'Ghazi Attack' - Review

On 3 December 1971, Pakistan attacked India and started the 3rd India-Pakistan War (which it proceeded to lose in 2 weeks). The next day, its most powerful submarine - PNS Ghazi - sank near Visakhapatnam. Pakistan said it was due to an 'accident'. India said the destroyer INS Rajput had done it. But INS Rajput was in the harbour on that day. Naval warfare experts said a submarine had sunk Ghazi. The Indian Navy refused to comment.

Ghazi Attack - by first-time director Sankalp Reddy - tells the story of what may have happened. We will never know the name of that submarine - or her men. In this movie, the submarine INS S-21 plays a deadly cat-and-mouse game with Ghazi in the waters of the Bay of Bengal, before finally sinking it.

Making a realistic movie on submarine warfare is technically demanding. And making it entertaining is artistically demanding. Sankalp Reddy and team succeed brilliantly on both the fronts. Through a series of twists and turns, Ghazi Attack gradually builds up the tension before reaching its climax.

War itself is a game of death. And when you are inside a metal tube 500 meters underwater, it is even more so. At that depth, the water pressure is so enormous it can crush a submarine like an eggshell. So even if the enemy doesn't kill you, the water surely will. Ghazi Attack superbly portrays the fear and danger of underwater warfare.

Kay Kay Menon and Atul Kulkarni - two of Bollywood's finest actors - play the submarine's captain and second-in-command, respectively. Rana Daggubatti plays the executive officer like an action star. The great Om Puri - in his last movie - plays Admiral S M Nanda. Ghazi Attack is an excellent tribute to our brave men in white.

PS: It was a special treat to watch the Indian Navy's Rudra-Tandava on this sacred day of Maha Shivaratri . . . :-)

Martin Scorsese's 'Silence' - Review

Japan is a unique country. An island off the coast of East Asia, it is literally on the edge of the world. Westerners reached it only in the 1500s. And almost immediately, Christian missionaries started going there - to convert them to Christianity. But around 1600, the Japanese cracked down. They banned Christianity and outlawed missionaries. Today only 1% of Japanese are Christians.

In 1966, Japanese-Christian writer Shusaku Endo wrote a novel called Chinmoku ('Silence') about this chapter in Japan's history. In 1971, it was made into a Japanese movie. And now Martin Scorsese has made its Hollywood version.

The story is set in the 1600s. A Portuguese missionary called Ferreira (Liam Neeson) goes to Japan and disappears after some time. Then his two disciples - Rodrigues (Andrew Garfield) and Garrpe (Adam Driver) go to Japan to search for him. They reach Japan and find some villagers who are secretly practising Christianity. They stay with the villagers for some time, but are eventually caught. Garrpe is executed and Rodrigues is taken to Nagasaki. There he meets senior Japanese officials - and also Ferreira. He is shocked to find out that Ferreira has renounced Christianity, embraced Buddhism and now works for the Japanese government - writing anti-Christianity books. Finally Rodrigues also becomes like Ferreira.

The first 2 hours is a typical story about Christianity told by a Christian. It glorifies the truth and greatness of the Christian religion. But in the last 30 minutes, the story does a complete U-turn. Here Christianity is brought face-to-face with Buddhism - when Rodrigues debates with the Japanese officials and also with his ex-guru Ferreira. And here, Christianity comes off as irrational and intolerant - as against Buddhism's rationality and tolerance. Of course, this is a debate not just between Buddhism and Christianity - but also more broadly between Aryan religions and Semitic religions.

What was Shusaku Endo thinking when he wrote that last part? Was he just trying to be an honest writer/artist and give space to an alternate viewpoint? Or was it his Japanese side triumphing over his Christian side? And what does Martin Scorsese think about that last part? Does he realise the power of those arguments against Christianity?

Silence is an honest and intelligent movie about Christianity - and religion in general. Not surprisingly, it has flopped in America. And the Oscars have given it only one nomination (for camerawork). Artists say the purpose of art is not to give answers but to ask questions. If that is true, then Shusaku Endo's Chinmoku and Martin Scorsese's Silence are very good works of art.

A Fool And An Angel

A FOOL AND AN ANGEL

When he first saw her
She looked an angel
In both face and heart
So he asked her
Will you be my angel?
She said yes I will
So he took out his heart
And he gave it to her
She took it in her hand.

And what did she do with his heart?
She grew claws on her hands
And sank her claws into his heart
She grew fangs in her mouth
And plunged her fangs into his heart
She grew horns on her head
And pierced her horns into his heart
She devoured the flesh from his heart
She drank the blood from his heart
Every day, every hour, every minute
Piece by piece, drop by drop
Then she held his heart over a blazing fire
And slowly reduced his heart to ashes
Finally she threw his heart away
Laughing at him all the while
Her eyes, horns, fangs, claws
All dripping with his heart's blood.

