Can you ease, when you are so tight?

India has jumped 30 places in the 'Ease of Doing Business' rankings of the World Bank, announced yesterday. A cock-a-hoop Finance Minister boasted, "Evaluation for the ease of doing business rankings is very tough. The ranking does not reflect the reform measures unless the outcome is visible on the ground." He believes that our rank will go up further next year when the Goods and Services Tax, or GST, introduced this year, is taken into account. So, a patiala peg all round? No. We are still at 100, three places below Guatemala, which has an extremely high rate of violent crime, and 33 places below Greece, whose economy is in intensive care. "The World Bank said that while there has been substantial progress, India still lags in areas such as starting a business (156), enforcing contracts (164) and dealing with construction permits (181)." How did it happen? Previously the World Bank surveyed only Mumbai but this time both Mumbai and Delhi were surveyed. Various permits can now be obtained online and India jumped from 170 in 2015 to 26 in 2017 on the parameter of 'Getting Electricity'. We may have gone up in the 'Ease of Doing Business' but we have dropped one place on 'Starting a Business', 16 places on 'Registering Property', and 3 places on 'Getting Electricity Connection'. Of course, getting a meter is not everything. A sudden black out, which is common in most parts of the country, or swings in voltage can severely damage equipment and cause huge losses. "The insights the World Bank compiles are extremely useful, but they are not necessarily representative of what firms experience in real life," wrote Lillehaugen and Vaishnav. Perhaps, the most important metric is "how India rates on the so-called 'Distance to Frontier' (DTF) measures, which capture the ease of doing business compared to the highest score any country has ever received in any given category". This compares how we perform compared to our competitors, and on this metric we have scored 60.76 compared to 56.05 last year. Good. Are we going to challenge for number one soon? Unlikely. One reason is that there are 75 ministers in the central government, each with a retinue of civil servants. Each of them wants to show his power to justify his humongous salary and perks. Salaries and junkets of ministers budget Rs 2.61 billion. The vaunted GST is so complicated that few understand how it works. Vast amounts of money are needed for handouts to win elections, Rs 110 billion has just been showered on Gujarat, which has to be wrung out of the people. Politicians do not understand why only 28.2 million pay income tax when there are millions of houses worth billions. It wants people to inform authorities if they suspect anyone of buying property with black money. Thing is, 89% of households live in their own homes, majority of which have been inherited. If they ease too much they may lose taxes. Horrible thought.

We are so different, despite common origin.

"Dictators are prone to self-destruction," wrote L Bershidsky. Daniel Treisman, a political scientist at the University of California, Los Angeles, has studied how dictatorship lost to democracy 218 times. "For a recent paper, he analysed 218 episodes of democratization between 1800 and 2015 and found they were, with some exceptions (such as Danish King Frederick VII's voluntary acceptance of a constitution in 1848), the result of authoritarian rulers' mistakes in seeking to hold on to power." Dictators relinquish power voluntarily only in a third of cases, in the rest they lose power due to hubris, needless risk, slippery slope, trusting a traitor, and counterproductive violence. Despite our thirst for freedom how dictators emerge was investigated by R Nuwer. Dictators tend to "harbour fantasies of unlimited power, beauty, glory, honour and domination, paired with a lack of empathy". According to Freedom House there were "106 dictatorships or partial dictatorships, accounting for 54% of the world's nations", in 2015. Are some people forced to become dictators out of fear? Robert Mugabe of Zimbabwe is hanging on to power at the age of 93 years through electoral fraud and violence, maybe because he fears prosecution for the massacre of the Ndebeles from 1983 to 1987. In neighboring South Africa, Nelson Mandela set such a precedent that President Jacob Zuma is forced to step down in 2019. He has faced "800 separate charges of fraud, money-laundering, and graft, a court ruling that he violated the country's constitution, multiple votes of no-confidence, and a rape trial," wrote I Bremner. He is desperately trying to get his ex-wife, Nkosazana Dlamini-Zuma, elected president in his place to escape prosecution but he should beware. Ex-wives can often be extremely vindictive. Similarly, Jawaharlal Nehru set the standard for democracy in India, and control of the armed forces. Pakistan, our neighbor, is an example of why people get tired of corrupt politicians and accept military rule as the lesser of the two evils. Democracies deal with dictators because they need to win elections back home. As the largest producer of oil in the world, democratic nations had no problem dealing with Saudi Arabia. Now that the country is running large budget deficits  due to a fall in the price of oil, Crown Prince Salman is introducing liberal changes even though the royal family remains in power. He has to be careful it does not become a 'slippery slope'. We may pride ourselves on our 'noisy democracy', and 85% of people may have trust in the government but a worrying 53% would not mind military rule in the country. That is how we differ from Pakistan.

It is more than just a tax.

The Goods and Services Tax, or GST, is a "modern reform implemented with archaic sarkari attitude", thinks C Bhagat. When Bhagat, with a business degree and a decade's experience in an investment bank, is unable to understand how to calculate GST what hope is there for a person, who has passed school but never been to college? People have tried to explain how GST works. For services it is a flat rate of 18%, but for manufacturing, tax paid at the previous stage is deducted while submitting tax for the next stage, thus avoiding tax on tax. What is the problem? There are too many rates and extra cess has been added on items considered luxury or sinful, 3 returns have to be filed every month, and figures of all the stages have to match exactly with each other or they will be rejected. This gives enormous powers to tax official and with it the scope for extra income under the table. The structure of GST is contributing directly to a slowdown in the growth of the economy, wrote Prof I Rajaraman. Previously, a retailer would return unsold goods to the supplier after a certain period of time and pay him only for goods sold. With GST, suppliers are refusing to accept returns because the process of claiming refund of tax already paid is so cumbersome. Retailers are therefore reducing their inventories, thus reducing the entire manufacturing chain. There is difficulty claiming input costs if some suppliers are too small to be registered with GST. GST will hit the informal sector, which constitutes 94.6% of our non-agricultural business establishments, wrote M Chakravarty. This sector was supposed to wither away as the economy developed, but it has persisted as a low paid refuge for the poorly educated unemployed. Many industries in the formal sector source their supplies from them because they are cheap. Big businesses are celebrating. Why? Because without competition from the informal sector they can increase prices. But that will reduce consumption. Already consumption is down because of increase in the price of oil and a fall in the number of jobs, wrote J Rodrigues. The government should "not have the attitudes of India in the 1960s. Which are (a) profits are terrible; (b) all businesses are run by crooks who we have to catch red-handed; (c) running businesses is no work, so people can sit around and do returns all day; we are government, so all businesses are beneath us -- we tax guys being colonial lagaan collectors for these uncouth thieves," wrote Bhagath. Politicians and big business are in cahoots, so they know each other, higher taxes are needed for social schemes to win elections, and the middle class needs to be kept under control. Will GST succeed in all this?

