Tuesday, April 21, 2020

China: How Credible that China Accidently or By Design Spread Covit-19?


Paper No. 6563                           18-April-2020
By Kazi Anwarul Masud (former Secretary and ambassador of Bangladesh)
Conspiracy theories abound. Main accuser is Donald Trump. Accused id Xi-Jinping.  Charge is very serious. Particularly when death toll has passed one hundred thousand. Is the charge tenable and incendiary at a time when time has stood still? The world does not yet know when it will be free from the scourge. Millions of people are losing or have lost their jobs. In the US alone post-covit-19 unemployment is expected to be 40% the highest ever in US history but during the Great Depression. In developing countries   conditions are expected to be dire. Nick Cohen a British journalist and political commentator writing in The Spectator found  WHO asleep at the switch and cautioned that the current state of vaccine development was  an expensive, slow and laborious process, costing billions of dollars, taking decades, with less than a 10 per cent rate of success.’         Cohen asked the people not to despair or return permanently to autarky and localism. With the right precautions, an open, free-trading, free-moving, innovating world is possible without pandemics and is essential for raising living standards. Government he said,  must both splash the cash and slash many of the things it does that are not urgent to alleviate human suffering, and there are a lot of them. Despite the obvious deadly impact of covet-19 on the health and the economy of the world people have started to wonder whether the space for democracy will not be squeezed in the post-coronavirus globe. Hungary’s right-wing government offers perhaps the most striking example of how a crisis of public health has been used to further authoritarianism. Prime Minister Viktor Orban has cited the virus spread to cancel all elections and remain in power indefinitely. He has invoked broad powers to limit air travel and individual movements. But there is no end date to the restrictions, nor any parliamentary review of his actions. For as long as Orban’s emergency orders are in place, he has claimed the right to rule by decree.      In Serbia, President Aleksandar Vucic has pushed for similarly extreme measures and relied on heavily armed police patrols to enforce his edicts. He too has undermined parliamentary oversight of his actions and assumed the right to rule by decree (Can democracy survive the coronavirus? SONALI KOLHATKAR APRIL 14 2020 ALTNET). One could argue that both Hungary and Serbia were part of the authoritarian regimes and their introduction to democracy has been of recent origin. But then again both are members of the European Union some of whose members in the past rose in rebellion against repressive monarchies and landed aristocracy. Though some people in some countries may for the time being feel at ease with strict disciplinary measures it is doubtful that these same people will countenance Orban and Vucic in the long run. In developing countries though due to lack of education, healthcare, and employment people caught in “poverty trap” may get used to authoritarianism and develop a thick skin to tolerate violation of their fundamental rights. Pakistan is an example where the armed forces either directly or through proxy have ruled the country ever since 1958 when General Ayub Khan imposed martial law in the country and ruled the country for a decade. Myanmar is another example where General Ne Win put the army in control since 1962 which remains the defacto ruler of the country despite a civilian cover. Bangladesh, a rebel with a cause since the British ruled the Indian subcontinent, has fought against the British and then Pakistani injustice and finally a bloody war of independence under the leadership of Bangabandhu Sheikh Mujibur Rahman. If some critics allege the present government, in power for more than a decade, of authoritarianism it is mainly because a credible opposition has  not been formed due to lack of popular support and the  inability of the   opposition party leaders failed  to enthuse    the people to embark on a mission to unseat the government.   It appears that despite weak administrative and Ministerial incompetence the present Prime Minister is incontestably the preeminent leader of the people and any talk of her replacement, be it voluntary or otherwise, and causes a shiver in the spine of the general people.  One may be reminded that Malaysian Mahathir Mohammed led the revolt against corrupt Negib government and became Prime Minister at the ripe age of ninety three. Joe Biden should he get elected to the US Presidency will be seventy seven when he takes oath in January next year.   Barak Obama’s endorsement of Joe Biden favors his chances of winning the November elections. More so as Trump has once again gained international opprobrium for his criticism of WHO for alleged mishandling of covit-19. The Coronavirus pandemic has involved the judiciary in the US on Wisconsin primary held on 7th April. After the State Governor’s order to postpone the elections to a later date was nullified by a Republican dominated state assembly who demanded that the elections be held as scheduled the case went up to the US Supreme Court where majority opinion held that the votes along with the absentee votes be counted on 7th April though many absentee ballots could not be sent by the state election commission to the voters. The Supreme Court saw the appeal as a narrow, technical question about the absentee ballot process. The Court held that       lower federal courts should ordinarily not alter the          election rules on the eve of an election and that the elections be held on 7th April. The decision was made despite the facts that in the weeks leading up to the election, the COVID–19          pandemic had become a “public health crisis.”  As of April 2, Wisconsin had 1,550          confirmed cases of COVID–19 and 24 deaths attributable to          the disease, “with evidence of increasing community. In a dissenting note Justice Ginsberg noted the   Governor’s order to postpone the elections to a later date until          slowing down of the disease.   Additionally gathering of the people at the polling place would poses dire          health risks.  Wisconsin voters—at the encouragement of public officials— turned          to voting absentee. About          one million more voters requested absentee ballots in          this election than in 2016.  Accommodating the surge          of absentee ballot requests heavily burdened election          officials, resulting in a severe backlog of ballots requested.   She further noted “While I do not doubt the good faith of my colleagues, the          Court’s order, I fear, will result in massive disenfranchisement. A voter cannot deliver for postmarking a ballot she          has not received. Yet tens of thousands of voters who timely          requested ballots are unlikely to receive them by April 7,          the Court’s postmark deadline. The Court’s suggestion that the current situation is not “substantially different” from “an ordinary election” boggles the mind….The majority of this Court declares that this case presents a “narrow, technical question.”  That is wrong. The question here is whether tens of thousands of Wisconsin citizens can vote safely in the midst of a pandemic”. With the majority’s stay in place, Justice Ginsberg, argued,   that will not be possible. Either they will have to brave the polls, endangering their own and others’ safety. Or they will lose their right to vote, through no fault of their own. That is a matter of utmost importance—to the constitutional rights of Wisconsin’s citizens, the integrity of the State’s election process, and in this most extraordinary time, the health of the Nation”.    Justice Ginsberg’s dissent note is an extra-ordinary chastisement of the Republican dominated Supreme Court who decided to follow an undemarcated line of loyalty for being appointed by Republican Presidents    to the nation’s highest judicial posts instead of the risks of contamination  to the voters to line up to cast their votes.   