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    The Road Leading to the India-China Standoff

    The reason for the China-India standoff in the Galwan Valley may not be the oft-mentioned construction of the Darbuk-Shyok-Daulat Beg Oldie (DSDBO) road. The new thoroughfare improved Indian logistics in the Ladakh area, meaning that supplies and troops can be deployed with far greater speed. While the DSDBO might have irked China, Beijing has deeper …
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    The post The Road Leading to the India-China Standoff appeared first on Fair Observer. More

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    Why Do Latinos Vote for Trump?

    Debates about the role of the Latino vote have become somewhat of a tradition in the United States. As campaigns begin to trace their strategies for the upcoming elections, the topic is brought up by political strategists, scholars and pundits who attempt to project the electoral behavior of these communities. Their concern is not unfounded. …
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    Why Is Foreign Investment Flooding Into India?

    For years, India suffered from what came to be called the “Hindu rate of growth” — a result of Jawaharlal Nehru’s policy choices. India’s first prime minister had a fascination for the Soviet Union and championed socialism. In India, this socialist economic model was incongruously implemented by a colonial bureaucracy with a penchant for red tape.

    Consequently, the license, quota and permit raj, a system in which bureaucrats commanded and controlled the Indian economy through byzantine regulations, throttled growth for decades. Once the Soviet model started collapsing in 1989, the Indian economy came under increasing pressure. A balance-of-payments crisis led to the 1991 economic reforms. Thereafter, India consistently grew at a rate of more than 5% per year until 2019.

    What Ails Corporate Governance in India?

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    During the COVID-19 pandemic, that growth has stalled. In the first quarter of India’s financial year that begins on April 1, the economy shrunk by a record 24%. Forecasts estimate that it will shrink further, although the rate of the contraction will decelerate considerably over the next two quarters. This contraction has left little elbow room for a government fixated on redistributive policies and fiscal restraint. This fixation is a hangover from the past.

    Historically, the Bharatiya Janata Party (BJP) has been more market-friendly than other political parties. In fact, the BJP broke new ground in the early 2000s by targeting and achieving a growth rate in excess of 8% when Atal Bihari Vajpayee was prime minister. Despite such high growth, the BJP lost the 2004 election. 

    Foreign Investment Hits Record Figures

    The BJP has not forgotten Vajpayee’s defeat. In particular, Prime Minister Narendra Modi has drawn a key lesson and focused on providing services to the masses. As a result, the government has focused on redistribution and taxation. It has put growth on a backburner. In 2018, the Modi government embarked upon what these authors termed Sanatan socialism, a policy that courts the poor with financial transfers and private provision of services. This strategy was vindicated by a resounding electoral victory in 2019.

    Today, COVID-19 is posing fresh challenges to the economy and to the Sanatan socialism policy. The growth slowdown in India is greater than in other emerging economies. The opposition has upped the ante and is blaming the government. Some business leaders are questioning the government’s lockdown strategy. This puts the BJP on the defensive regarding the economy.

    Yet even during such a growth shock, foreign direct investment (FDI) and foreign portfolio investment (FPI) have been pouring into India. Surprisingly, the FDI has hit record figures. In the first five months of this financial year, $35.7 billion has come into India. The FPI figures are also at an all-time high. In November, foreign investors plowed $6 billion into Indian capital markets, beating figures for Taiwan and South Korea. What is going on?

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    Three key facts explain this inflow. First, corporations from the US and the Gulf have bought big stakes in Reliance Industries, India’s biggest conglomerate. They are also buying shares in Indian companies. In effect, they are betting on future growth.

    Second, the Performance Linked Incentive (PLI) scheme has gained some traction. The purpose of the PLI is to boost electronic manufacturing in the country. So far, India has been too dependent on China. Current tensions along the border have led India to change tack and give financial incentives to companies who manufacture in-house. Players like Samsung, Pegatron, Foxconn, Wistron and AT&S have responded well to the PLI.

    Third, global corporations might be diversifying their supply chains to mitigate the risk of manufacturing exclusively or mainly in China. This strategy to tap alternative supply chains to China is widely known as China Plus One, and India might be benefiting from it.

    Modi has doubled down on an advantageous situation. Sovereign wealth funds, pension funds and organizations with over $6 trillion of assets under management attended a summit organized by the prime minister in the first week of November. In addition to Modi, India’s business leaders such as Mukesh Ambani of Reliance Industries Limited, Ratan Tata of the Tata Group and Deepak Parekh of Housing Development Finance Corporation pitched to these investors. More foreign investment might follow soon.