And after all this was done
What was he thinking?
He had only one thought
God, make her happy
If there is any pain in her life
Please give it to me
If there is any joy in my life
Please give it to her
I have never asked You anything
But now I ask You this
So You have to give it
Make her happy always
Keep her smiling always
This is all I ask of You
So please give it
And I know You will.

May They Fill Me

MAY THEY FILL ME

This Sacred Land has
For five thousand years
Given birth to warriors
Who lived and fought
For this land
For this people
For this culture.

Every grain of soil
Every blade of grass
Every drop of water
Has been sanctified
By the blood of martyrs.

From Chandra Gupta Maurya
To Subhash Chandra Bose
From Kittur Rani Channamma
To Jhansi Rani Lakshmibai
From Sangolli Rayanna
To Guru Govind Singh
And countless nameless heroes.

Blessed am I
To be born in
This Holy Land.

Every thought they had
Every word they said
Every deed they did
May all these fill me.

Every struggle they waged
Every sacrifice they made
Every battle they fought
May all these fill me.

Every victory they won
Every defeat they suffered
Every wound they received
Every pain they felt
May all these fill me.

Every sword they wielded
Every arrow they fired
Every spear they threw
Every shield they held
May all these fill me.

Their love, their passion
Their strength, their courage
Their happiness, their sorrow
Their laughter, their tears
May all these fill me.

May they fill my body
May they fill my mind
May they fill my heart
May they fill my soul.

May I be the seed
May they be the soil
May they be the rain
May they be the breeze
May they be the sunlight.

With such blessings
Can I become a flower
That is worthy of You
My Beloved Motherland?

Demonetisation - by Prashant Kaddi

By Prashant Kaddi:

First things first. It is not really demonetisation as the smaller-denomination currency notes are not touched. It is an extreme case of 'discontinuation' of a series of notes of particular denomination - ie, all series of Rs 500 and Rs 1000 notes.

There are 2 broad objectives that are stated:
a. Removing hoarded black money (money for which tax is not paid or acquired illegally through corrupt means)
b. Removing counterfeit currency (largely used by terrorists and others in anti-national activities)

As a wise professor once summarised:
Money is a matter of functions four,
A medium, a measure, a standard, a store.
The idea is to retain the 3 functions: a medium of exchange, a measure of value, a standard of payment - but to remove it as a store of value.

The simple truth is that such a large-scale move in a country so large and diverse (especially with such large cash-transaction volume) has never been attempted in history. And nobody - no matter how many degrees or four-syllable English words they have acquired - has a handle to be able to predict the outcomes. Also, nobody can predict the behavior of a billion people when such a move is announced and the bottlenecks that develop. One just has to be flexible to manage the availability of cash.

Likely outcomes, simpler one first:

Counterfeit Notes - This problem will get solved for the time being, till the printing presses start to copy the Rs 2000 note as well. On the plus side, there are security features which may be visible to the naked eye as well as under ultraviolet, the problem being you and I have no way to recognise them. Follow-up action generally believed is that the Rs 2000 note will also be similarly discontinued at some point in the near future.

Black Money - While it is true that most black money is in bullion or real estate, there is still substantial amount which would be in cash - ie, political funding as well as the built-up stock which will shortly be used to buy real estate or gold.

Out of the approximately Rs 14 lakh crore in high-value currency, Rs 5.5 lakh crore has already come into the banking system. If we assume that is a large part of the stock and say there is still some Rs 3-4 lakh crore to come, there is still a possibility of a windfall of Rs 4-5 lakh crore for the government - in addition to the tax on the currently deposited monies. The money which does not come back is a reduction in RBI liability. Hopefully this money can be utilised to fund schemes, reduce poverty, give tax benefit to the current carriers of the cross (salaried class, businesses, etc).

Will it stop the generation of black money? No, it won't. But in conjunction with the Black Money Bill, GST and a slew of tax reforms that are ongoing and expected in the future, it would suffice to say that making black money would possibly become slightly more difficult. And with systems of transparency, high-level corruption can be reduced. However, to root out low-level corruption, a social change is required. It cannot be done through enacting rules or introducing technology alone. And needless to say, political and bureaucratic possibilities of making money need to be dealt a blow.

There are suggestions to end taxes which will remove any possibilities of tax avoidance and several radical economic proposals, along with electoral reform. But my guess is that we will go step by step. Nobody can take on all vested interests at once and survive politically. One at a time and that will be killed completely.