We promise to be good. Please don't stop us.

Global money laundering is estimated to be between $800 billion to $2 trillion per year, according to the United Nations Office on Drugs and Crime, while companies lose 5% of their revenue every year to employee fraud, says the Association of Certified Fraud Examiners, wrote B Dominic. "An organization that loses trust among its customers due to one dishonest act of their employees will have to demonstrate its honesty in many more occasions just to even stand a chance of conveying to its customers that it has now mended its ways." The Volkswagen scandal is a typical example, in which the company installed a 'defeat device' in each of its diesel cars to reduce emissions during tests but not when the the car was in use. Profits of the company are still being hit because of recall of defective cars and fines imposed by regulators. Why do employees resort to such scams which will definitely be detected at some point? It maybe because companies set unrealistic targets on employees. There are many studies showing that companies should help employees reach their targets, but managers maybe creating unbearable pressure to maximize 'shareholder value', wrote J Nocera. When American Airlines gave a raise to its workers its share prices fell. "Labor is being paid first again," wrote K Crissey. "Shareholders get leftovers." The vast majority of those who cheat do it only once in a while. "Usually just a feeling that one is going to cause harm to someone is enough to deter a wrong act. But if the party on the other side is the government, or large organizations, the feeling that one could cause harm to them does not easily arise." People in India believe that the government is there to provide us with everything, because of decades of socialism, known colloquially as 'mai baap sarkar', which means 'government our father'. There is certainly a feeling that the government must provide everything but that is only in those who qualify for handouts or reservations, while the educated middle-class has a deep mistrust, even contempt, for politicians and civil servants, when we are consistently found to be the most corrupt country in Asia. The constant lies by politicians do not help. For example, we are constantly being told that biometric identity cards are optional and only to prevent theft from subsidies to the poor, but it is mandatory to file income tax returns. It is no surprise that at least some people see the government as the enemy. Instead of punishing corrupt officials the Rajasthan government wanted to pass a law to protect them. Most of us want to be honest. Just get the monkey off our backs.

A double edged sword called 'democracy'.

The Catalonia parliament voted for independence from Spain yesterday, by 70 votes to 10, with the opponents of independence boycotting the session. Following that, the Spanish senate in Madrid voted to revoke Catalonia's autonomy, sacked the regional government and imposed direct rule by the central government. A referendum was held on 1 October which was declared illegal by the Constitutional Court in Spain. The Spanish government sent the national police, who fired rubber bullets and beat up people wanting to vote, to stop the referendum. Only 42% of people could vote, of whom over 90% voted 'yes' for independence. The Spanish government is taking a hard line, claiming that the videos of police brutality are fake and that the government had a right to try to stop the illegal referendum from taking place. Spain has 17 regions which have their own elected bodies with administrative powers, while foreign policy, defense and fiscal policy are in the hands of the central government, which has the power to override a regional government. This creates resentment. A lot of it has to do with money. Catalans claim that they pay high taxes but get back less in return than Extremadura, which pays less taxes but gets more money from Madrid in return, and the Basque region gets to keep all its taxes. Transfer of wealth from a rich area to a poorer one is practiced in every country but it is the feeling of unfairness that is driving Catalan resentment. The anger grew because of austerity imposed by the European Union following the economic crisis of 2008. Unemployment jumped to 25% in Spain. Taxes were increased which infuriated Catalans who compared their rates with other regions of Spain. Following Catalonia, Veneto and Lombardi in Italy have overwhelmingly voted for more independence from the government in Rome. Other regions are also thinking of asking for more powers to regulate their own affairs. Europe's problems are due to poor decision making, trying to arrive at a consensus between 28 member nations, wrote P Taylor. Monetary union without fiscal union, getting rid of internal borders before strengthening its external boundaries and the withdrawal of the US under Donald Trump. A senior official of the EU warned of more cracks in the union. Paradoxically, being in the EU may provide more reassurance for separatists who feel that since they are part of a super-state they do not need to be part of a nation state. Prof Y Varoufakis wrote that this is a great opportunity for the EU, which should enact clear rules for those who want to break away from their countries but remain a part of the EU. No politician wants to give up power over his own people. It is becoming a tussle between hunger for power in politicians and yearning for true independence in people. Democracy. 

Call it recapitalization by issuing bonds.

The government just announced a plan to transfer $32 billion, equivalent to Rs 2.11 trillion, to public sector banks to cover a portion of the bad loans on their books. Analysts say that banks need an additional $40-65 billion to meet capital adequacy ratio under Basel III by 2019. The government is seeking help from the Reserve Bank to postpone meeting these requirements to a later date. That will have all sorts of repercussions on bank ratings and bond yields. Total bad loans at banks is estimated at $153.5 billion, or Rs 10 trillion. The government has passed an Insolvency and Bankruptcy Code which will empower creditors to remove existing management, take over assets of a defaulting company and appoint insolvency professionals to sell those assets, to settle outstanding debts. However, in the first case under the new law creditors could recover only Rs 540 million out of a total of Rs 9 billion, just 6%, of the outstanding dues. Not just the crooks, even banks are not happy with the bankruptcy law because value of assets apparently drops precipitously, as buyers lower their bids with a view to acquiring cheap assets. Banks want to increase provisions for bad loans, but that will only increase the amount required for recapitalization. Not just government banks, even private banks tend to hide their bad loans, probably to prevent a drop in the prices of their shares, which would reduce the wealth of their managers. Trouble is, that the law has no teeth to punish cheats, said Kroll, a US-based risk consulting firm. "Unfortunately when there is a bad business, there is typically, an element of fraud," said Tadashi Kageyama, head of Kroll's Asia operations. "All the stakeholders; the banks, the government as well as borrowers, want to lift the bad loans as quickly as possible, but our question is who is going to investigate the fraud and who is going to be accountable." Horrible thought. Criminals, officials, civil servants and politicians are all making merry, so holding one person accountable may bring down many. This is unlikely to stem the rot because politicians use them to pay for dubious policies, to win elections, wrote M Sharma. How will the government pay for Rs 2.11 trillion without increasing its fiscal deficit, which is pegged at 3.2% this year, when it has spent 96.2% of it already? Apparently, 60% of the amount will be financed by issuing bonds, so it will not add to the deficit. But, that is merely a sleight of hand because it adds to total government debt and increases interest payment, wrote Aurodeep. The government says it will allow banks to lend for new business projects but capacity utilization is at 71.2% so there is no reason to add to capacity. But, it is taxpayer money, so it belongs to politicians. Or so they think. 