    What Lies Ahead?

    If investment is flowing in, what are its implications for the Indian economy? First, India will experience a growth spurt within three to four quarters from now. In recent years, private investment has been weak because of a banking crisis. Indian banks lent large sums to big borrowers who had no intention or ability to pay back their debts. This meant that they had no money or appetite to lend to bona fide businesses. A credit crunch ensued, investment suffered and so did growth. Increased FDI will reverse this trend and fuel growth by restoring investment.

    Second, India will experience job growth thanks to higher FDI. The entrance of new players and the revitalization of older ones will increase employment. The government has already instituted major labor market reforms to encourage manufacturing and other labor-intensive activities. 

    Third, increased employment could boost domestic demand, raising growth rates. These might materialize by the 2022-23 financial year, just in time for the next general election. The FDI flowing in right now might be boosting the BJP’s 2024 reelection chances.

    Finally, the record FDI is giving the Modi administration a leeway to achieve geopolitical goals. With cash coming in from friendly economies, the government is limiting economic engagement with nations hostile to India, especially in core sectors such as power, telecommunications and roads. Aimed largely at Chinese and probably Turkish entities, the move could benefit European, American and East Asian companies from Japan, South Korea and Taiwan.

    India’s new economic direction reflects the seismic shift in the global economy. The post-1991 era is over. As during the Cold War, countries are now mixing politics and business again.

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    Joe Biden’s Revolving-Door Cabinet

    After a weird hiatus in modern history lasting four years — more like the “Twilight Zone” than “West Wing” — the US under Joe Biden will presumably return to its stable center, which is proudly claimed to be “center-right.” The Biden camp thinks that defining the nation as center-right is an objective, lucid, realistic evaluation of the mood of the population. They base it on their interpretation of the results of the 2020 election that sent Joe Biden to the White House, reduced the representation of Democrats in the House and left Republicans in control of the Senate.

    The true Democrats — a group that excludes a small minority of fanatical progressives — consider themselves the center but also claim to be progressive. The true Republicans — moderates like John Kasich and Meg Whitman, who endorsed Biden — are just right of center. And they claim that the millions of Trump voters define the right. This means that to accomplish the goal of unifying the country and offering something to everyone across the spectrum, President-elect Joe Biden’s policy should logically be situated somewhere to the right of the moderate Republicans.

    The Low Expectations of Biden’s High-Mindedness

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    Though the media seems uninterested, it can easily be demonstrated that this official reading of the “mood” of the US is based on totally erroneous assumptions. The US population is clearly tired of a foreign policy based on endless overseas wars, even traumatized by it. A clear majority of Americans, irrespective of party allegiance, favor the principle themes proposed by the progressive left of the Democratic Party: Medicare for All, a wealth tax, an end to bailouts for the rich, a $15 minimum wage, free college education, the decriminalization of marijuana, to mention only those. The Democratic center that Biden represents has branded most of those positions extreme. And the Republicans will systematically oppose them.

    If a majority of the people clamor for progressive policies but the officials they elect oppose them, shouldn’t the leaders recognize a state of cognitive dissidence rather than assume that their own values represent the truth? When citing the “mood of the nation,” whose mood are they talking about, the people’s or the that of Washington insiders? Whose mood will guide the new administration’s policies?

    If the choices Biden has been making for his cabinet are any indication, the only mood worth taking seriously is that of Beltway insiders. An article in The New York Times by Eric Lipton and Kenneth P. Vogel, “Biden Aides’ Ties to Consulting and Investment Firms Pose Ethics Test,” looks at the recent activity of Biden’s cabinet choices reveals how the system is built. All of the identified candidates for significant posts are linked to the kinds of corporate interests that oppose the positions the US public supports.

    Worse, the authors analyze the structural corruption of the DC system of revolving doors. They focus on two companies: the consulting firm WestExec Advisors and an investment fund, Pine Island Capital Partners. The two firms feature “an overlapping roster of politically connected officials,” that include “the most prominent names on President-elect Joseph R. Biden Jr.’s team and others under consideration for high-ranking posts.” WestExec was founded by the future secretary of state, Tony Blinken, and a top candidate for secretary of defense, Michèle Flournoy.

    The authors bring up the fact that Biden’s nominees have refused to release a list of their firm’s clients. This would be the key to following up any suspicion of corruption. WestExec generously offered this explanation of their refusal: “As a general matter, many of our clients require us to sign nondisclosure agreements, which are a standard business practice to protect confidential information. We are legally and ethically bound by those agreements.”

