With all the goodness of the Universe, the Life is never fair to any one

The following poem written originally in Tamil by one P.Thangamani, in a scantily circulated literary magazine (Aavigal, 27th Dec 1998) was translated by me during the late 90s and kept safe in my accumulated academic debris. To a great extent, these lines partly or fully capture the growing divide between the rich and the poor in both the developed and the developing societies. Globalization can never be fair, unless they have access to education or credit.


All of you are at home,
Comfortably leading a life of luxury
Blanketed with sweater, head adored with hat,
Hands and legs fully covered with socks
You warm yourself
Before fire and in the kitchen,
All the time munching something hot
You have many blankets,
More than adequate bowl of rice
You eat your dinner,
While watching TV and
Have a quiet, pleasant sleep on Foam bed.

We’re are not blessed like you
Into our slums, floating under
Knee deep water,
Unable to stand
Also can’t sit
With all our clothes drenched,
The body has turned into ice
Somehow we manage during day time,
But can’t bear it in the night

I could not help recollecting these lines getting mesmerized by the state of affluence while I was in Paris city. Although, Thomas .L.Friedman says the world is flat, meaning: there is level playing field for all, it’s all related to glass curtain economy- the weightless I.T. economy. Regardless of the stages of development in the affluent west and the poverty stricken East, one thing is sure there is more pain and poverty for the majority of the poor people.

This year,(2009) the winter and the rainy season during October- November was moderate in Paris city.With occasional drizzle, the sun shown brightly during my brief stay there. The weather was enjoyable and managaeable because, to insulate myself from the chill breeze, I had all the protective cover like sweater, shirt, coat, and on top of it, an over-coat with muffler tied around the neck. Any typical wage earner, must have enough Euro to have this kind of war chest against chill breeze, otherwise he or she will be frozen to death.

To what extent all the poor people in European countries can afford all these in an adequate measure is a moot point. In Paris too ,I have seen a few people begging in the train in a more decent way by placing cards on the seat or playing with musical instruments . On the way towards Saint .Michel church, I saw a old man with Dog alone as his companion , sitting and ruminating over life. I could not help , but comparing the noise and the dirt of my metropolitan cities with that of reasonable cleanliness and order even in that disorderly ordererly world.

In the monsoon rain, Mumbai city floats, Calcutta or Chennai is dirty, for all practical purposes with all their glory and civilization roots. God alone knows the degree of congestion and pollution in the air conditioned city of Bangalore and its infrastructural bottle necks. The supreme Lord, sleeping in heavens alone would know the sufferings of the platform dwellers and those who get sheltered on the river bed and many other rain susceptible regions during the rainy season. Of course, the over all damage is less because, the rain God too is shrinking His responsibility to protect the mother India, mostly residing in the rural areas. How can we change Him, when reckless economic growth over heats the globe and unleash climatic change? Copenhagen meet at best would address the issue, but will it lead to any kind of positive resolution to the satisfaction of all?

Don’ wake up at 65 years and complain about life

“Whatever you do don’t wake up at 65 years old
And think about what you should have done with your life”-

I stumbled upon this passage, actually the best advice given to
George Clonney by his father on a night of moderate rainfall
While heavy thunder and lightning were lashing outside
Indeed it was a matter of irony that by not getting enough sleep-
And unwilling or unable to sleep.
I was reading this passage in one old Reader’s Digest issue (August 2006)
Whose cover story was –
“Too many Indians are sleep deprived,
get enough sleep … or else”

While I was thumbing through that issue
I remembered many backlog of things which I needed to be done
Having postponed them for years
It was the night of -30th August 2009,
Or was it the early hours of 1st September 2009 morning
I can’t say,
I never thought that at this odd hour I would be sitting like this
And ruminating over many things which I have failed today in my life
Indeed that wish list is very long and if I start elaborating
That would be more embarrassing and intimidating
And definitely make me more anxious and nervous.

On that fateful rainy day
An all encompassing peace was clothing me, like a blanket
I have already stepped into it my 60th year Thank God
Few more years to go to reach 65
If I am destined to live until that day or beyond
The best advice was ideally suited to me now.

Somehow or other I have lived all my 60 years doing the
Only work I know , reading and teaching.
Virtually lacking any ambition or setting any goals in life
But there was always some eager imagination and sense of wonderment
About the infinite variety of life.

