that made up the Luftwaffe needed tetraethyl lead gasoline in order to fly. At the time, only Standard Oil, Du Pont, and General Motors had the ability to produce this vital substance. In 1938, (Standard Oil helped ) I.G. Farben to acquire 500 tons of tetraethyl lead from Ethyl, a British Standard subsidiary... After the war began in Europe, the English became angry about U.S. shipments of strategic materials to Nazi Germany. Standard Oil immediately changed the registration of their entire fleet to Panamanian to avoid British search or seizure."
This small clip from the documentary The Corporation shows some insightful visuals depicting this collusion between business and fascism during WW-II
... And of course there were many others in the game. Excerpts from an article, New World Order's Fascist Pedigree:
"The holocaust was very good business. Throughout the 1930's Wall Street investment banks participated in "aryanization" which meant getting Jewish owned breweries, banks, factories, department stores etc. for 30% of their true value.... It is not an exaggeration to say that the Nazi war effort was financed by the Bank of England (which, for example, transferred the Czech gold reserves to the Nazis), Wall Street (Prescott Bush, W's grandfather was one of the leading Nazi financiers) and Jewish plunder... The list of US corporations that had the equivalent of $8 billion invested in Nazi Germany include Standard Oil, General Motors, IBM, Ford, the Chase and National City Banks, ITT, and many others. As a result, the men of "The Greatest Generation" didn't know that ITT built the airplanes that dropped bombs on them. They didn't know that Ford and General Motors built the Nazi's trucks and tanks. They didn't know that ball bearings crucial to the Nazi war effort were manufactured in Philadelphia, yet were in short supply in the USA."
One of the major attraction for the MNCs was the low labour costs of the slave labour. Besides the above mentioned, there were a number of businesses which were lured by this "low-cost labour advantage" (reminds one of the presen-day CCA and the likes).
For instance, one BBC report on Nestle's complicity:
"...as well as food giant Nestle, were aware that forced labour was being used in their German subsidiaries.... "As a rule they were not worried or uneasy about the situation, and as long as production was maintained they had no thoughts of intervening in the management or personnel policy of their subsidiaries," says the report."
Similary, in 1998, UBS of Switzerland, one of the world's biggest banks, admitted:
"...that it exploited Nazi slave labourers during World War II.... The bank has confirmed it owned a cement factory where SS officers forced at least 400 prisoners from the nearby Auschwitz concentration camp to work."
... The list can go on and on...
But the puzzle remains:
Why did the world (with all its civilized governance, ethics, and plain common sense), not only allowed - what in the 20/20 hindsight looks so criminal and inhuman - to happen, but actually participated in it with full consciousness?... Why did sane, normal people - the kind who love their families, tend their gardens and walk their dogs - participate in what perhaps was one of the greatest collective crime of the civilization?
Well... That will be the Making of a Holocaust - Part II... Please wait.
After all, it is all happening today as well!!