    Today’s Daily Devil’s Dictionary definition:

    Legally and ethically bound:

    Required by a supreme law, doubly enforced (by a moral code among people of honor and commercial law) to place one’s loyalty to corporate masters ahead of public service.

    Contextual Note

    Welcome to the iron-clad logic of what may be called the rulebook of the elite. Slaves in the old South and elsewhere were physically bound to prevent their escape. Slaves to an all-powerful corrupt system are voluntarily bound by shackles of self-interested solidarity. The average person assumes that the wealthy and powerful have absolute freedom. They too are slaves.

    Some may wonder if any difference exists between the idea of being “ethically bound” by devious commercial agreements and the Mafia’s law of omertà. Both function as a law of silence designed to hide shameful activities. The difference is that the Mafia never claims their business is either ethical or legal. Saagar Enjeti addressed The Times article on his program for The Hill, describing how the influence-peddling system Blinken and Flournoy created works, how the consulting company and the hedge fund work together to disguise their corruption. He added that “the best part is it’s totally legal. It’s also corruption 101 … a more sophisticated way of handing somebody a briefcase full of cash.”

    Embed from Getty Images

    Lipton and Vogel describe the system in these terms: “WestExec’s business plan accommodates the revolving door between the influence industry and government by offering services that draw on government expertise without triggering lobbying laws that would require its officials to disclose their clients’ identities or specific issues before the government.”

    Democrats will undoubtedly point out that none of this compares with the obscenity of Donald Trump’s flagrant violation of the emoluments clause of the Constitution from day one of his presidency, to say nothing of the aggravated nepotism of his administration over the past four years. But the Democrats’ precious revolving door has been there for decades. Trump’s outrageous performance offered a singular advantage to any Democrat or Republican succeeding him. If they return to the more traditional, discrete methods of corruption, no one will blink an eye. Biden has been around DC lobbyists and their ilk long enough to understand the rules of that game.

    Historical Note

    The Times article is astonishing if only because it breaks with the newspaper’s perceived editorial stance of systematically developing Democratic talking points and avoiding any criticism of the party’s establishment. This time, the authors pull no punches as they describe what can only be called a flagrant sell-out to the corporate plutocracy by a president who didn’t even wait to assume his functions before putting the graft machine to work.

    Democrats will protest that, to quote Marc Antony on Brutus and his fellow assassins, “these are all honorable men” (even if today many of them are women). Lipton and Vogel mention the fact that the DC lobbyists they have spoken to “say WestExec has already come to be seen as a go-to firm for insight on how Mr. Biden’s team will approach issues of significance to deep-pocketed corporate interests.” Given the direct connections his appointees have with major defense contractors, the military-industrial complex will find itself in a more comfortable position than under Trump.

    The article nevertheless carefully avoids adventuring into the real and most troubling consequences of this revolving door. Biden’s group of political professionals has a shared professional and financial interest in keeping the massive arms industry ticking over. That doesn’t mean that war is imminent. It means that the risk of war and the threat of military intervention will continue to be a dominant tool not just of diplomacy, but also of the management of the economy.

    Trump had his own personal way of being what he claimed he would be during his first presidential campaign: “the most militaristic” president ever. Nevertheless, he thought military action abroad was a waste of money and sought to bring home the troops, but he also insisted that military build-up was vital. He relentlessly and needlessly bloated the defense budget. In comparison, Democratic presidents, at least since Lyndon Johnson, have tended to support both the build-up and the intervention.

    Biden’s future cabinet certainly appears to conform to that model. This cabinet will undoubtedly find itself “ethically and legally bound” to reinforce the US military presence across the globe. That’s what Democrats have been doing for decades. And that’s what the masters of the revolving door have been trained to do.

    *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    ‘This is my home now’: The charities helping refugees rebuild their lives

