The Lions of Lisboa

An interesting story to share in these tumultuous times. Today, Celtic FC surpassed a 50-year old record for unbeaten games. The previous team that held the record were the Celtic team of 1967, who were also known as the ‘Lisbon Lions ‘for being the first British team to win the European Cup by defeating the expensively assembled Inter Milan in 1967 in Lisbon.

I managed to catch the play, ‘The Lions of Lisbon ‘ today at the Tron Theatre as part of Celtic Connections 2017. It is a heartwarming play for anyone interesting in catching it!

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It is also worth reminding ourselves of the origin of Celtic Football Club in 1888. It was founded by Brother Walfrid who established the club so as to support and feed the starving, to help those who were being persecuted for their religious beliefs, the refugees, and alleviate poverty through the raising of funds by hosting football games.

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This has led to the Celtic Football Club ethos of being open to anyone, regardless of their religious beliefs, their creed, race, colour or creed.

A message which is needed today more than ever. Hail Hail!

#Celtic #Lisboa50

The Lions of Lisbon

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Robots! Clear and Future Danger For Economies

I was at a conference recently and there was a speaker who was extolling the power of robots, technology, automation and artificial intelligence (AI) in the modern workplace and how it was going to revolutionise the global economy.

There was quite a catalogue of achievements as a result of increased robotics and AI including lower ‘FTE’ (or ‘Full Time Equivalent’ of human labour) requirements and greater efficiency, productivity and decreased errors and mistakes. These were achievements that were backed by undisputed statistics and data.

The ability to create consistently high economic value using systems, robots and AI which do not make mistakes, which do not break down often, which can even be self-correcting becomes very appealing.

However amidst the glories of robotics and AI, I felt increasingly concerned about where the world was heading with the increased introduction of automation, robotics and AI and the impact this was going to have on employment, social mobility and income equality.

My concerns

Technology as a displacer of jobs.

Technology, automation and robotics initially replaced blue-collar jobs and roles from the economies. Increasingly greater sophistication of AI means that white-collar jobs are also being replaced. We read various reports about the jobs of the future being technology-related roles that help create, maintain and repair robots and their related technology, but I postulate that robots can fix themselves (and their ‘peers’) better than people ever can and over time, robots can create other robots to do the tasks which they need done.

In the past, technology was an enabler. It was a great source of enhanced productivity for nations’ economies.

However, technology has now become a replacer or displacer – of jobs, of people, of roles. It has now become a tool to enhance economic output but ends up depleting people and their earnings.

This is going to be a longer-term fundamental problem and challenge to societal and economic growth and development.

The impact on developing economies

Let us consider Philippines and India. They have spent billions of dollars investing in the infrastructure and ecosystem to help create thriving shared services and business process outsourcing (SSCs / BPOs) businesses. This was to help meet the needs of multinational companies. However, with AI and automation increasingly taking on a majority of the roles and jobs that are currently being done by millions of people in both countries, it is going to lead to a significant job loss and risk the potential collapse of the SSCs and BPO sector in both countries.

Over time, with increasing automation and AI, multinationals need not outsource various roles to locations of lower labour cost. They will instead seek to outsource the roles to nations with the lowest tax and the best technology infrastructures in which they can base their systems and robots. 

The moral obligation and income inequality

With increasing AI and automation, I struggle to see how the job losses faced by millions as a result of robots taking on their roles are going to be mitigated. There also seems to be little alternative sources of formal employment.

Whilst it is easy to highlight how automation can reduce expenses by 66% and reduce ‘FTEs,’ I think we need to look at people beyond merely being an ‘FTE’ or as a mere factor of production.

 

Over time, it is going to also exacerbate the issues of income inequality which is already one of THE pressing moral issues of our time. I’ve covered this topic at length previously.

The factors of production, the technologies, the AI and robots are going to be in the control of a very small segment of society. Whilst it may create vast economic growths, it does not lead to growth in income or wealth for the majority of the people. This will lead to societal fractures which can be devastating to nations and society.

What then the moral obligation to people and society?

Possible solutions?

Leaving this issue to be dealt with purely by market forces will not result in resolution and frankly will be disastrous in my opinion. There needs to be a concerted governmental approach to resolving this and finding solutions that work.