Most of the constitutions of the world provide for peaceful right to assembly. But the state reserves the right to place restrictions on the time, place, and manner of peaceful assemblies. In the case of social distancing and lockdown the governments may seem to have trodden on the right of assembly but when it is being done for the good of many and the people generally consenting to such compression of liberty such governmental actions should be presumed to have the sanction of the law.   Global projection on coronavirus suggests that at the end of the covet-19, unpredictable though it is now, half of the global population will live in poverty. Even before the pandemic hit the world multiple international indices ranked Bangladesh one of the world’s most natural-disaster prone countries.          Bangladesh joins a growing number of countries trying to endorse food as a legally binding right. Many international NGOs have been advising the government to regard food as a human right. Monisha Biswas, policy and advocacy manager for international NGO Oxfam in Bangladesh, said even though Article 15 of the constitution recognizes the state’s responsibility to secure the “basic necessities of life” for its citizens, - including food, it does not recognize a person’s right to food. As of December 2010 13 countries worldwide recognized the right to food or provided for state obligations relating to food and nutrition as state policy  and Bangladesh was one of them. Though it has not yet been legislated the decisions announced by Prime Minister Sheikh Hasina to reach food to the hungry and to sell rice at a very concessional rate to the poor are expected to meet the challenges thrown by covit-19 on hunger and poverty. Another challenge thrown by coronavirus pandemic is large scale unemployment both in developed and developing countries. 
In the US till 16th April jobless claims have exceeded 22 million in four weeks. It underscores how the downdraft has spread to every corner of the economy: hotels and restaurants, mass retailers, manufacturers and white-collar strongholds like law firms.        According to a prominent economist: “This is the deepest, fastest, most broad-based recession we’ve ever seen.”                Some of the new jobless claims represent freshly laid-off workers; others are from people who had been trying for a week or more to file. The US Commerce Department reported the steepest monthly drop in retail sales since record keeping began nearly 30 years ago, and the Federal Reserve said industrial production had recorded its biggest decline since 1946.     World output, writes Ishaan Tharoor in Washington Post, over the next two years will fall $9 trillion short of what was expected before the crisis. It is a loss akin to having Germany and Japan’s economies vanish, says Gita Gopinath, the IMF’s chief economist. More than 90 countries have petitioned the IMF for assistance, with poorer nations facing the looming prospect of debt crises and   political turmoil should they fail to secure fiscal aid from wealthier powers.  Will the world come back to its axis before the corona virus almost devastated many countries regardless of the rich or poorness of the regions and the countries? This is an important question facing all of us as China is advocating itself as possessing the best model not only to save people from pandemic the likes of which the world has never seen but also having the best economic model for others to emulate. This argument may get force from the fact of the American withdrawal from the role of the leadership of the world. Ever since Donald Trump declared his “America First” policy which effectively meant that the US would  look after its own  interest and the NATO allies  and the Bretton Woods institutions better listen to the US dictates, withdrawal of US troops from Syria, abandoning the fifty year old Palestinian policy and declaring Jerusalem as the capital of Israel, distancing US from the policies of its European allies, and most recently withdrawing support from WHO at a time when international coordination with WHO at the center was the call of the day. Domestically  Donald Trump declared the media as his enemy, frequently firing  senior policy makers from their positions( some like General Mattis preferred to step down), and being at odds with the Democrats in the House and the Senate, quarreling with the CNN journalist as an example, and most recently calling the popular Governor of Michigan as “that woman”. The list is endless.  The future both near and far will testify to the destruction wrought by Trump administration long after he is gone. Richard Hass, an American diplomat and President of the Council of Foreign Relations wrote recently ( The Pandemic Will Accelerate History Rather Than Reshape It-April 7 2020) “It is too soon to predict when the crisis itself will end. Whether in six, 12, or 18 months, the timing will depend on the degree to which people follow social-distancing guidelines and recommended hygiene; the availability of quick, accurate, and affordable testing, antiviral drugs, and a vaccine; and the extent of economic relief provided to individuals and businesses…Haas continues “Implicit in  “Trump’s America First” policy  was the assumption that much of what the United States did in the world was wasteful, unnecessary, and unconnected to domestic well-being ……        The pandemic is likely to reinforce the democratic recession that has been evident for the past 15 years”.  Opposed to that Mark Green, the outgoing administrator for the U.S. Agency for International Development (USAID), raised alarms about how refugees and displaced populations (71 million displaced around the world) will be affected by the pandemic and reflected on the Trump administration’s repeated attempts to cut funding for foreign aid.  It is difficult to accept a proposition that the US that prided on American Exceptionalism will become a second rate power conceding the preeminence     to China. Most of the countries of the world except a few African countries( Patrice Lumumba’s Congo, Zimbabwe, Guinea,Ghana, Tanzania) most of the newly freed nations adopted democratic elections as a way of changing power. In Asia SEATO, CENTO and other organizations kept these countries away from communism. One of the reasons was that the colonizers were European powers who had no tract with communism. China was no factor during the forties and fifties   when liberation movements were at their peak. As deeply flawed as Washington’s response to the pandemic has been so far, the United States’ power—distinct from any particular president—rests on an enduring combination of material capabilities and political legitimacy, and there are few signs that the pandemic is causing power to shift rapidly and permanently to China’s side of the ledger write Michael Green and Evans Medeiros  (The Pandemic Won’t Make China the World’s Leader Foreign Affairs) that “as deeply flawed as Washington’s response to the pandemic has been so far, the United States’ power—distinct from any particular president—rests on an enduring combination of material capabilities and political legitimacy, and there are few signs that the pandemic is causing power to shift rapidly and permanently to China’s side of the ledger. … Some leaders, of course, are embracing Beijing’s narrative and applauding its methods in combating the outbreak—including officials in Cambodia, Iran, Pakistan, and Serbia. But few of these governments have been newly persuaded by recent Chinese messaging; they have a long record of accepting Chinese political narratives and economic assistance, often at the service of their own power at home. Indeed, some early recipients in Europe of Chinese-made testing kits and protective equipment rejected them as substandard. Just this week, Finland’s prime minister fired the head of the country's emergency supply agency for spending millions of euros on defective Chinese facemasks”. China’s expulsion of journalists from New York Times, Washington Post and Wall street Journal have put question mark on China’s tolerance of transparency. Though China’s has toned down its attack that the US had spread the virus in Wuhan many countries have not forgotten China’s efforts to contain information when they realized that the virus had gotten out of their hands in December last year. In conclusion the world now more than ever has to fight this evil together. Time for bickering is not now. 
    