    Sitting in one of the Middle Eastern cafes that have sprung up in Birmingham over the last decade, Maan quietly tells his story. He was a 14-year-old school student, the son of a farmer in Daraa, an agricultural town in southern Syria, when the uprising started. “A group of teenagers were arrested for putting anti-government slogans on a wall. When the kids were not returned, the parents protested and the army shot them.” The uprising rapidly escalated into a full-blown military assault on the citizens of the town and its surrounding villages. Maan lost an uncle and four other relatives. With his mother and younger brother, he eventually fled to Jordan. After two years working illegally in cafes and restaurants, he realised he had no future there. “I dreamed of going to the UK to study business management. They respect humanity in the UK. The language, you can use it anywhere in the world. And the degrees are better.”He went to the UK embassy in Amman. “They treated me in a rough way. They told me there was no asylum here. They don’t accept applications.” It was the same at the French and German embassy. So with family savings he flew to Algeria; paid $1,500 and was trafficked through Tunisia to Libya; spent 11 days in a house with no mattresses and little food; then at four in the morning he was taken with 900 others in a rickety boat across the Mediterranean. He feared for his life on the journey with water coming in. “Fortunately, the Italian military picked us up or we would all have drowned.” It took 20 hours for the Red Cross to check them all in – a mixture of west and east Africans, Afghanis, Syrians. And then he made his way through Europe – Catania, Milan, Nice and Paris to Calais. “I spent 27 days in Calais, climbing the fences, clinging underneath lorries, getting caught and returning to try again. I broke my leg climbing; was taken to hospital; then went back to trying to get onto a lorry.”  More

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    What Ails Corporate Governance in India?

    Most businesses perish not because of strong competition or adverse macroeconomic conditions but because of cracks within. One such failing is weak corporate governance. For publicly listed companies, this often translates to controlling shareholders or “promoters” pursuing policies and practices in their own interests at the expense of minority shareholders. It turns out that companies with such promoters are at greater risk of crises and near-death moments in bad economic cycles. Those companies with better governance, where promoters act responsibly in the interests of shareholders, tend to do better during adversity. In fact, savvy investors now treat good corporate governance as an intangible asset.

    This can be best seen in India’s banking sector. In general, private sector banks have practiced better governance than state-owned ones. Consequently, their financial and operating metrics also tell a story of profitable growth with less asset quality issues than their public sector peers. No wonder that private sector banks trade at a higher valuation than public sector ones.

    360˚ Context: The State of the Indian Republic

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    Higher valuation puts these banks into a virtuous growth cycle. They are able to raise capital cheaply with less dilution. This reinforces their already high return ratios, which in turn continue to support a higher valuation. This self-perpetuating cycle has led to long-term compounding of shareholder returns. State-owned peers have fared much worse.

    Despite a large number of state-owned banks, the majority of credit growth in India is led by private sector banks. In fact, state-owned banks are struggling and the government is forced to merge them to ensure their survival. The success of well-run private banks demonstrates how good governance can lower a company’s cost of capital. That is not all. The resulting higher valuation also gives such companies immense pricing power in corporate transactions and talent management, widening their economic moat. 

    Multiple Issues

    India boasts of the oldest stock exchange in Asia, which is also the region’s largest. However, corporate governance in India still lags behind many other places like Singapore or Taiwan. India must understand that good corporate governance is the foundation of a lasting business. It builds investor confidence and has other benefits. India is short of capital and needs to earn investors’ trust. Without an infusion of capital, the Indian economy will fail to thrive. 

    Embed from Getty Images

    There are multiple issues that plague corporate governance in India. First is the lack of accountability among controlling shareholders. For example, promoters get away with appointing their friends, ex-employees and business-school classmates as independent directors with no one raising an eyebrow. Often, statutory auditors are given only one-year extensions to pressurize them to “comply” with management demands. Compliant auditors tend to persist for too long, developing far-too-cozy relationships with the very people they are supposed to keep an eye on. With no strong checks and balances, promoters are in effect incentivized to take advantage of minority shareholders. 

    Second is the slow and selective enforcement by the Securities and Exchange Board of India (SEBI), the country’s market regulator. Cases against the management’s missteps take years to resolve. SEBI generally hands out warnings or mild punishments. This could be because SEBI does not have enough resources to deal with a large number of cases, or it could be a lack of authority or competence. In certain cases, promoters are extremely powerful and politically connected. Given that regulators are political appointees, it is far from easy for them to ignore pressure from politicians, remain impartial, punish the powerful and deliver justice.

    Third is the fact that markets do not punish poorly managed companies for their misdeeds. India needs deeper markets with broader participation for true price discovery. Stock markets must be treated as marketplaces, not as forums for votes of confidence on the government’s economic policies. Because governments place too much importance on market performance, they have an incentive to keep them inflated. Indian corporate bond markets are even worse than stock markets in terms of participation. They are really accessible to only a handful of companies. 

