The TIME at Davos Debate: Capitalism Under Fire

http://business.time.com/2012/01/25/time-debate-is-capitalism-failing/

TIME International Editor Jim Frederick hosts a panel discussion on the future of capitalism: Can a system that came of age in the 20th century serve the needs of 21st? Joining Frederick tackling this question is:

• Sharan Burrow, General Secretary, International Trade Union Confederation (ITUC), Brussels; Global Agenda Council on Employment & Social Protection
• Brian T. Moynihan, Chief Executive Officer, Bank of America
• Raghuram G. Rajan, Eric J. Gleacher Distinguished Service Professor of Finance, Booth School of Business, University of Chicago
• David M. Rubenstein, Co-Founder and Managing Director, Carlyle Group, USA
• Ben J. Verwaayen, Chief Executive Officer, Alcatel-Lucent

Noam Chomsky–7th Edward Said Memorial Lecture

There will be no entertainment this weekend. In stead, I have chosen to post some serious stuff for our reflection about life and personalities of great intellect.

Darwin, Humanism and Science–A.C.Grayling

I have posted a number of Prof. A.C. Grayling’s articles on the blog in the past. He is my favorite Philosopher of our generation. In keeping with that, I thought it would be a good idea if we listen to his lecture on Darwin, Humanism and Science. Below is some background that may be useful for us to understand his speech:

http://ottawa.humanists.net/lifewithoutgod/humanism.php

A.C. Grayling explores the idea of Humanism informed by Science

Humanism is a positive view of life that roots itself in the natural world and celebrates freedom, cooperation, understanding, creativity and compassion. It is a philosophy that allows people to affirm that they are responsible, ethical members of society, and justify it in a way that is compatible with modern science.

Most Humanists reject supernatural explanations for everything, including the most puzzling and seemingly unexplainable phenomena. We don’t, however, dismiss that some things that have traditionally been in the realm of theology deserve an explanation. Some of these important things include: The origins of the universe, ethics and morality, consciousness, emotion, and purpose. The project that is Humanism is to assemble natural explanations for all of these things into a view of the world that is logical, defensible, and most importantly: awe inspiring.

Doubt, Critical Thinking and the Scientific Method

“Take no one’s word for it”

One of the most core values of modern day Humanism is that it advocates the use of critical thinking and the scientific method in every aspect of a person’s life. Doubt is a feeling that is cherished by a Humanist because it has proven to be the great engine of innovation and progress.

Many say that one of the most important discoveries ever made by humanity was the scientific method. Since it has been adopted, the human species has been lifted out of millenia of dark ages and stagnation, and into a brand new world of understanding and discovery.

The scientific method is a self correcting process used for uncovering the nature of our world. Humanists believe that we are far from understanding the anything in it’s entirety, and only by subjecting all of our ideas to deep scrutiny and experiment will we ever get any closer. To a Humanist, nothing is beyond scrutiny and inquiry, not even the principles of Humanism! The fact that we are always open to being wrong, or not quite right is what allows us to move forward and grow.

Freedom, Cooperation, and Responsibility

“Democracy must be something more than two wolves and a sheep voting on what to have for dinner.”

Take a moment, and try to imagine your life as a hermit with absolutely no interaction with other human beings on a day to day basis. Think of everything that you would be responsible for, and think of how barren a life in isolation would be emotionally. It is a dark thought, but on the bright side, it would be next to impossible to realize in our modern day world.

There are billions of humans on this planet, and millenia ago we had the collective realization that it would be much better for everyone if we organized ourselves and cooperated in societies. Today we have no choice but to play a contributory role in this massive human adventure. Humanists not only accept this fact but realize that respecting our roles as members of society is crucial in maintaining and bettering it.

Unfortunately we have not yet been able to level the playing field for everyone born into this world, and to do so is a mammoth yet extremely admirable goal to which we strive. Humanists value systems of organization and government that encourage peace, freedom, prosperity, diversity, and sustainability.

