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      The Season of Presidential Pardons Is Upon Us

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      An intriguing story broke this week about possible corruption surrounding eagerly awaited news of Donald Trump’s presidential pardons. He got the turkey out of the way, as expected for Thanksgiving, and added a somewhat controversial pardon of Michael Flynn, which the Democrats are unhappy about because they used Flynn’s case to launch the obsessive Russiagate campaign.

      Alex Acosta and the Guidelines of the Elite

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      Associated Press Journalist Eric Tucker has had access to a heavily redacted Justice Department court document from August of this year revealing “that certain individuals are suspected of having acted to secretly lobby White House officials to secure a pardon or sentence commutation and that, in a related scheme, a substantial political contribution was floated in exchange for a pardon or ‘reprieve of sentence.’” 

      Today’s Daily Devil’s Dictionary definition:

      Political contribution:

      The principal form of currency used by the corporate and financial elite in Washington, DC, for the purchase of their essentials: friendly laws, lucrative contracts, pardons, diverse forms of influence and all other monetizable commodities that have a starting price of no less than $1 million.

      Contextual Note

      The Guardian quotes from the report the more brutal description of the acts as “bribery-for-pardon schemes.” President Trump predictably explained the whole thing away: “Pardon investigation is Fake News!” Any reasonable observer, with an understanding of how news cycles work, would be tempted to reformulate this as, “Pardon investigation is Ephemeral News!” In all likelihood, this will be a one-day scandal. CBS News offers this commentary: “While the release by the court indicates the investigation was underway during the summer, it is unclear whether the allegations have yet or ever will be brought before a grand jury.” When a journalist says something is “unclear,” it means simply that it “ain’t gonna happen.”

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      Is this a call for justice? More likely, the story itself is the result of a leak by someone, possibly even by a Trump loyalist attempting to warn the president that pardons of particularly toxic people could irreparably damage his reputation. Those whose names were redacted in the document will now understand that their chances of receiving a pardon have been nullified. And they won’t even be able to blame Trump himself for not honoring their friendship, meaning that, if justice served to them is not too severe, they will have other opportunities to support Trump’s future campaigns.

      Twenty years ago, President Bill Clinton’s set a precedent with a last-minute pardon of ace fraudster, tax evader and billionaire Mark Rich. This caused a scandal at the time. Clinton even admitted to Newsweek in 2002 that “It wasn’t worth the damage to my reputation.” Clinton’s remorse may have been slightly disingenuous because, for one thing, by 2002, Clinton’s reputation was clearly on an upward tick. His expression of mild regret also allowed him to deviate some of the blame to both the Reagan administration and Israel. 

      Further investigation revealed that Clinton’s explanation was at least half-right, even if he lied about the Reagan justice department’s contention that Rich was wrongly accused. Rich’s donations to the Clinton machine turned out not to be the determining factor in his decision to pardon.Joe Conason, writing for Salon in 2009, revealed that the more compelling reason Clinton had for pardoning Rich was that “Rich had long been a financial and intelligence asset of the Jewish state.”

      In 2016, Jeffrey St. Clair, the editor of CounterPunch, reconstructed the entire timeline of unsavory acts and squalid relationships leading to Rich’s pardon. It reveals something less anecdotal and more substantial about US politics in general. St. Clair states his case brutally: “Marc Rich bought his pardon,” but not just through direct contributions. He reminds readers that at one point, prior to the pardon, Rich “neared the top of the FBI’s Ten Most Wanted list.” This was not about misdemeanors or “poor judgment.”

      St. Clair exposed the deeper, more complex truth behind the “request” by the Israelis: “Rich offered his services to the Israeli government, especially the Mossad.” Rich had already fled to Europe from US justice and was actively exploiting his vast financial resources. According to St. Clair, “Rich was subsidizing Israeli intelligence operations. He financed numerous covert missions and allowed Mossad operatives to work covertly in his offices around the world.”

      Some might see parallels with Jeffrey Epstein. When Epstein’s federal prosecutor Alex Acosta — recently accused of “poor judgment” — was grilled by the Trump transition team before his nomination as secretary of labor, he indicated that Epstein was untouchable because he “belonged to intelligence.” Acosta never indicated whose intelligence he was working for, but other sources have revealed connections between the Maxwell family — Robert and Ghislaine — with the Mossad. In today’s world of politics, as soon as the word “intelligence” is evoked, wise people know that it’s prudent to stop asking questions.