At 60 plus now I wake up and seduce myself
That henceforward I would attempt to streamline
My academic and domestic life; no regrets in life;
I should thank the Almighty for having anchored me in the
Teaching post instead of hijacking me towards banking/civil service sector –
The areas for which I too made my own preparation without doing any Substantive work during my early days of
Assistant Professor Period in college services in the early 70s.

On September 1st, 2009
There was still more lightning and thunder outside
“Should I read now or go to sleep?
Am I going to follow A. R. Rehman
The great musician to spend this peaceful and chill night
To cool and calm me down by reading and writing
As my ball point pen is sharp and flowing”, I mused.
No, I wouldn’t do that mistake;Do you know why?
Too many Indians are sleep deprived
I don’t want to belong to that set

The U.S.Dollar will die –only slowly

For quite some time now, I have not sent any piece to Business Line . After writing profusely on Dollar in Business Line in 2003, I did not articulate much subsequently on that subject too. Many a time I feel that I have said enough. The story of U.S.Dollar is obvious even to layman. Friends and students are asking me to write on ailing Dollar. Hence this revisit on Dollar’s plight. A brief recap.

The U.S.Dollar is getting beaten rather belatedly, as Japanese Yen witnesses a decisive rise in its value .Despite zero interest ruling in the U.S, recovery is yet to percolate down deep into the economy. Unemployment is on the rise. Support for further fiscal stimulus is lukewarm, as authorities begin to worry more about the consequences of rising budget deficit, on the value of Dollar.

The richest country in the world is not in good shape now. It is the largest debtor country. Fortunately, its growing external debt is denominated in its own currency, dollar. The U.S. can very well print and repay the debt. That might lead to an inflationary explosive situation. Let us hope that U.S will not resort to that kind of mis adventure.

The U.S has all the problems of any typically mismanaged developing economy. Its currency is weak .Cumulative increase in the budget deficit and escalating trade
deficit have raised debt to GDP ratio: fear of rising inflation is very much real, given the ultra low interest rate policy followed and continuing expansionary policy thrust. Any other country, having all these vulnerabilities, would have experienced a currency chaos. Because the U.S. is still a key currency country and enjoys the residual hegemonial status, dollar’s death is postponed.

It’s not that the U.S has suddenly got into this financial mess. It has been there for ages. The U.S. had been always hopping from one crisis to another, and falling into mild and shallow recessions despite getting boost to the growth rate via finanacial globolisation I the recent past. The U.S.Economy and its currency could escape from speculator’s attack as foreign central banks always came forward to defend the dollar in a crisis situation .

The dollar would soon touch its lowest level against Yen.Shall we recall that in 1987, a similar situation prevailed and the world Central Banks signed Lovoure Accord to arrest the dollar’s slide, and revive its value.



Despite all central banks best attempts, the dollar again hit the bottom in mid 90’s : since then, a great deal of diversification has been taking place away from dollar, slowly but steadily. The sub prime lending crisis of late 2000s has put the U.S economy at a cross road. It has exposed the fundamental weaknesses in the U.S banking system. Dollar was not under attack then, thanks to safe haven hypothesis and an enormous amount of dollars was flowing back towards the U.S , close on the heels of the crisis in 2007-08. but , hence forward the dollar scenario will be a different story. Progressively, dollar will decline in value, with occasional bouncing back. But the secular tendency for the dollar is to fall.

Whatever may be the support ring placed around the dollar, one thing is certain that the dollar depreciation cannot be halted. Foreigners would not suddenly withdraw financing deficits. They all know that they are under dollar trap. China has already seized up the problem and started diversifying towards non- dollar assets in a graduated fashion. Central Bank of Japan and others may not want their currencies to rise against the dollar. But they too cannot ultimately stem against the tide. In all probability, when Euro and Yen fail to rise, to punish the dollar, gold will glitter. Black gold and few other metals may give company to yellow metal. The dollar will die only slowly, as the rest of the world will not allow any quick and tragic death of Dollar.