Also, the political opposition is not based on facts. Maybe everyone in the opposition is pissed that they are staring at a loss of their main source of power which is wealth, and/or the larger-than-life figure the Prime Minister has taken on with several historic 'strikes'. Either way, there is no credence to the claims that the poor are severely inconvenienced. Everyone is somewhat inconvenienced, but not too much, and almost the entire country is willing to do their part to see the illegally wealthy sweat a bit. Also, the charge that the implementation is botched is probably not true, given that Rs 1.5 lakh crore is already either withdrawn or exchanged by banks within about 10-12 days - which is approximately 1/3 of the notes in circulation. Approximately 1 in 4 of all notes were in circulation as per RBI; the rest were presumably stored (assuming an equal % of all denominations). This scale of distribution is unprecedented and the scale of adjustments done based on ground feedback is definitely a positive.

Make no mistake. This move is not merely about the numbers. It is a strike at the heart of the darkness that is black money. That the state is not impotent against the illegally rich and mighty, who have eaten away at the very fabric of this economy for so long. And putting the fear that though corruption giveth, the long arm of the law can taketh away.

'Queen Of Katwe' - Review

Review of 'Queen Of Katwe':

2005, Kampala (Uganda): An engineer called Robert Katende joins an NGO and starts teaching chess to children in a slum in Katwe (the poorest area of the city). One of his students is a 10-year-old girl called Phiona Mutesi - the daughter of a widow with 4 children, who sells vegetables for a living. Under Katende's guidance, Phiona achieves the unlikely feat of becoming Uganda's national chess champion and an international chess player.

In 2012, Sports Illustrated reporter Tim Crothers wrote a book about Phiona Mutesi called Queen Of Katwe. And now, Meera Nayyar (Mira Nair) has made it into a movie - featuring Madina Nalwanga in the lead role.

The most striking thing about Queen Of Katwe is its depiction of the Kampala slum. The word 'poverty' is too feeble to be used here. This is a world where life is not a wide zone of comfort but just a thin line of existence - and any chance event (like a road accident or heavy rain) can push you right off that line. Where a simple thing like taking a bath is a major project. Where shops don't have open fronts but iron grills instead. But somehow, in the midst of all this deprivation and despair, the poor people of the slum manage to celebrate life - through music, dance and colour.

Queen Of Katwe is a simple and heart-warming story about real people, their real pain and suffering, their real hopes and dreams, their real victories and defeats. It is definitely a welcome change from Hollywood's mind-numbing superhero factory.

Purusha, Prakriti, Brahma, Kshatra

A categorisation of human qualities:

Purusha		Prakriti
Brahma	Kshatra
Intelligence + Knowledge	Strength + Courage	Softness + Gentleness

'Sully' - Review

Review of 'Sully':

On 15 January 2009, a plane took off from New York to Seattle with 150 people on board. Shortly after takeoff, a flock of birds hit it and blew out both its engines. The standard solution in such a situation is to return to the airport. The pilot, Captain Chesley Sullenberger (Sully), had just seconds to make a decision. He chose instead to land the plane on the Hudson River - a very dangerous move. Miraculously, the plane landed safely and all the 150 people survived. Sullenberger became an American hero.

Clint Eastwood's Sully tells the story of that incident (which everybody knows) and more importantly, what happened behind the scenes (which everybody doesn't know). Because even as the American public and media went ballistic about Sullenberger's heroism, the National Transportation Safety Board (NTSB) was conducting its investigation into the incident. And its initial direction was that Sullenberger had been reckless and irresponsible in landing the plane on the river - instead of taking it back to the airport.

The first half is average. The writing (script by Todd Komarnicki) and direction could have been better. The second half is the part that delivers. Eastwood tells the story in his trademark no-nonsense style. Aaron Eckhart as the co-pilot (sporting a thick mustache) and Laura Linney as Sullenberger's wife give solid performances. But the movie, needless to say, belongs to Tom Hanks. He portrays Sullenberger as a genuine hero. Not a movie/media hero who is flashy, flamboyant and larger-than-life. But a real hero who is no-frills, down-to-earth, simple and humble.

'Pink' (Hindi Movie) Review

Review of Hindi movie 'Pink':

What is a movie? What is motion picture? Motion picture is an art form that tells stories. So a movie is a work of art that tells a story - about some characters, the lives they live, the situations they go through and the emotions they feel. This is the fundamental function of a movie.

But art also has power. And motion picture, in particular, is very powerful. It can be used to inform and educate people - especially about important social issues. But to the extent it does this, it compromises on its fundamental function - and therefore on its quality as a work of art.

Which brings us to Aniruddha Roy Chowdhury's Pink. Pink takes a 50-50 approach. 50% of it is a movie that tells a story about some characters. And 50% of it is about an important social issue - violence against women. The movie part of it is good. It is realistic and has some good performances.