Central banks trapped in Nash equilibrium?

The International Monetary Fund has predicted global growth of 3.5% this year, up from 3.2% last year, but this is as high as it can get, while another financial crisis is brewing up, wrote Prof K Basu. This growth is a result of "unprecedentedly easy monetary policies" by central banks, along with "large scale quantitative easing" which has "injected a massive $32 trillion into the global economy over the last nine years". "But these unconventional policies are turning out to be a classic game-theoretic bad equilibrium: each central bank stands to gain by keeping interest rates low, but, collectively, their approach constitutes a trap." Why? Because if one central bank reduces interest rate it weakens its currency and increases exports but if all of them do it then it increases strain on the banking sector. Investors, looking for higher returns, put money into risky investments: collateralized loan obligations (CLOs) have reached $460 billion, looking like the collateralized debt obligations (CDOs) of 2008. And, finally, people, worrying about their pension schemes, start saving more, which reduces demand. But why are central banks resorting to unconventional policies? With increasing growth and falling unemployment demand should rise, leading to higher inflation, but core inflation has actually fallen in the US, wrote Prof N Roubini. This is because developed economies are experiencing "positive supply shocks" as cheap goods from China and emerging economies keep prices low. In response central banks have kept interest rates low, with increased danger of asset price bubbles. Despite tightening labor markets wages have remained low, especially in Japan where unemployment has fallen to 2.8%. On top of all this the World Bank recently warned that millions of jobs will be lost to automation, which will further reduce bargaining power of labor. The Bank of England cannot explain why wages are not growing despite unemployment falling to a 42-year low of 4.3%, but hopes that they will soon begin to rise. Although the Dow is at record level N Colas does not find this excessive. He thinks that the next recession will be due to technological disruption to jobs. What of India? The Sensex closed at record level yesterday but V Prasad is not worried, even though prices are at 24 times expected earnings per share. There are warnings that emerging markets, including India, are going to be badly affected when developed economies start tightening their lending rates, wrote R Singhal. India has received Rs 12.6 trillion of foreign inflows since 1992-93, which could flow out. The 'Great Unwinding' has begun, wrote M Chakravarty and its effects are yet to be felt. "The invisible hand of the market does not always lead individually self-interested agents to a collectively desirable outcome," wrote Basu. It is the 'Nash equilibrium' of the traveler's dilemma game.

Another Great Leap Forward for China?

As expected, Xi Jinping has become a virtual dictator of China, like Mao Zedong used to be, as the party enshrined his thoughts into the constitution of the party. This is called, "Xi Jinping Thought for the New Era of Socialism with Chinese Characteristics". We have just got used to 'capitalism with Chinese characteristics' in which anyone disagreeing with the party is whisked off to secret prisons, with great resemblance to descriptions of the Gulag Archipelago. Socialism is state control of business, so does it mean that Xi would like to nationalise successful companies, like Alibaba? Business leaders can suddenly disappear if they displease party officials, so state control will take away the risks of doing business in China. Xi has been accumulating official titles over the last few years. Last year he anointed himself Commander in Chief of the Peoples' Liberation Army, or the PLA. Then he was hailed as 'mighty Uncle Xi', a term used for the emperor in olden days, as well as referred to as a 'core leader' which made him equal to Mao and Deng Xiaoping. What is the legacy of Mao Zedong, that Xi would want to emulate? In 1959 Mao conducted an experiment on his people, known as the Great Leap Forward, in which farm implements were melted down to make machinery. Over 20 million are estimated to have died of starvation as agriculture ground to a halt. The disaster of the Great Leap Forward resulted in opposition to Mao within the party. To silence any criticism Mao unleashed his Cultural Revolution, in which Red Guards, young people, some in their teens, were encouraged to humiliate and beat up older people, to make them subservient to the party. Red Guards carried Mao's thoughts contained in a Little Red Book, much like the quotations of Confucius or Sun Tzu. No accurate figures are available for the number of people killed by Mao but it maybe up to 65 million, wrote L Edwards. "What's so unusual about Emperor Shih Huang of China Dynasty? He buried alive 460 scholars only, but we have buried alive 46,000 scholars," boasted Mao. Red Guards cooked and ate meat of the people they killed. Not just at home, Xi Jinping is intent on expanding China's borders by forcibly occupying international territory. China has constructed artificial islands in international waters of the South China Sea, with military aircraft and ships. Elements of the PLA entered Doklam plateau in Bhutan forcibly, seeking to dominate adjoining Indian territory. A barbaric uncivilized people who can resort to cannibalism, China is a threat to the whole world. What will save us? Seems that Xi has trouble controlling generals of the PLA. Apparently, there was a plot to overthrow him. A civil war in China would bring peace for the world. We hope.

How people will feel in 2019 will decide the outcome.

"Will an economic slowdown hamper Modi's re-election bid?" asked P Chakravarty. GDP growth fell to 5.7% in the April-June quarter, current account deficit jumped to 2.4% of GDP, private consumption and investment demand are falling, and non-performing assets, or NPAs, of banks are rising. Total NPAs climbed to more than Rs 8.3 trillion at the end of the June quarter. The next general election is due by May of 2019, which is 18 months from now, so speculation on the outcome has already begun. "Political science theorists and public commentators intuit a relationship between GDP and electoral outcomes and thus proclaim that the 2019 electoral air is now getting murkier," wrote Chakravarty. Is it? Most people do not understand what GDP means and do not care. "In national elections, the National Democratic Alliance (NDA) from 1999-2004 delivered average 5.8% GDP growth and was voted out while the United Progressive Alliance (UPA)1 (2004-09) delivered 8% GDP growth and was voted back." What about elections in states? "In 27 of the 36 elections in this analysis, the ruling party lost vote share, regardless of GDP performance. But the ruling party won its re-election 19 times out of these 36 -- 12 of them with a lower share." "Of the 24 times that the ruling party delivered a higher GDP growth than in the previous tenure, it still lost vote share in 18." So is the GDP irrelevant? "...the ruling party has a 75% chance that it will lose vote share when it delivers higher GDP growth but more than a 90% chance that it will lose vote share when the economy slows." So, growth matters, negatively. Inflation also did not seem to affect voter behavior. The numbers are actually worse than they look, wrote M Chakraborty. Any growth that occurred was due to government expenditure. Government final consumption expenditure went up to 34.1% from 23.8%, whereas private final consumption expenditure declined to 62.3% from 66.2%. Services increased while manufacturing contracted. However, Index of Industrial Production, or IIP, rose 4.3% in August, while retail inflation remained steady at 3.28% in September, and wholesale prices rose by 2.6%, down from 3.2% in August. GDP growth from 2014 to 2016 was due to just one reason, and that is precipitous fall in oil prices, wrote M Chakraborty. When that reversed growth rate fell as windfall gains dried up. So, what will decide whether the people will give Modi a second term? It will depend on how people feel. Private consumption is down as manufacturing jobs are set to fall by 30% this year, wrote J Rodrigues. Which means, household finances of Indians are in a precarious state, wrote M Chakraborty. It may come down to the number of notes in our pockets.