    Fourth is the lack of transparency and weak disclosure requirements. This further perpetuates weak governance. The most detailed yearly disclosures by Indian companies are annual reports, which are often colorful marketing decks instead of detailed, factful and insightful documents, like the 10-Ks in the US. The quarterly earnings report for many companies is just a one-pager. This discloses summary items only without any breakdown of details.

    Earlier, manufacturing companies were mandated to disclose operational details pertaining to capacity, production and inventory. A few years ago, this disclosure requirement was done away with. Now, the only time companies make adequate disclosures only during their initial public offerings, which is a mere one-time event instead of an annual exercise.

    Bringing Sense to the Madness

    The only way to bring some sense to the madness in India’s public markets is to give more independence, power and resources to SEBI. At the same time, India must seriously penalize auditors and boards of companies for overlooking management follies. In addition, the authorities must incentivize and protect whistleblowers in a similar manner to developed economies.

    Some argue that complying with higher disclosure requirements might be too costly for smaller companies. That is not true. Furthermore, even the top 100 Indian companies default frequently on mandatory disclosures. Instead of reducing requirements for disclosures, India should lower costs of disclosures and compliance by using more technology.

    Another way to improve the health of India’s public markets is to increase market participation and trading volumes. Then good corporate governance would be rewarded while poor corporate governance would be penalized. Making short-selling a smoother affair might make the market deeper and more liquid. To increase depth in corporate bond markets, India must make lasting banking reforms. This involves privatization and granting more powers to the banking regulator.

    An unintended consequence of banking reform might be the improvement of India’s infrastructure. Currently, many state-owned enterprises in infrastructure sectors such as power are mismanaged because their bosses are able to buy time by restructuring their bank loans. Banking reforms will make that impossible and will transform this sector too.

    A combination of disclosure, regulation and enforcement can improve corporate governance. Reforms can also reduce conflicts of interests as well as create the right incentives and disincentives for Indian companies. These would inevitably lead to some short-term backlash, but the substantial long-term benefits are too significant to be ignored.

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    Is Michel Zecler France’s George Floyd?

    In recent weeks, France’s President Emmanuel Macron has accelerated his recent campaign to bolster his credentials as Europe’s most determined authoritarian leader. Citing France’s secular philosophical tradition, he appears to believe in the 18th-century cultural meme of the enlightened despot.

    Macron came to power in 2017 after painting himself as the inclusive centrist standing midway between the left and the right, whose parties were in total disarray. Like Joe Biden today, he promised to unite a nation that had suffered from a system of “alternance” (alternate rule). For decades, it had allowed the powerful political organizations on the right and left to repeatedly replace the other as France’s ruling elite, perpetuating a political class that had lost touch with reality.

    After three years of Macron, and because of the events last week, the president may be suddenly realizing the truth behind William Butler Yeats’ observation a century ago that “the center cannot hold.” Yeats was of course referring to Western civilization as a whole, not French politics. Macron wants people to believe he represents Western civilization. After claiming Jupiterian authority at the beginning of his reign, he has increasingly projected himself as the all-seeing arbiter of modern political truth. He claims to embody what he calls “the principles and values” of la république. His version of the Enlightenment has become the French version of Puritan America’s shining city on a hill.

    The Rapid Growth of Emmanuel Macron’s Authoritarianism

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    Macron may have noticed that the American politicians — notably Ronald Reagan and George W. Bush — who successfully marketed the shining-city meme to justify their militaristic authoritarianism, represented the right rather than the center. The right traditionally applauds xenophobic nationalism. But Macron still sees his brand as centrist. This obliges him to thread the needle by emphasizing secular universalism, traditionally approved by the left, as opposed to the right’s typically faith-based nationalism.

    In recent months, Macron has pushed two distinctly authoritarian themes: declaring cultural war on Islamists (meaning he has a beef with Islam itself) and reinforcing France’s already well-structured police forces to help the nation evolve into an enlightened police state. At the same time, he poses as the promoter of European unity, encouraging the EU to rally around his “liberal” values that notably include “freedom of expression,” redefined as the right — if not the duty — to blaspheme, so long as the target is Muslims, who clearly take their religion too seriously.

    Macron’s crowning achievement of the past week was the French parliament’s passing of the global security law, with its provisions to punish journalists and citizens who dare to film the police in the act of enforcing the always fair and just authority of the state. Those found guilty of filming the police face a €45,000 fine.

     Today’s Daily Devil’s Dictionary definition:

    Global security (Sécurité globale):

    The universally valid application of authoritarian methods of policing human activity in France and, why not, everywhere around the globe, since France is, as everyone should know, the source of universal moral values.   