And how about Richard Dawkins? He lectures on Charles Dawin and Evolution at The Humanist Society of the United Kingdom:

China-dependent Asia could be catching an Economic Cold

by Laura Tyson (12-19-11)

As 2011 draws to a close, there are growing signs that Asia is becoming caught up in the global slowdown, dashing hopes that the region’s economies would “decouple” from the prolonged recession in Europe and America’s lackluster recovery.

China’s export growth is slipping, owing to faltering demand in Europe, which has surpassed the United States as China’s largest foreign market. Indeed, China’s manufacturing activity is contracting for the first time in almost three years. Reverberations are already evident in other emerging Asian economies that depend on exports both to China-based manufacturers and to the US and Europe.

Decoupling did not occur in 2008, when exports accounted for about 45% of pan-Asian GDP (excluding Japan) and every emerging country in the region experienced a sharp contraction in growth as world trade plummeted. Nor is decoupling likely today, because exports still account for about the same share of the region’s GDP, and about 50% of these exports are still headed to developed countries.

So the idea of decoupling appears to be a chimera. Even if the euro crisis is resolved, austerity in Europe, along with anemic growth or worse in the US, will mean a slowdown in export-dependent Asia. But Asia’s economies can still grow much faster than the developed West if they respond to prolonged stagnation by rebalancing their growth toward internal demand, especially household consumption. The good news is that these economies have substantial room for such rebalancing, as well as the policy flexibility to accomplish it.

The share of consumption in GDP in these economies fell from more than 60% in the early 1980’s to less than 50% today. In China, it is less than 40% – far below the norm for the world’s major economies and for other Asian economies at a comparable stage of development – despite nearly 7% annual average growth in China’s per capita consumption in recent years.

The Asian economies are home to 3.5 billion consumers, but their share in global consumption remains small – much smaller than their share in global GDP. China alone accounts for 20% of the world’s population, nearly 11% of global GDP, but only 3% of global consumption.

China and most of the other emerging Asian economies have strong government balance sheets – the GDP shares of their budget deficits and public debt are relatively small. As a result, they have the fiscal firepower to boost consumption in order to mitigate the effects of declining exports.

True, many local governments in China are saddled with debt, some of which may need to be restructured. But the central government enjoyed a 28% increase in revenues over the last year, and has more than $3 trillion in foreign-exchange reserves. In addition, the moderation of inflationary pressure as a result of slower growth and cooling global commodity markets will allow Chinese and other Asian policymakers to shift their focus from containing economic overheating to rebalancing growth. In China, where inflation is falling sharply, monetary policy has already begun to ease.

Even with significant policy support, however, most of the smaller Asian economies – Taiwan, Thailand, Singapore, and even South Korea – will not be able to replace external demand with internal demand to the same extent that China can. So, even with rebalancing, exports will remain a significant determinant of their growth, and China is already their major export market.

That is why China’s rebalancing is so important not only for its own economy, but for all of China-centric Asia. Intra-regional trade flows have surged during the last decade, but they have been concentrated in parts and components that go into finished products assembled in China for export to developed countries. With depressed markets in the developed world, intra-regional trade in the future will depend more on exports to satisfy Chinese domestic demand. Again, there is cause for optimism: China’s imports from Asia have been growing faster than China’s exports to the US for the last several years.

China responded to the 2009 global slowdown with dramatic fiscal and monetary stimulus, which fueled a rapid investment-led recovery at home and throughout Asia. Investment, mainly by local governments and state-owned companies with easy access to bank financing, soared to more than 45% of GDP, and, consistent with China’s long-run urbanization strategy, was concentrated in infrastructure and property-development projects.

Over time, much of the expansion in capacity will be absorbed, as an estimated 15 million people move from rural to urban areas each year over the next decade. But, for now, many investment projects are not yet generating enough income to service their debts (some of them never will), and there is significant spare capacity.

Confronted with another global slowdown that could depress its export markets for years, China needs to boost consumption even as it cools investment. And it needs to so in ways that do not rely on excessive credit expansion.