Is it sympathy with a hidden motive?

An article in the Lancet asserts that India suffered the highest number of pollution related deaths, at a total of 2.51 million, in the world, in 2015. Of this 1.81 million died of air pollution and 0.64 million died of water pollution. China had the second highest number. With populations in excess of 1.3 billion people each it is only natural that total mortality rates will be highest in these 2 countries, but there is a huge outcry in India, partly because we have extreme respect for foreign journals, especially from western countries, and partly because it provides opportunities for some people to pontificate on various news channels. Apparently air pollution is worst in poor countries, related to the levels of particulate matter in air. True, but why is the rate of bronchial asthma rising worldwide. The World Health Organization estimates that 100-150 million people in the world suffer from asthma and about 180,000 die from the disease every year. There are 4 million asthma sufferers in Germany, 8% of Swiss population suffer from the disease, and 5,000 Americans die of it every year. But, surely pollution is caused by human beings through using fossil fuels in cars and producing electricity, while asthma is just bad luck? One big element of asthma is allergy to plants, and humans plant trees and grow gardens. Delhi is reputed to be the most polluted city in the world but Delhi is surprisingly green, virtually every road being an avenue, with trees growing on both sides. Surely, even the most strident critics will not recommend cutting all trees to reduce the rate of asthma? The government has announced a Graded Response Action Plan, or GRAP, which is a list of actions to be taken as pollution level rises, especially during winter months when fog traps smoke and fumes, raising air pollution to danger levels. It proposes shutting down an electricity producing plant on the outskirts of Delhi and heavy fines for anyone using diesel generators. All hospitals, hotels, shopping malls and high rise buildings have back-up generators in case of power cut. Why power cuts in the capital city? Because bills for those who use up to 400 units of electricity per month are reduced by half, so providers refuse to buy electricity when spot rates are high. Shutting down the power plant may make it worse. As for stopping construction activities, stone crushing and brick kilns, poor people, dependent on daily wages, will suffer. The same people who are screaming about pollution will scream about suffering of the poor. As for cars, India had 18 cars per 1000 people in 2014, compared to 797 in the US. Oceans are dying because of increasing acidity caused by excessive carbon dioxide. So, is the Lancet study an effort to transfer responsibility for climate change on poor countries while the rich ones continue to pollute? Cynical.

Are Indians illogical?

About 4/5th of people, that is 85%, in India trust the government, but, at the same time, 55% would support autocracy and 53% would be comfortable with military rule. This was in recent a report by the Pew Research Center. Naturally, commitment to democracy is highest in countries which are economically advanced and lowest in poorer countries. Why would a majority of Indians support military rule, with its severe restrictions, when almost everyone seems to trust the government. Vast numbers of people are dependent on subsidies handed out by the government, so naturally they have faith in the system. Even the 1.5 million engineering students are hoping to get government jobs after qualifying. There is a dearth of well paid jobs in the private sector and the fear is that the number of such jobs maybe shrinking, wrote S Khanna. According to the International Labour Organization our employment elasticity was 0.3 from 1991 to 2007, which means that a 1% growth in GDP produced 0.3% employment growth, but that has dropped to 0.15%. New businesses need fewer employees, with increasing use of automation and artificial intelligence. While Japanese and Korean business leaders are keen to learn about latest technologies, Indians do not have the same urgency, wrote Prof V Wadhwa. That is probably because Indian businesses do not bother with exports, when they can make eye-watering profits selling to 1.3 billion Indians, whatever the quality of production. Our total export in the last financial year was $274.63 billion, compared to over $2 trillion by China. Lately, there have been demands for reservation in education and government jobs by various groups, including land owning communities, such as the Marathas. On the other hand India is severely lacking in services that the state should provide, such as education, healthcare and criminal justice. E Barry studied an small village in UP which was run by a man, whose wife had been elected to the post. He ensured that the poor received services to which they are entitled and improved their living standards, and he was instrumental in the cover up of the brutal murder of a woman in front of villagers by her husband, because the man's family could guarantee 150 votes in the next election. The state government of Rajasthan has just issued an ordinance banning all investigations of civil servants on corruption charges. Why is this necessary? Because civil servants know exactly how politicians multiply their assets by 500% in just 5 years and they need to be protected from spilling the beans. Indians depend on government charity or jobs for survival but would not mind military rule to blow the scum away. That is the paradox.

A revolution by tweeting?