The other 50% is meant to educate people about violence against women. Specifically, it argues the case of modernity against feudalism. This part gets full marks for good intentions. But it goes against the fundamental function of a movie - which is to tell a story. So it reduces Pink's quality as a movie.

So as an educational video meant for bringing about social improvement, Pink gets 10 out of 10. And as a movie, it gets 5 out of 10.

Analysts Rule The World

ANALYSTS RULE THE WORLD

(On an alien space-ship)
Alien 1: Sir, we have discovered a planet with life.
Alien 2: What! Really?
Alien 1: Yes. Its atmosphere is nitrogen + oxygen, its surface is covered mostly by water and it has carbon-based life-forms.
Alien 2: How many types of life-forms?
Alien 1: There are many. But one type is dominant.
Alien 2: Find out everything you can about them.
Alien 1: Yes, sir.

(Some time later)
Alien 1: Sir, their primary mode of information transmission is in audio-visual form by using electro-magnetic waves.
Alien 2: How do they receive this information?
Alien 1: Through some strange-looking boxes.
Alien 2: Is this important?
Alien 1: Very. They spend all their time looking at these boxes.
Alien 2: Excellent. Tap into those waves. Find out who are their rulers.
Alien 1: Yes, sir.

(Some time later)
Alien 1: Sir, their rulers are called 'analysts'.
Alien 2: What?
Alien 1: Yes. We did a frequency study of their transmissions. 99% of their transmissions contain the words "According to analysts", "Analysts say this", "Analysts say that", etc.
Alien 2: Are you sure about this?
Alien 1: We are 100% sure.
Alien 2: OK, locate these analysts immediately. We must talk to them soon as possible. I will inform the Emperor.
Alien 1: Yes, sir!

Segregation of Sexes in India

An important difference between agricultural society and industrial society is the relationship between the sexes.

20th century India was an agricultural society. One feature of an agricultural society is the segregation of the sexes. Boys and girls sat separately in schools and colleges. They did not talk to each other. If a boy talked to a girl (or vice versa) it would make news. As a result, boys and girls grew up without interacting much with each other. This situation continued into adulthood. Women did not work much outside the house. Their participation in the workforce was low. So men and women also did not interact much with each other.

21st century India is an industrialising society. It is completely different from 20th century India. It is not yet an industrial society. But it is no longer an agricultural society either. Today boys and girls sit together in schools and colleges. They talk to each other all the time. And more women are now working outside the house and participating in the workforce. So men and women also interact much more with each other.

This seems like a trivial point (and today's youth will find this description of 20th century India bizarre). But it may have some relevance. Social scientists say that violence against women is mainly due to the segregation of the sexes. How? One, boys/men don't know/understand girls/women. So they don't respect/appreciate them enough. Two, boys/men don't have normal and healthy relationships with girls/women. So this leads to frustration - which in turn leads to violence. Now if this theory is correct, then increasing industrialisation/modernisation will lead to decreased violence against women.

'Star Trek Beyond': Review

Review of 'Star Trek Beyond':

In 2009, Paramount Pictures rebooted the Star Trek movie series. Director J J Abrams and scriptwriters Roberto Orci and Alex Kurtzman (Transformers series) made Star Trek (2009) and Star Trek Into Darkness (2013). For the third movie, Paramount made two disastrous changes. First, Abrams went away to direct Star Wars: Force Awakens. So they replaced him with Justin Lin (Fast & Furious series!). Second, scriptwriters Orci and Kurtzman were replaced with actor Simon Pegg (!!!) and rookie Doug Jung.

Hollywood action movies have a formula: beginning action scene + middle plot sequence + ending action scene. Star Trek Beyond follows this formula, but screws up 2 out of the 3 parts:
a) Beginning – Justin Lin's dal-roti is cars racing on the road, not spaceships fighting in space. So for the opening spacebattle sequence, he copies Michael Bay – yes, the jerky camerawork that gives you a headache. The over-complicated battle scene is badly shot and edited.
b) Middle – There is not much of a plot here. At best, it is a plot for one TV episode. Simon Pegg plays Scotty here, and Benji in the Mission Impossible series. His one-point agenda in writing this script was to give himself a Tom Cruise scene (hanging from a cliff). The entire middle is poorly written and directed.
c) Ending – Here Justin Lin dumps Michael Bay and tries his own thing. The result is a climax that is at least watchable. (Any Beastie Boys fans around? Kirk and co destroy an entire alien invasion fleet just by playing their song 'Sabotage'!)

