THE GET RICH GUIDE FOR THE DEVELOPMENT SECTOR
A 2-Pager by Ajit Chaudhuri
People looking to make big bucks quickly and easily generally tend to avoid the development sector – their preferred career choices are investment banking, government service and spiritualism. They are making a mistake! Do not be misled by talks of sacrifice and penury, there is plenty of money to be made in poverty eradication. Here’s how it’s done!
Start your own NGO: The Trusts Act is structured so that the NGO and all its assets are in effect the property of its owner (in legal parlance, the settler) – which is why no matter how many UN jobs with tax free dollar salaries are dangled in front of their faces, NGO bosses never leave. There is little point in working your way up the hierarchy – no. 2s are synonymous with peons. So don’t waste time – start your own NGO, and then work to multiply its assets and infrastructure. Be sure to pack the governing body with friends and relatives. Have one ‘name’ there as well – someone from within the sector who sits in a lot of governing boards and contributes to none of them. Get a pliable statutory auditor – like the ‘name’, they too are a dime a dozen. Get one of your adult children in as second line management cum inheritor of the organisation, and ensure that s/he uses a different surname – Kumar is the surname of choice for boss’ children cum Deputy Directors.
Work the donor circuit: Speak English, practise that wearied sigh that combines exasperation and hope, and focus conversation on the misdeeds of the government. Nod appreciatively when donors describe their philosophies and policies, and commend their wisdom. Be suitably obsequious, and do not hesitate to equate their views with those of Einstein and/or Keynes. Ply them with bullshit about having followed your inner calling to work with the poor instead of joining the corporate sector. Do not ever get drawn into topics such as – if you have spent twenty years working here (and used lots of money in the process), why is it that the tribal/dalit/woman/child/farmer/whatever is in the same situation as when you began. And do not forget – these people tend to equate tailoring and table manners with intelligence and integrity.
Once you own an NGO and get the money, you need to ensure that it goes where it is supposed to go. The best ways of ensuring this are –
Overstate and underpay salaries: Most grants have money for salaries. Have fictitious employees earning fat salaries (who taught this to Satyam?), pay those who do exist less than the amount budgeted and pocket the differential, and hey presto, about 70 percent of the salary component of the grant can be in your pocket. If you are queried, say that it was towards a staff welfare fund that will enable the organisation to pay salaries when project funds are not available. Or, that you are forced to pay ‘tax’ to the Maoists. Some staff members are vocal about not liking it? Kick them out!
Get into revolving funds: This money is given to you to pass on as loans to beneficiaries who pay it back so that it can be passed on as loans again to a new set of people and so on, therefore revolving. Sell the concept to donors as enabling the money to ‘macro-benefit’. The beauty of this is that, when it is first returned, it can revolve into your pocket. You can even apply the concept to all money provided for activities. For example, you have raised funds to provide goats to people. Buy the goats, and thereby book the expenditure, but pass them on as a loan or at half payment. Ensure that the beneficiaries are willing colluders so that, when the donor comes, there are goats, grateful faces and no mention of payment or loans. If caught, make an argument combining concepts of neo-liberalism, community institution building, and the enhanced value people ascribe to a product when they pay something for it.
Use multiple funds: Get many donors to support the same thing. That community water tank could have been bought with X’s money or Y’s, who is to know. Vouchers can be easily relocated from one donor’s file to another (you have to ensure that you avoid the practise of marking the voucher as pertaining to a particular donor). And temporary signage expressing the community’s gratefulness to X can be easily organised. The donor wants permanent signage, such as a marble slab built into the wall? Express your concern at the trend of donors acquiring cheap publicity for themselves.
Enable over-invoicing via empowerment: This business of schools, hospitals, water tanks, goats, etc., requires someone to do some work. The beauty of the ‘rights mode’ approach is that nobody has to do anything – you merely have to organise people to demand services from the government by having meetings. Budgeting for meetings is easy, so many people into so much per person for food, transportation, and lodging. There is no way for the donor to check whether you actually held the meetings and, if you did, how many people actually came and how much was actually spent on food. Ensure that you maintain a book containing unintelligible minutes in some local language followed by a series of thumbprints. And don’t worry, this is not expected to show results – nobody seriously believes that the government does things because some NGO organises people.
Get your assets to work for you: You have (oops, read as ‘your NGO has’) a nice SUV, office and training centre. Get these to generate funds by hiring them out to projects at a price that, as both the client and the service provider, you decide. And yes, build in a fat budget within the grant for training hall hire and transportation. Take this concept a step further by building in a huge consulting fee for experts and use this to pay yourself. You are caught? Say that you are not paid a salary from the project, but as it does absorb considerable amounts of your time and draws on your expertise you do need to be compensated in some way, and at a rate that the UN would have paid had they sent you to New York to take over as Secretary General.
Take up pimping: When you get tired of all the small time wheeling and dealing described above, you can consider the next stage in the hierarchy – the middleman. Donors want to work in poor areas, but don’t have the ability and the systems to do so. Offer services as a ‘resource organisation’, wherein your NGO does the unpleasant work of identifying NGOs and projects, monitoring them, providing training and expertise, and enabling the work to synergise at the district/state/national level. Ensure that this involves the pleasant work of receiving the funds and routing it to small time operators at a 25 percent operational charge and an additional bottom-up kickback.
Become a Guru! How long can this last? There is a saying – you can fool one person all the time, or you can fool all the people once, but you can’t fool all the people all the time. The development sector does not provide an exception. But herein lies the beauty of the system. Once you are revealed for what you are, with nice cars, jazzy properties, kids in expensive schools and colleges, latest communication equipment, etc., while undertaking poverty alleviation work on a token salary so as to ‘feel the pain of the poor’ – donors will flock to you for more of the same. You can increase the above activities fourfold while hitting the development conference circuit as a motivational speaker and receiving awards for your services to the poor.
Let me add that this is not everyone’s cup of tea. The same requirements for making big money everywhere else – of vision, intelligence, diligence, ruthlessness and a zero sense of ethics – are required here. If you don’t combine these, the development sector can be a cruel place in the long term and you may be better off trying to actually do good work for the poor.
Tuesday, September 8, 2009
Wednesday, August 12, 2009
Married But Available
MARRIED BUT AVAILABLE
A 2-Pager by Ajit Chaudhuri
Are you an MBA? The correct answer to this one depends upon what MBA stands for – there are imbeciles around who claim that it is an acronym for ‘married but available’ and replying in the affirmative raises a few cackles among them. But others, who do equate it with a Masters in Business Administration, are also asking – what does an MBA stand for? Today’s economic quagmire has many villains – investment banks, big business, credit rating agencies – and one among the institutions that society has lost confidence in is the business school. Is it a mere coincidence that so many of the greedy bastards that screwed the world are products of these places, or is there something deeply flawed with the B-School as an institution of learning? What is it about management education that has led people to believe that B-Schools foster self-interested, unethical and even illegal behaviour? Why are MBAs considered part of the problem rather than the solution?
A recent article in the Harvard Business Review addresses some of these questions. Joel Podolny, its author, was the Dean at Yale School of Management and, before that, a Professor at Harvard Business School and Stanford Graduate School of Business – and therefore his views are those of an insider. This paper summarises his views on what is wrong and what needs to be done to address the problems at B-Schools, and then tries to apply the learnings to the Indian B-School environment.