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Thursday, February 27, 2020

The Challenges Facing the World Today: The case of Bangladesh

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Paper No. 6545                 Dated 23-Feb-2020
By Kazi Anwarul Masud
 American economist Geoffrey Sachs (Columbia University and an expert on economic development and poverty) considers geography of nations as a true driver of economic development “because it affects the profitability of various kinds of economic activities, including agriculture, mining, and industry; the health of the population; and the desirability of living and investing in a particular place…. As human-led climate change progresses, many regions could well be hit by devastating environmental shocks, such as heat waves, droughts, and floods, that are far beyond their control” (Foreign Affairs Sept/Oct 2012). Sachs counters monocausal theory of Daron Acemoglu and James Robinson’s (Why Nations Fail) that governments that protects property rights and represent their people lead their economies to prosperity and those that do not end up with stagnant and declining economies. State capitalism that promoted the economic development of South Korea during Park Chung Hee’s military regime coupled with those of China, Taiwan, Vietnam belie the claim that only capitalism with Western values can lead the country to prosperity. China today is the second largest economy in the world though its growth has been recently arrested by the outbreak of coronavirus disease that has virtually quarantined the country from the rest of the world. Given the fact that China accounts for 16% of the global output the disease is bound to have global impact in particular small Asian countries linked to China who do not have sufficient cushion to absorb the ill effects and may slide into recession.
A Reuter report sounds an optimistic note (London 20th February) to the effect that epidemics normally have a severe but relatively short-lived impact on economic activity, with the impact on manufacturing and consumption measured in weeks or at worst a few months. Even pandemics such as the Black Death (1348/49), Spanish influenza (1918/19), Asian influenza (1957/58) and Hong Kong influenza (1968/69) that caused large numbers of deaths had a brief impact on the economy. China's coronavirus outbreak should conform to this pattern of a severe downturn followed by swift recovery, provided it does not initiate a broader cyclical slowdown in the already-fragile global economy. China witnessed an economic growth of 6.1 per cent in 2019, the slowest in recent years. And the International Monetary Fund expects it to slide further to 6 per cent and 5.8 per cent in the next two years. The Coronavirus strike will impact consumer spending in China, which may further impact the economy and the trade pacts with the US.
The Federal Reserve Bank chief Jeremy Powell considers China’s economy as very important in the global economy now, and when China’s economy slows down it is felt by the USA though less than countries near to China or those actively trading with China like some Western European countries. Coronavirus aside one may question the efficacy of state capitalism as a strategy for economic growth. The recent Bangladesh government decision fixing deposit and lending rates by banks and post offices has been described as “financial repression’” ( Financial Express 12-02-2020) that may cause significant drag on growth, according to a study, ranging between 0.4 to 0.7 % of the GDP. This repressive approach was justified by some governments on John Maynard Keynes’ argument to distinguish between investment for productive purposes and those for speculation.
Such an approach has been criticized by another school of economists who opposes artificial imposition of ceilings to encourage investment and calls for market forces to determine the preferred rate of interest and encourage competition among banks and financial institutions. Particularly galling has been interest cut in postal savings as it directly affects the middle and lower middle class in Bangladesh who account for 70% of the account holders. Joseph Stieglitz (The Great Divide 2012) has argued that inequality results from conscious political decisions which results in a world of super-rich, a vanishing middle class and growing poverty. Stieglitz also questions the efficacy of a government that embraces political capitalism—a system where the rich and the powerful influences government choices that in Hobbesian terminology ends up as being “nasty brutish” and ultimately selfish and protects the interests of their own class.
Political capitalism can also be defined as an economic and political system in which the economic and political elite cooperate for their mutual benefit. Perhaps one may wish to visit the Great Gatsby Curve introduced by Alan Krueger, Chairman of the Council of Economic Advisers in 2012 illustrating the connection between the wealth of one generation facilitating the following generations to have or even surpass the wealth of the earlier generation and the possibility of the poorer in the earlier generation unable to pass on any wealth to the following generation thus denying them the opportunity to climb up the both social and economic ladder.
Bangladesh has had the highest rise in its ultra- wealthy population, surpassing any other country in the world. The growth rate, calculated by Wealth-X, a global financial intelligence and data company, stands at a solid 17.3 percent. If Bangladesh had 100 Super rich in 2012, for example, the number should stand at 219-220 by 2017. In other words, the number of super-rich more than doubled in our country in just five years. At the same time defaulted loans despite easier payment terms accorded to the defaulters has not eased the problem of loan default. Billions of dollars are suspected to have been siphoned off to safe heavens abroad. According to Global Financial Integrity Report 2017, Bangladesh topped the list of least-developed countries in terms of “illicit financial flows”. In 2014 alone, Bangladeshis laundered USD 9.11 billion to foreign countries. At the end of 2016, the amount of money Bangladeshis deposited with Swiss Banks stood at USD 683 million—near equivalent to the amount deposited by Indians. (Daily Star 20-09-2018). Truly Joseph Stieglitz’s observation on “A banking system is supposed to serve society, not the other way around” appears to have fallen on deaf ears. Yet incontestably Bangladesh economy broke through a period of stagnation and even regression through robust export of garments and remittance of Bangladeshis working abroad and today has become the third fastest growing economy in the world.
The Gross Domestic Product (GDP) in Bangladesh was worth 274.03 billion US dollars in 2018. The GDP value of Bangladesh represents 0.44 percent of the world economy. GDP in Bangladesh averaged 53.02 USD Billion from 1960 until 2018, reaching an all-time high of 274.03 USD Billion in 2018 and a record low of 4.27 USD Billion in 1960. The Gross Domestic Product per capita in Bangladesh was last recorded at 3879.20 US dollars in 2018, when adjusted by purchasing power parity (PPP). The GDP per Capita, in Bangladesh, when adjusted by Purchasing Power Parity is equivalent to 22 percent of the world's average. Bangladesh apparently is doing well. Yet apart from growing inequality in the distribution of income one would be well advised to bear in mind the dystopian pictures drawn by MIT husband and wife team ( The Limits of Growth-1972) of the world facing an “over shoot and collapse” by 2100 unless the world took seriously the environmental and resource issues. According to the book, to feed the continued growth in industrial output there must be ever-increasing use of resources. But resources become more expensive to obtain as they are used up. As more and more capital goes towards resource extraction, industrial output per capita starts to fall – in the book, from about 2015.As pollution mounts and industrial input into agriculture falls, food production per capita falls. Health and education services are cut back, and that combines to bring about a rise in the death rate from about 2020(The Guardian 2nd September 2014).
The emerging economies in particular those in South Asia should take lessons from these discourses. Inequality should not be allowed to fester. Growth that does not serve the interest of the majority of the population means only economic figures. The world- both the developed and the developing- should strive for gender equality. Climate change should be a central issue in international conversations. Political capitalism- a momentary solution of economic woes- cannot be the hall mark of economic growth. Social Darwinism, the popular theory in the late 19th century that life for humans in society was ruled by “survival of the fittest,” that helped advance eugenics into serious scientific study in the early 1900s has to be avoided at all cost because the world cannot afford another Hitler. Religious divide that contributes to populism should be avoided.
One hopes that the future generation would be able to inherit that is more prosperous and where opportunities are not denied on grounds of religion, caste, creed or the economic circle one is born into.
The writer is a former Ambassador and Secretary in the Foriegn Ministry of Bangladesh.
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Saturday, January 25, 2020

