Wednesday, 29 December, 2010

Stalin cynical, Roosevelt great

The halt of the Russian forces at the doors of Warsaw as the Poles rose in revolt under  General Tadeusz 'Bor' Komorowski is universally condemned as the most cynical decision of the Second World War, where Satlin let the Nazis kill of any potential threat to his power in Poland.

The Russians maintain, at least under communist rule, that they had asked the Poles not to revolt because they (the Russians) were too exhausted  and stretched to attack Warsaw. Hence, the decision not to come in aid of the rising had, from their point of view, more to do with saving Russian lives than taking Polish ones. Obviously, this logic cannot matter to Western historians.

The other day, I was watching A Tale of Three Cities: How the U.S. Won World War II, a lecture by David Kennedy. In the Q&A session following his talk, someone asked if Roosevelt’s decision to postpone the second front in Europe in spite of Stalin repeatedly asking for it was not a cynical decision, by which he saved American lives at the cost of many Russian dead. Had UK and USA attacked France in 1943 instead of waiting till 1944, they may have taken many divisions off the eastern front. Kennedy replied that while Roosevelt may had wanted to save American lives, that’s what he was voted into office to do. Hence, he can’t say that Roosevelt was cynical. He was doing his duty as USA’s president.

Well, that logic cannot apply to Stalin, because the Red dictator had no value for Russian lives. Didn’t he send troops to the front without guns or ammunition? Didn’t he gamble with underequipped armies? Did he not kill millions in gulags and by execution? He did. But can’t the Warsaw decision be militarily and morally correct in  spite of all this?

Also, what were Stalin’s choices during the second world war? The Nazis had already shown that they were out to kill Russians, not conquer them. In fact, they killed and enslaved many who welcomed them as liberators from communist dictatorship. So, it is very unlikely that Stalin would have saved lives by letting his forces surrender.

Prof Kennedy made another interesting point during the Q&A. He said that by his estimates, USA supplied around 20% of the martial the Russians used. Now, western historians make it seem as if all the Russians’ material came courtesy Uncle Sam. While that 20% may have been decisive, it wouldn’t have mattered hadn’t the Russians been able to come up with the balance 80%.

It’s not my intention to be an apologist for Stalin and his gang. However, if we want to learn from history, we have to be objective. More importantly, historians must  remember that they are not propagandists.

Tuesday, 21 December, 2010

Usury English style = Inclusive growth

In an editorial titled Microfinance and financial inclusion, the Financial Times says, "A crackdown (on microfinance in South Asia) would not help anyone, except perhaps traditional moneylenders and feudal landlords… Microfinance's advantages over traditional sources are that loans are cheaper and free of the social conditions attaching to credit in feudal relationships… As to the charge of gouging, microlenders have small margins in spite of their high interest rates… Evidence suggests the Indian suicides were the result of borrowers taking on too much debt from multiple sources. Credit practices must be improved to prevent this. Lenders should disclose interest rates to stimulate competition. This requires intelligent regulation.

Microfinance brings a crucial service to poor people. Rather than being attacked, it should be helped to do an even better job of assisting them to assert their financial autonomy."

The piece raises a number of obvious questions. First, why do microlenders have small margins in spite of high interest rates? Is it because their overhead costs are high? Or do borrowers default in large numbers? Or are they plain badly run?

Second, if credit practices were improved, would microfinance companies be able to charge the high interest rates? If I knew the probability that a borrower may default, can I still charge him a high rate? For instance, credit card companies in India justify charging usurious interests to all customers with the excuse that credit ratings are unavailable in India (without ever bothering to explain why they haven't developed ratings of their own over decades of operating in India): They cannot do so in civilised countries because credit scores are available.

Third, what does 'financial autonomy' mean?

Finally, why are people committing suicide when overwhelmed by loans? As per FT, microfinance is 'free of the social conditions attaching to credit in feudal relationships.' So what is it not free of? What are those borrowers afraid of? (Let's say you put money into my scheme, which doesn't work out. Now, I'd be sorry about it, but it's quite unlikely that I'd be so ashamed or petrified by failure that I'd kill myself… unless you had some abnormal bodily or psychological hold over me. What hold do these microfinance companies have?)

That South Asian politicians, in particular, and people, in general, are incurably corrupt is truer than the sun's rise in the east. Nonetheless, it does not logically follow that everything they say is to benefit landlords and usurers, more so when microfinance can offer far bigger bribes than the former.

Friday, 17 December, 2010

Brains leaking

In an article titled, Rahul Gandhi warned U.S. of growth of extremist Hindu groups: WikiLeaks on leaked cables from American diplomats in India published by WikiLeaks, the Hindu writes: "Their (American diplomats') view of Indian politicians is variable, however. The failure of Sonia Gandhi, who chairs the ruling United Progressive Alliance coalition, to overcome opposition to a nuclear power agreement is criticised heavily.

A deal would see, the U.S. diplomats said, a big boost for clean energy in India and a market worth $150bn for American companies. 'Mrs Gandhi never misses an opportunity to miss an opportunity,' one cable sent in November 2007 said."

There is something very disturbing about this, a typical sample of what's been coming out in the press thanks to the WikiLeaks. It's the childishness of the remarks. 'Mrs Gandhi never misses an opportunity to miss an opportunity… 'raucous democracy' of India… "If you want to end malaria you have to get rid of the swamp," the Indian national security adviser told the FBI director last year.

The picture that emerges from embassies and government offices across the world is not of sage statesmen or sly scoundrels, but of mediocre people who haven't outgrown the editorship their class magazines. Too clever by half, yet unwilling or unable to cope with complexities, and seeking comfort in cynicism. Was diplomacy and international relations always like this?

Monday, 13 December, 2010

9% growth… from selling the country

“Rajeev Chandrashekhar, a Rajya Sabha MP and former FICCI president, has pointed out that agriculture has grown at a dismal one per cent and manufacturing at no more than three per cent. The so-called miracle has been achieved through phenomenal growth in mining, real estate, construction.” So says Neelabh Mishra in his article in Outlook, titled The Banana Sheikhs.

Read this with Jagdish Bhagwati’s lecture The Unfinished Reform Agenda. The good professor says nothing about the sources of growth, even while  he rages against Indian novelists being allowed to write on the economy.

When ordinary people cannot see the growth they are supposed to be enjoying, who do they turn to, economists with figures or novelists with facts?