He makes several observations. The first is that B-Schools pay little attention to ethics and to the teaching of value based leadership. The second is on the way B-Schools teach management, carving up the subject into disciplinary silos that leave MBAs without a holistic appreciation for the challenges that they will confront. The third is that many academics at B-Schools are not curious as to what really goes on in companies, and prefer to develop theoretical models that obscure rather than clarify the way organisations work.
About 50 years ago, a study of business education in the US (by, among others, the Ford Foundation) concluded that the quality of scholarship was quote terrible unquote and recommended hiring academics trained in traditional disciplines that emphasise quantitative methods. Today, faculty relying on mathematical models and whatnot outnumber those emphasising qualitative techniques. This has produced greater rigour – but also fragmented the study of management challenges as problems were carved up to fit academics’ areas of expertise. This has had two consequences –
One, B-Schools ignored the study of values and ethics. Those who do teach ethics (and there was a move towards this after the Enron and WorldCom fiascos) do so in a vacuum. And one of the consequences of this is that many MBA students regard right and wrong as defined by the norm, i.e. if many others are doing it then it is right. And yes, there are surveys to back this up.
Two, leadership and ethics courses are flawed, with faculty and students regarding them as ‘soft’ subjects that do not require detailed analysis. And the manner of teaching these subjects is such that students are allowed to regard the moral consequences of their actions as mere afterthoughts.
Doesn’t the case study methodology, with its emphasis on context, help overcome these problems? No, says Prof. Podolny! Cases can be a source of inter-disciplinary integration and a way to focus on various dimensions of leadership, but they rarely are. Faculty from the same discipline usually write a case, and the cases end up being function specific. And when students must read a dozen cases a week, they tend to believe that each one deals with an entirely separate issue. And the case methodology does not teach that being consistent in different situations and continuously paying attention to detail are among the most challenging aspects of leadership.
Another issue is rankings! These drive the competition for B-School students – not bad in itself, as market pressures should force Deans to keep improving curricula and teaching methods. But these factors influence rankings only in the long run, and curricula changes require faculty cooperation and time to iron out wrinkles. Deans therefore tend to focus on influencing the measures that change rankings quickly, such as getting graduates to place themselves in higher paying jobs. This means admitting students with more experience, who command higher starting salaries, and preparing them for higher paying industries such as consulting and financial services. It also means bringing in consultants to help students perform better at interviews, and thereby boosting the number of job offers each receives. Again, on the surface, nothing wrong! But when B-Schools use rankings and starting salaries as the basis by which to attract students, they lend credibility to students’ claims that a B-School’s primary goal is to get them a high paying job.
What do B-Schools need to do? First, accept that people don’t simply lack trust in B-Schools, they actively distrust them (and there is a huge difference). Second, show that they value what society values, that principles, ethics and attention to detail are important components of leadership, and they need to place emphasis on leaders’ responsibilities and not just their rewards. Third, foster greater integration among disciplines (possibly through the appointment of teaching teams rather than single faculty courses) and link analysis with values. Fourth, encourage qualitative research. Fifth, stop competing on rankings. Sixth, set up a code of conduct for MBAs (learn from other professions, lawyers, doctors) and revoke degrees of those who violate this.
Though obviously based upon the American experience, there is much that B-Schools in India can take from this article. We too have a mushrooming of institutions that provide an MBA, and students here too have a single expectation – that a two-year stint will increase their value in the job market by a factor of ten. Many spend a lot of money on their MBAs, and have borrowed to do so (and have to pay the money back with interest), and see the degree in pure return on investment terms – and B-Schools have cashed in on this. This is not an environment that encourages talk about ethics and values.
At the same time, the need for a focus on these matters, and on responsible leadership, is probably more in India where we see affronts in front of us every day of our lives and where the conflicts of interest that an MBA student has to deal with in the future are more basic. We do need a moral compass to guide us on difficult choices, and a B-School does need to play a role in providing us with the tools to formulate one.
I would like, at this stage, to hark back to Dr. Verghese Kurien – the founder of, among many institutions, the Institute of Rural Management in Anand (IRMA) where I did two years of swotting for an MBA back in the late 1980s and where I am privileged to occasionally visit now. I didn’t think too highly of him then – there is something off-putting about having someone’s photograph in every room while the person is still alive. But there was a sharp and clear focus on values within IRMA and a deep belief that this provided a cutting edge to its graduates. This has been eroded along with his loss of influence in the boardroom, and the absence of a vision for the institution is discernable.
There is a saying ‘never waste a disaster’! The same applies to economic downturns. This is a time for B-Schools to look at basics again – and to ask themselves a question. What does an MBA stand for?
A 2-Pager by Ajit Chaudhuri
Are you an MBA? The correct answer to this one depends upon what MBA stands for – there are imbeciles around who claim that it is an acronym for ‘married but available’ and replying in the affirmative raises a few cackles among them. But others, who do equate it with a Masters in Business Administration, are also asking – what does an MBA stand for? Today’s economic quagmire has many villains – investment banks, big business, credit rating agencies – and one among the institutions that society has lost confidence in is the business school. Is it a mere coincidence that so many of the greedy bastards that screwed the world are products of these places, or is there something deeply flawed with the B-School as an institution of learning? What is it about management education that has led people to believe that B-Schools foster self-interested, unethical and even illegal behaviour? Why are MBAs considered part of the problem rather than the solution?
A recent article in the Harvard Business Review addresses some of these questions. Joel Podolny, its author, was the Dean at Yale School of Management and, before that, a Professor at Harvard Business School and Stanford Graduate School of Business – and therefore his views are those of an insider. This paper summarises his views on what is wrong and what needs to be done to address the problems at B-Schools, and then tries to apply the learnings to the Indian B-School environment.
He makes several observations. The first is that B-Schools pay little attention to ethics and to the teaching of value based leadership. The second is on the way B-Schools teach management, carving up the subject into disciplinary silos that leave MBAs without a holistic appreciation for the challenges that they will confront. The third is that many academics at B-Schools are not curious as to what really goes on in companies, and prefer to develop theoretical models that obscure rather than clarify the way organisations work.
About 50 years ago, a study of business education in the US (by, among others, the Ford Foundation) concluded that the quality of scholarship was quote terrible unquote and recommended hiring academics trained in traditional disciplines that emphasise quantitative methods. Today, faculty relying on mathematical models and whatnot outnumber those emphasising qualitative techniques. This has produced greater rigour – but also fragmented the study of management challenges as problems were carved up to fit academics’ areas of expertise. This has had two consequences –
One, B-Schools ignored the study of values and ethics. Those who do teach ethics (and there was a move towards this after the Enron and WorldCom fiascos) do so in a vacuum. And one of the consequences of this is that many MBA students regard right and wrong as defined by the norm, i.e. if many others are doing it then it is right. And yes, there are surveys to back this up.
Two, leadership and ethics courses are flawed, with faculty and students regarding them as ‘soft’ subjects that do not require detailed analysis. And the manner of teaching these subjects is such that students are allowed to regard the moral consequences of their actions as mere afterthoughts.