      We will probably never know whether Israel has anything to do with the pardons of the names redacted in the court document that has just come to light concerning eventual Trump pardons. The crimes of which they are accused sound more like the desperate initiatives of the types of grifters and scoundrels whose friendship Trump has cultivated throughout his career. But the case of Clinton’s pardon of Mark Rich demonstrates that pardons have never really been about the personal magnanimity of a departing president. If Trump is interested in demonstrating magnanimity, he might seal his reputation as someone truly independent of the establishment by pardoning Edward Snowden, Julian Assange and Chelsea Manning. That seems unlikely.

      Historical Note

      Concerning Trump’s eventual self-pardon, Ruth Marcus at The Washington Post may be historically correct when she writes: “The United States is not a place, chants notwithstanding, where those in power lock up their political enemies. There is a delicate line between the pursuit of justice and indulging the urge for retribution.”

      Embed from Getty Images

      But it is also a place whose unity, which is increasingly frayed, depends on a shared belief by most citizens in basic ethical ideals linked to the idea of democracy. These ideals are codified less by the text of the Constitution than by the idea associated with the cartoon character, Superman, “truth, justice and the American way.” Donald Trump’s assault on truth and neglect of justice appear to have remodeled many people’s idea of “the American way.”

      The fraying of any sense of unity or national purpose has been accelerating, particularly over the past four years. But Trump is the effect rather than the cause of it. His genius has been to serve as the detective’s magnifying glass to reveal the extent of the damage as well as clues pointing to the culprit. The rift has become not just visible after magnification, but glaringly obvious to the entire world. Nothing demonstrates it better than the showdown that is expected to take place on January 20, the date on which Trump has threatened to launch his 2024 presidential campaign in a race for ratings against Joe Biden’s inauguration. 

      It may well be that the US is not a nation where “those in power lock up their political enemies,” but this is the first time a guilty leader has refused to facilitate a smooth transition. Ruth Marcus is wrong to dignify Trump with the label of Biden’s “political enemy.” He has become a symbol of every trend that has pushed US society and culture to an immoral extreme. The list includes greed, narcissism, bullying, destructive competition, in-your-face consumerism and bling, amoral materialism, assertiveness understood as aggressiveness, pathological individualism and the exaltation and adoration of celebrity.

      Trump neither created nor imposed any of these modes of perception and values that have become the dominant character traits of post-industrial US culture. Its adepts take pride in neutralizing those who militate for respect, humility and concern for the downtrodden. They define an entire class of modern social norms. Trump simply exemplified them in his person. He overturned the tradition of hypocrisy and Tartufferie in which presidents and social leaders not only masqueraded their own deep respect for these pernicious trends, but encouraged others to develop them.

      While playing the role of dignified decision-makers, traditional political leaders charged with managing the economy considered all these traits to be the necessary ferment of the consumer society, a concept that justified the idea of continual progress and positioned the US as exceptional.

      *[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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      Agriculture Is India’s Ray of Hope in Time of Crisis

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      As India completes 73 years of independence, agriculture has emerged as a mainstay of the economy. Despite the COVID-19 crisis, Indian agriculture is poised to grow by an estimated 3% in 2020-21. Shaktikanta Das, the governor of the Reserve Bank of India (RBI), has acknowledged that agriculture remains a “beacon of hope” at a time the economy is shrinking.

      The government has announced a new agricultural policy that has drawn both supporters and detractors. Farmer protests have broken out in parts of the country. About 50,000 have marched to New Delhi from the agrarian state of Punjab, objecting to the loosening of price, storage and sales regulations that have traditionally shielded India’s farmers from the free market forces.

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      As of August 25, the International Monetary Fund projected India’s real GDP growth to be 4.5% in 2020. This shrinking of the economy in a country with a growing population could lead to a major crisis. Already, jobs are scarce, industrial production has declined, services have suffered and demand has plummeted. Even after decades of independence, agriculture remains “the largest source of livelihoods in India.” As India gears up to celebrate Mahatma Gandhi’s 151st birthday, there is no better time than now to achieve the Gandhian vision of rural self-reliance.

      Blessing in Disguise

      COVID-19 has made rural areas more important than ever. On March 25, Indian Prime Minister Narendra Modi announced a nationwide lockdown. It took the country by surprise. Millions of urban migrant workers were left with little choice but to walk home to their villages. Carrying their meager household possessions and with their small children in tow, many walked hundreds of kilometers, suffering thirst, hunger and pain. Some died en route.

      Embed from Getty Images

      India’s Economic Survey 2016-17 estimated the “annual inter-state migration [to be] about 5-6.5 million between 2001 and 2011.” In 2020, this migration has been reversed. People who fled rural areas for urban jobs have returned home. Chinmay Tumbe, a professor of economics at the Indian Institute of Management Ahmedabad and an expert on migration, estimates that 30 million migrants might have returned to their villages since the lockdown began. The number could be as high as 70-80 million if reverse intrastate migration is accounted for.