I am Sorry ,I Abandoned myself

For a long time my blog has been in state of suspended animation . I know it is grossly unfair to those who are concerned with me as also the subject of economices which I love most.I am still not able to understand what pulls me down & why I am not sensible & responsible enough to do justice to my blog which was created to have dialogue with a broader audience , my students being the treasured segment in it . After congratulating Prof.Paul Kurgman when he won the noble prize in 2008, I did not bother to renew my romance with the blog. Today my student friend from IT city of India is right now with me & goading me to action.He is only typing this post. I hope that I would rediscover & reinvent myself in the days to come by sharing my emotional & intellectual links with subject & also other worldly things of life. I have bottledup my feelings on a varity of things in many diaries over a period of time & under the caption from my dateless diary I would like to post taking some excerpts perhaps doing some marginal editting .

For three weeks, during October end & first two weeks of November 2009 I was privileged to be in Paris & Few cities in Germany. Mr Sangeet Varghese, currently CEO of a company in Bangalore & emerging as Scholar in the area of leadership was of enormous help in my preparition for the foregin trip besides my few collegues & other well wishers & one christian father at Pondicherry.Mr.Paul Arokiyam Raja one of my former students currently in London was in touch with me during my stay in Europe through Mail.I told him that I would be documeting my expirence in both English & my mother tounge Tamil in the days to come . Indeed I did write a few pages in Tamil , breathing & drinking the cool breze in the serane enviroment there - the air conditioned city of Paris .

Besides lecturing on the issues related to free trade & Globalisation at University Of Paris 13 , I had an opportunity to interact with youth & especially a few French Girls, while traviling to Germany & Visiting the museme at paris. I was amazed by their tremendous maturity & wisdom in their thinking process & I could only emvy them .In the final leg of my stay at Paris a sizable number of Tamil Families & friends showered their love.

I under took my first overseas trip in the 40th year of teaching & at matured young age of 60;it has had a profound infulence on me.In what respect it has transformed me I cannot say fully but it's true in some respect I am a changed man & I can't fully express the nature of change for it is like a feeling of love or romance which one can only feel & not explain to others .

A poet told once; Blessed is he who has found his work & let him ask no other happiness. I would add here that beside work one should also have his/her own love & also an opportunity to travel a lot especially beyond his/her country's geogaphical boundry.

After returning from this trip I sincerly feel that like first love ,first kiss & the first poem in ones life , the first overseas trip has also got its own fun ,thrill , adventure & so on. I was unlucky not to have fallen in any mad love with any girl at the right young age although I was a student of Madras Presidency college in late 60's & later assistance Professor in Goverment Arts College in the Kerala Region of Union Tertory of Pondicherryin early 70's, given my shyness & brought up in traditional outlook in those days .I do not remember the first kiss at the time of marriage but the first poem that I wrote in Tamil is very clear in my green memory.

I am lucky that I could undertake the first forign trip against heavy odds and I may not be able to capture all my intesnse feelings which I experienced there , but defiently i can share a little & recollect in tranquility in the days to come. This Trip will enable me to look back at my own village & college life & also enable me to do a tremdous lamentation over my country's state of affairs in all walks of life although it is projected to be one of the emerging economic powers in 21st century.

KRUGMAN WINS NOBEL: ECONOMICS REDEEMED TO AN EXALTED STATUS EVERYONE IS DELIGHTED.

Yesterday it was raining heavily and I felt like staying at home rather than attending office. I felt miserable as I was missing my MBA Macro class for quite some time, setting aside that guilt conscience, I started cleaning up my academic files & books and Paul Krugman’s ‘The Return of Depression Economics’ caught my attention. I got immersed in the book, did I have any premonition then about Krugman winning Nobel when I started thumbing through his book? I am not sure. But I was feeling very much fascinated to go through his volume second time. Krugman had anticipated lot of things in his earlier writings in the late 90s’ about the plausible banking and financial crisis likely to take place in the US and other western countries.

Towards evening, I received a series of phone calls from my students a few of them are now professors that Paul Krugman has received Nobel Prize for his contribution to trade theory. My joy knew no bounds; the feeling that Krugman was not getting his due for long and the heightened lamentation that Krugman would go Ms. Joan Robinson way had been haunting my thoughts. Thank God. The suspense is now over and every honest and good soul in Economics will now have a sigh of relief.