Is Inequlity Fated to Stay? The Case of Bangladesh.

Paper No 6536              Dated 25-Jan-2020
By Kazi Anwarul Masud
Hunger, Famine, Inequality, Injustice and many other words in English language may have different interpretation but are intrinsically intertwined and almost incestuous in origin. A person infested in famine must be hungry and is not equal in food intake compared to their richer compatriots. At the extreme pole one could cite one of the most famous quotes in history. At some point around 1789, when being told that her French subjects had no bread, Marie-Antoinette (bride of France's King Louis XVI) supposedly sniffed, “—“Let them eat cake.” Or one could revisit My Fair Lady and the conversation between Colonel Pickering and Alfred Do little where Do Little admonishes Colonel Pickering for boasting for having morals which Pickering could not have afforded had he been as poor as Do Little.
This brings us to the question: whether immorality is deeply connected with famine and hunger. In least developed countries hunger is a common affair and is generally accepted as a way of life. In the race for growth and development these countries get more embroiled with statistical improvement of growth for praise from the World Bank, IMF, Asian Development Bank and other international institution than really improving the life of greater number of people. Trending of lack of interest of women to marry less educated males    post-industrial society where the glass ceiling for the women to rise to be equal or higher than their male colleagues have been broken due to the demand for educated and technologically attired candidates regardless of gender.    “Just as manufacturing had previously displaced agriculture as the major source of employment, sociologist Daniel Bell argued, so the service sector was now displacing manufacturing. In a postindustrial, knowledge-based economy, the production of manufactured goods depended more on technological inputs than on the skills of the workers who actually built and assembled the products….
The revolution in information technology that has swept through the economy in recent decades, meanwhile, has only exacerbated these trends (What the Right and the Left Get Wrong By Jerry Z. Muller March/April 2013Foreign Affairs). Related to this post-industrial society’s emphasis on education Nobel Laureate Paul Krugman’s (THE UNEDUCATED AMERICAN)  blaming of the US’ progressive loss of global position partly on “fiscal responsibility” which greatly affected amount of money spent on education. Consequently, Krugman states that in the USA a college graduation rate is slightly below the average across all advanced economies.
In the context of less developed countries e Bangladesh, for example, prides itself for bringing the country’s poverty rate (people living below $1.90 a day) down to 21.8 percent while people living in extreme poverty, came down at 11.3 percent in 2018, according to the latest data of the Bangladesh Bureau of Statistics.    It has also been claimed that Bangladesh    would be able to attain SDG by eliminating poverty by 2030.  Though famine conditions have not been seen in Bangladesh for decades but the people living in extreme poverty cannot have the required amount of food necessary for living well. In other words, while people do not starve in Bangladesh a determinate number of people are undernourished with consequent denial of access to health and education. While an essential driver for development is hope, and Bangladesh’s promotion from LDC to low middle income country is laudable, an eminent economist points out that “not much is added to our achievement by calling ourselves a “non-LDC developing country”, if at all we have to find a new designation.” (May 15, 2018 Least Developed and Developing Countries-A matter of definition? Wahid Uddin Mahmud). 
Citing th lone case of South Korea who graduated to an industrialized countryafter the Second World WarDr Mahmud continues to explore the path on which Bangladesh should continue “What could then be our next target in terms of country classification? It could be graduating to the high-middle-income status according to the World Bank's classification, which will mean increasing the per capita income nearly fourfold in real terms; or, it could be becoming a developed or industrialized country in the sense it is understood in the common development terminology”. It is given that with enlarging population not necessarily able to gain from demographic dividend, lower productivity due to lack of required skill, dependence on remittance from expatriate manpower  and export of readymade garment, calamitous effects from climate change, losing arable land to feed the growing population, growing youth unemployment, possibility of political unrest that at present appears nowhere near the horizon and the country virtually ruled by a coalition of likeminded people Bangladesh may continue with the Political Capitalism  model--  an economic
system in which business controls government more than government controls business and the economic and political elite cooperate for their mutual benefit. If left unaddressed, in the words of Professor Jerry Muller (March/April 2013 Foreign Affairs), rising inequality and economic insecurity can erode social order and generate a populist backlash against the capitalist system at large. 
 Conceding the thesis the political capitalism is not the midway between socialism and capitalism one cannot but agree that capitalism breeds inequality of opportunity and an undeclared aristocracy emerging through marriage between the scions of ultra-rich families. Thus transference of movable and immovable assets are ensured from one generation to another and as the value of the assets increase over time they are concentrated in fewer hands. This develops the elitist class who are considered superior, by themselves of others, due to wealth and power
(the two are closely related as the retention of power is dependent on the support of the elites in society). In the US, for example, 1% of the population owns almost 39% of the wealth which is twice that the bottom 90% of the people own. Rising inequality, observes Paul Krugman, has both economic and political costs (Paranoia and Plutocrats January 24, 2014). Concentration of wealth in the hands of the few even with higher productivity may cause stagnant wages and worsening living standard along with unaffordability of good education, higher mortality due to lesser income as a proportion to medical costs. The moneyed class who are allied with power have to  contend with explosive resentment of the have-nots and consequent rise of autocrats and diminishing space of democratic values. One would be better advised that Adolph Hitler’s rise to power in 1930 general elections giving the National Socialist Party largest number of seats in the Reichstag was due to the disaffection of the German people with the worsening economic condition, Treaty of Versailles notwithstanding, and partly occasioned by the Great Depression forcing the US government to recall the loans earlier given to the German government. Albeit Thirties scenario is too dystopian and the rise of fascism to be replicated in the present day global society and one has to accept the fact that capitalism has come to stay packaged in basically two varieties---one Western capitalism imbued with democratic ideals and the other being the Chinese variety where private sector thrives under strict supervision by Chinese Communist Party.  The problem of unregulated capitalism result in the money accrued is spent on luxury not needed by the spender which political philosopher Benjamin Barber calls “infanitilisation” e.g. money spent on satisfying infantile desires. Barber’s criticism rests on his argument that while early capitalism encouraged virtues with the working men’s “robust motion of agency and spirited grittiness” while the decay that spells later day capitalism suffers from a paradox—“the needy are without income and the well-heeled are without needs”. This redoubles Paul Krugman’s doubts about the Conservatives that equality of opportunity will gradually bring about equality of income. Such views propagated by the conservatives ignore the culture of poverty resulting in the cycle of poverty also known as “development trap” denoting low income, poor education, poor housing and poor health. Since these disadvantages work in a circular fashion it becomes difficult to break out of this cycle. Conceding the premise that capitalism has come to stay or in any case is better than other alternatives the inequality in all its forms are evident in both developed and developing countries. An OXFAM study recently released tells us that India's richest 1 per cent hold more than four-times the wealth held by 953 million people who make up for the bottom 70 percent of the country's population, while the total wealth of all Indian billionaires is more than the full-year budget.
Releasing the study 'Time to Care' ahead of the 50th Annual Meeting of the World Economic Forum (WEF), rights group Oxfam also said the world's 2,153 billionaires have more wealth than the 4.6 billion people. The report flagged that global inequality is shockingly entrenched and vast and the number of billionaires has doubled in the last decade, despite their combined wealth (The Economic Times January 20, 2020).
 The situation is similar in Bangladesh. The gini coefficient, which is the economic measure of equality was 0.458 in 2010 rose to 0.482 in 2016. The rich has become richer while the poorer became poorer. Capital Dhaka being the center of administration and industrialization the income inequality increased between the urban and rural areas as did the migration to the city from rural areas. One saving factor has been the foreign remittance sent to village homes by Bangladeshi expatriates working abroad. While the World Bank, IMF, ADB and many others are praising the high growth rate of Bangladesh and have projected the rate of growth will remain high in the coming years unemployment remains a problem mainly due to disconnect between growth and employment opportunities.  The IMF mission that visited Bangladesh recently expressed concern over banking sector irregularity, reported by the media time and time again, can derail the growth momentum. IMF mission was also skeptical about the new regulations brought in to arrest the growing amount of bad loans, many of which, may become unrecoverable. What good is economic growth if its fruits are denied to the great majority of the people? Harvard Professor Joseph Nye jr, Nobel laureate Joseph Stieglitz among many others have questioned the efficacy of refusal to address the worry of the have-nots across the world. Very recently Klaus Schwab, the founder of the Davos based World Economic Forum (Capitalism Must Reform to Survive From Shareholders to Stakeholders January 16, 2020) has taken pains to inform the world that “Davos Manifesto’s opening line declared that “the purpose of professional management is to serve clients, shareholders, workers, and employees, as well as societies, and to harmonize the different interests of the stakeholders.”    This information is meant for those who are critical of Wall Street corporations who prefer shareholders’ interest to those of stakeholders.  In conclusion, both the developed and developing nations alike, must recognize the fact the statistical increase of Gross Domestic Product and euphoria over high growth rate alone will not endear any government to the people for votes in the next elections.
   The writer is a former Ambassador and Secretary f Bangladesh.         ..