Using levers such as tax policies will be ineffective, particularly in a world with little tax harmonisation. For instance, increased taxation for robotics-led solutions will only encourage a beggar-thy-neighbour policy and in a world with little tax harmonisation, it becomes a useless endeavour.

 

If we accept that robotics and automation are an inalienable part of the development of society, then we need to accept that the current economic models  will not be best suited for what the world needs. Maybe it is time for us to seriously consider and contemplate universal income as a way to mitigate and tackle some of the problems coming our way as a result of robotics and automation.

Universal income is something a number of countries are experimenting with to tackle income inequality which as I’ve explained earlier will only be growing with greater automation and robotics. Finland for instance has started a pilot programme, the Swiss held a referendum in June 2016 to consider universal basic income which did not pass as only a quarter of the Swiss agreed with it, the Dutch will be carrying out a pilot programme this year, and this is just a start.

What is increasingly clear is that it is not enough to simply hope the challenges brought on by AI and robotics are going to go away, there needs to be a concerted and strident efforts made to mitigate them.

Of Pianos and Harmony

At the Africa National Congress office in Kliptown

This is Thamba (in the photo next to me), originally from Swaziland but who was born and brought up in Soweto, Johannesburg. I had the pleasure of Thamba’s company as he showed me Soweto and helped me understand the history of South Africa, the impacts of apartheid era on society and on him personally. He went to school with Mandela’s daughter and therefore had the unique experience of having walked with Mandela and been very much a part of the struggle for equality as a young man.

Thamba recounted a very interesting anecdote about Nelson Mandela’s view on social cohesion and the need for harmony between the different races in post-apartheid South Africa. Madiba  (as Mandela is known fondly in his homeland) used the parable of a piano to highlight why everyone needed to march together to achieve progress. He explained that playing the piano with just the white keys or just the black keys, whilst able to produce a tune, will never be as rich as the symphony one can create if one was to use both the black and white keys together. This, he explained, was the route towards a  better and greater society and stressed the need for the white, black and other communities to all work together to achieve social progress. 

A simple message, elegantly put and to very powerful effect!

A Man’s A Man For A’ That by Robert Burns (a Tamil Translation)

Speech delivered to the Mother Club (established 1801), Greenock Burns Club.

6th October 2016, Greenock

Good evening everyone

My name is Reza Ali.

I would like to first thank the honourable members at the Mother Club for allowing me to be here this evening.

It is indeed my privilege and my honour to be able to address this esteemed audience.

I must also of course thank the boss and my mentor, Raymond Jack, for his support and for inviting me to my first Burns Supper earlier this year which was an eye-opening experience.

I live between Singapore, Glasgow and London but am originally from the southern coast of India, from Tamil Nadu. Not unlike Robert Burns, I also come from a line of farmers!

I was based out in Glasgow for a big part of last year on work and during the time I had the opportunity to explore the different parts of Scotland and it was on one of those trips that I visited Ayrshire and explored Robert Burns’ home and got drawn into the fascinating life and times of Rabbie Burns. His depth and breadth of writing from nature to hardship to love to family demonstrated a mind and soul that was as unique as it was brilliant. His ability to recognise and more crucially to empathise with the nature of the human condition is something is what makes Robert Burns truly great.

It was then I came across the poem ‘A Man’s a Man for A That’ and was drawn to its messages of universal brotherhood, liberty and social equality.

It is also my view that Rabbie Burns’ egalitarian world view is the perfect antidote this deeply divided world needs.

It was with this in mind that I embarked on this journey of translating ‘A Man’s a Man For A That’ into Tamil as I thought promoting and propagating the virtues and ideals espoused in this poem will benefit the wider community. Tamil is the language of my birth, an ancient language, and one that is still spoken by over 70 million people today. It is my hope that this Tamil translation can be further improved by my peers and also further bring the genius and the universal and timeless messages of Robert Burns across southern India.