The cast (Chris Pine, Zachary Quinto, etc) do the best they can with this average script. And why hire a good actor like Idris Elba (the villain) just to wear a plastic mask on his face? Heck, I could have done that job (for a lot less money). This year is the 50th anniversary of Star Trek. Hollywood has reduced the classic sci-fi saga to a mediocre product from its assembly line. Creator Gene Roddenberry must be rolling in his grave. Star Trek Beyond joins this year's big-budget duds: Star Wars: Force Awakens, Superman Vs Batman, Avengers: Civil War and X-Men: Apocalypse. Mainstream Hollywood is as dead as mainstream Bollywood. (STB has a Rotten Tomatoes score of 85%. This puts one more question mark on the honesty of American movie critics. The cynics seem to be the only honest guys around)

PS: I felt so guilty about dragging my parents to this B-grade show that in the interval I booked tickets for a Kannada movie for the next day – to atone for my sin :-p

Universalism and Particularism

Everything in the world can be divided into two categories:
1. Universals – ideas, concepts, principles
2. Particulars – things, events, humans

# Giving importance to universals is universalism. Giving importance to particulars is particularism.

# 99% of humans are particularists. 1% of humans are universalists.

# Universals are fundamental. Particulars are expressions of universals.

# Universals are permanent. Particulars are temporary.

2008 American Financial Crisis (AFC)

In 2005, Raghuram Rajan (IMF's chief economist) warned that America was headed for a major financial crisis. Most American economists ridiculed him. 3 years later, his words came true. The 2008 American Financial Crisis (AFC) was the worst since 1929. And it plunged all the industrialised countries (America, Europe, Japan) into the Great Recession - the worst since the Great Depression of the 1930s.

In 2010, Rajan wrote a book called 'Fault Lines: How hidden fractures still threaten the world economy' to explain the causes of AFC:

1. In 1980, something strange happened in America: the salaries of the majority of Americans stopped increasing - and instead started decreasing. Why? From 1980 onwards, technology started advancing very rapidly. So demand for high-skilled workers (with a college degree) went on increasing and demand for low-skilled workers (with a high-school degree) went on decreasing. So salaries for people with college degrees went on increasing, whereas salaries for people with high-school degrees went on decreasing. Majority of Americans do not have a college degree. Hence their salaries have gone on decreasing.

2. Since 1945, America has been having a recession almost every decade. But every time it recovered quickly: the lost jobs came back within a year. In 1991, another recession struck. But this time, the recovery was much slower: it took 2 years for the lost jobs to come back. As a result, President George Bush (senior) lost the election that year.

3. All industrialised countries have an unemployment support system. That is, the government pays money to unemployed people. America has the weakest unemployment support system among the industrialised countries. Both the money paid and the duration for which it is paid is the lowest. This made problem #2 worse.

4. In 1992, Bill Clinton became President. He had to deal with both the immediate problem #2 and also the longer-term problem #1. The solution for problem #1 (and also problem #2) is to increase the education level of the people. But this requires changing the education system - which is very difficult. So he chose an easier solution: to give low-interest loans to poor people, especially for buying houses. America's central bank - under its chief, Alan Greenspan - supported this solution by keeping the interest rate low.

5. In 2000, the dot-com bubble burst and America had another recession. This time the recovery was even slower than in 1991: it took 3 years for the lost jobs to come back. That year, George W Bush (junior) became President. Faced with a similar (but worse) problem as Clinton, he also opted for the same solution. He not only continued Clinton's scheme, but expanded it. And again, the central bank under Greenspan supported it.

6. Poor American families (mostly black and Latino/Hispanic) with no job, salary or property applied to banks for home loans - and got them. The banks packaged these loans together and converted them into 'financial assets'. They kept some of these 'assets' themselves and sold the rest to other financial companies (mutual funds, pension funds, etc). Rating agencies - whose job is to certify the quality of financial assets - gave these 'assets' a good rating.

7. With the government pushing more and more low-interest loans and poor families buying more and more houses, house prices went on increasing. The bubble went on growing. But at some point, the borrowers had to start repaying their loans - which they obviously could not do. The bubble finally burst in 2008. Borrowers started defaulting on their loans. And the whole process went into reverse gear - at a much faster speed. House prices crashed and the 'financial assets' became worthless overnight - bankrupting the banks and financial companies that owned them. The American government had to step in with a huge rescue package to save the largest banks.

'Fault Lines' is a very good book that dissects a complex topic and explains it in a simple language to people who are not economists.

'Free State of Jones' (Slavery in America)

In 1600, white Europeans started going to America. Almost immediately, they also started 'importing' Africans and using them as slaves. Northern America is cold and dry, with rocky soil. Southern America is warm and wet, with fertile soil. So the south is good for large-scale agriculture. There, whites started large-scale plantations (of tobacco and cotton) using large numbers of slaves. By 1850, America had about 50 lakh slaves and slaves made up one-third of the south's population.

In 1861, the anti-slavery Abraham Lincoln became America's President. Immediately, the 11 southern states left America and declared themselves a separate country: the Confederate States of America (CSA). The north declared war, and the American Civil War began.