Sunday, December 1, 2019


Intertwining of the global economy
 Kazi Anwarul Masud | Published:  August 12, 2017 19:09:10 | Updated:  October 24, 2017 21:32:17


Brexit and President Trump's 'America First' rhetoric notwithstanding it is unlikely that nationalism and economic nationalism would be able to arrest the march of globalisation. The world has become too complex and politico-economic relations have become intertwined for other ideologies to interfere in the conduct of global affairs.
A few examples below to point out the intertwining of the global economy:
n A rise in the price of onions in India has increased its price in Bangladesh. Bangladesh has contracted to buy rice from Cambodia because the price in Vietnam and Thailand has gone up. It is reported that a possible rice deal with Thailand may also be in the offing.  For building infrastructure Bangladesh has to borrow money and expertise from China.
n Sri Lanka-China agreement on building Hambantota port has debt-equity swap of 80-20 for China and Sri Lanka with China controlling stake in the port leased for 99 years with the possibility of Sri Lanka buying back the shares after 60 years. Many fear that Sri Lanka may fall into a Chinese debt-trap because its economy would not be able to afford the buyback. This caused last month both domestic and international concern due to suspected Chinese design to increase influence in the South Asia and Association of Southeast Asian Nations (ASEAN) regions (Africa also remains a Chinese target).
n The Bolivian, Venezuelan   and Russian reassertion of state control over energy and industry would not be sustainable in the long run. These are bravados of Bolivian President Evo Morales, Venezuelan President Nicholas Maduro and Russian President Vladimir Putin bravado for their domestic audiences.
n Before David Cameron's departure from No. 10 Downing Street the British demands to the European Union (EU) reportedly included EU make  two "explicit statements":  the UK will be excluded from any moves towards a European super state, and secondly, the Euro is not the official currency of the EU. Albeit late in the day, the pro-remain group argued that the vast majority of British and foreign economists warned that Brexit would be a disaster. The EU remains the world's largest economic area. Brexit would mean loss of hundreds of thousands of jobs and would have marginal control on immigration. In short, Britain remains in a flux as the negotiations have just begun and is expected to continue for two years.
n One could also mention Donald Trump's 'America First' dubbed by The New Yorker magazine as "Trump's dark nationalism" which is in stark contrast with the final inaugural address of Franklin Delano Roosevelt (FDR); Dwight Eisenhower's pledge to build strength to deter the enemy; John Kennedy's summons to the young Americans to fight for liberty; and Roland Reagan's call to fight "communist enemies".  The latest warning that President Trump has given to North Korea to cease its nuclear programme or to see its total annihilation   in a war is something that the world has never seen before. Though political in nature the economic policies successive US Presidents followed had little to do with protectionism.
TWO FACETS OF GLOBALISATION: Globalisation has not been bliss for everyone. Some have described it as "the aggressive programme for the imposition of Western norms of national economic management, economic deregulation and market opening, and facilitating takeovers of indigenous industries and agriculture by multinational companies." Predictably, the international financial institutions and other establishment "experts" have enthusiastically endorsed the expansion of unbridled capitalism throughout the world. The International Monetary Fund (IMF) officials argue, "Globalisation offers extensive opportunities for truly worldwide development." From their perspective, the increasing global integration of national economies holds great promise because "markets promote efficiency through competition and the division of labour...." Still, the IMF concedes, "markets do not necessarily ensure that the benefits of increased efficiency are shared by all." In his well-known book, The Lexus and the Olive Tree, the New York Times columnist Thomas Friedman insists, "Globalisation has fostered a flowering of both wealth and technological innovation the likes of which the world has never before seen." However, he admits that this historical process has produced substantial "disruption and dislocation".
A contrary opinion sees globalisation as "corporate-led globalisation" and the "unrestricted movement of capital" generating enormous profits for transnational corporations but producing significant economic, social, and political harm for the majority of nations and peoples. According to this opinion, "The undermining of small-scale, diversified, self-reliant, community-based agricultural systems and their replacement by corporate-run, export-oriented monocultures" is "a major contributing factor to global environmental devastation."
INTERDEPENDENCY OF ECONOMIES AT DIFFERENT LEVELS: But the call for economic nationalism/protectionism has not come about despite the financial crisis of 2007-2008 considered by many as the worst economic crisis since the Great Depression of 1930s. Contributing factors, as described by an economist, could have been (1) the integration and therefore interdependency of economies; (2) the complexity of the global economy, making it all but impossible to separate by nationality; (3) the greater extensity of world markets compared to the mid-20th century; (4) the redundancy of the various models of economic nationalism.
The question that arises is whether interdependency of economies at different levels can be beneficial. For example, a least developed country (LDC) lacking in physical and human capital, small population and lack of legal institutions that would guard foreign investment is unlikely to have close economic relations with a developed economy. In this case the developed economy is more likely to adopt an extractive policy towards the LDC if it is endowed with natural resources like oil and gas.
In the case of the USA and Europe, economic relations are likely to be more balanced not only because of the comparable economic factors but also because of similar political institutions and values. One can   bring into this debate of economic interdependency Samuel Huntington's hotly contested  Clash of Civilisations thesis in which he classified Western civilisation as comprising North America, Western and Central Europe, Australia and Oceania. He was in two minds whether to include Latin America and the former member states of the Soviet Union or to treat them as their own separate civilisations.
The close economic relations with the emerging economies like China and India with the Western world belies the thesis that trade is possible only with politically compatible countries. Up to June 2017 US exports to China amounted to $ 59338.9 million and imports amounted to $ 229909.9 million leaving a trade deficit of $ 170671 million. In 2016, deficit was $ 347016 million. President Trump is unhappy with Chinese alleged theft of intellectual property and he is pressuring China to cut steel production to ease global over supply.
With India, US imports until June 2017 has been $12105.9 million and imports have been $ 23610 million leaving a deficit of $ 11504 million. Trump had in the past included India in the list of countries stealing US jobs. During the recent visit of Indian Prime Minister this question was not raised.
The US, Chinese and Indian examples demonstrate an interdependent world where economic crisis in any one part affects, in varying degrees, other parts of the globe. It would be wise for the South Asian Association for Regional Cooperation (SAARC) region (Indo-Pakistan animosity remains an impediment) to start closest possible  economic relations while continuing to deal with the developed and developing regions of the world.
The writer is a former Ambassador and Secretary.
kamasud23@gmail.com