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With the Executive Committee of the Mother Club (L-R: Bill McCready (Past President), me, Jim Donnelly (President), Jamie Donnelly (Senior Vice President))

Robert Burns, ராபர்ட் பர்ன்ஸ்

A Man’s A Man For A’ That 

மனிதன் என்பவன் மனிதனே அதற்காகவே

(The full translation and a brief history of Tamil can be downloaded here:)

அங்கே, யாரேனும் ஏழ்மையான ஆனால் நேர்மையானவர் உள்ளனரா,

வறுமையின் காரணமாக அவர் தலை தொங்குகிறது, அதற்காகவே.

நாமும் கடக்கிறோம் அந்தக் கோழை அடிமையை,

வறுமையை விரும்ப மாட்டோம் அதற்காகவே.

அதற்க்காகவே, அதற்க்காவே.

நமது கடின உழைப்பை மறைதுவைப்போம் அதற்காகவே.

சாதனை என்பது நமக்கு தங்கத்தில் முத்திரை பதித்த முகமே,

அவன் தங்கமே அதற்காகவே.

நாம் நமது வருமானத்தில் சிறந்த உணவை உண்டாலும்,

சாம்பல்நிற முரட்டு கம்பளியை அணிந்தாலும்,

முட்டாளுக்கு கொடுங்கள் பட்டாடையும், திராட்சை ரசத்தையும்,

மனிதன் என்பவன் மனிதனே அதற்காகவே.

அதற்காகவே, அதற்காகவே.

அவர்களின் ஆடம்பர பகட்டைக் காட்டிலும்,

நேர்மையானவன், ஏழையே யாயினும்,

அவனே அரசன்.

நீ பார்க்கலாம் எஜமான் என்றழைக்கப்படும் கனவானை,

விறைப்புடனும், கர்வத்துடனும் செல்பவனை

பல நூற்றுக்கனக்காநூர் அவன் சொல்லை வணங்கினாலும்,

அவன் முட்டாலன்றி வேறில்லை.

அதற்காகவே, அதற்காகவே.

அவரது பட்டமும் பெருமையுரைக்கும் நாடவும் மற்றும் அனைத்தும்,

சுதந்திர புத்தியுள்ள மனிதன்

அதைப் பார்த்து நகைப்பான் அதற்காகவே.

ஒரு இளவரசன் உருவாக்கலாம் ஒரு வீரனை,

ஒரு கனவான், பிரப்பு, அதற்காகவே.

ஆயினும் ஒரு நேர்மையானவன் எல்லாவற்றிக்கும் மேல்,

நன் நம்பிக்கையை, அவன் அதற்காக குறை செய்யக்கூடாது.

அதற்காகவே, அதற்காகவே.

அவர்கள் தங்கள் கடப்படுகளுக்காகவும் அதற்காகவே.

மற்றும் உணர்வு மற்றும் பெருமை மற்றும் மதிப்பும் வலிமையும்,

தங்கள் உயரதிகாரம் மேல் என்று அதற்காகவே.

நாம் அனைவரும் பிரார்த்தனை செய்வோம் அது நடகட்டுமென்று,

எல்லாவற்றிற்கும் அது நடக்கட்டுமென்று அதற்காகவே,

உலகமெல்லாம் உள்ள உணர்வும், மதிப்பும்,

அதற்கான பரிசை பெற வேண்டும், அதற்காகவே.

அதற்காகவே, அதற்காகவே.

அவையனைத்தும் இன்னும் வருமென்று அதற்காகவே.

உலகிலுள்ள எல்லா மனிதர்களும்,

சகோதர்களாக இருப்போம் அதற்காகவே.

The Amazing Story of the Magnificent Nine!

I had the pleasure of watching a fantastic Japanese film, The Magnificent Nine (殿、利息でござる! (Tono, Risoku de Gozaru!). The trailer can be viewed here.

The Seven Samurais have always captured the imagination of people with their valour and bravery. However, this riveting film based on a true story of the magnificent nine heroes – and theirs is a story that must be told and spread widely – is an important one.

This is a movie about sacrifice, about going beyond one’s own sense of privilege and thinking of the wider community and striving to support one’s people and community regardless of the hardships this may bring about. This remarkable tale was recorded by the priest Zuishi Eishu in his book, “Koko-on-ki.”

The story is set in the middle of the 18th century (1766 to be precise) during the Samurai era. The place is Yoshioka, a poor town, within the Kurokawa district in northern Japan. The people of Yoshioka were ruled at the time by a young feudal lord by the name of Shigemura Date.