The south's rich planters - who owned slaves - took their states out of America and started the Civil War. But none of them (or their sons) fought in the war. All the soldiers in the south's army were ordinary farmers - who did not own slaves. One of them was a man called Newton Knight from Mississippi state's Jones district. Disgusted with this situation, he left the war and went back to his district. There he hid in a swamp/marsh with some blacks.

More soldiers started leaving the south's army. They went and joined Newton Knight. This band went on increasing in size. They started protecting the district's farmers from the looting raids of the south's army. Next they started fighting the south's army directly. Eventually they defeated it - and overthrew the south's control over their district. They declared their district to be a free country: the Free State of Jones. They held the south's army at bay till 1865 - when the north defeated the south and the Civil War ended.

In 2001, historian Victoria Bynum wrote a book about this episode. And now, director David Ross (Seabiscuit, Hunger Games) has made it into a movie - starring Matthew McConaughey as Newton Knight.

David Ross has made Free State of Jones with a slow and precise style. This makes FSJ an excellent history movie, but not necessarily a mass entertainer. This is a pity. Because FSJ is an exciting and inspiring story - about slavery in America, about an amazing episode in America's history and the life of a true American hero. A movie like this should be seen by everybody. If only David Ross had spiced up FSJ with more drama and action (like Steven Spielberg), it would have achieved this objective. This was especially important this year - when the Donald Trump campaign has shown how strong racism is in America. So Free State of Jones is - unfortunately - a golden opportunity missed.

When will Hollywood make a movie on the anti-slavery crusader John Brown - one of America's greatest heroes?

GDP Components: India and Other Countries

GDP components of major countries:

Country	C	G	I	X	-M
India	60%	12%	31%	19%	-22%
America	69%	18%	17%	13%	-16%
China	38%	14%	43%	23%	-18%
Japan	60%	20%	21%	19%	-19%
Germany	54%	19%	20%	46%	-39%

C = Consumption
G = Government
I = Investment
X = Exports
M = Imports

GDP = C + G + I + X - M

Financial System and the Economy: America Vs Europe

What is a financial system? It is a system that supplies money for economic activities - like buying a tractor, building a factory or starting a company. What is the need for a financial system? Only rich people have money. So a financial system is needed to provide money to ordinary people for economic activities.

The financial system is to the economy what the circulatory system is to the human body. The body needs blood to function - and the circulatory system supplies it. Similarly, the economy needs money to operate - and the financial system supplies it. Banks are the best-known part of the financial system. The stock exchange is another. There are many more.

In 2003, Raghuram Rajan and Luigi Zingales (professors of finance at the Chicago School of Business) wrote a book called "Saving Capitalism From Capitalists". In it, they argued that the best financial system is a free/unrestricted financial system - like America's. 5 years later, the 2008 American Financial Crisis happened - the worst financial crisis since 1929 (which had caused the Great Depression of the 1930s). Most economists blamed America's unrestricted financial system for this crisis.

In 2014, Raghuram Rajan wrote a 10-page afterword titled 'Lessons from the Great Recession'. In it, he talks about the recession that the financial crisis caused - rather than the financial crisis itself. Further, he blames the recession on long-term economic and political trends - rather than the financial system. He is slightly casual both about the financial crisis itself and the unrestricted American financial system that caused it.

The sub-title of the book is 'Unleashing the power of financial markets to create wealth and spread opportunity'. The authors argue that a free/unrestricted financial system (like America's) is the best financial system because it supplies the maximum money to ordinary people and small companies. On the other hand, they argue that an unfree/restricted financial system (like the European countries) supplies money only to rich people and big companies.

If this argument is correct, then America must perform better than the European countries. Is this so? America's per capita income is higher than all the European countries, yes. But the authors argue that America's free/unrestricted financial system is the best for supplying money to poor people and lifting them out of poverty. So we should look at the income of the poorest 10% of the people. And in this, America is one of the worst among the industrialised countries.

The authors may argue that the poorest 10% in Europe have a higher income due to government handouts. Then let us look at upward mobility - the degree to which the poor can come out of poverty. In this also, America is beaten by:
a) North Europe (Norway, Sweden, Finland, Denmark)
b) West Europe (Germany, France, Holland, Belgium)
c) British colonies (Canada, Australia, New Zealand)
Only South Europe (Spain, Portugal, Italy, Greece) is worse than America.

The authors may argue that this is not due to the financial system, but the larger economic system. To this, we can make two points. The first point is trivial and technical. Yes, the financial system is not an independent system. It is only the sub-system of a larger system - the economic system. But in that case, it is the performance of the system that really matters, and not the performance of the sub-system. What is the use if the sub-system works well, but the system does not?