More than a decade ago, when my first daughter was studying M.A English Literature at Pondicherry University campus, a few of her friends, most of them boys- studying MIM made a wry comment to my daughter when I was passing by. “Hey junior Paul Krugman is going there…” perplexed by their comments my daughter mistook their comments to be acerbic sarcasm. But they responded by saying that it was real and made with good intentions and spirit and had nothing to do with sarcasm. With much humility and some minimum intellectual arrogance, I would say that I was chosen by God to introduce Paul Krugman to my MIM students who in any case did not have any rigorous background in Economics proper. The wise and benevolent destiny gave me some academic strength to teach from Paul Krugman’s books and articles to MBA and Politics and International Studies which immensely benefited them.

Small wonder then that Mr. Vinod Kumar, the MIM student of late 1990s, called me late night yesterday from Banglore, and shared his happiness over Krugman’s getting this laurel at long last. Unable to control his joy and a sense of thrill following Krugman’s elevation to exalted status he burst out by saying that he felt as if his own teacher got the prize. What else one needs in the profession? Paul Krugman’s exalted status now as a winner of Nobel has created a series of ripples of happiness among my students and I feel amply rewarded for my work ethics when all well informed students in economics rejoice over this event as if it is an occasion for familial celebration. Professor Ram Gopal, while narrating this event over phone yesterday was recollecting the glimpses of some memorable moments that he spent with his father soon after the latter underwent a major brain surgery in the ICU; still semi-conscious but attempting to answer his son’s questions on Economics in general and his methodology used in Ph.D thesis from his subconscious mind. Intellectually mad people like Prof. Ram Gopal and me including many students spread all over the world just feels elated and happy after receiving this pleasant shock.

For so many years, Krugman was a potential candidate for Nobel Prize but that was getting distanced from him for no fault of his. Indeed, the recognition has come at a right time when unfettered free market capitalism has brought disaster to the United States and other advanced economies. Did not Paul Krugman warn in the eighties when Savings and Loan Association collapsed? More than his contribution to Strategic trade theory which is sighted by the committee while awarding the prize I would say his scholarly writings on currency crises and his critical commentaries on both International Politics and Economics in a lucid style would merit more attention from his supporters and wellwishers.

For a long period Chicago School based economists rooted in monetarist tradition and free market ideology merited attention from the selection committee for Nobelprize. Now there is a welcome paradigm shift in recognizing economists endowed with Keynesian flavor. Let me hope that the role of slim but effective government will have more contextual relevance while experimenting any policy package in the years to come. This event like a chaos theory will have tremendous spill over effects on the thinking and teaching of economics away from neo-classical, free market oriented lassiez faire towards interventionist Keynesian tradition especially in the field of finance. Long ago Keynes told that ‘let not finance go global’; in the current wave of globalization, the world at large may not approve of this but those emerging markets which have not embraced a ful-fledged financial market liberalization have been least affected by the financial hurricane unleashed by the US and others. When Krugman visited India soon after Asian Financial Crisis, he not only wanted the weak banks to be closed and strong banks to be recapitalized well, but also cautioned that capital account convertibility can wait - a sermon which IMF and the US would not have appreciated at that time.

In my early life I was a fan of Harry G. Johnson – a Professor who had a democratic fervor in transmitting knowledge to the lesser privileged people in this part of the globe. Only after going to Pune, Gokulae Institute, I came to terms with Paul Krugman and indeed my last chapter in my PhD thesis was very much borrowed from his third Lionel Robbins Memorial Lecture revolving around exchange rate instability delivered in London in 1989. Since early 1990s my sentimental and intellectual association with his writings has continued uninterrupted.

Having got his Nobel Prize stature, his well-wishers would feel that he should continue to write for students and teachers in economics not well trained in mathematics and econometrics. Although he is quite capable writing in a technical way which many cannot read, his greatness is that he has demystified many complex issues and distilled the essence of the literature on international finance as also international politics. On this occasion I sincerely pray the almighty whom I don’t worship in any conventional way that he should live longer and become more bolder in making economics as a scientific discipline such that even ordinary student in economics can romance with his writings and profit by it.
For long, I have not written in my blogspot. The death of my mother in the first month of this year paralyzed me to the depth that I forgot my responsibility to continue to write. Many significant developments have taken place in international monetary arena, the US dollar sinking and the dollar empire collapsing close on the heels of sub prime lending crisis which cropped up in August 2007. But I failed to realize my academic obligation. Krugman getting the Nobel Prize was such a pleasant long awaited news that I have got out of my deep slumber and will continue to write in the blog.