    Contextual Note

    The vote in parliament took place the same day the surveillance video was released of the brutal beating by the police of Michel Zecler, a black music producer. The police booked Zecler for “violence against a public authority,” which, if successfully prosecuted, would have landed him in prison for many years. The three officers failed to notice the surveillance camera in Zecler’s professional premises, where the beating took place. The episode has proved severely embarrassing for Macron’s government. Although alive and safe, Michel Zecler could become the George Floyd of France. The law was already contested, but a massive protest on Saturday highlighted the symbolic importance of this incident. Others are likely to follow as the government hesitates on what tack to take.

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    Without the video, Zecler would have undergone the fate of so many other members of minorities harassed or brutalized by the authorities. The police officers claimed that he had assaulted them and attempted to seize their weapons. What judge or jury would believe Zecler’s word against theirs in a courtroom? Zecler has insisted on expressing his own respect for the police. He considers his attackers as three bad apples who do not represent the vast majority of law enforcement. What they do represent, however, is the workings of an arbitrary, racist and authoritarian system that Macron has chosen to reinforce and place beyond any criterion of accountability.

    The government finds itself in a quandary that in some way resembles the comedy of the Keystone Kops. The right-wing interior minister, Gérald Darmanin, a J. Edgar Hoover-type personality whom Macron appointed to demonstrate his commitment to authoritarian rule, immediately dismissed any reconsideration of the law. Within an hour, Prime Minister Jean Castex contradicted him, asserting, as France 24 reported, “that the government would review the wording of a controversial draft law that would place restrictions on citizens filming the police and publishing the images.” Castex immediately promised to set up “a commission to rewrite the text.”

    It didn’t take long for Macron’s own legislators who voted for the law to protest, calling the idea of appointing a commission to rewrite their law an insult. One complained of being treated like a “vulgar floorcloth” (serpillière), another like a doormat (paillasson). How embarrassing! The president had crafted the entire operation specifically for electoral purposes, following the results of private polling that showed a positive response to Macron’s promise to get tough on Muslims.

    Macron’s minister of justice, Eric Dupond-Moretti, speaking to BFM-TV, dared to undermine Macron’s and Darmanin’s logic: “It’s out of the question to forbid journalists from filming and informing the public.” He called for “amending a number of the law’s provisions.”

    Historical Note

    Macron has been heralding the 18th-century Enlightenment as an export rivaling champagne, Bordeaux or foie gras. This tells us a lot about the political philosophy of a man whose career oddly parallels Donald Trump’s. For both men, the presidency is the first political office they have been elected to. Theoretically, that should be good for democracy in two nations that have suffered from the corruption associated with government by political professionals whose idea of governing amounts to playing off vested interests against one another.

    Neither Macron’s center nor Trump’s solipsistic system have the capacity to mold reality to their purposes. But if both political mavericks managed to make it to the top, it is also because the traditional parties had themselves succumbed to a reality they could no longer control.

    Future historians will undoubtedly look back with curiosity at this strange period of history inaugurated by Osama Bin Laden in 2001, in which small terrorist groups and individuals managed to destabilize the immense power of the Western nations not through the damage they did do it directly, but through their ability to provoke self-destructive authoritarian responses from Western governments.

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    To be elected and respected, leaders had to show their electorate their determination to base policy on paranoia. In the meantime, the entire political class had lost its ability to analyze causes and effects, for the simple reason that they were focused on the task of balancing the interests of the powerful cliques — financial, industrial and military — that formed a club they aspired to belong to.

    Their governments’ growing authoritarianism had a two-fold effect: It punished its own citizens by restricting their liberty and reducing them to puppets in a system increasingly designed for a single purpose: to protect the status quo. Since terrorists were attacking the existing system, good citizens could accept the idea that it was the system that needed protecting, not the people themselves. 

    The second effect was more fundamental. The laws and political practices designed to protect the status quo augmented the power of private interests, increasing their wealth and control over the economy. This produced devastating social effects. The people — the supposed bedrock of democracy — were faced with an intolerable psychological dilemma. They were asked to adhere willingly to an increasingly arbitrary system that pushed them further and further into economic oblivion. Up to now, the system has worked because it seemed like the only system possible. But Yeats was right: There comes a moment when the center cannot hold. Sometimes it’s an obscure name that triggers it — a name like George Floyd or Michel Zecler.