North Korea has written an open letter to all the parliaments of the world, pleading for help in stopping President Donald Trump, who is threatening to "totally destroy the DPRK". It is incensed that Trump "spit out ignorant remarks of 'total destruction' at the UN General Assembly", which is "an intolerable insult to the Korean people". Not strictly true. South Koreans are worried but not insulted. The letter threatens the US with a nuclear attack. "The DPRK has emerged a full-fledged nuclear power which has a strong nuclear arsenal and various kinds of nuclear delivery means made by dint of self-reliance and self development." An empty threat. North Korea cannot reach the US. South Korea is within reach and, maybe, the island of Guam, but the US can annihilate DPRK with attacks from its aircraft carriers and nuclear submarines. While begging for "international justice and peace" North Korea again issued threats of nuclear annihilation against the US vowing "unimaginable strike at an unimaginable time". Why this incoherent mixture of begging and bluster? Possibly because recent sanctions by the US against 8 North Korean banks and 26 individuals, who were operating in China, Russia, Libya and the United Arab Emirates, have seriously restricted its efforts to earn foreign exchange, to pay for import of essentials. Several countries have thrown out North Korean envoys. Even China, its traditional friend and protector, has cut imports from that country and supplies of oil. A high-ranking former official of North Korea, Ri Jong-ho recently said that the country will collapse as its industries grind to a halt and dwindling earnings are used to make new weapons. "Many people will die," he said. Liberals are infuriated with Trump's tweets but they seem to be unsettling the regime in North Korea, which is used to the weasel words of previous presidents. Kim Jong un may have a vast network of deep underground tunnels to protect himself against an attack, but he cannot live there for an entire lifetime. Americans just have to wait long enough before he reveals himself in search of food. Trump's tweets are unsettling his own party, the Republicans. Recently, Senator Bob Corker has criticised Trump's foreign policy. He feels emboldened because he is not standing for re-election in 2018. John McCain had his revenge on Trump by voting against the Obamacare repeal bill. But what can they do? If they get rid of a Republican president they will be trounced in elections. Seems that Trump will really "drain the swamp", as he promised. Republicans are also part of it.

How can we protect ourselves if we do not understand the rules?

"How borrowers are exploited by banks," is analysed by T Bandopadhyay. "An internal study-group of the Reserve Bank of India (RBI), chaired by Janak Raj, principal adviser, monetary policy department, has lambasted commercial banks for their non-transparency in fixing loan rates and graphically dissected how most Indian banks exploit borrowers." Banks are quick to lower the rate of interest on term deposits and for new borrowers but reluctant to lower rates for existing borrowers. The RBI sets a base rate and banks are supposed to add their spreads on that, based on borrowers' risk profile, in a transparent manner. But, "The most disturbing factor is the lack of transparency and 'arbitrariness' in the way the banks change the spreads." To a certain extent banks, especially public sector ones, are forced into cheating customers. Because, they are loaded with bad loans which are estimated to have crossed Rs 8 trillion, of which government banks hold over Rs 7 trillion. The total maybe even higher as the amount of restructured loans is unknown. Bank lending took off during the growth years of 2005-2009, but have turned sour since then. This is probably due to a combination of factors. Bank officials have little understanding of business models, politicians exert pressure on officials to favor friends and relatives and officials accept bribes for disbursing loans, which was described by the same author in "The murky world of suitcase banking". Private banks are even worse. They have a plethora of charges, much of them hidden in fine print and for which they do not inform customers. Indian banks are not the only ones cheating customers. International banks fixed Libor rates in 2008 to increase their profits, or to hedge against losses, when Lehman Brothers collapsed. Libor, or London Interbank Offered Rate, is the basis for $450 trillion of loans and derivatives, so banks would have made hundreds of billions from the scam. Total foreign currency transactions in the world amount to around $5 trillion everyday. Banks cheat customers on charges for conversion of one currency to another as well as on exchange rates. The RBI feels aggrieved that its rate cuts are not being transmitted to customers by banks. Bank officials resent being told what interest to charge on loans. They feel that the RBI should lay down the guidelines and let the market decide on what banks charge their customers. Trouble is that there is no system of punishing those who manipulate the system, like there is in the US. In the absence of any fear bank officials will continue to extort. The RBI should make rules simple and inform us. We can create the market.

Money go round will not make us wealthy.

"Despite low world prices for the commodities on which they tend to depend, many of the world's poorest economies have been doing well," wrote Prof D Rodrik. African countries, such as Senegal, Burkina Faso and Rwanda, and Asian countries like, India, Myanmar and Cambodia, are "all projected to achieve growth of 6% or higher this year". Surely not? Senegal has a GDP of $14.77 billion, Burkina Faso of $12.12 billion, Myanmar $67.43 billion and Cambodia $20.02 billion, while India's GDP is $2.25 trillion, so how can India be lumped with these tiny economies? Because India has the largest number of poor people in the world and there is no way out of poverty because manufacturing contributes only 17% of GDP, while it is 35% of GDP in Thailand, 32% in China, 30% in Philippines and 29% in Indonesia. So what? "Developing economies that manage to grow rapidly on a sustained basis without relying on natural-resources booms -- as most of these countries have for a decade -- typically do so through export-oriented industrialization." But, manufacturing is almost stagnant in India, forcing us to import everything, wrote A Ranade. Trouble is, manufacturing has become highly skilled and the rest of the world may not allow India to imitate China in growing fast through low-tech, labor intensive manufacturing because robotics and automation are gradually replacing human labor. Only 3% of Indians qualify as the global middle class, with a per-capita income of $10-$20 per day. The vast majority of Indians in the top 20% of the population consider themselves as lower middle class or poor. Whatever manufacturing we have is mostly in the informal sector, with 94.6% of non-agricultural establishments employing 5 workers or less. These businesses will be hit by the Goods and Services Tax, or GST, while larger companies will benefit, wrote M Chakravarty. Many of these small firms are suppliers of the big companies, so how they will profit from the failure of cheap suppliers is a mystery. If our growth is predicted to be in excess of 7%, despite all these negatives, then what is propelling this growth. "Labour has been moving from low-productivity agricultural activities to higher-productivity activities, but the latter are mostly in services rather than manufacturing." Sinha and Bhattacharya think that India can leapfrog over manufacturing to high tech digital services. Alibaba is to invest $15 billion on research into digital technologies. This is just one company in China. There will be some growth, "But the evidence suggests that the growth rates brought about recently by rapid structural change are exceptional and may not last," thinks Prof Rodrik. It means that we need new money from exports. Money going round in circles within India is no growth.

It was just oil all along, not policies.