Doesn’t the case study methodology, with its emphasis on context, help overcome these problems? No, says Prof. Podolny! Cases can be a source of inter-disciplinary integration and a way to focus on various dimensions of leadership, but they rarely are. Faculty from the same discipline usually write a case, and the cases end up being function specific. And when students must read a dozen cases a week, they tend to believe that each one deals with an entirely separate issue. And the case methodology does not teach that being consistent in different situations and continuously paying attention to detail are among the most challenging aspects of leadership.
Another issue is rankings! These drive the competition for B-School students – not bad in itself, as market pressures should force Deans to keep improving curricula and teaching methods. But these factors influence rankings only in the long run, and curricula changes require faculty cooperation and time to iron out wrinkles. Deans therefore tend to focus on influencing the measures that change rankings quickly, such as getting graduates to place themselves in higher paying jobs. This means admitting students with more experience, who command higher starting salaries, and preparing them for higher paying industries such as consulting and financial services. It also means bringing in consultants to help students perform better at interviews, and thereby boosting the number of job offers each receives. Again, on the surface, nothing wrong! But when B-Schools use rankings and starting salaries as the basis by which to attract students, they lend credibility to students’ claims that a B-School’s primary goal is to get them a high paying job.
What do B-Schools need to do? First, accept that people don’t simply lack trust in B-Schools, they actively distrust them (and there is a huge difference). Second, show that they value what society values, that principles, ethics and attention to detail are important components of leadership, and they need to place emphasis on leaders’ responsibilities and not just their rewards. Third, foster greater integration among disciplines (possibly through the appointment of teaching teams rather than single faculty courses) and link analysis with values. Fourth, encourage qualitative research. Fifth, stop competing on rankings. Sixth, set up a code of conduct for MBAs (learn from other professions, lawyers, doctors) and revoke degrees of those who violate this.
Though obviously based upon the American experience, there is much that B-Schools in India can take from this article. We too have a mushrooming of institutions that provide an MBA, and students here too have a single expectation – that a two-year stint will increase their value in the job market by a factor of ten. Many spend a lot of money on their MBAs, and have borrowed to do so (and have to pay the money back with interest), and see the degree in pure return on investment terms – and B-Schools have cashed in on this. This is not an environment that encourages talk about ethics and values.
At the same time, the need for a focus on these matters, and on responsible leadership, is probably more in India where we see affronts in front of us every day of our lives and where the conflicts of interest that an MBA student has to deal with in the future are more basic. We do need a moral compass to guide us on difficult choices, and a B-School does need to play a role in providing us with the tools to formulate one.
I would like, at this stage, to hark back to Dr. Verghese Kurien – the founder of, among many institutions, the Institute of Rural Management in Anand (IRMA) where I did two years of swotting for an MBA back in the late 1980s and where I am privileged to occasionally visit now. I didn’t think too highly of him then – there is something off-putting about having someone’s photograph in every room while the person is still alive. But there was a sharp and clear focus on values within IRMA and a deep belief that this provided a cutting edge to its graduates. This has been eroded along with his loss of influence in the boardroom, and the absence of a vision for the institution is discernable.
There is a saying ‘never waste a disaster’! The same applies to economic downturns. This is a time for B-Schools to look at basics again – and to ask themselves a question. What does an MBA stand for?
Sunday, August 9, 2009
The Real Football Fan
THE REAL FOOTBALL FAN
By Ajit Chaudhuri
Football has become popular, and everyone and their aunts consider themselves a fan. How do you sift the genuine article from the bozos that are floating around in red t-shirts with ‘RONALDO’ emblazoned across the back? Here are some ways.
1. The real fan thinks that his/her baby’s first words were not ‘Mama’ or ‘Papa’ but a footballer’s name? Those first ‘mmmboo’s would have been mistaken for Emil Mboo Mboo, the midfielder from the Indomitable Lions of 1990 and 1994
2. The real fan does not associate the name ‘Schumacher’ with size, beauty or cars, but would instead think of a German goalkeeper who should have gone to jail for his assault on Patrick Battiston in the 1982 semi-final. Similarly, Socrates is not a philosopher, Wagner is not a musician, and Kiss is not a rock group.
3. The real fan cannot stand the German or Austrian national teams, even that winning German one of 1990 (grudging admiration, perhaps, at best). S/he always supports their opponents and is happy when they are kicked out of tournaments (Lechkov’s header in the 1994 quarter final was a particularly sweet moment, as was the ball dropping out of Kahn’s hands and on to Ronaldo’s feet in 2002). S/he would never, ever, forgive them for that fixed match they played in 1982 to keep Algeria out.
4. The real fan would associate the name ‘Bernd Schuster’ with that brilliant creative midfielder who refused to be part of the German team featured in point 3 above. Yes, he did go on to do other things.
5. The real fan knows that Diego Maradona is the best footballer that could ever have been. The mind does not change because he is not in a suit pimping for his country as a world cup destination or coaching some fancy team. He took two very ordinary teams to the world cup final (can you name any other player from either of those teams?), where he won one and lost one. Which other candidate for the ‘best ever’ tag did anything without brilliance all around in support. Pele in 1958 and 1970? Cruyff in 1974? The only one coming anywhere in the vicinity is Zidane in 2006.
6. The real fan watches women’s football for the football and not the women, and did not even consider a peek when Brandi Chastain took off her shirt to celebrate the USA’s victory in 1999. And yes, s/he loves Marta and Sun Wen.
7. The real fan follows the fortunes of teams out of the top four in the English and the top two in the Spanish leagues. S/he knows of Zenit St. Petersburg, Stadt Rennes, FC Tromso, Ruben Kazan and Almeria, and knows why teams don’t like to play away against FC Rosenborg in the Champions League in November.
8. The real fan does cry – but on select occasions such as when Cameroon lost that quarterfinal in 1990, or when Andres Escobar was murdered.
9. The real fan watches Indian football, and tries to do so in the stadium whenever possible.
10. The real fan starts smirking when the discussion turns to whether Cristiano Ronaldo has taken the best free kick ever. S/he has seen Michel Platini and Roberto Falcao take free kicks.
By Ajit Chaudhuri
Football has become popular, and everyone and their aunts consider themselves a fan. How do you sift the genuine article from the bozos that are floating around in red t-shirts with ‘RONALDO’ emblazoned across the back? Here are some ways.
1. The real fan thinks that his/her baby’s first words were not ‘Mama’ or ‘Papa’ but a footballer’s name? Those first ‘mmmboo’s would have been mistaken for Emil Mboo Mboo, the midfielder from the Indomitable Lions of 1990 and 1994
2. The real fan does not associate the name ‘Schumacher’ with size, beauty or cars, but would instead think of a German goalkeeper who should have gone to jail for his assault on Patrick Battiston in the 1982 semi-final. Similarly, Socrates is not a philosopher, Wagner is not a musician, and Kiss is not a rock group.
3. The real fan cannot stand the German or Austrian national teams, even that winning German one of 1990 (grudging admiration, perhaps, at best). S/he always supports their opponents and is happy when they are kicked out of tournaments (Lechkov’s header in the 1994 quarter final was a particularly sweet moment, as was the ball dropping out of Kahn’s hands and on to Ronaldo’s feet in 2002). S/he would never, ever, forgive them for that fixed match they played in 1982 to keep Algeria out.