    *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    Sex Abuse Is the Moral Downfall of the Catholic Church

    My mother passed away a few years ago. She spent the last years of her life in a home for the elderly in a small town in Bavaria, where she and my father had spent most of their lives. In their younger days, both my parents were devout Catholics, initially taking at face value what the church taught. Later on, confronted with the daily hypocrisy and outright nastiness inherent in the institution, they gradually distanced themselves from the Catholic Church, disillusioned, disenchanted, if not worse. But that is a different story.

    I myself spent eight years in a Catholic boarding school, initially with great enthusiasm, in later years increasingly disenchanted, seeking to get out. My parents would not hear of it, for good reasons which had nothing to do with the Catholic Church. I stuck it out until I was old enough to transfer to a different school.

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    A few months before my mother passed away, during one of my last visits with her, she suddenly, out of the blue, asked me a question that initially stunned me: “Why were you so eager to leave the boarding school?” Her eyes were insistent, her voice sounded almost desperate, looking for an answer that would alleviate her concerns and anxieties. At the time, I did not understand. Only a few weeks later, when I recalled the incident, it dawned on me: My mother was afraid that I had experienced sexual abuse, that my asking for being allowed to leave the place was a plea for help, and that, by refusing to take me out, my parents had been accomplices in abetting abuse.

    I had the opportunity to alleviate my mother’s fears. I never experienced sexual abuse nor am I aware of any of my fellow students ever having been subjected to it. Yet this episode showed me to what degree the criminal behavior of legions of members of the Catholic clergy was causing mental anguish among ordinary believers like my mother.

    Facing the Facts

    Over the past few decades, the Catholic Church has been forced to face the facts in the wake of investigations that revealed the full extent of the depravity and corruption endemic to some of its institutions. In the process, once-eminent icons such as Pope Benedict’s brother, Georg Ratzinger, once the all-powerful director of the famous Regensburg Domspatzen (boys’ choir), have fallen hard. In some cases, even members of the Catholic Church’s gotha were convicted of crimes and sent to jail by worldly courts unimpressed by the status of the accused.

    And yet, the McCarrick report recently released by the Vatican suggests that previous scandals have done little to bring about a fundamental change in the way parts of the Catholic hierarchy have been dealing with the question of sexual abuse that has fatally undermined the Catholic Church’s claim to represent a moral authority.

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    For those unfamiliar with the case, until his forced resignation in 2018, Theodore McCarrick was the cardinal of the Archdiocese of Washington, which encompasses the District of Columbia and surrounding areas in Maryland. This is of particular significance given that Maryland has an extensive history of Catholic settlement in the United States, dating back all the way to the 17th century. McCarrick was appointed cardinal of Washington by Pope Paul II, despite allegations that McCarrick had engaged in questionable behavior involving young aspiring priests — he slept in the same bed as seminarians.

    Paul II did not believe the allegations. They reminded him of allegations at priests in his native Poland, promoted by the “communists” to discredit Poland’s Catholic Church. It was only under Paul’s successor, Pope Benedict XVI, that the allegations were taken seriously. But by then, it was too late.

    By now it is established — and the report makes it quite clear — that Cardinal McCarrick has a long track record of sexually-inspired coercion, largely ignored and hushed up by the Catholic hierarchy, including the entourage of Paul II. As a result, as The New York Times recently put it, Paul’s image has been severely tarnished, his canonization (the elevation to the status of a saint) put in question. Pope Francis, under whose aegis the report was assembled, has made it entirely clear that he “Intends to rid the Catholic Church of sexual abuse.”

    I, for my part, believe in his sincerity. The reality is, however, that he is confronted with a hierarchical structure which, in the past, has gone out of its way to dismiss, downplay and cover up reports of abuses, if only to uphold the authority of the church.

    Absurd Theater

    A recent prominent case is the absurd theater provoked by the Catholic Church of Cologne. Its cardinal, Rainer Maria Woelkli, had commissioned a law firm from Munich to investigate allegations of sexual abuse by priests in the archdiocese. The Cologne prosecutor’s office recently brought charges against one of them. He is accused of sexual abuse of his underage nieces in the 1990s.

    Once the expertise was delivered to the Cologne archdiocese, it was kept under lock and key by the cardinal’s office, which charged that it was methodologically faulty and therefore useless. The real reason, critics suggest, is that the report implicates one of Woelkli’s closest aids, today archbishop of Hamburg, put in charge to make sure that the affair would be covered up.