"What went wrong with the economy?" asked M Chakravarty. "The economy started going downhill from the June 2016 quarter..." Economic growth was 7.27% in the March quarter of 2015, rose to over 9% in mid-2016 and then dropped off to 5.72% in the June quarter of this year. Why? The real question is not that growth has slowed down but why it was buoyant in 2015-16, despite investment as a proportion of GDP falling since 2011-12, export growth falling or growing in low single digits since 2012-13 and agriculture suffering 2 years of drought in 2014 and 2015. So, what caused the economy to grow in 2015-16? It was the price of oil. "The price of Brent crude fell from $114 per barrel in mid-June 2014 to $54 by the end of March 2015. It then fell further to $39 by the end of March 2016." Low oil prices, along with good monsoon and the huge rise in the salaries of civil servants led to a consumption boom which fell off with demonetization in November last year and the Goods and Services Tax, or GST, this year. The Reserve Bank is under pressure to reduce policy rate which, it is felt, will make it easier for companies to start new projects by reducing borrowing costs. The RBI regularly makes wrong inflation forecasts on the higher side, based on which it sets its policy rate, wrote S Jain. If interest rate is too high why was private consumption booming? "Even as India's total bank credit to GDP ratio declined by about 100 basis points over FY12-17, the 'retail credit' to 'private consumption' ratio rose by about 150 basis points over the period," wrote Mukherjee and Shekhar. Retail loans and loans against property have been growing, giving rise to fears of defaults. If consumer demand is so strong why is investment so weak? Because increased demand is being met by increasing imports, which grew by Rs 650 billion year-on-year, in the June quarter. "The vast majority of Indian businesses are in the informal sector. The Sixth Economic Census found that 94.6% of non-agricultural establishments in the country employed five workers or less," wrote M Chakarvarty. GST is intended to bring all these establishments within the formal sector and increase tax collection. No one is asking why the formal sector will take over these business sectors when it did not do so all these years or why rising prices due to new taxes will not increase imports. The share of indirect taxes is the highest in India when compared to other nations, while the savings rate is dropping, compared to China. India is missing out on global trade recovery, wrote T Kundu, and if commodity prices rise it could get worse. Should have saved the windfall from low oil prices. Too late.

Sounds good, but is it?

"A steady momentum has been building up in India on the clean and renewable energy front," wrote RK Misra. "The government has been working to effect a radical shift in our energy production and consumption patterns to reduce dependence on fossil fuels." As part of its policy "the government intends that all vehicles sold in India by 2030 should be electric". That is laudable but we Indians become wary when we are told that "it presents the government's vision of a shared, electric and connected mobility paradigm where mobility is a service based on an electric vehicle (EV) fleet, enabled by the convergence of low-cost technologies, smart designs, business model innovation and supportive policies." Indeed. Electric cars run on batteries which need to be charged. How long does it take? A full 300 mile charge for a Tesla takes 9.5 hours. Which means, that electric cars cannot be used for long drives. "Battery swapping" is a solution to this problem. Which means replacing an exhausted battery pack with a fully charged one. Tesla has applied for a patent on a system that would change a pack within 15 minutes. So, instead of petrol pumps there will be wayside stations where thousands of battery packs will be plugged in. Before that can happen we need guaranteed electricity supply 24/7 in every corner of the country. At present, large parts of India are without dependable supply. Power cuts are frequent even in the capital, new Delhi. Electricity will presumably be produced by solar panels, which are largely imported from China. Bids for solar projects has dropped to Rs 2.44 per unit, well below the lowest rate for thermal power. This is considered too low to be viable in the long term. Any rise in the price of solar panels from China will raise the cost of solar power and will put companies in financial stress. This being India, contracts are made to be broken. States, which signed contracts at a higher price are refusing to pay. They want to renegotiate at the lower price being offered at present. It all seems fantastic. Instead of fossil fuel people traveling by electric buses and taxis, not producing any polluting exhausts, charged with solar electricity, without the radioactive waste products of thermal power plants. Sadly, solar panels are difficult to dispose of because they are almost impossible to recycle. At present there is little recycling of the lithium-ion batteries of electric cars. They require large amounts of rare earths whose extraction is highly contaminating. Most likely, used batteries and solar panels will end up at garbage dumps, creating more hazardous mountains for the poor. Good intentions can suffer from unintended consequences. Especially in India.

The less we divide the more we will have.

"India 100th on global hunger index, trails North Korea, Bangladesh," informed a recent headline. The photograph at the top of the article shows a child, in tattered clothes, eating white rice with a tiny morsel of something yellow, presumably a little dal or vegetable. This is as bad as can be imagined. It has calories in the form of carbohydrates but no protein, fat, minerals or vitamins. No wonder that child wasting rate is 21% and stunting rate is 38.4%. The reason is simple. We have a huge population in a relatively small area which means less land per head. In terms of total population the top 6 nations are China, India, the USA, Indonesia, Brazil and Pakistan, but India has the highest population density at 394 per sq km, Pakistan 244 per sq km, China 145 per sq km, Indonesia 125 per sq km and the US has 90.6 per sq km. According to the Untied Nations, India will become the most populous country in the world by 2030, but according to a Chinese in the US, India has already surpassed China as a result of China's one child policy. How does population increase poverty? Because national wealth gets divided among a larger number of people. The nominal GDP of China is $11.8 trillion and per capita GDP is $8,481. India's GDP is $2.454 trillion but per capita GDP is only $1,850. With lower nominal GDP Brazil's per capita GDP is  $10,309, Indonesia's is $3,895, only Pakistan's is lower at $1,629. If we factor in the fact that the richest 1% of Indians own 58.4% of the total wealth of the nation, and the top 10% own 68.8%, we are left with 31.2% of wealth to be divided among 90% of the huge population. Not much for those at the bottom. Poverty and population density results in families cramped into tiny homes. Average living space per person in the lower 80% of the rural population is 94 sq ft, while average living space for the lower 60% of people in urban areas is 93 sq ft, the recommended space for a prisoner in our jails is 96 sq ft. Of course, the poorer the family the lesser the space. This overcrowding, along with poor nutrition, provides fantastic opportunities for the spread of the tuberculosis bacillus, resulting in 2,70,000 deaths per year. The only way to reduce malnutrition, hunger and Tb is to provide paying jobs but most of the growth in population is happening in states with poor education levels and poor job prospects. As the global economy, including developing countries, starts to grow India is lagging behind. Why is poverty so difficult to cure? Children, born deaf were given cochlear implants, but are still speechless because parents cannot afford speech therapy. The only way to reduce hunger is to reduce hungry mouths. We owe it to our children.

Is Pakistan playing with the US again?