Economics in a lighter vein

There is a general impression that economics as a subject is very dry, colourless and devoid of humour. Indeed, quite a majority of the students have not developed much romance with the discipline for the way in which it is taught. Disproving this general impression, one of my collegaues Prof. Ram Gopal, a great and passionate teacher of economics, has just sent an e-mail bristling with economics full of fun and frolic and heightened sense of humour. Let me share his thoughts with the broader audience.

RIDDLES

Why was it impossible to shake hands with Adam Smith?
Because his hands were invisible.

Which city would Marx first visit when he traveled to a foreign country?
The “Capital” city, of course!

Why did Keynes avoid participating in marathon races?
Because according to him “in the long run we are all dead”!

Why would it be nice to have Ricardo as a tenant?
Because he will never forget about the rent.

Why does Dracula hate economics textbooks?
Because of the crosses, the Marshallian cross and the Keynesian cross.

How many members of the Chicago school of economics will it take to change a light bulb?
None. The free market will change it automatically if necessary.

OTHER FUNNIES

“The invisible hand works well, but it often works by strangulation”. (Joan Robinson, about the market mechanism)

“A Russian proverb says that ‘Fear has big eyes’, but I would add that it also has deaf ears”. (Jagdish Bhagwati, referring to the attitude of middle-class Americans about outsourcing to India)


Name the two great personalities who abused each other as “Ba…td” and “SOB” respectively when they were introduced to each other.
Answer: Adam Smith and Samuel Johnson (This is a true story; who says great thinkers are always polite?)

It was said about Schumpeter that he always gave A grade to three groups of students: a) All girl students, b) All the Chinese students and c) All the remaining students.


Haseeb A. Drabu, now the chairman of Jammu & Kashmir Bank said “Delhi is Keynesian while Bombay is Schumpeterian.” I would like to extend the thought experiment. Bangalore is Coasian. (Economist Niranjan Rajadhyaksha in his column Café Economics)

The only case of a ghost written Ph.D thesis turning out as an excellent work: the American economist Paul Sweezy needed some money when he was a Ph.D student and so he ghost wrote a thesis for a classmate. That work is regarded as a masterpiece on the Japanese economy and the guy who bought it got a very good job because of the thesis!

Recent Radio Talk on UN Day

Celebration of United Nations Day this year has tremendous significance in the context of Mahatma Gandhi’s birthday being celebrated as International Non-Violence day on the initiative of the UN itself. Has the UN accomplished its historical objective of averting war and establishing peace among the Nations? The track record of UN in this regard is not that pleasant to look at because it is not UN which has called the shots but only the superpower US which has been shaping the political and economic destiny of the world economy by sheer military might and hegemonial power associated with it, in spite of the fact that it is a shrinking economic power. Furthermore, if at all there is any failure on the part of UN it can be simply attributed to the collective failure of many Nation- States which embody United Nation.

Let me begin my talk with a simple but lengthy sentence I remembered to have heard from a radio talk delivered by one of the greatest statesmen of the country Dr. C. N. Annadurai way back in the late sixties.

“There stands a massive building where flags of more than hundred nations fly side by side with equal honour proclaiming to the world that they belong to different countries but belong to one world. They have a separate existence but for a common objective, they have riches and strengths of various dimensions to be pooled together for the common task of freeing mankind, from fear and famine, pestilence and ignorance, violence and vandalism, and above all to give man his due, the dignity of labour.”

It would not be an exaggeration to say that this simple quote captures the essence of the initial euphoria with which the UN was established in 1945. Its stated objectives were to maintain international peace and security, to develop friendly relations among nations, to achieve international cooperation for engineering collective security, promote and encourage respect for human rights and ensure freedom for all. Thus, the visionary ambition of UN was to prevent powerful States invading and occupying weaker ones and more important to prevent the eruption of another war. Except for a few occasions when UN was successful in mitigating the dangers of power politics especially during the Cold War, UN became defunct because of extreme bipolarity of international politics prevailing then. During this Cold War era, US found itself in an advantageous position to play the role of a world banker, supplier of world money and also an arbiter, at least in theory, in promoting democracy and human rights through UN. With 40 percent of UN funding contributed by American tax payers, US hoped that its veto power in UN Security Council would help protect America’s national interest. But at no time US was keen to make any multilateral framework to succeed; be it political or economic field. This was the reason the UN could not evolve closer to at least a semblance of world government.