4. The real fan would associate the name ‘Bernd Schuster’ with that brilliant creative midfielder who refused to be part of the German team featured in point 3 above. Yes, he did go on to do other things.
5. The real fan knows that Diego Maradona is the best footballer that could ever have been. The mind does not change because he is not in a suit pimping for his country as a world cup destination or coaching some fancy team. He took two very ordinary teams to the world cup final (can you name any other player from either of those teams?), where he won one and lost one. Which other candidate for the ‘best ever’ tag did anything without brilliance all around in support. Pele in 1958 and 1970? Cruyff in 1974? The only one coming anywhere in the vicinity is Zidane in 2006.
6. The real fan watches women’s football for the football and not the women, and did not even consider a peek when Brandi Chastain took off her shirt to celebrate the USA’s victory in 1999. And yes, s/he loves Marta and Sun Wen.
7. The real fan follows the fortunes of teams out of the top four in the English and the top two in the Spanish leagues. S/he knows of Zenit St. Petersburg, Stadt Rennes, FC Tromso, Ruben Kazan and Almeria, and knows why teams don’t like to play away against FC Rosenborg in the Champions League in November.
8. The real fan does cry – but on select occasions such as when Cameroon lost that quarterfinal in 1990, or when Andres Escobar was murdered.
9. The real fan watches Indian football, and tries to do so in the stadium whenever possible.
10. The real fan starts smirking when the discussion turns to whether Cristiano Ronaldo has taken the best free kick ever. S/he has seen Michel Platini and Roberto Falcao take free kicks.
Thursday, January 8, 2009
A GUIDELINE FOR THE MELTDOWN
A GUIDELINE FOR THE MELTDOWN
By Ajit Chaudhuri
‘Kuchh baat hai, ki hasti mit-thi nahin hamarin.
Sadiyon rahaa hai dushman, daurey zamaa hamara .’
In the beginning, it was pretty good fun! The TV pictures of stockbrokers returning their Porches and the billionaires contemplating an existence with only a few hundred million – one could believe there was a God after all. But the meltdown has spread, and those at the lower end of the chain have begun to feel the pain. Organisations are not hiring, people are not buying, profit margins are dropping, and there is a general sense of pessimism contributing to a downward spiral. World over, the following trends are visible –
• Economic growth rates are dipping and the D word is being mentioned.
• Currencies are fluctuating, as are oil and commodity prices.
• Food is becoming more expensive.
• People are less worried about the HIV/AIDS situation in Africa and more worried about whether they will receive a salary at the end of the month.
What does this mean for the Indian NGO sector, and what does it mean for that globalised category within, the FCRA -wallah?
The past decade has been a good one for the FCRA-wallah. Money has been plentiful, organisations have grown in number and size (people employed, assets owned, projects undertaken, money spent) if not in significance, the development sector has professionalised to some extent, and a fairly large ancillary industry (consultants, evaluators, middlemen, etc.) has developed. Is this a bubble, like the sub-prime credit market, which is going to burst? Or are the fundamentals of the sector strong, and is the crisis likely to leave us better off for the discipline required to survive. It is difficult, at this very early stage, to make credible predictions – so let me stick to pointing to possible trends.
Funds for NGOs from abroad originate primarily from three sources. The first is the individual donor – directly, or via charitable organisations (the Actionaids, Oxfams, etc.), or via religious institutions. This has been dropping for some time, and most foreign charities are more dependent upon being part of the long sub-contracting chain linking taxpayers’ money with development activities . It is likely to drop significantly further, as household budgets tighten and a generation that considered giving as an obligation goes into retirement.
The second source is the overseas development budgets of western governments and multilateral agencies. With economic growth in rich countries likely to be negative in 2009 and with budgets strained with fiscal stimulation packages for the local economy, funding Indian NGOs and the huge inverted pyramid of consultants and support organisations that accompany them is unlikely to be a high priority in the near future.
The third source is private and corporate foundations. An interview with the bosses of Carnegie Foundation and Hewlett Foundation is telling – both are large grant making organisations whose assets have depreciated sharply in the meltdown and, while they will stick with plans for 2009, the chances are that there will be major cuts in 2010. Salary freezes are already on, construction plans are deferred, and worst of all everyone has to travel economy class. Other Foundations have started cutbacks and layoffs and there is also plenty of news of reneging on funding commitments made.
And therefore, if you are dependent upon foreign sources for your money, chances are that you are going to have a difficult few years ahead.
What do NGOs need to do to survive? Here is a list of suggestions!
1. Be calm and confident! NGOs have survived bigger things, and fund crunches are nothing new. It is these times that separate men from boys.
2. Get back to the basics! Return to your core values! Cut out activities that have origins in vanity – that expansion into the neighbouring district/state, whatever. And if the main reason for your organisation to exist (be honest here) is because it exists, close down.
3. As the old saying goes – never waste a crisis! Sort out governance issues! Get a board in place that meets the needs of a modern organisation – that provides oversight and strategic vision. Push through a separation of ownership from management. Get those friends and relatives out, get those whose presence is for tokenism purposes out, get the disinterested out. Get in people who are going to add value. And get a real auditor.
4. Be nice to your existing donors, and work to keep them! Especially those donors you earlier disrespected and/or accorded low priority to because they don’t pester you and inflict their presence on you continuously and regularly. Send your reports on time and without the need for reminders, and work to convince them that their money is being spent correctly and effectively. Be sure that they too are facing a crunch, and are deciding which relationships are worth keeping and which are not.
5. Get Indian money! Most FCRA-wallahs have a disdain for Indian money, no doubt having experienced that Indians tend not to have a proclivity to confuse khadi attire and fluency in English with integrity and intelligence. The Indian money is there! It is plentiful! Giving money for good causes is recession proof . It does not come to you for good reasons, not because Indians are idiots who just don’t get it. Address those reasons!
6. Recruit sensibly! You won’t have the usual rejects coming to you for jobs –the intelligent and well-qualified are more willing to work in the development sector in these times, when opportunities elsewhere have dried up. Work to get good people into the sector and to keep them there.
7. Focus on results! The world does not owe you an existence for your values and self-sacrifice. And these days, people are even less likely to be dazzled by your impassioned rhetoric on the conference/workshop circuit. Demonstrating that your organisation’s work is bringing about real change is the most effective way of raising money and winning support.
8. Try and deal directly with your donors! Every in between layer takes 20 percent of the budget. Yesterday was yesterday! Today, there is not enough for the fat cats – the various nodal organisations, resource organisations and whatever that were representing your interests to others – and for you. Work ruthlessly to eliminate them from your relationships.
9. Collaborate more with your peer organisations! Share back office functions where possible. And collude with them on 8 above.
10. Explore new and recession resistant sources of funds! Many Universities have a requirement for students to spend a semester in the field and are willing to pay organisations that enable this. Getting on to the indigenous tourism circuit can be lucrative, as can providing a base for volunteerism. And, of course, begin couching your activities in climate change terms – that is the one topic that has not gone off the agenda in the meltdown.
By Ajit Chaudhuri
‘Kuchh baat hai, ki hasti mit-thi nahin hamarin.