When I first started watching the film, I’d assumed that it was a comedy; and whilst there were some laughs and warm-hearted moments, it could not make the deeply philosophical messages about the themes of sacrifice and noblesse oblige.

Yoshioka was a small ‘post town’ – so called because it was under the obligations of an old tradition (established 150 years earlier) called the “post horse duty” – where it was the duty of the folk of the ‘post town’ to transport all of their feudal lord’s goods at their own cost (including that of horses and labour) to the next unfortunate ‘post town’ which had to do the same until it got to its desired destination.

Due to the severe burden placed upon it, the little town of Yoshioka faced a growing exodus.  The people of the town, already in dire straits, went bankrupt and fled. The remaining town folk faced an increasingly greater burden as more people left and had to deal with growing costs of the post-horse duties.

It was at this point, one of the remaining residents, a tea grower by the name of Sugawaraya, hit upon an idea of a collective solution that will reduce the burdens of the townsfolk.

The idea rested on a simple premise. A select group of investors will band together and raise 1000 ryos (an old Japanese denomination) or US$3 million in current day terms and loan that full amount to Lord Shigemura Date, who was in straightened financial circumstances.

Subsequently when their Lord pays the interest on the loan, the yearly interest income will cover the full costs of their ‘post town’ duties for each and every person in the town. This meant that all of the people of Yoshioka will be able to escape the debilitating effects of the post-down duties and be able to build better live for themselves.

These few men had a belief that since they have the means, the can band together and create a solution for all of the people in their society. This small group of men will receive no returns nor profit as a result of doing this and their only benefit is the collective well-being of their town.

The efforts of this small band of heroes meant that the town of Yoshioka flourished and grew for a hundred years as they were paid an interest by the Lord and his successors till the end of the Edo era. Yoshioka entered the Meiji era as a vibrant town with a healthy and prosperous community.

It was profoundly moving to watch the story of the sacrifices of these unassuming few. One of them, Kokudaya, stated in his will simply, “Do not tell others what I have done.”

However the legacy of these men has somehow endured the test of time due to the efforts of the aforementioned priest, Zuishi Eishu.

Kokuday (who came from the Asanoya clan who were famous for their sake brewery) has his name living on as a beer and sake brewery in Yoshioka to this day. Please see photo below.

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The thoughts and words of Kokudaya’s brother, Jinnai Asanoya, also were very profound. When they were in the presence of a very powerful official of Lord Shigemura Date’s court and enquired why Jinnai had not used the horses or palanquin sent to fetch him, Jinnai demonstrated his Confucian belief system which guided him and  formed the cornerstone of his values and attitudes towards life.

Jinnai explained to the powerful court official that he was taught that as Man is the lord of all creation, it was not right for one to ride on the back of an ox or a horse and cause it grief. He further explained that riding a palanquin was even worse as one man being carried by another man showed nothing but contempt. He also felt that one should not make use of men or cause suffering.

Jinnai spoke the truth, risking potential death, knowing fully well that Lord Shigemura Date himself often used the palanquin and horses! This virtuous quality of speaking the truth, even in the most dangerous of circumstances is one that one should seek to emulate.

Jinnai, who lost his sight from his middle age, also spent the rest of his life spending the profits of his business in building and repairing the roads and bridges of Yoshioka. His sake business grew from strength to strength despite at one point being almost bankrupt because he contributed the most money to fund the loan at the expense of his business.

However Lord Date, who heard of the selfless sacrifice made by these men, ensured that Jinnai remained in business and ensured that Jinnai followed his commandment that: “Your business must not be ruined. If you fail because of your lord, then my honour will be stained.”

Kokudaya, his brother Jinnai Asanoya, Kokudaya’s son Oteomon also embody the values of filial piety and honouring of parents. Kokudaya and Jinnai’s father, unknown to them, had previously already started collecting money to do precisely what they did – to loan money to their feudal lord and use the interest collected to offset the post-town burden. His sons, when they found out, were determined to complete the task their father started, to the point where Jinnai sacrificed his entire business to fulfil his father’s dreams and desires.

This fascinating tale (and beautifully captured movie) encapsulates the ingenuity of men in times of need. It also extols the timeless values of service, duty and sacrifice above one’s own needs. Values which transcend culture, language and faith.