Saturday, September 21, 2019

US Global Primacy- Its Significance:SOUTH ASIA ANALYSIS GROUP

Paper No. 6496                   Dated 17- Sep-2019
By Kazi Anwarul Masud
The primacy of the US is expected to remain, though contested by somefor the forthcoming future. Though the emerging economies would like
to have some influence in the conduct of global affairs the huge gapbetween the US, China and India will constrain these powers to
challenge the US.
In 2030 per capita income of the US will be US $60000/- while that of China will be almost half and that of India is expected to be US $ 10000/-. According to IMF the GDP per capita in the US was $59,495 (PPP) / $59,500 (Nominal) as at end 2017. In China it was just $16,624 (PPP) / $8,643 (Nominal). Militarily America’s military superiority remains unrivaled spender.
The United States has a strong military alliance with Europe through NATO, Japan, Australia South Korea, GCC countries (Saudi Arabia, Qatar etc.), while China is not part of any significant military alliance. Could the US and Chin fall for “Thucydides Trap’? Given the latest US-China trade talks, reports by The New York Times (Alexandra Stevenson Sept 11 2019, President Trump’s vow to raise tariffs on $250 billion in Chinese goods, including cars and aircraft parts, to 30 percent from 25
percent on Oct. 1.  may chart a difficult path for the two countries to reach an amicable settlement.
One has to remember that China accounts for a large percentage of the US total imports. However, the US does not account for a similarly large percentage of China’s imports or exports. China imports and exports a lot with other Asian countries and Europe, not just with the US. Basically the US needs China more than China needs the US.  US trade deficit with China was $419 billion in 2018. Us imports was $540 billion while her export were $ 120 billion. That’s not to say China can ignore the US, butrather it is necessary for the global prosperity for the two to reach an amicable settlement.  It should not, however, be presumed that conflict for influence is inevitable. On the contrary efforts are being taken to enable nations to be more responsible. Indeed as Stephen Walt( of Harvard University) points out the world is inflicted by (Asia Has Three Possible Futures foreign policy SEPTEMBER 5, 2019) an escalating trade war between the United States and China, North Korea’s growing nuclear arsenal and improved missile capabilities, deteriorating relations between South Korea and Japan, and increased cooperation between the United States and the Association of Southeast Asian Nations, the Afghanistan peace talks and India’s heavy-handed actions in Kashmir. Walt’s scenario depicts rise of China and a stumbling US where “Unless India had somehow managed to keep pace with China, a balancing coalition confined to Asia would still be weaker than this hypothetical Chinese colossus and would face the usual dilemmas of collective action. This vision of the future is undoubtedly Beijing’s preferred scenario, and Chinese President Xi Jinping has suggested as much in the past.
Pushing the United States out of Asia and getting its immediate neighbors to defer to Chinese preferences would maximize Chinese security while making it easier for Beijing to project power in other areas that it might deem critical such as the Persian Gulf”. But does it have to be so? Democracy imbued with liberal principles still remain to be the preferred destination of most of the countries of the world. Besides China is faced with aging population, environmental degradation, lack of adequate water supplies, geopolitical constraints, restive minorities, financial imbalances, etc.), while the United States retains a number of important strengths, such as a highly favorable geographic location, ample natural resources, and a still-innovative economy.
 Stepping back to the 20th century one may recall that   during the Cold War neither of the super powers thought of nuclear war though the
world was at an edge during the Cuban missile crisis. Dwight Eisenhower’s refusal to use the atomic bomb was a reflection of Eisenhower Doctrine to keep peace after the untold devastation wrought by the Second World War.  This required him to stand steadfast in the gap against civilian and military authority who wished to lower the
threshold or trigger for authorizing the use of nuclear weapons in any confrontation with the Communists. Instead, he refused to use atomic bombs in the Korean War, or against China in that War, or in later fighting over the islands of Quemoy and Matsu off of Formosa after the Nationalist Chinese fled from the mainland. The islands had no strategic value, which he easily recognized since he could not be bluffed or fooled on military matters. Significantly, he fully
recognized that nuclear war with the Soviets would be the end of civilization, and he acted accordingly to prevent atomic War.  Thedoctrine was intended to check increased Soviet influence in the Middle East, which had resulted from the supply of arms to Egypt by communist countries as well as from strong communist support of Arab states against an Israeli, French, and British attack on Egypt in October 1956. Eisenhower proclaimed, with the approval of Congress,
that he would use the armed forces to protect the independence of any Middle Eastern country seeking American help.  It was a continuation
of the U.S. policy of containment of or resistance to any extension of the Soviet sphere of influence. The continuing struggle got influence
between the East and the West came to an end with the fall of the Berlin Wall and the dissolution of the Soviet Empire.
In contrast Harry Truman was the only head of government who actually used a nuclear weapon in warfare. After entering into office, he learned of the atomic bomb and had to decide whether or not to use it. Although he knew that Japan was seeking to surrender, he chose to use the bomb on