Sadiyon rahaa hai dushman, daurey zamaa hamara .’
In the beginning, it was pretty good fun! The TV pictures of stockbrokers returning their Porches and the billionaires contemplating an existence with only a few hundred million – one could believe there was a God after all. But the meltdown has spread, and those at the lower end of the chain have begun to feel the pain. Organisations are not hiring, people are not buying, profit margins are dropping, and there is a general sense of pessimism contributing to a downward spiral. World over, the following trends are visible –
• Economic growth rates are dipping and the D word is being mentioned.
• Currencies are fluctuating, as are oil and commodity prices.
• Food is becoming more expensive.
• People are less worried about the HIV/AIDS situation in Africa and more worried about whether they will receive a salary at the end of the month.
What does this mean for the Indian NGO sector, and what does it mean for that globalised category within, the FCRA -wallah?
The past decade has been a good one for the FCRA-wallah. Money has been plentiful, organisations have grown in number and size (people employed, assets owned, projects undertaken, money spent) if not in significance, the development sector has professionalised to some extent, and a fairly large ancillary industry (consultants, evaluators, middlemen, etc.) has developed. Is this a bubble, like the sub-prime credit market, which is going to burst? Or are the fundamentals of the sector strong, and is the crisis likely to leave us better off for the discipline required to survive. It is difficult, at this very early stage, to make credible predictions – so let me stick to pointing to possible trends.
Funds for NGOs from abroad originate primarily from three sources. The first is the individual donor – directly, or via charitable organisations (the Actionaids, Oxfams, etc.), or via religious institutions. This has been dropping for some time, and most foreign charities are more dependent upon being part of the long sub-contracting chain linking taxpayers’ money with development activities . It is likely to drop significantly further, as household budgets tighten and a generation that considered giving as an obligation goes into retirement.
The second source is the overseas development budgets of western governments and multilateral agencies. With economic growth in rich countries likely to be negative in 2009 and with budgets strained with fiscal stimulation packages for the local economy, funding Indian NGOs and the huge inverted pyramid of consultants and support organisations that accompany them is unlikely to be a high priority in the near future.
The third source is private and corporate foundations. An interview with the bosses of Carnegie Foundation and Hewlett Foundation is telling – both are large grant making organisations whose assets have depreciated sharply in the meltdown and, while they will stick with plans for 2009, the chances are that there will be major cuts in 2010. Salary freezes are already on, construction plans are deferred, and worst of all everyone has to travel economy class. Other Foundations have started cutbacks and layoffs and there is also plenty of news of reneging on funding commitments made.
And therefore, if you are dependent upon foreign sources for your money, chances are that you are going to have a difficult few years ahead.
What do NGOs need to do to survive? Here is a list of suggestions!
1. Be calm and confident! NGOs have survived bigger things, and fund crunches are nothing new. It is these times that separate men from boys.
2. Get back to the basics! Return to your core values! Cut out activities that have origins in vanity – that expansion into the neighbouring district/state, whatever. And if the main reason for your organisation to exist (be honest here) is because it exists, close down.
3. As the old saying goes – never waste a crisis! Sort out governance issues! Get a board in place that meets the needs of a modern organisation – that provides oversight and strategic vision. Push through a separation of ownership from management. Get those friends and relatives out, get those whose presence is for tokenism purposes out, get the disinterested out. Get in people who are going to add value. And get a real auditor.
4. Be nice to your existing donors, and work to keep them! Especially those donors you earlier disrespected and/or accorded low priority to because they don’t pester you and inflict their presence on you continuously and regularly. Send your reports on time and without the need for reminders, and work to convince them that their money is being spent correctly and effectively. Be sure that they too are facing a crunch, and are deciding which relationships are worth keeping and which are not.
5. Get Indian money! Most FCRA-wallahs have a disdain for Indian money, no doubt having experienced that Indians tend not to have a proclivity to confuse khadi attire and fluency in English with integrity and intelligence. The Indian money is there! It is plentiful! Giving money for good causes is recession proof . It does not come to you for good reasons, not because Indians are idiots who just don’t get it. Address those reasons!
6. Recruit sensibly! You won’t have the usual rejects coming to you for jobs –the intelligent and well-qualified are more willing to work in the development sector in these times, when opportunities elsewhere have dried up. Work to get good people into the sector and to keep them there.
7. Focus on results! The world does not owe you an existence for your values and self-sacrifice. And these days, people are even less likely to be dazzled by your impassioned rhetoric on the conference/workshop circuit. Demonstrating that your organisation’s work is bringing about real change is the most effective way of raising money and winning support.
8. Try and deal directly with your donors! Every in between layer takes 20 percent of the budget. Yesterday was yesterday! Today, there is not enough for the fat cats – the various nodal organisations, resource organisations and whatever that were representing your interests to others – and for you. Work ruthlessly to eliminate them from your relationships.
9. Collaborate more with your peer organisations! Share back office functions where possible. And collude with them on 8 above.
10. Explore new and recession resistant sources of funds! Many Universities have a requirement for students to spend a semester in the field and are willing to pay organisations that enable this. Getting on to the indigenous tourism circuit can be lucrative, as can providing a base for volunteerism. And, of course, begin couching your activities in climate change terms – that is the one topic that has not gone off the agenda in the meltdown.
Friday, December 12, 2008
MORE ON TERROR
OH NO! NOT MORE ON TERROR!
A 2-Pager by Ajit Chaudhuri
‘Hagney jad aavey tho loto ro yaad aavey’
These days, I am at the receiving end of everyone’s outpourings on terror. Our PM is talking about a federal agency to deal with the scourge, our opposition about bashing Pakis, our chatterati about bashing politicians, and our media (and no doubt our phone companies) about sending messages in support of or against this that and the other. Some are linking the above average post-terrorist-strike noise with the fact that the English speaking elite got hit instead of the usual migrants from Bihar, others with elections being around the corner. And I am increasingly being reminded of the old Marwari saying featured above. And I too would like to add my piece to the rhetoric.
In sum, I would like to say what I have yet to hear – that we will have to live with terrorism until and unless we deal with corruption. And we will have corruption as long as our political system depends upon black money. And in all the rhetoric, there has been no mention of the need to address this and get the state to fund elections. This is because, for our political system, terrorism is a small price to pay for the spoils of office that high corruption allows, more so because the spoils accrue to the neta-babu-thekedar nexus and the price is paid by the aam aadmi. And expecting the nexus to change the rules in favour of honest and transparent governance is the equivalent of expecting Al-Qaeda to formulate rules for the US for better inland security. So – are you lukewarm about corruption? Do you think of it as an ‘enabler’? Do you see it as a wheel of the economy? If yes, do not crib about terrorism. You, like Lashkar-e-Toiba, are part of the problem. And yes, I do realise that my argument rests upon the link between terrorism and corruption, and this is what this paper is about. Please read on!
Allow me to take you back to class 6, when we learnt that fire required three ingredients – oxygen, fuel and a spark. A fire cannot begin without the presence of all three, and can be doused by removing any one of these. Terrorism too requires three ingredients to thrive. The first is the existence of a large number of very angry and aggrieved people in the general population. The second is the existence of organisations with the ability to motivate a core group of desperate young people into doing anything. The third is the ability to move people, weapons and explosives.