The second point is more fundamental, about philosophy. Every country has a philosophy, and it builds all its systems (political, economic, financial, etc) on the foundation of that philosophy. No country builds one system on one philosophy, and another system on another philosophy. America is no different. And it has built both its economic system and its financial system on the same philosophy - Darwinism (ie, natural selection and survival of the fittest; or 'every man for himself, devil take the hindmost'). So it doesn't make sense to praise the financial system but criticise the economic system when both are built on the same philosophy. (Another view: You cannot expect the financial-economic system to treat ideas, products, services and industries in one way - and people in another way)

But these criticisms aside, "Saving Capitalism From Capitalists" is a very informative and interesting book about the financial system and also about economic history.

America: Stupidity + Ignorance + Racism = Donald Trump

Donald Trump is a real-estate tycoon with zero political experience. His campaign has been a series of stupid, ignorant and racist statements. Now he is the Presidential candidate of one of America's two political parties. He is one step away from becoming the leader of the world's most powerful country. How did this happen?

The core ingredients of Donald Trump's campaign are:
1. Stupidity + Ignorance
2. White Racism
3. Anti-Immigration
4. Anti-Globalisation
5. Christian Fundamentalism

1. Stupidity + Ignorance

In any industrialised country, this is an automatic disqualification for politics - especially for the highest office of the land. Not in America. Why? Because Americans are the perhaps the most ignorant people among the industrialised countries. How? How can the world's most technologically and economically advanced country be the most ignorant (among its industrialised peers)?

America is the world's most techno-economically advanced country due to its scientists, engineers and managers. These are the most intelligent and knowledgeable people in the world. But they are just 1% of the country. The remaining 99% of the people (factory workers, shopkeepers, clerks, etc) are stupid and ignorant. This is due to history and geography. First, America has no history to speak of - it was born only in 1600. Second, it is cut off from the world by two oceans. Third, its population is small compared to its area. So half of Americans live in 'small towns' (actually villages) which are far from one another.

So in America, stupidity and ignorance is not a disqualification for politics - even for the highest office in the land. It can even be a qualification due to the "He is one of us" factor. Example: George W Bush.

2. White Racism

Today's America was born in 1600 - when white Europeans started going there, exterminating the natives and stealing their land. This wasn't enough. They also started 'importing' Africans and using them as slaves. This slavery went on for almost 250 years. In 1865 they stopped slavery - but didn't accept blacks as citizens. They kept blacks as non-citizens for another 100 years. Only in 1964 did blacks become citizens. So racism is deeply embedded in America's DNA.

In 1968, the Republican Party became the party of racist whites. Since then it has carried on a campaign of racist propaganda. Over half a century, this has kept racism alive in America. Enter Donald Trump with his explicit racism. Previously, Republican Party leaders (like Nixon and Reagan) were implicit in their racism. Explicit racism is a disqualification, you may think. It is not. Republican Party voters embraced Trump hysterically.

When Trump launched his campaign, the violent white racist group Ku Klux Klan (infamous for killing blacks) declared its support for him. America was horrified. Even Republican Party leaders were embarrassed by this open display of racism. They called upon Trump to denounce Ku Klux Klan and distance himself from it. Trump did nothing of the sort.

Trump's campaign slogan is "Make America great again". It means "Make America white again".

3. Anti-Immigration

This is Trump's - well - trump card. After dominating America's politics for almost half a century, the Republican Party lost two Presidential elections in a row in 2008 and 2012. The reason was simple. Racist whites voted for the Republican Party. Non-racist whites, blacks and Latinos/Hispanics voted for the Democratic Party. Republican Party leaders did a lot of head-scratching. They came up with the solution: To win, all they had to do was somehow get the Latino vote. And how to do this? Simple: 'immigration reform' - ie, give citizenship to all the illegal Mexican immigrants.

There was just one problem. For half a century, the Republican Party had taught its voters to hate all non-whites - which is not just blacks but also Latinos. Now these voters exploded with rage. Enter Donald Trump with his solidly anti-immigration campaign. He had launched his campaign by calling Mexican immigrants as 'rapists' and 'drug-dealers'. Again, Republican Party voters embraced him hysterically.

America has 1 crore illegal Mexican immigrants. They do low-paying jobs that whites are not willing to do. Without them, many sectors of the American economy will collapse. Trump says he will deport all of them. He says he will build a wall along America's 3,000 km border with Mexico. This will cost $25 billion, but he says he will make Mexico pay for it. How? Only he knows.

4. Anti-Globalisation

Starting with the Industrial Revolution, transportation and communication technology advanced - and helped to connect all the different parts of the world together. This process accelerated after World War 2. People, goods, services, money and information started flowing freely all across the world. The world was 'becoming one'. This process is called globalisation.