      The reverse migration from urban to rural areas might be a blessing in disguise. Over the last few decades, urban migration has led to overcrowding of cities, the proliferation of slums and much misery for poor migrants. In cities, they have lacked community, cultural moorings and social safety nets. The massive migration to India’s cities was a result of failed economic policies that focused on megacities while neglecting villages. Several studies have found that at least 60% to 70% of the migrant workers who returned to their native places are unlikely to return back to the cities, at least not in the near future. The millions of migrant workers, whom I refer to as agricultural refugees, flocked to cities because the government’s economic policies kept them impoverished.

      A recent study by the Organisation for Economic Co-operation and Development in collaboration with ICRIER, a New Delhi-based think tank, concluded that Indian farmers suffered a cumulative loss of Rs. 45 lakh crore (over $600 billion) between 2000 and 2016-17 because of such policies. Subsequently, the NITI Aayog, a policy think tank of the government of India, admitted that, between 2011-12 and 2015-16, the growth in real farm incomes was less than 0.5% every year. It was 0.44% to be exact.

      Since then, the growth in real farm incomes has been near zero. With farm incomes growing painfully slowly and then stagnating, what else could be expected from the rural workforce but migration to cities where menial jobs as daily wage workers give many the only shot at survival?

      Despite the Hardships

      Despite these hardships, Indian farmers have toiled hard to produce a bumper harvest year after year. This has led to overflowing food stocks. Reports show that this abundance of food grains has come in handy. The government has been able to provide subsidized rations to over 720 million people during the four months of the post-COVID-19 lockdown. In addition, the government has been able to provide free rations to the needy.

      A buoyant agricultural output has hidden a severe agrarian crisis. Farmers get little money for their produce. With less money available in their hands, rural demand has dipped. This had led to a slowdown in the Indian economy even prior to the lockdown. In a country where the agricultural workforce accounts for nearly 50% of the population, the surest way to bolster the economy is to create more rural demand. This involves providing farmers with decent incomes.   

      The lockdown has increased downward pressure on farm incomes. It coincided with the rabi (winter crop) harvest season and resulted in a crash in demand for winter produce. Farmers suffered huge losses in the case of perishables such as vegetables, fruits, flowers, poultry, dairy and fish. Not all news is grim though. On May 15, the United States Department of Agriculture estimated that India is on course to produce “a record 295.7 million metric tons, with estimated record rice, wheat and corn production.”

      For the next kharif (monsoon crop) season, the sowing area coverage of summer crops has increased by 13.92% as compared to last year. With rains expected to be normal, and with a much higher area under cultivation, the kharif harvest will be bountiful just like the rabi one. It seems that in these times of crisis, agriculture alone provides a ray of hope in India.

      Aim for an Economic New Normal

      The coronavirus pandemic has come as a timely reminder of the limitations of dominant economic thinking. Its inherent bias and blind spots stand exposed. For the last two centuries and more, economics has sacrificed agriculture on the altar of industry. The dominant assumption is that industry drives productivity and growth.

      India has never quite managed to industrialize like, for example, the US or China. Still, it has kept farm incomes low and neglected public investment in agriculture for many decades. As per the RBI, this investment hovered around 0.4% of the GDP between 2011-12 and 2017-18. It is little surprise that agriculture has floundered in India.

      The time has come to change outdated economic thinking. Agriculture matters to India because it employs a majority of the country’s population. It provides food security to 1.3 billion people whose ancestors suffered repeated famines until a few decades ago. COVID-19 gives the country the opportunity to return not to normal, but to a new normal.

      The return of migrant labor to villages gives India the opportunity to reinvigorate its rural economy. The country must tap the socioeconomic wealth of rural enterprise, its diversity, and the traditional knowledge base. Prime Minister Narendra Modi’s vision of Atmanirbhar Bharat — a self-reliant India — can only be achieved through a focus on agriculture. A sharp focus, sensible policies and public investment can unleash growth not only in the sector but also in the country.

      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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      The Road Leading to the India-China Standoff

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      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 …
      Continue Reading “The Road Leading to the India-China Standoff”
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      Why Do Latinos Vote for Trump?

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      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. …
      Continue Reading “Why Do Latinos Vote for Trump?”
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      Why Is Foreign Investment Flooding Into India?

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      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.

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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

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      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.

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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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      in World Politics

      What Ails Corporate Governance in India?

      by

      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

      READ MORE

      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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      in World Politics

      Is Michel Zecler France’s George Floyd?

      by

      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

      READ MORE

      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.

      Embed from Getty Images

      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