China’s 12th Five-Year Plan, which will take effect in 2012, recognizes these policy imperatives and calls for several measures to fulfill them, including wage increases for urban workers; income support for rural households; enhanced access to capital for small businesses, especially in the underbuilt services sector; and more generous social-welfare programs, which would reduce Chinese households’ high levels of precautionary saving. All of these measures are already underway, and Chinese leaders appear committed to embracing a new growth strategy that will benefit both China’s population and Asia as a whole.

The Asian economies should not count on being able to decouple from the economic woes of Europe and the US in the short run. But there are promising signs that, over time, the advanced countries’ difficulties will trigger a healthy, if belated, shift in Asia’s development strategy, with China leading the way.

Laura Tyson, a former chair of the US President’s Council of Economic Advisers, is a professor at the Haas School of Business at the University of California, Berkeley. She is now with the London Business School as Dean

Copyright: Project Syndicate, 2011.
www.project-syndicate.org

Get Rid of the God Complex

A Very Good Morning to you. Listen to Tim Harford’s presentation on the Value of Trial and Error. This video is dedicated to politicians including the Great One  (Tun Dr. Mahathir Mohamad) and others in Malaysia with “God Complex”, who think they have answers to everything. God Forbid, if they should populate and rule the world. We have seen many of these characters throughout history like Hitler, Stalin, Pol Pot and Idi Amin in the 20th century.–Din Merican

 ”When a politician stands up, campaigning for elected office and says I want to fix our education system, our health care system, I have no idea how to do it. I have half-a-dozen ideas; we’re gonna test them out; they’ll probably all fail; then we’ll test some other ideas out; we’ll find some that work; we’ll build on those; we’ll get rid of the one’s that don’t. When a politician campaigns on that platform, and more important, when voters like you and me are willing to vote for that kind of politician, then I will admit that it is obvious that trial and error works…”–Tim Harford

Tim Harford (born 1973) is an English economist and journalist, residing in London. He is the author of four economics books (Adapt, Dear Undercover Economist, The Logic of Life and The Undercover Economist) , presenter of BBC television series Trust Me, I’m an Economist, and writer of a humorous weekly column called “Dear Economist” for The Financial Times, in which he uses economic theory to attempt to solve readers’ personal problems. His other FT column, “The Undercover Economist“, is syndicated in Slate magazine.

Harford studied at Aylesbury Grammar School and then at the University of Oxford, gaining a BA and then an MPhil in Economics in 1998. He joined the Financial Times in 2003 on a fellowship in commemoration of the business columnist Peter Martin. He continued to write his column after joining the International Finance Corporation in 2004, and re-joined the Financial Times as economics leader writer in April 2006. He is also a member of the newspaper’s editorial board.

In October 2007, Harford replaced Andrew Dilnot on the BBC Radio 4 series More or Less. He is a visiting fellow at Nuffield College, Oxford.–wikipedia.

Asian Woman Power

by Vishakha N. Desai

India’s Indira Gandhi, Sri Lanka’s Sirimavo Bandaranaike, Pakistan’s Benazir Bhutto, Sheikh Hasina of Bangladesh, Corazon Aquino of the Philippines, and Megawati Sukarnoputri of Indonesia – these women leaders dominated South and South East Asia for much of the past four decades.

Each belonged to a special class of women whose husbands or fathers were their country’s recognized founding father or longstanding political leader. But, while their dynastic links brought them to power, they were not the sole factor keeping them there.

When first elected, none of these women had any serious professional or political qualifications. For some, this “shortcoming” was seen as an advantage, enabling some of them to project an image of innocence and purity, even martyrdom, as they stood in the place of their deceased husbands or fathers. None was particularly focused on a women’s agenda (at least not in their first terms in office), and studies show that rural women did not fare particularly well under their rule.

But something very different emerged in Asia in 2011. We still have women leaders who came to power at least partly because of their family ties. But they now seem to use their positions with far more confidence in putting women and their concerns squarely at the center of their agendas. And perhaps more importantly, a growing number of women are reaching for the highest political echelons in their countries by dint of their political talents alone.