Before globalisation, products were made in the place where they were sold. The 20th century was a honeymoon period for America. Being the largest Western country, it had the largest market in the world. American industry boomed and Americans prospered. With just a high school education, lakhs of lower class whites got a job as a worker in the local factory - and lived a middle class life (house + car). This was the American Dream.

After globalisation, products could be made anywhere in the world. Industry's aim is to maximise profits. The best way to maximise profits is to minimise cost. And a major cost is workers' wages. So the best way to maximise profits is to produce in a place where the wages are lowest - ie, poor countries. So multi-national companies started moving their factories from rich countries to poor countries. Specifically, America's factories started moving to China.

As a consequence, America's factory workers - ie, lower class whites - started losing their jobs. Their American Dream became a nightmare. With just a high school education, they could get only low-skilled and low-paying jobs. Today they are angry - very, very angry. Enter Donald Trump saying he will reverse all this and 'bring the jobs back from China'. Lower class whites embraced him hysterically.

What Trump says is impossible. You don't need a PhD in economics to know this. A minimum knowledge of today's world is enough. Yet a large number of Americans believe Trump and support him. Why? See point #1.

5. Christian Fundamentalism

Donald Trump has appealed to Christian fundamentalists also, even though this is not his strong point. He said his favourite book is the Bible. But when asked for his favourite verse, he didn't have an answer. In spite of this, Christian fundamentalists have also embraced him enthusiastically.

Republican Party: Racism, Christian Fundamentalism and Plutocracy

In 1964, America's President Lyndon Johnson (of the Democratic Party) passed the Civil Rights Act giving equal rights to blacks. This enraged racist whites. In 1968, Republican Party leader Richard Nixon appealed to these whites and won the Presidential election. Since then, whites have been voting more for the Republican Party. It effectively became the party of the whites.

White voting in Presidential elections:

In 1980, Ronald Reagan combined the Republican Party's white racism with one more element: Christian fundamentalism. He appealed to Christian fundamentalists and won their support. He also did something else that was perhaps even more important. He made the Republican Party the party of the rich by adopting their agenda – which was mainly cutting their taxes. In a democracy, a political party has to work for the good of the majority of the people. Under Reagan, the Republican Party started working for the good of only the 1% rich. Thus it became a plutocratic party – and America became a plutocracy.

So the Republican Party became an alliance of the rich and racist-fundamentalist whites. But this was an unnatural alliance. Today 65% of America is white. In this, only 1% are rich. The remaining 65–1=64% are middle class and lower class. What do these people want from the government? They want welfare programs like Social Security, Medicare and Medicaid. Now these programs cost money. Where will the money come from? Obviously, from high taxes on the rich. But the aim of the rich is to minimise (not maximise) their taxes. Thus there is a fundamental contradiction in this alliance of the Republican Party.

Yet this strategy was extremely successful. From 1968 to 2007, the Republican Party won 7 out of 10 Presidential elections. How was this possible? Simple. The Republican Party pursued the economic agenda of the rich – ie, cuts in the top tax rate. This went against the economic agenda of the middle class and lower class whites – ie, more money for welfare programs. Yet the Republican Party got those people's votes. How? It diverted their attention from their economic agenda by pursuing their 'cultural' agenda – ie, white racism and Christian fundamentalism. Thus the strategy succeeded brilliantly for almost four decades.

So that is the ideology of the Republican Party – plutocracy combined with white racism and Christian fundamentalism. The rise of Donald Trump is nothing but the direct outcome of this process.

America: Conservatism, Christian Fundamentalism and Racism

For almost 250 years, there was something called 'American Conservatism'. It stood for small government, low taxes and free trade. And for around 150 years, it was the ideology of the Republican Party.

In 1980, Ronald Reagan made a cynical alliance with Christian fundamentalism to increase the power of the Republican Party. A bizarre cocktail of political conservatism and Christian fundamentalism became the new ideology of the Republican Party.

But there was one more, older, ingredient. In 1968, Richard Nixon had shaken hands with another devil – white racism. The undercurrent of racism has been flowing beneath the conservatism and Christian fundamentalism of the Republican Party since then.

Today the chickens have come home to roost. The expedient add-on has ended up becoming the main engine. For the first time in America's 240-year history, a blatant racist has been elected as the Presidential candidate of one of its two parties. With the triumph of Donald Trump, white racism has now become the official ideology of the Republican Party.

What happens to the other two ingredients? Christian fundamentalism is perfectly compatible with white racism. So it will continue as a co-ideology. But the political/economic plank of Trumpism – ie, the real plank – is big government, high taxes and isolationism. This is nothing but the anti-thesis of conservatism.

So American conservatism is dead and buried. RIP.