two Japanese cities in short succession. This brought the war to a quick end. Truman's other motive was to deter USSR from expanding the
limits of Eastern Europe. Truman in an address to the Congress appealed for support to stop the expansion of communism. He said "Atthe present moment in world history nearly every nation must choose between alternative ways of life. The choice is too often not a freeone. One way of life is based upon the will of the majority, and is distinguished by free institutions, representative government, free elections, guarantees of individual liberty, freedom of speech and religion, and freedom from political oppression. The second way of life is based upon the will of a minority forcibly imposed upon the majority. It relies upon terror and oppression, a controlled press and radio, fixed elections, and the suppression of personal freedoms".
Pronouncement by Pres. Harry Truman. Engaged in the Cold War with theSoviet Union, the U.S. sought to protect those countries from falling
under Soviet influence after Britain announced that it could no longergive them aid. Despite the moral support of a part of the world to
Truman Doctrine one could smell a whiff of Machiavellism.
Machiavelli set the precedent for the cold and calculated regardless of the century they live in. He discusses frankly, the necessity of
cruel actions to keep power. He was in the business of power  preservation not piety. Those who desire power in any situation may
look to his strategies for solid aid. "...he (the leader of the state) must stick to the good so long as he can, but, being compelled be
necessity, he must be ready to take the way of the evil.  Thus the term Machiavelli’s is defined: "The political doctrine of Machiavelli, which denies the relevance of morality in political affairs and holds that craft and deceit are justified in pursuing and maintaining political power." .
 It was a continuation of the U.S. policy of containment of or resistance to any extension of the Soviet sphere of influence. The continuing struggle got influence between the East and the West came to an end with the fall of the Berlin Wall and the dissolution of the Soviet empire. As the world saw during the Iraq war George Bush's failure to bring together the important players like Russia, China and France who after the fleeting unipolar moment wanted a multipolar world to regulate international affairs.
Yet Harvard Professor Joseph Nye   like conservative Robert Kagan believes that American power and leadership will remain crucial to stability and prosperity at home and abroad. But presidents will be better served by remembering their transactional predecessors’ observance of the credo
“Above all, do no harm” than by issuing stirring calls for transformational change.
The problem arises when non-state actors like al-Qaeda and now ISIS in the name of a faith is causing turbulence in
a world that is transforming from industrial age to an information age. Whether such a change with consequent unemployment will bring
happiness to the people of the world is debatable. As is debatable the progression of people from one class to another. Barring exceptions
people are more likely to find themselves bound in the same class, albeit with more money than their parents earned, compared with those
born with silver spoon in their mouth. One may cite FDR and JFK as an examples of gaining the highest office in the land while most of the
post-second world war Presidents came from modest background. Yet social scientists and economists are convinced that the great divide
between the rich and the poor has come to stay.  This divide more prominent between the developed and the developing nations coupled
with religious divide will not let the world the rest in peace.
Many in the West would agree with people like Christopher Caldwell that the grim fact is that no Western European country—not one— has managed even a marginally successful integration of its Muslim immigrants, despite half a century of vast treasury outlays, wholesale
constitutional re-workings, and indefatigable excuse-making. One isdrawn to the conclusion that no successful integration was ever to be
expected. Larger historical currents were at play. Islam was on the rise. Europe had lost its élan vital, or whatever you choose to call
it. The idea that Europe could handle a mass immigration of Muslims may have been a momentous historical mistake.
As Roy Jenkins, the leader of the Liberal Democrats in Britain, remarked in 1989, “We might have been more cautious about allowing the creation in the 1950s of substantial Muslim communities.” Additionally, there are people like Bernard Lewis and Samuel Huntington with his civilizational
thesis to spur the movement of a fresh crusade though not in mediaeval form. The question is does it have to be so? The formation of G-20 or
BRICS or ASEAN-- have all been directed towards economic benefit (EU is omitted as all   are of the same faith though that is not the
binding rope). In South Asia SAARC is a glaring example of economic cooperation which hopefully will turn into a customs union and a free
trade area. The similarities are more than   the differences. Yet there is tension particularly between Pakistan and India, and to an extent though dormant in Bangladesh.
Though India has signed on to the China sponsored AIIB one trillion offered by China for the infrastructural development of the Belt and Road Initiative may only provide seed money as the Asian Development Bank estimates that Asian infrastructural development will need more than $ 20 trillion dollars.
Yet the Chinese initiative should be welcomed but the recipients should be careful lest they fall into a “Debt Trap” like a few other
countries. For countries like Bangladesh it would be easier to cooperate with India as closely as possible because of shared history,
culture, language (with West Bengal), and entwined economic interests.
The writer is a former Ambassador and Secretary of Bangladesh.