Sonia Gandhi (left), the Italian-born wife of former Prime Minister Rajiv Gandhi and daughter-in-law of the late Indira Gandhi, became India’s most powerful woman for dynastic reasons but she has consistently demonstrated that she is a shrewd behind-the-scenes political operator.  For her, the main task at hand is to strengthen the Congress Party, which in early 2011 she was elected to lead for an unprecedented fourth term. But she has also expended considerable energy on promoting women, particularly their representation in politics. Indeed, she pushed hard in backing Pratibha Patil to become India’s first woman president.

Similarly Sheikh Hasina, Bangladesh’s prime minister, who carries the mantle of her assassinated father, has become a keen advocate of development issues, with a special emphasis on women and their needs. That agenda, missing in her first term, has dominated her current period in office.

In East Asia, too, women are on the rise politically. Park Geun-hye (right), daughter of Park Chung-hee, President of South Korea from 1961 to 1979, is now one of the two likely candidates to succeed President Lee Myung-bak. While Park derives some of her power from her family pedigree, she has proven to be an astute and seasoned politician – one who climbed the Grand National Party’s leadership ladder over the last two decades to emerge as a national figure. Her role in championing an inclusive agenda for women provides a new lens through which to assess the power of Asia’s new leaders.

Compare Park to Corazon Aquino, who, when elected President of the Philippines, famously remarked that she was simply a housewife, not a professional politician or an experienced leader. It was clear that voters elected her because she was the widow of the slain opposition hero Benigno Aquino. By contrast, no one would deny Park’s professional credentials. She is taken seriously more for her own experience and political power than for her family connections.

Even in Japan, a similar change is in the air, but with no hint of dynastic trappings. Yuriko Koike (left), a former defense minister and national-security adviser, is one of the country’s most powerful figures; indeed, she could become Japan’s next prime minister.

Unlike many other leaders of her Liberal Democratic Party, Koike has no real family connection to any major political figure. Instead, her standing reflects her unique political talents: an academic background in Arabic studies (she studied at Cairo University) and fluency in English, which give her a global perspective that most of her male colleagues lack. Koike is not the only Asian woman without family ties forging a political career that may lead to the top.

Indonesia’s Sri Mulyani Indrawati, a former finance minister and currently a managing director of the World Bank, is often mentioned as a leading presidential candidate in her country. Indeed, a party has been formed specifically to entice her to run for president in 2014.

In Taiwan, Tsai Ing-wen, is making a sustained and powerful challenge to the incumbent president in the election due in January 2012.  Having helped to draft Taiwan’s special state-to-state act that regulates relations with China, and then having headed the country’s Ministry for Mainland Affairs Council, she is well positioned to manage the thorniest issue any Taiwanese leader will face: the relationship with China.

Another newcomer to political leadership is Yingluck Shinawatra (right), Thailand’s Prime Minister. Clearly, one reason she swept to power this year were her ties to her brother, exiled former Prime Minister Thaksin Shinawatra, who controls the country’s strongest political party. But she made it clear during the campaign that she is her own person, a seasoned business leader with appropriate professional degrees.

Then, of course, there is the Burmese Nobel Peace Prize laureate Aung San Suu Kyi. The daughter of the founder of independent Burma, Suu Kyi is now engaged in perhaps the most delicate task of her remarkable political career – trying to engineer a true democratic transition from decades of military dictatorship.

Unlike the first generation of Asian women leaders, who gained power primarily because of their familial connections, the emerging crop are strong, confident, and ready to take on the challenge of leading their nations on their own terms. Their followers appear to see in them harbingers, unjaded by history, of the change for which their societies are clamoring.

At a time when, despite economic growth in Asia, there is much social and income inequality, as well uncertainty about the durability of peace in the region, the desire to find fresh solutions to problems has given a powerful boost to women leaders. They are poised to take their seats at the top table – and perhaps to change its shape.

Vishakha Desai is President and CEO of Asia Society, which will host the Women Leaders of New Asia Summit in Zhenjiang, China, April 19 – 21, 2012.