Much has been made of the fact that the US and the UK, unlike India, have dealt with that one terrorist attack in such a way as to ensure that there have been no others. Well, there are large numbers of people majorly pissed with the US and plenty of organisations willing to work on terrorist strikes against it – but they are all sitting in Pakistan, Afghanistan, the Middle East and North Africa. We have them next door, in every direction, and even within. The UK too has angry people and organisations – many sitting within, but procuring and moving weapons and explosives is so difficult that they find it easier to go to Pakistan and Afghanistan to vent.
It is the existence of all the ingredients that makes India particularly vulnerable. With politicians who should be in jail for crimes against humanity legitimately occupying high office, with a sclerotic legal system, and with opportunities available only to a miniscule minority, I think it is safe to say that we can be certain of large numbers of angry and aggrieved people in the foreseeable future. And as the old saying goes – you can fight history but you can’t fight geography – and we are stuck with the neighbours we have. As long as they remain chaotic basket cases for failed states, there will be space for non-state actors to go about their business of motivating and training disaffected youth and coordinating terrorist strikes. And they too will remain so in the foreseeable future. And our not seeing Pakistani, Bangladeshi and Nepali stability and prosperity as being in India’s strategic interest does not help the situation. It is the last piece of the triumvirate that can be worked upon – that it is so easy to procure and move weapons and explosives, to create identities, to establish safe houses and to generally go about the mundane activities that are necessary for intent to be converted into action. And this is where corruption is a critical factor.
Terrorist operations do not build logistical chains – these are usually too complicated. They merely adapt existing ones for their requirements, chains that have been built up for the illegal movement of drugs, hooch, contraband, and people (prostitutes, child labour, etc.). And these chains have political connections and police protection, if not ownership. They cannot operate without these. And if you look back at any terrorist act and dissect it, you will see the role of corruption as a critical enabler at every stage. Yes, the same corruption that we see around us all the time!
If I have convinced on the link between corruption and terrorism, let me take the argument a step further. There is no way of separating corruption relating to terrorism from corruption relating to crime, politics, extortion and speed money. If you want to curb one, you have to curb all. And curbing corruption is our only way of realistically preventing further terrorist attacks. However, curbing corruption is not easy. It is naïve to expect that individual citizens can do this by standing up and saying no – refusing to accept bribes and refusing to pay them – or by signing on to some media website. The root of the problem is that a politician does not have the option of honesty – s/he has to generate funds to pay for elections. And if the person at the top of the food chain has to generate a slush fund, there is no way of preventing lesser minnows doing the same. And the only way around this is to have the state meet the election expenses of all major political parties, thereby removing the top persons’ need for corruption. Unfortunately, this requires statesmanship – not a quality associated with our political establishment. It is easier to talk about creating more bureaucracy in the form of another agency, and of Paki bashing, and of uniting people against terror. And then to just forget about the whole thing! Until the next terrorist attack! And then do the same again! And again! As has been the case so far!
Acronyms etc.:
Aam-Aadmi Ordinary Person
Neta-Babu-Thekedar Politician-Bureaucrat-Contractor
PM Prime Minister
A 2-Pager by Ajit Chaudhuri
‘Hagney jad aavey tho loto ro yaad aavey’
These days, I am at the receiving end of everyone’s outpourings on terror. Our PM is talking about a federal agency to deal with the scourge, our opposition about bashing Pakis, our chatterati about bashing politicians, and our media (and no doubt our phone companies) about sending messages in support of or against this that and the other. Some are linking the above average post-terrorist-strike noise with the fact that the English speaking elite got hit instead of the usual migrants from Bihar, others with elections being around the corner. And I am increasingly being reminded of the old Marwari saying featured above. And I too would like to add my piece to the rhetoric.
In sum, I would like to say what I have yet to hear – that we will have to live with terrorism until and unless we deal with corruption. And we will have corruption as long as our political system depends upon black money. And in all the rhetoric, there has been no mention of the need to address this and get the state to fund elections. This is because, for our political system, terrorism is a small price to pay for the spoils of office that high corruption allows, more so because the spoils accrue to the neta-babu-thekedar nexus and the price is paid by the aam aadmi. And expecting the nexus to change the rules in favour of honest and transparent governance is the equivalent of expecting Al-Qaeda to formulate rules for the US for better inland security. So – are you lukewarm about corruption? Do you think of it as an ‘enabler’? Do you see it as a wheel of the economy? If yes, do not crib about terrorism. You, like Lashkar-e-Toiba, are part of the problem. And yes, I do realise that my argument rests upon the link between terrorism and corruption, and this is what this paper is about. Please read on!
Allow me to take you back to class 6, when we learnt that fire required three ingredients – oxygen, fuel and a spark. A fire cannot begin without the presence of all three, and can be doused by removing any one of these. Terrorism too requires three ingredients to thrive. The first is the existence of a large number of very angry and aggrieved people in the general population. The second is the existence of organisations with the ability to motivate a core group of desperate young people into doing anything. The third is the ability to move people, weapons and explosives.
Much has been made of the fact that the US and the UK, unlike India, have dealt with that one terrorist attack in such a way as to ensure that there have been no others. Well, there are large numbers of people majorly pissed with the US and plenty of organisations willing to work on terrorist strikes against it – but they are all sitting in Pakistan, Afghanistan, the Middle East and North Africa. We have them next door, in every direction, and even within. The UK too has angry people and organisations – many sitting within, but procuring and moving weapons and explosives is so difficult that they find it easier to go to Pakistan and Afghanistan to vent.
It is the existence of all the ingredients that makes India particularly vulnerable. With politicians who should be in jail for crimes against humanity legitimately occupying high office, with a sclerotic legal system, and with opportunities available only to a miniscule minority, I think it is safe to say that we can be certain of large numbers of angry and aggrieved people in the foreseeable future. And as the old saying goes – you can fight history but you can’t fight geography – and we are stuck with the neighbours we have. As long as they remain chaotic basket cases for failed states, there will be space for non-state actors to go about their business of motivating and training disaffected youth and coordinating terrorist strikes. And they too will remain so in the foreseeable future. And our not seeing Pakistani, Bangladeshi and Nepali stability and prosperity as being in India’s strategic interest does not help the situation. It is the last piece of the triumvirate that can be worked upon – that it is so easy to procure and move weapons and explosives, to create identities, to establish safe houses and to generally go about the mundane activities that are necessary for intent to be converted into action. And this is where corruption is a critical factor.
Terrorist operations do not build logistical chains – these are usually too complicated. They merely adapt existing ones for their requirements, chains that have been built up for the illegal movement of drugs, hooch, contraband, and people (prostitutes, child labour, etc.). And these chains have political connections and police protection, if not ownership. They cannot operate without these. And if you look back at any terrorist act and dissect it, you will see the role of corruption as a critical enabler at every stage. Yes, the same corruption that we see around us all the time!