Monday, September 16, 2019


11:00 PM, November 21, 2009 / LAST MODIFIED: 11:00 PM, November 21, 2009

Time to wake up from stupor

THE Washington-based Centre for Strategic and International Studies, before the 1/11 change in its Transnational Threat Update, stated: "The current security climate in Bangladesh may allow terrorist groups to organise attacks using a radiological dispersal device. Concerns over this possibility are plausible given that radio substance have proven accessible to terror groups within the country." The recent arrests of militants from Pakistan and India, activists of banned Lashkar-e-Toiba, some of whom were educated in engineering in Bangladesh while recruiting prospective terrorists, confirm anew Eliza Griswold's report in the New York Times (January 2005), raising the possibility of Bangladesh giving birth to the next Islamist revolution. Travelling through Bangladesh, she concluded "The global war on terror is aimed at making the rise of regimes like that of the Taliban impossible, in Bangladesh the trend could be going the other way." In Griswold's footsteps, Bertil Linter's article in the Far Eastern Economic Review (April 2002) warned of the rise of Islamic fundamentalism in Bangladesh. Time magazine and the Asian Wall Street Journal alleged of sanctuaries being given to transnational Islamist elements.

In the eyes of Robert Kaplan, many in Bangladesh view it as a weakly governed state (The Atlantic-September 2009), surprisingly ignore David Held's (of London School of Economics) assertion that we no longer live in a world of discrete national communities but in a world of "overlapping communities of fate." So the Muslims in Bangladesh do not constitute the majority community as they are surrounded by Hindu majority India and Buddhist majority Myanmar, and in the vicinity of non-Muslim South East and Far East Asian countries.

Militancy will not decrease in Bangladesh unless the primary education system is urgently addressed. Mainly due to poverty, coupled with Islamic fervour, people in general send their children to get educated at village madrasas. Since madrasa education is free, but does not carry much financial reward in a labour market demanding non-ecclesiastical skills, students graduating from madrasas are forced to become madrasa teachers or priests in mosques. Coming from impoverished families, they are forced back into poverty in a world racing for material advancement. This vicious cycle of poverty and deprivation find expression in anti-Western feelings, particularly in the aftermath of the decimation of Afghanistan and the illegal invasion of Iraq. Many madrasa students may find Osama bin Laden as a hero. Understandably, the US Congress keeps itself informed of the madrasa education in South Asia. A report by the Congressional Research Service -- "International Terrorism in South Asia" -- states that among the approximately ten thousand madrasas in Pakistan, some have been implicated in teaching militant anti-western and anti-universal values.

The emergence of religious intolerance in Bangladesh, particularly during the BNP-Jamaat regime, should be seen in a global context. If Muslims are to prove historian Bernard Lewis wrong, that "Islam was never prepared, either in theory or in practice, to accord full equality to those who held other forms of worship, and that the centuries old rivalry between Christianity and Islam is no less than a clash of civilisations -­ the perhaps irrational but surely historic reaction of an ancient rival against our Judeo-Christian heritage, our secular present, and the world wide expansion of both," then the Islamic world would have to abjure stoning and imprisoning of rape victims, public flogging, stoning and decapitation of criminal offenders. Globalisation is no longer a choice; it is a reality that all countries have to deal with.

In this game, the West has a decided advantage over the Muslim world, particularly the least developed among them. Countries like Bangladesh, suggests Dr. Biru Prakash Paul (The Daily Star, 15.11.09), should address modern trends and future needs in higher education to ensure quality in education. According to Cybermatrics Lab, Dhaka University has been ranked 4922 among 6000 universities in the world. Indian and Pakistani universities attend American job markets to select the best possible candidates, as do universities in France, Egypt, Singapore and China.

Nobel laureate Paul Krugman (The Uneducated American, October 2009) wrote that if one had to explain US economic success in one word, it would be "education." In the 19th century, America led the way in universal basic education and as other nations followed suit, the "high school revolution" of the 20th century took the Western world to its height of prosperity, and the US continued to lead the world in higher education. Krugman is disappointed that due to the current economic meltdown, described by Josef Stiglitz as a tsunami shock to capitalism and free market as the collapse of the Berlin Wall had been to communism (stoutly refuted by his Columbia University colleague Jagadish Bhagawati), education, mainly the responsibility of state and local governments, has become a victim of austerity as in many other sectors of the economy.

It is possible that emerging economies -- China and India ­- will lead in producing more engineers, doctors and scientists than the US and the West, and bring into question the technological superiority, claimed by some academics as one of the pillars, as to why the 21st century would continue to be the next American, and not Chinese, century.

Unless we wake up, our society will be irreversibly pulled down towards the labyrinth of underdevelopment and darkness

Kazi Anwarul Masud is a former Secretary and ambassador.