Copyright: Project Syndicate, 2011.
www.project-syndicate.org

NFC:  A Case of Greed, Corruption and Sheer Financial Imbecility

by  Nawawi Mohamad, Wong Choon Mei, Malaysia Chronicle

January 26, 2012

FTimes Editorial (12-27-11)

Capitalism is dead; long live capitalism

The market economy is the most successful mechanism for creating prosperity humanity knows. Allied to modern science, it has done more than transform the world economy; it has transformed the world. For the first time in history, the world’s principal states rely on the market economy to develop their economies. Almost as important, they rely on a global market economy. Contemporary states are destined to co-operate with one another if they are to prosper.

Yet the market economy is not as unchangeable as the laws of the Medes and the Persians in the book of Daniel. It is successful not because it stays the same, but because it does not. The driving force is the desire of all human beings to work for the betterment of themselves and their families. The mechanism is the equally natural search for a better deal. But institutional settings and relationships with political institutions have always been open to change. This very adaptability has ensured the survival of market economies.

Two centuries ago there was no limited liability, no personal bankruptcy, little central banking, no environmental regulation and no unemployment insurance. All these changes occurred in response to economic or political pressures. All brought with them new solutions and new challenges. At a time of ongoing financial shocks, this need for adaptation has not ended. On the contrary, it is as important as ever.

What, then, are the challenges that matter today? The libertarian movement in the US, whose standard-bearer is Ron Paul, is clear about the answer: abolish nearly all of these policy innovations and go back, as far as possible, to the capitalism of the late 19th century. Outside the US this current of opinion holds little sway. Even inside the US, it is merely a component of the Republican coalition. It is more than a mere curiosity – but it is not going to shape the future.

More relevant is asking how far the resurgent capitalism that emerged in the 1980s, under the leadership of Ronald Reagan in the US and Margaret Thatcher in the UK, now needs to be reformed. The answer is that it must be, for it has proved not just unstable, but, in important respects, unjust. The result has not only been a devastating crisis, but also a sense that the achievement of extraordinary wealth may not reflect exceptional merit. In societies that rely on consent, this is politically corrosive.

At the heart of the renewed debate are three issues: finance, corporate governance, and taxation. These are the questions raised by the “occupy” movements, which, for all their intellectual incoherence, have altered the terms of the political debate.

The financial sector grew too big, partly because risks were misunderstood and partly because it was encouraged by policymakers to expand. It will need to be better constrained in future, partly by ensuring the risks it creates are internalised. Again, corporate management has too often rigged executive compensation in its own interests, rather than that of shareholders. Finally, a plethora of incentives have allowed many of the most successful people to escape taxation. In all these respects, the modern economy needs reform, to become both fairer and more efficient.

Beyond such reforms, the debate over macroeconomic stabilisation that goes back to the 1930s has been renewed. In the years up to the crisis, the broad consensus was that a monetary policy targeted at inflation was enough. This view has been exploded. After the extended period of desperate improvisation now under way, a new synthesis will be required, one that takes proper account of asset prices, leverage and the role of central banks as lenders of last resort.

Capitalism will endure, by changing. That is the lesson of the past. It is just as relevant today.

www.malaysiakini.com

Public Accounts Committee delays its deliberations on NFC: Azmi Khalid answers Lim Kit Siang

Public Accounts Committee (PAC) chief Azmi Khalid justified the parliamentary body’s decision to delay investigation into problems revolving around the National Feedlot Centre.

Azmi (left with his Deputy who is from DAP) agreed that it was his opinion that the PAC should pause its proceedings until the Police and the Malaysian Anti-Corruption Commission (MACC), which also initiated investigations at about the same time, to wrap up their probe.

“It is quite normal for PAC to delay inquiries until other relevant agencies had completed their jobs, since it involves the same people and documentation,” he said, in a statement today.

“But it does not mean that we are closing the case…whatever that is being recommended by the PAC to the enquiry, is to the police and the MACC, because we don’t have the forensics facility to go through every document one by one,” elaborated Azmi when contacted by Malaysiakini.

The veteran Padang Besar UMNO MP clarified that there have been cases where witnesses had refrained from giving information on the advice of their lawyers, for fear of being subjudice.