If I have convinced on the link between corruption and terrorism, let me take the argument a step further. There is no way of separating corruption relating to terrorism from corruption relating to crime, politics, extortion and speed money. If you want to curb one, you have to curb all. And curbing corruption is our only way of realistically preventing further terrorist attacks. However, curbing corruption is not easy. It is naïve to expect that individual citizens can do this by standing up and saying no – refusing to accept bribes and refusing to pay them – or by signing on to some media website. The root of the problem is that a politician does not have the option of honesty – s/he has to generate funds to pay for elections. And if the person at the top of the food chain has to generate a slush fund, there is no way of preventing lesser minnows doing the same. And the only way around this is to have the state meet the election expenses of all major political parties, thereby removing the top persons’ need for corruption. Unfortunately, this requires statesmanship – not a quality associated with our political establishment. It is easier to talk about creating more bureaucracy in the form of another agency, and of Paki bashing, and of uniting people against terror. And then to just forget about the whole thing! Until the next terrorist attack! And then do the same again! And again! As has been the case so far!
Acronyms etc.:
Aam-Aadmi Ordinary Person
Neta-Babu-Thekedar Politician-Bureaucrat-Contractor
PM Prime Minister
Wednesday, October 15, 2008
AN ICY WIND
AN ICY BREEZE
A 2-Pager by Ajit Chaudhuri
Introduction: Readers of my generation may remember the novel “Running Blind” by Desmond Bagley – a good book made better for its introducing the reader to a small island nation nestling just under the Arctic Circle. Iceland occasionally popped up in the news after that – from its location as somewhat in between Moscow and Washington and therefore a good place to hold contentious discussions during the cold war years to the exploits of the singer Bjork. Readers of human development indexes would know Iceland as a country that combines wealth with equity , travel addicts for its mountainous and volcanic interior and for whale watching, and scientists for its energy policy and research on genetics . And hardcore Olympics watchers this August, such as yours truly, would have followed the country’s men’s handball team trying to win its first every gold medal (they lost in the final and settled for silver).
Iceland burst into the news again last week as the first nation-casualty of the current financial crisis! Its banking system has broken down, its currency is in free fall, and it has moved from being a wonderful example to a horrible warning – all in one week. What happened? Why? And what are the lessons to be had?
What happened? The first indication that it was not only banks going under and that an entire nation was in deep s--- was on 7th October, when the Icelandic government made three announcements –
1. That it was abandoning its efforts to peg the Icelandic Krona at 131 to a Euro.
2. That it would nationalize the country’s three largest banks – Kaupthing, Landsbanki and Glitnir.
3. That it was in the process of obtaining a loan of Euro 4 billion from Russia.
The British were the first to react! Upon not getting a guarantee protecting British deposits in the banks, Gordon Brown announced the freezing of Icelandic assets in Britain on 8th October and used anti-terrorist legislation to do so. Other countries with a significant Icelandic banking presence followed suit. The Icelandic Krona dropped in a day to 340 to a Euro and then went into free fall. There was no sign of any money from Russia, and Iceland’s Prime Minister Geir Haarde backtracked to say that the loan was still being negotiated.
Why? How did a country fall so far so fast? Iceland had traditionally been dependent upon fishing – its location and lack of neighbours give it a natural advantage in this field. Somewhere in the 1990s, the government decided to liberalize the economy – starting with the banking sector. Banking prospered, and soon found that Iceland’s demographics did not match the banks’ growth ambitions. Aggressive expansion followed – into the UK, the USA, the Netherlands and Scandinavia. Deposits were attracted by high interest rates , which were in turn forced up by Iceland’s high inflation – about 14 percent in the 12 months up to September 2008. They were successful! IceSave, an Internet banking subsidiary of Landsbanki, had about 300,000 depositors (about Iceland’s population) in the UK. Landsbanki’s owner, Bjorgolfur Gudmundsson, became a billionaire and Iceland’s second richest man (after his son) and went on to indulge in typical billionaire stuff like buying an English football team.
And then, the sub-prime crisis happened and banks stopped lending to each other. Icelandic Banks, like other banks, were unable to roll over their loans – and with a combined foreign debt of about seven times Iceland’s GDP, a falling currency (thereby increasing the value of foreign debt in Icelandic Kronur), and a high inflation rate (thereby adding momentum to the falling currency), they were particularly exposed. This is normally where a central bank would step in and play the role of a lender of last resort – but this was not possible here with the debt being so much more than the size of the national economy.
What’s going to happen? Difficult to say, with events still unfolding every day! Can the USA play guarantor, as it has chosen to do with its own banking system? Possible, but it does relegate Iceland to Puerto Rican status. Can the European Union? In the long run, Iceland may see value in joining the Euro – but not right now, Iceland’s current ruling party and opposition are both anti-EU and anyway the EU is unlikely to be interested. On the other hand, the fundamentals for Iceland are intact – the fish haven’t gone anywhere, there are still no aggressive neighbours, and its human capital remains among the best in the world. Its currency was considered the world’s most overvalued and could do with a correction. The tourism industry is already benefiting from Iceland being a less expensive place to visit. I would bet on a large loan (from Russia?), a circumspect recovery, less flirtation with neo-liberal concepts, and, for the West Ham United fans among you, Mr. Zola not getting funds for a major expansion this January.
What are the lessons here? The first is a sobering note for all the insurgent elements in India who are looking to break away – running a small country requires more than the ability to fire an AK-47 and suck up to fringes in the Pakistani and Bangladeshi armies. You have to run an airline, maintain a central bank and a currency, and develop a football team for world cup qualifiers. And when large fish decide to screw you, you have to lie down and take it – witness Geir Haarde’s comment when Gordon Brown used anti-terrorist legislation to send Iceland into a tailspin, a mere ‘this is not a friendly act’. Iceland may be the richest, whitest and most progressive country on the planet, but when the fertilizer hits the fan who cares – the world can afford it to fail.
The second is more worrisome in the Indian context. Policy makers choose between enabling growth and fighting inflation. Policies that enable growth, such as low interest rates, more circulation of money and larger fiscal deficits, tend to be inflationary and to reduce the rupee’s value. And policies that fight inflation, such as high interest rates, squeezed money supply and circumspect government spending tend to curtail growth. It is an interesting tightrope walk and one that is not so much of an issue in times of high growth and low inflation – this was the case over the past few years but is not the case now. The Indian government had reacted to the difficulties faced by people because of rapidly rising prices by taking anti-inflationary measures. The priorities appear to have u-turned in the aftermath of the financial crisis, and all hands are now on the pump that looks to maintain high economic growth and protect the integrity of the country’s financial systems. In effect, they have chosen the interests of those with businesses, jobs and bank accounts over those who use a significant proportion of their earnings to buy food. Given the number of elections scheduled over the next year, I am yet to decide whether this is brave or foolhardy.
A 2-Pager by Ajit Chaudhuri
Introduction: Readers of my generation may remember the novel “Running Blind” by Desmond Bagley – a good book made better for its introducing the reader to a small island nation nestling just under the Arctic Circle. Iceland occasionally popped up in the news after that – from its location as somewhat in between Moscow and Washington and therefore a good place to hold contentious discussions during the cold war years to the exploits of the singer Bjork. Readers of human development indexes would know Iceland as a country that combines wealth with equity , travel addicts for its mountainous and volcanic interior and for whale watching, and scientists for its energy policy and research on genetics . And hardcore Olympics watchers this August, such as yours truly, would have followed the country’s men’s handball team trying to win its first every gold medal (they lost in the final and settled for silver).