Joshua Boyle, a Canadian, and his wife, Caitlan Coleman, an American, held hostage by Pakistani Taliban for 5 years, were rescued by Pakistani forces a couple of days ago. The couple have 3 children, born while in captivity. Boyle has alleged that one infant daughter was murdered by the Taliban and his wife was raped by one of the guards. Why were they having children while being held by barbaric savages, when the woman would not have medical supervision of her pregnancy and delivery? It could be because they had nothing else to do or, because they may have thought that even savages would not harm her if she was pregnant or breast-feeding. We do not know, but the story is certainly very strange. Boyle, whose parents are fundamentalist Christians, became interested in terrorism after 9/11 and even learnt Arabic. He was briefly married to Zaynab Khadr, oldest sister of Omar Khadr, a detainee at Guantanamo Bay. He could have converted to Islam. "He was given special breaks from his job as customer service representative to pray at appropriate times, his co-workers say," wrote Mayor T Ritchie. The family refused to board a flight to the US because Boyle feared arrest over his previous links to Islamists. President Trump thanked Pakistan for its cooperation saying that "I believe they're starting to respect the United States again". This is a snide reference to Pakistani support for terrorist networks, like the Haqqanis. Defence Secretary, James Mattis told Congress. "So, there are decisions Pakistan must make. We are out to change that behaviour and do it very firmly." Pakistan Foreign Minister, Khawaja Asif was given a hostile reception in Washington, wrote S Sirohi. Pakistan has been throwing such bones to the US for a very long time. President Reagan invited Jalaluddin Haqqani, the founder of the Haqqani network. to the White House. In 2011, the Pakistan Army helped the US to kill Osama Bin Laden in Abbottabad. Obama won re-election in 2012 and showed his gratitude by showering Pakistan with sophisticated weapons, including P-3C Orion maritime patrol aircraft, 2000 TOW anti-armor missiles, and 20 Cobra attack helicopters, among others, which could only be used against India. Confident of US support Pakistan has increased terrorist attacks on India. A few attacks were from Maoists and other insurgents but the majority were cross-border from Pakistan. The farcical house arrest of Hafiz Saeed has just been withdrawn. So, is the release of the hostages a bargain for the release of Saeed? We hope not. But, we will not be surprised if it is.

If everyone is right what do we do?

The slowdown in the Indian economy, with the International Monetary Fund predicting a growth rate of 6.7% this year, is being hotly debated. Prof D Nayyar has his own views on "Why the economic slowdown, and how to fix it". Faced with criticism the government has responded in 2 ways. "There is a denial mode that dubs critics as Cassandras or prophets of doom. There is a damage-limitation mode that seeks to mollify people with doses of populism, such as the cut in excise duties on petrol and diesel or goods and services tax (GST) reliefs and concessions to small businesses and exporters." Rural demand is down, the share of the manufacturing sector is falling, private investment is down and exports are down. So what is the remedy? "The way forward, then, is to allow the fiscal deficit to rise by 0.5% of GDP, using that to finance public investment, and to drop interest rates in steps by at least 2 percentage points, which would help the exchange rate depreciate. Together, these would would stimulate investment and promote exports, to revive economic growth." The government has spent 96.1% of the fiscal deficit by the end of August, so a fiscal stimulus is already on. If it continues at this rate the deficit will rise to 4.9% of GDP, 1.7% higher than the 3.2% promised in the budget, wrote V Kaul. The government should lower taxes instead. Trouble is that revenue deficit till the end of August was 133.9%, compared to 91.7% last year. Reacting to enormous pressure the government reduced fuel prices by Rs 2 per liter, having increased excise duty 11 times, as the price of crude fell from $110 per barrel to below $50 a barrel. We are paying taxes of around Rs 40 per liter of petrol. Rural demand has slumped because of falling wage growth and there is a great need for a rural stimulus, wrote Prof Himanshu. Economic growth was driven by private consumption, driven by credit, which has risen 150 basis points in the last 5 years, wrote Mukherjee and Shekhar. But this is not likely to last because it has not been supported by investments, consumer confidence has fallen to a new low, households savings has dropped to 19% of GDP and the rise of bad loans at banks. Personal consumption is supported by 8.9% growth in outstanding credits on credit cards. As for reducing policy rate by 200 basis points to weaken the rupee, the rupee has fallen from 7.5 to the dollar in 1966 to around 65 today. We should be the highest exporting nation in the world. Apparently, the Real Effective Exchange Rate of the rupee is some 18% overvalued. Is the government pressuring the Reserve Bank to keep it high? Only the government gains from a strong rupee, while the nation loses, wrote TK Arun. The more the experts the more the confusion. Politicians laugh. 

Why bother, when there will be no result?

Writing on "The new pattern of urban terror", ex-IPS officer, Anil Chowdhry expresses regret at the respect offered to the police in the US compared to the way our police are treated in India. After the shooting at a Las Vegas hotel, that killed 58 people and wounded 489, President Trump thanked the Las Vegas Police for their "miraculous response" and praised their "exemplary professionalism". The people and the media did not spread rumors and, "There was no politicking, blame game or mudslinging." Recently, there has been some dispute about the timeline of events between police and the hotel from where the shooting happened. After the terrorist attacks on Mumbai on 26 November, 2008 "The blame game on intelligence and police failure went on and on." Perhaps, the biggest difference between the US and India is that mass shootings are commonplace in the US, so that the police, hospitals and the media have become experts in their response, whereas they are rare in India, probably because our police are quietly keeping us safe. After Indian soldiers carried out a 'surgical strike' within Pakistani territory in Kashmir in September last year politicians, who had never served a day in the armed forces, were going around thumping their 56 inch chests. Now the major who led the attack has written a book on how difficult it was to get his men back safely. In August, police had to fire 1,000 rounds to control rioting mobs after the controversial guru, Baba Ram Rahim was found guilty of rape by a CBI court. The point is not that there was a riot, everyone anticipated one, the point is why the people were allowed to congregate and why buses and local trains were not suspended for the day to prevent people from coming. Turns out that politicians of all shades sought the support of Ram Rahim, to win elections. Writing against 'encounters', wherein criminals are shot dead, Indian police need to be reformed, wrote D Prasad. Why do police eliminate criminals instead of trying to capture them? Our police are treated with gross disrespect and not provided with the most basic necessities for human existence, even as they sacrifice their lives to fight Maoist terrorists. If they do catch criminals what's the use? The courts will only set them free. Yesterday, the Allahabad High Court threw out the verdict of a CBI court on the murder of Aarushi Talwar and Hemraj. The Court insulted the CBI judge saying that he had acted as a "math teacher" and "film director". Another, High Court, this time in Gujarat, overturned the death sentences of 11 men who cold bloodedly set fire to a train, killing 59 Hindu pilgrims. If the lower court judges are so incompetent why are they not being sacked? Meanwhile, the dead cry out for justice. Since the police are on the front-line they get blamed.

The self destruct button of civilization.