The notion that ordinary men can indeed make a profound difference if they had the right set of values and the company of like-minded men is one that is made powerfully through this movie and story. Get the DVD!!

If you are keen to read a more detailed plot and summary of the film, the links below will be a good place to start:

 http://jbspins.blogspot.co.uk/2016/07/japan-cuts-16-magnificent-nine.html

http://nanaironohouseki.tumblr.com/post/146487223111/summary-of-the-magnificent-nine

For those with Japanese proficiency:

http://blog.kahoku.co.jp/shokuweb/vam/2016/07/post_251.html

For anyone keen on visiting Yoshioka today and learning more, please visit:

http://www.town.taiwa.miyagi.jp/site/kanko/3571.html

 

FW: INCOME INEQUALITY RE: MAJOR PROBLEM

 

“I believe this [income inequality] is the defining challenge of our time.”
Barack Obama (2013)

 

“One of the leading economic stories of our time is rising income inequality, and the dark shadow it casts across the global economy.”
Christine Lagarde (2015)

 

There is a clear recognition of the risks, dangers and the pain which income inequality imposes on society. Despite the recognition, it is a problem which seems to constantly be forwarded on to successive generations to resolve rather than finding a decisive set of solutions.

We will all do well to pay heed to the US Senator John Sherman who in 1890 when he introduced his landmark Sherman Antitrust Act said that he sought to “put an end to great aggregations of capital because of the helplessness of the individual before them” and also because he fundamentally believed that amongst all of the nation’s problems, “none is more threatening that the inequality of condition, of wealth and opportunity.”

So why does inequality matter? Why is it important that we all strive towards resolving it? Societies that are hugely imbalanced and unequal ultimately become fractured which in turn lead to painful social and economic consequences that affect everyone. Neither the rich nor the poor will be able to avoid the huge social costs of a fractured society.

The stark facts

  • 62 of the richest people in the world own what the bottom 50% of the world’s population own.

  • 1915: The richest 1% of Americans earned 18% of the national income.
    1930s to 1970s: The share plummeted and remained below 10%
    From the 1970s: The share has increased to almost 30%

  • 1980: The top 0.1% wealthiest Americans controlled about 9% of all household wealth
    2015: The top 0.1% own 22% of all household wealth.

  • USA: The top 1% of America control 40% of America’s wealth

  • Germany: Poverty has risen by half since 2000.

  • 1965: CEO pay at the largest 350 U.S companies was 20 times as high as the pay of the average workers
    1989: The figure is 58 times as high
    2012: The figure is now an astounding 273 times as high.
    (It is worth bearing in mind that Peter Drucker argued that the pay ratio between the top executive and the humblest worker should be no greater than 20 to 1.)

  • OECD: The gap between the rich and poor is now at its highest level in OECD economies in 30 years according to a report produced in 2014. The overall increase in income inequality has been driven by the richest 1%.
  • 2008: The United Nations University (UNU) and the World Institute for Development Economic Research (WIDER) estimate that the global Gini coefficient (a measurement of inequality between 0 – representing complete equality and 1 – representing complete inequality) was 89.

    An alternative way to interpret this is that in a population of 10 people, if one person had $1000, the other nine have only $1 each.

  • 2014: The Credit Suisse Global Wealth report estimates that that the richest 0.7% (who hold over US$1 million in wealth) held 44% of the global net worth.

Some context

The economic success stories of many countries hides a dangerous truth – that a significant majority of economic gains are going to those at the very top of the income distribution whereas those lower down have seen real incomes stagnate or diminish.

This has in turn perpetuated further inequality as those in a position of privilege often use their wealth and influence to shape policies that further increase their concentration of power. These policies have not necessarily been in the interests of those lower down the income ladder.

A research conducted by Martin Gilens, a political scientist at Princeton, lends credence to the notion that the US government responds more positive to the most affluent ten percent of Americans whilst “the preferences of a vast majority of Americans appear to have essentially no impact on which policies the government does or doesn’t adopt.” (A video of Gilen’s lecture can also be viewed here.)