    The result has been a perfect example of mutual recriminations and mud-slinging. Those opposed to the way the diocese has handled the affair allege that Woelkli is more interested in protecting the perpetrators than the victims of abuse. In the meantime, church authorities have gone out of their way to censure and silence critics. A few days ago, they turned off the webpage of the archdiocese’s Catholic University Community, in charge of looking after the wellbeing of Catholic students at various universities in the region. The reason was, according to a Cologne newspaper, the community’s continued criticism of the “backward and evasive” attitude of Church officials with regard to controversial issues, including sexual morals.

    In the meantime, the recent start of an official investigation by the Vatican has put additional pressure on Cardinal Woekli. The investigation concerns a priest active in three dioceses in the greater Cologne area. Tried and convicted of sexual abuse of children and dependents, the priest had been sent to jail in the early 1970s. After his release a short time later, church officials reinstalled him. In the late 1980s, he was once again convicted of sexual abuse. And, once again, he was allowed to continue his active service. It was not until 2019 that he was retired, most likely as a result of the expertise commissioned by the archdiocese.

    In sharp contrast to the Cologne church authorities, the Diocese of Aachen, whose cathedral was the site of the coronation of German kings between 936 AD and 1531, recently announced it would no longer privilege the perpetrators of abuse — an independent report established numerous cases of abuse by priests in the diocese — over the rights of their victims. Unlike hushing up abuse, church authorities in Aachen launched a newspaper campaign asking victims of clerical abuse to contact church offices.

    Not Draining the Swamp

    What all of this suggests is that a significant segment of the Catholic hierarchy has absolutely no interest in “draining the swamp,” to borrow a term from an entirely different source. The reality is that the avalanche of revelations about sexual abuse rampant inside the Catholic Church has not only severely undermined its authority to speak on matters of morals, particularly when it comes to sexual mores, but its authority in general. In late 2019, a mere 14% of the German population said they trusted the Catholic Church; 29% said they trusted the pope. In contrast, 36% expressed trust in Germany’s Protestant Church.

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    You don’t have to be a prophet to suggest that the most recent revelations about sexual abuse and the way these have dealt with will further tarnish the church’s already dismal image and its moral authority. And for good reasons. The Catholic Church’s position on homosexuality is a joke given the prevalence of homoerotic endeavors within the church itself. As Shakespeare put it so eloquently, the priest “doth protest too much, methinks.”

    The Catholic Church’s position on birth control is also risible, given the fact we no longer live in an age where the survival of the tribe depended on replenishing its membership. Those who don’t know what this means might want to read the story of Onan, famous (wrongly so) for being the father of masturbation. Onan’s crime — in the eyes of the Lord — was not that he masturbated, but that he preferred to “spill his seed” outside of the vagina of his late brother’s betrothed rather than fathering an offspring that would be credited to his dead brother.

    Today, we are no longer subject to archaic tribal rationale. Yet the Catholic Church still pretends that we are. Unfortunately enough, President Donald Trump has managed to stuff the US Supreme Court with prominent legal minds stuck in a pre-Middle Age way of thinking. Most of them are Catholics, Amy Coney Barrett the most recent one. In a world where the moral authority of the Catholic Church has been debased to a degree that even in Poland, the home of Pope John Paul II, a mere 10% of young people see the Catholic Church in a positive light, with 47% viewing it negatively, the Catholic Church and its representatives would do well to keep a low profile.

    In reality, the opposite is the case. High-ranking Catholic officials continue to take the moral high ground while pretending that sexual abuse is negligible. As Arthur Serratelli, a retired bishop from New Jersey, put it last year, “Is the terrible crime of child abuse limited only to Catholics? Today’s media would even have people believe that abuse of minors is becoming more frequent within the Church. Patently false. But, too often facts do not matter when a villain is needed.”

    Serratelli should know. During his time as an active bishop, the New Jersey dioceses were a hotbed of sexual abuse by priests. In 2019, New Jersey’s bishops listed some 200 priests “found credibly accused of sexually abusing a child.” To be sure, sexual abuse of minors is hardly limited to the Catholic Church. Quite the contrary. But given its claim to be the ultimate yardstick of moral authority, it should be held to the highest standards. The notion that the Catholic Church is not any worse than any other institution, as Serratelli implies in his defense of his own institution, does not cut it.

    Luckily for the Serratellis and Woelklis of this world, Jesus is no longer around. As he once said, “If anyone causes one of these little ones–those who believe in me–to stumble, it would be better for them to have a large millstone hung around their neck and to be drowned in the depths of the sea” (Matthew 18:6). Those concerned are advised to study Houdini. His tricks might come in handy.

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More