Daily Archives: February 9, 2012

Growing up in India in the 1960s, I knew that America gave us wheat, and Britain gave us books. On a table in my uncle’s home was a stack of elegant hardcovers, borrowed from the library of the British Council. Later, as a student at Delhi University, my own education in literature and history was largely shaped by the books from the same library.

Those memories came back when I read the commentary in the British press about whether the UK should stop giving aid to India. Over the years, while the British Council libraries were allowed to run to seed, the Department for International Development supported rural health and education schemes. Several years ago, when Indian billionaires started buying UK companies, calls were first heard for the dismantling of these operations. Earlier this month, when despite continued aid activity, the Indian government said it might buy French warplanes rather than British ones, these calls were renewed.

Undoubtedly Britain and India have a somewhat special connection. No other relationship between a former imperial power and a former colony is so suffused with affection and so free of animosity. To maintain this spirit, the British would do well to focus on culture rather than economics or military hardware. Close down DfID’s operations in India. Do not sulk when the Indian government buys guns from elsewhere. But, please, do restore the collections of the British Council libraries, and do send your best writers and actors on trips to India. Read more

Thursday’s agreement on a new adjustment programme for Greece appears to be a courageous and ambitious. Yet two factors could derail the deal well before any of its benefits materialise.

First, all three parties feel they have already been asked to do a lot, without seeing any actual or potential benefits to their sacrifices.

Successive Greek governments have been forced into rounds of austerity measures for the last two years, yet every meaningful indicator of their country’s economy and finances has worsened. Official creditors have poured money into the country, but this has done little to improve Greece’s prospects. Meanwhile, those creditors that still have Greek bonds complain that every time they have agreed to a haircut, other parties have moved the goal posts.

The second factor complicating the process is that no party sufficiently “owns” the adjustment programme. This is likely to prove a problem: weak ownership makes it hard for government leaders, the ECB and IMF, or those negotiating on behalf of private creditors – to sell an agreement to their constituents with any conviction, or to sustain implementation. It also makes it hard to make the many corrections needed over the course of an adjustment programme.

The agreement is welcome, but it stands a small chance of placing Greece on the path to high growth, ample jobs and financial stability. Greece needs a fundamental economic, financial and institutional reset. Such resets take time and carry considerable risk. But until they happen, repeated rounds of protracted negotiations are the rule, not the exception – as are derailed agreements, finger pointing and disruptive blame games. Read more

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Amid all the chest thumping and finger pointing about the failures of capitalism, let’s not forget the responsibility of governments across the globe. They relaxed regulatory requirements, turned blind eyes to dangerous activities and indulged in their own excesses.

Capitalism is like an energetic small child who needs rules, boundaries and discipline. If a toddler accidentally sets his home on fire, it’s the parents who bear the blame. “Capitalism in crisis” could easily be subtitled “government in crisis”. I’m not trying to excuse capitalism or its principal actors from a generous portion of the blame for the all too vivid pain of the past four years. Serious alterations are needed, only some of which have been put in place. But government has also seriously let us down.

If capitalists wish to avoid more regulation, they must get behind better governmental oversight. Read more