The erosion of the social compact

This wasn’t always the case though. Whilst there has always been inequality, it has never been to this extent or been as pervasive. There was also more concerted effort to reduce the level of inequality and dampen its deleterious impact on society.

The experience of the First World War revolutionised American attitudes towards taxation and redistribution of income. When the War Revenue Act of 1917 was passed, there was talk of “conscription of income” and “conscription of wealth” at a time when young men were enlisting en masse. “Let their dollars die for their country too,” one congressman said. The call for fiscal patriotism helped legitimate the progressive income tax in the United States, and by 1944 the top marginal rate had risen as high as 94 percent.

Across Europe, a fear that the lack of reform could lead to social and political turmoil and the horrors of two World Wars meant that policies such as social insurance, minimum wage, a strong welfare state and progressive income tax were implemented leading to more egalitarian societies and economies.

inequality 2The experiences of global ears produced visions of a social bond holding countries together and nurtured the notion that every single person owed a debt to the welfare of the broader community and society.

However since the 70s, the disappearance of these conditions has meant that the support for egalitarian public policies has also diminished.

We now live in a world where even high skilled jobs are being commoditised so that even highly educated workers are not making sufficient progress as gains in economic growth are limited to a very elite group of financiers, entrepreneurs and managers. In the past only unskilled workers lost jobs to automation, now even highly skilled occupations are at risk with the advancement of artificial intelligence, robotics and automation.

The social structure of Silicon Valley provides us with an instructive view of the future: One where expert systems have replaced the majority of people and a tiny but well-remunerated minority direct the economy whilst the majority exist to serve them alone.

The conflict is no longer just between the working class and the middle and upper classes – it is now between a tiny elite and the great majority of citizens. As the majority develop a sense of common interest, or what Marx may have termed ‘class consciousness’, the need to resolve inequality will become more acute as the resentment of it intensifies.

 

What happens when income inequality starts to become entrenched?

  • Health: Societies that are more unequal tend to have lower life expectancies, higher infant mortality, higher levels of infant mortality and high levels of diseases and conditions such as HIV/AIDS.
  • Human capital development: As inequality rises, scores on the UNICEF index of child well-being become significantly worse. Literacy rates are also lower and youth unemployment also becomes a major issue. A higher level of equality also leads to a greater level of innovation as a result of greater access to opportunity.
  • Social mobility: Inequality restricts social mobility – equality of opportunity is enhanced by greater income equality. Reduced social mobility further exacerbates income inequality and this becomes a vicious spiral from which an effective functioning economy becomes more and more difficult.

    inequality1 2
    (C) Walt Handelsman
  • Economic progress and stability: An IMF report highlights that by reducing inequality and bolstering longer term economic growth are “two sides of the same coin.” In both rich and poor countries, inequality is strongly correlated with shorter spells of economic expansion and growth over time. Unequal economies are also more susceptible to severe boom-and-bust cycles leading to greater volatility and crisis. Extreme levels of income inequality depress economic growth. An OECD report estimates that inequality has had a cumulated loss of GDP across OECD economies of 8.5% over twenty-five years.
  • Social challenges and issues: Inequality breeds corruption. Unequal societies also lead to greater economic instability. If one considers the root causes of the Arab Spring, the lack of economic opportunity or equality is one of the main drivers leading to revolt.

A blueprint for change and resolution

The solution and change required for income inequality is not a zero-sum game. There will be those who are impacted more than others, but it is essential in calibrating the world in a more equal way.

It is very easy to be dangerously complacent and ignore equality, but chronic economic inequality hurts everyone, both the rich and the poor.

Resolution of a problem like inequality requires a revolutionary approach. We need to accept a fiscal revolution or risk a social one.

I’ve highlighted below briefly some key practical steps that need to be considered as we seek an urgent resolution to the problem of income inequality.