“In any case this code is not cast in stone as any member of PAC can request a hearing by making a simple request to the chairperson,” he said. Azmi was responding to calls from Ipoh Timur DAP parliamentarian Lim Kit Siang, who demanded  the former’s resignation for holding back PAC’s investigations.Urging Azmi to “not be an obstacle”, Lim insisted that PAC should resume its probe and complete its report in time for Dewan Rakyat’s sitting in March.

‘PAC has never been partisan’

However, Azmi refused to counter Lim on a “political level”, emphasising that PAC “has never been partisan either in its deliberations or conclusions”. He proudly stated that the powerful committee comprises parliamentarians who are “professional” in their conduct and fair in their “conclusions”.

PAC had interviewed several agriculture and agro-based industries ministry officers on the weaknesses in the multi-million ringgit cattle farming project, raised in the 2010 Audit Report presented in parliament last November.

Azmi complained then that the government loan was given to the company even before the agreement was signed. Lim, however, raised the issue of conflict of interest as Azmi was the natural resources and environment minister in 2006, when the cabinet was deliberating the project.

He retorted today that Lim had similarly asked him to step down as the PAC chief when the committee was hearing witnesses in relation to Port Klang Free Zone (PKFZ) scandal.

At the end of the PKFZ probe, PAC recommended, after an inquiry, the persons involved be investigated for criminal breach of trust, an offence that carries a maximum 20-year jail sentence, with whipping and a fine.

“I do not think I need to say more on this as evidenced by the PKFZ case ,and I leave it to the rakyat to judge me in my capacity as the PAC chairperson,” said Azmi.

Likewise, Azmi said that although he was part of the Cabinet in 2006, he “cannot remember the case”. “As far as I am concerned, there is no question of conflict of interest, let alone be a hindrance to any function that is duty-bound on any parliamentarian,” he said.

www.malaysiakini.com

Sodomy 2 Written Judgment is not yet ready

by BERNAMA

The grounds of written judgment of Anwar Ibrahim’s acquittal, on a charge of sodomising his former aide Mohd Saiful Bukhari Azlan, are not yet ready.

Anwar’s lead counsel Karpal Singh said he was informed by the trial judge’s secretary that the judgment is not yet ready. He said this to reporters after checking on the judgment with High Court Judge Mohamad Zabidin Mohd Diah’s secretary at the Jalan Duta Court Complex in Kuala Lumpur today.

He, however, said that a trial judge was obliged to provide a grounds of written judgment within eight weeks from the day a notice of appeal was filed, as provided under the Chief Justice’s circular.

On January 20, the Attorney-General’s Chambers (AGC) had filed the Notice of Appeal against Anwar’s acquittal from the sodomy charge. The notice which was signed by Solicitor-General Idrus Harun was filed at the Kuala Lumpur High Court Criminal Registry.

Karpal also said the A-G’s Chambers had the power not to proceed with the appeal after perusing with the grounds of written judgment by the trial judge.

Karpal said it was still open to the A-G’s Chambers not to prosecute the appeal further, after reading and being satisfied with the written judgment which contained the exhibits, notes of proceedings and the written judgment.

“We have done it (not to appeal) in other cases. When I get the Petition of Appeal, I found the grounds were not worth to proceed with the appeal,” said Karpal.

He said the A-G’s Chambers had 10 days to file the petition of appeal under the Rules of the Court of Appeal 1994, upon receiving the record of appeal and if the 10-day period had lapsed, it was deemed to be withdrawn (the petition of appeal).

The party who had filed the notice of appeal at the High Court registry would have to file the petition of appeal at the Court of Appeal Registry, if they wanted to pursue the appeal, upon receiving a complete record of appeal.

On January 9, Justice Mohamad Zabidin acquitted and discharged Anwar after the court found that it could not be 100 percent certain that the integrity of the DNA samples had not been compromised and that it was reluctant to convict Anwar based solely on the uncorroborated evidence of Mohd Saiful.

Anwar, 64, had been charged with sodomising Mohd Saiful, 26, at a Desa Damansara condominium unit in Bukit Damansara here between 3.10pm and 4.30pm on June 26, 2008.He was charged under Section 377B of the Penal Code which carries a sentence of up to 20 years’ jail and whipping, upon conviction.

- Bernama