Human beings were much better off living as hunter gatherers wrote J Lanchester in "The case against civilization". He makes a distinction between technology and science. "Wheels and wells, cranks and mills and gears and ships' masts, clocks and rudders and crop rotation: all have been crucial to human and economic development, and none historically had any connection with what we think of today as science." According to Prof JC Scott, the most important piece of technology was the control of fire, for which we are indebted to our ancestors, Homo erectus. Fire allowed us to cook food which gave more energy to develop our brains. Evidence of the use of fire by humans is found in southern Africa. "The earliest, oldest strata of the caves contain whole skeletons of carnivores and many chewed-up bone fragments of the things they were eating, including us. Then comes the layer from when we discovered fire, and ownership of the caves switches: the human skeletons are whole, and carnivores are bone fragments." Then came farming and everything changed. Farming of grains led to development of societies and the arrival of the taxman. Plough agriculture became man's work and women stayed at home to look after children and the house. Agriculture needs land and perhaps the first wars were fought over ownership of land, which were more fertile and created more wealth for inhabitants. Fire allowed the use of metals and the oldest bows and arrows date back to 9,000 BCE. Wheels were used for making chariots and iron was used for making armor. Writing was invented in Mesopotamia and for half a century after that it was used only for bookkeeping, keeping an account of what everyone possessed so as to tax them. Our government has proudly announced the collection of Rs 3.86 trillion in direct taxes from April to September this year. Since our politicians believe that every citizen is a criminal we have to provide our photographs, prints of all 10 fingers and iris scans for the privilege of paying income tax. Forget chains made of iron, digital chains are oh so comfortable. J Suzman studied Bushmen in southern Africa who still live as hunter gatherers. They spend 17 hours a week in finding adequate amounts of food, 19 hours a week in domestic chores and had an average calorie intake of 2,300 a day. He calls it "Affluence without abundance." No need to accumulate. As humans fled Chernobyl, wild animals have taken refuge and are thriving, a dramatic proof that nature needs to be protected from science. Perhaps, humans need to be protected from science as well as some predict humans being wiped out by robots. But, robots have no emotion and cannot appreciate art or music, so what would be the reason for their existence? Perhaps, if we civilize them they will eliminate each other.

How to find solutions to the puzzle of India?

The International Monetary Fund, or IMF, increased its forecast for global economic growth to 3.6% in 2017, while reducing India's growth prospects to 6.7%. "IMF expects India's economy to recover sharply in 2018 to grow 7.4%, still 30 basis points lower than its earlier estimate in April." That is good, but will it help the people? "The vast majority of India businesses are in the informal sector. The Sixth Economic Census found that 94.6% of non-agricultural establishments in the country employed five workers or less." wrote M Chakravarty. As farms became smaller, people were forced off their land into city slums, "or they scratched out a precarious living by supplementing their income by wage labour or by setting up petty businesses, or they took their lives". "78.2% of non-agricultural enterprises were self financed" which means that "The huge informal sector is, for the most part, a vast sink of disguised unemployment, a reflection of the failure of the formal sector to create jobs for the masses." The Goods and Services Tax, of GST, is supposed to force the informal sector to get registered and become formal. Will this suddenly make them world class and create millions of jobs? Hardly, because GST is extremely complicated which raises the cost of compliance, wrote Prof I Rajaraman. Most of these people have little education so they will have to pay accountants, which will increase costs further. But it is not only because of GST, wrote Himanshu. Manufacturing and construction sectors have been declining since last year, so jobs for labor are down. Stalled real estate projects have hit a nine-year high, the rate being higher in the commercial than the residential sector. GST will hit low end manufacturing, like toys and textiles, which create jobs for the poor. The World Bank warned of a jobs crisis due to automation. Automation is highly capital intensive so businesses in the informal sector will not be able to compete and will have to shut down. Why so much attention on GST? Because very few Indians pay income tax. The government is patting itself on the back because it was able to snare 28.2 million people into filing tax returns in 2016-17, an increase of 24.7% over the previous year. This is a country of 1,300 million people. Politicians get infuriated because there are hundreds of millions of properties, so they think that there are that many rich people in India. A survey showed that most people in India live in their own homes, and 97% of the poorest 20% of the population own their own residences. With earnings so meager only the better off can afford to pay rent,the poor will starve. That makes India a big puzzle and solutions difficult to find. Will GST improve living conditions? Most unlikely, wrote A Ranade. Not by increasing taxes, at least.

Can ordinary people be truly independent?

"To revive the ailing European project, the ugly conflict between Catalonia's regional government and the Spanish state may be just what the doctor ordered," wrote Prof Y Varoufakis, briefly Finance Minister of Greece in 2015. Catalonia is a state in the northeast of Spain, one of the wealthiest in the country. On 1 October it held a referendum on declaring independence from Spain, in which 90% voted for independence, on a turnout of 43% of the people. Declaring the vote to be illegal the government in Madrid sent Spanish riot police which resorted to extreme brutality, to prevent people from voting. Over 900 people were injured in police violence. The European Union refused to condemn the Spanish government. "To declare, as the president of the European Commission did, that this is an internal Spanish problem in which the EU has no say, is hypocrisy on stilts," wrote Varoufakis. "Of course, hypocrisy has long been at the centre of the EU's behaviour. Its officials had no compunction about meddling in a member state's internal affairs -- say, to demand the removal of elected politicians for refusing to implement cuts in the pensions or to sell off public assets at ridiculous prices." He is referring to the severe austerity, imposed on Greece by Europe, which has broken its economy. Even German Finance Minister Wolfgang Schaeuble, who was the architect of these measures, admitted that he would never have agreed to implement them on his own country. Catalonia is suffering because of austerity imposed on Spain. "Barcelona, Catalonia's exquisite capital, is a rich city running a budget surplus. Yet many of its citizens recently faced eviction by Spanish banks that had been bailed out." The mayor of Barcelona planned tax cuts for local businesses and built 15,000 housing for refugees but the central government stopped the tax cuts and barred entry to the new housing to force Barcelona to transfer its budget surplus to Madrid. Exploitation of people by politicians is not new or confined to Spain. Globalization resulted in a flow of finance to where returns were maximum, so that the rich became richer, but people were stuck within boundaries of states to be suppressed by their own governments. Emmanuel Macron, elected president with such enthusiasm in France, finds it difficult to comprehend problems of ordinary people. Just as Hillary Clinton was unable to understand that people supported Donald Trump because of economic anxiety and not because all of them were in a "basket of deplorables". Indians were made to stand in queues for hours to withdraw money from banks because of demonetization but some have seen their fortunes grow. Whatever happens in Catalonia politicians will gain. They always do.