The UN is just 60 plus. It has emerged as a symbol of global identity. It is essentially a platform where Nation-States can listen to one another and settle disputes if any with less reliance on force. It is a mechanism for conflict resolution in international security affaires. Theoretically at least, along with international institutions like IMF, IBRD and more recently established WTO, the UN is a closest thing to world government but in essence it is not. Since sovereign nations are unwilling to surrender their political sovereignty UN has not become an all powerful governing body. It exists because others want it. Many nation states have created and lived with it to serve their own national interest.

UN’s structure is built around General Assembly where each nation-state has one member one vote principle. General Assembly largely works through recommendations and advice to member states and to Security Council but they are not binding on any one of them. General Assembly also coordinates a variety of Third World activities through one of its principle body of Economic and Social Council (ECOSOC). It is this Council which coordinates the work of various UN specialized agencies like UNDP, UNCTAD, FAO and so on. Parallel to General Assembly is UN’s Security Council which consists of five permanent members and other 10 non-permanent members. This is the primary action agency of UN and vested with primary responsibility for the maintenance of peace and security. Administration takes place via UN Secretariat and International Court of Justice also known as world court is the judicial arm of UN. As of now, there are more than 190 members of the UN. The major strength is universality of membership, but democratization of UN is constrained by big five in Security Council and their veto power.

The major constraint impinging on UN is resource crunch. Despite many nations joining UN, it appears very small and fragile institution, lacking funding facility. Especially the US has played truant and for many years it did not pay dues. Indeed, US is largest defaulter in paying its dues and contributions to the UN. There can be two reasons cited for such US sleight: first, is the US inherent dislike of multilaralism for it curtails its maneuverability in international politics and it is in this context that UN is treated as an institution which will obstruct maximization of its national interest via unilateralism. Second, shrinking economic strength does not provide necessary financial wherewithal for taking care of UN. While world spends $800 billion on military, a mere $2 billion are spent on UN budget.

During Cold War era, in the face of perennial US-Soviet conflict, UN had only a limited role to play. It did not play any central role in resolving conflicts. Although the American unilateralism did not have any high cost, the relative roles of US and UN have been always a certain source of tension. The end of Cold War coincided with disintegration of Soviet Union and demise of communism. It was during this period that Iraq under Saddam occupied Kuwait fully convinced that it would go scot-free but the US through a formidable alliance within the UN framework and effectively dismantled the Iraqi occupation. This US effort gave a ray of hope that at long last nation-states especially those who are in key position were ready to give UN a chance to play the role intended for it. But alas it was not destined to be.

September 11, 2001 attack on US twin towers gave a fresh lease of life to US to declare war on terrorism as the central objective of foreign policy and in close collusion with Britain it invaded Iraq and removed Saddam Hussien ruthlessly citing the reason which has now become fully discredited exposing fully the shallowness and crookedness of these superpowers. UN was completely sidelined and marginalized in this entire military exercise.

Under the circumstances, UN is neither able to manage the world problems nor restrain the US which continue indulge in rampant unilateralism in its foreign policy under the guise of facilitating effective promotion of democracy, human rights and counter terrorism and so on. The UN has become a passive spectator and sitting on the sidelines virtually helpless.

Writing in New York Times January 12 2002, “On what is Americas place in the world now”, Alexander Stille says,

‘Clearly the world has changed. Developments in technology have given small group of people the kind of destructive power once available to national governments. The principal mechanism the world has devised – foreign aid , non governmental institutions, the world bank , the United Nations – have not succeeded in dealing with the most troublesome and difficult cases’.


In a world which has become flat – meaning globalization has ensured a level playing field, there are still a number of political and economic zones which are simply far away from the so called level playing field. Therefore, there is an imperative on the part of international institutions and organizations including the UN to play really a substantiative role in attacking all social, economic and political problems plaguing the globe. But unfortunately they are only making a notional contribution and UN is no exception. The time has come for all the stakeholders to change for the better. The US must realize that it does not own the world but shares it with others as it was aptly observed by Prof. Naom Chomsky. Therefore it can not claim a special and differential status.

For the UN to play a central role, radical changes are needed in the institutional structure in the pattern of administration of the UN to represent the changing times.