  1. Tax reforms – Income taxes need to be more progressive (the way they were previously in times of greater equality). There needs to be a reform in the way the transfer of wealth is also taxed. The OECD has suggested that attempts to reduce inequality tax and transfer policies will not harm growth as long as the chosen policies are well designed and implemented. The OECD further argues that redistribution efforts should focus on families with children, on the youth and the improvement in human capital investment through the promotion of skills learning and development.
  1. Continued focus on economic growth and employment – Policies targeting economic growth need to continue as growth ensures jobs are created and ensures employment. Employment will support social mobility which is essential to the reduction of inequality.
  1. Ensure emphasis on social mobility – Social mobility is a key driver towards the reduction on inequality. Emphasis on education, skills learning and development is vital to support social mobility.
  1. Support small savers and small businesses – Policies should not be tilted towards just merely taxing the rich but also be aimed at increasing the wealth of small savers and businesses. For instance we should consider the introduction of accounts for small savers and businesses that guarantees positive returns in excess of inflation. It is also a widely observed phenomenon that lower income families borrow more to support their consumption and this in turn creates a systemic risk.
  1. Enhanced social policies – Governments and policy makers should also consider more directed interventions to enhance the social conditions of lower income families. For instance, in the UK, the Child Benefit offers a weekly allowance to parents for every child they raise. The transfer could be better targeted by making the income taxable as personal income, which will reduce the size of the benefit for those in higher tax brackets or who do not have face any other mitigating circumstances. In the UK, child poverty has dropped sharply whilst in the USA; it has risen by a third between 1969 and 2013. A child-benefit programme will help make a major dent in child poverty and also represent a powerful investment in the future. Introducing a child-benefit program in the US will make a major dent in child poverty and represent a powerful investment into the future.
  1. Minimum wage – Governments should also take an active review of the minimum wage policies in their countries and recalibrate them to local conditions. There is always a temptation to keep minimum wage lower because neighbouring countries are keeping theirs lower, but this beggar thy neighbour policy will not benefit anyone in the long run. Countries that make the effort to ensure greater equality will be healthier in the long term.
  1. Automation and technological change – Governments should take an active interest in the direction of technological change. It is mostly governmental grants and labs that are responsible for the underlying research that has led to the progress in automation and technology and they therefore have the right to ensure a clear review is undertaken to mitigate the social impacts of technological change through appropriate fiscal and taxation policies.

It is crucial that we as a collective rise up to face the challenges of income inequality and work closely to create a more equal society. The corrosive impacts of inequality will affect us all and the sooner we can find solutions to achieve an equal society, the better, for all.

Muzzling a rockstar central banker – the Indian way

This article reflects only my own personal thoughts and do not reflect the official position of any other organisation. Responsibility for the information and views expressed this article lies entirely with me. 

The news of the resignation of India’s central banker Raghuram Rajan has unsettled Indian investors, and rightfully so.

Rajan was one of India’s best central bankers and was a cornerstone in driving the Indian economy over the last three years.

Here is a man who in 2005 at a conference in Jackson Hole made some prescient statements about how financial developments have made the world a riskier place and called out the systemic risks posed by banks to the global economy. (His speech can be found here: https://www.imf.org/external/np/speeches/2005/082705.htm). He was derided as a luddite who was misguided. However, the developments of the 2008 financial crisis proved him right and a number of his proposed safeguards have since been implemented.

Some may question why the current Indian administration has removed a man who is widely recognised as an architect of India’s growth story.

It goes back to 2014, when Rajan questioned Modi’s “Make in India” campaign and cautioned against “against picking a particular sector such as manufacturing for encouragement, simply because it has worked well for China. India is different, and developing at a different time, and we should be agnostic about what will work.”

Last year, Rajan also questioned the rising of sectarian tensions and intolerance propagated by factions associated with the currently ruling government.  In a speech to the Indian Institute of Technology last October, Rajan lambasted the rising intolerance and stated: “India has always protected debate and the right to have different views. Excessive political correctness stifles progress as much as excessive license and disrespect.”

This is consistent with the pattern of behaviour displayed by the current Indian administration .

What have Modi and his administration achieved in the last two years:

 

So what does this administration do in response? Remove one man who can help make a difference and help improve matters.

Another great article here: By getting Raghuram Rajan out, Modi may have won, but India has lost

I am genuinely concerned at the state of affairs in India and despite the sometimes effective PR campaign Modi’s government may run, the cracks are beginning to show.

India’s always been a home to alternative thoughts, ideas, ideologies, religions, faiths, beliefs, ethnicities and ways of life. We have been a beacon of hope and democracy for all and it is very sad to see the very edifices of inclusivity and secularism crumbling.