Iceland burst into the news again last week as the first nation-casualty of the current financial crisis! Its banking system has broken down, its currency is in free fall, and it has moved from being a wonderful example to a horrible warning – all in one week. What happened? Why? And what are the lessons to be had?
What happened? The first indication that it was not only banks going under and that an entire nation was in deep s--- was on 7th October, when the Icelandic government made three announcements –
1. That it was abandoning its efforts to peg the Icelandic Krona at 131 to a Euro.
2. That it would nationalize the country’s three largest banks – Kaupthing, Landsbanki and Glitnir.
3. That it was in the process of obtaining a loan of Euro 4 billion from Russia.
The British were the first to react! Upon not getting a guarantee protecting British deposits in the banks, Gordon Brown announced the freezing of Icelandic assets in Britain on 8th October and used anti-terrorist legislation to do so. Other countries with a significant Icelandic banking presence followed suit. The Icelandic Krona dropped in a day to 340 to a Euro and then went into free fall. There was no sign of any money from Russia, and Iceland’s Prime Minister Geir Haarde backtracked to say that the loan was still being negotiated.
Why? How did a country fall so far so fast? Iceland had traditionally been dependent upon fishing – its location and lack of neighbours give it a natural advantage in this field. Somewhere in the 1990s, the government decided to liberalize the economy – starting with the banking sector. Banking prospered, and soon found that Iceland’s demographics did not match the banks’ growth ambitions. Aggressive expansion followed – into the UK, the USA, the Netherlands and Scandinavia. Deposits were attracted by high interest rates , which were in turn forced up by Iceland’s high inflation – about 14 percent in the 12 months up to September 2008. They were successful! IceSave, an Internet banking subsidiary of Landsbanki, had about 300,000 depositors (about Iceland’s population) in the UK. Landsbanki’s owner, Bjorgolfur Gudmundsson, became a billionaire and Iceland’s second richest man (after his son) and went on to indulge in typical billionaire stuff like buying an English football team.
And then, the sub-prime crisis happened and banks stopped lending to each other. Icelandic Banks, like other banks, were unable to roll over their loans – and with a combined foreign debt of about seven times Iceland’s GDP, a falling currency (thereby increasing the value of foreign debt in Icelandic Kronur), and a high inflation rate (thereby adding momentum to the falling currency), they were particularly exposed. This is normally where a central bank would step in and play the role of a lender of last resort – but this was not possible here with the debt being so much more than the size of the national economy.
What’s going to happen? Difficult to say, with events still unfolding every day! Can the USA play guarantor, as it has chosen to do with its own banking system? Possible, but it does relegate Iceland to Puerto Rican status. Can the European Union? In the long run, Iceland may see value in joining the Euro – but not right now, Iceland’s current ruling party and opposition are both anti-EU and anyway the EU is unlikely to be interested. On the other hand, the fundamentals for Iceland are intact – the fish haven’t gone anywhere, there are still no aggressive neighbours, and its human capital remains among the best in the world. Its currency was considered the world’s most overvalued and could do with a correction. The tourism industry is already benefiting from Iceland being a less expensive place to visit. I would bet on a large loan (from Russia?), a circumspect recovery, less flirtation with neo-liberal concepts, and, for the West Ham United fans among you, Mr. Zola not getting funds for a major expansion this January.
What are the lessons here? The first is a sobering note for all the insurgent elements in India who are looking to break away – running a small country requires more than the ability to fire an AK-47 and suck up to fringes in the Pakistani and Bangladeshi armies. You have to run an airline, maintain a central bank and a currency, and develop a football team for world cup qualifiers. And when large fish decide to screw you, you have to lie down and take it – witness Geir Haarde’s comment when Gordon Brown used anti-terrorist legislation to send Iceland into a tailspin, a mere ‘this is not a friendly act’. Iceland may be the richest, whitest and most progressive country on the planet, but when the fertilizer hits the fan who cares – the world can afford it to fail.
The second is more worrisome in the Indian context. Policy makers choose between enabling growth and fighting inflation. Policies that enable growth, such as low interest rates, more circulation of money and larger fiscal deficits, tend to be inflationary and to reduce the rupee’s value. And policies that fight inflation, such as high interest rates, squeezed money supply and circumspect government spending tend to curtail growth. It is an interesting tightrope walk and one that is not so much of an issue in times of high growth and low inflation – this was the case over the past few years but is not the case now. The Indian government had reacted to the difficulties faced by people because of rapidly rising prices by taking anti-inflationary measures. The priorities appear to have u-turned in the aftermath of the financial crisis, and all hands are now on the pump that looks to maintain high economic growth and protect the integrity of the country’s financial systems. In effect, they have chosen the interests of those with businesses, jobs and bank accounts over those who use a significant proportion of their earnings to buy food. Given the number of elections scheduled over the next year, I am yet to decide whether this is brave or foolhardy.
Friday, July 11, 2008
Football and Life
FOOTBALL AND LIFE
A 2-Pager by Ajit Chaudhuri
‘Football is not a matter of life and death – it’s a lot more important than that’[1]
Introduction: I have been at the receiving end of lectures on the evils of football for a long time (some of my dear readers – do you recognise yourselves?). There is a pattern to this. The crescendo is highest during a World Cup or a Euro and during my (increasingly frequent) injury breaks. The troughs occur when I am listless, pale and crabby, when it is pretty obvious that I am ‘not getting enough’. I have learnt to accept them with equanimity – along with the comments about the need to focus on the important things in life and the observations that it is just ‘22 morons in perms chasing a ball’. I was also recently witness to a friend’s 15 year old son getting one of these from his father – something along the lines of ‘what do you learn from sitting up every night to watch Euro 2008?’[2]. Having also been awake every night for three weeks in June, I am reasonably qualified to address this question for my friend and similar sceptics. But first –
Why football? Many people consider two things important to growing up – playing a team game, and having a dog. The former teaches you about group dynamics, supporting each other, winning, losing, and rejection. The latter provides you with love that is pure and non-judgemental while teaching you about authority and responsibility. I don’t have any specific recommendation for football – most team games (basketball, hockey, etc.) are just as good, cricket possibly minutely less so being an individual game that is played in a team, rugby possibly more so except for the higher chances of your body parts being severed. A deeper analysis of the specific benefits of football is available in my blog theintelligentwomanstoyboy.blogspot.com in a paper entitled ‘Alive and Kicking’.
Lessons in life from Euro 2008: Much has been written about the successes of Euro 2008. As a neutral football lover, the quality of football on display was, for the most part, brilliant. The best team actually won. And, with no British teams playing, we could watch with the volume on and not have to cringe at the moaning, griping, whining English commentary[3]. But were these lessons in life? Nope – these follow!
TTMO: There is an old joke that goes – what is the similarity between dying and taking a crap? The answer – when you gotta go, you gotta go! Unfortunately, some teams had players who should have taken their walk into the sunset earlier, and these teams did badly. Particularly at fault were the French and Italians, where many were playing a tournament (or two) too many – particularly criminal for the French because they had the young talent available. The Swedes were the oldest team of the tournament and they were huffing and puffing in the second half of their games. The Greeks brought in the same personnel and tactics that won them the tournament in 2004 only to find that the same legs were four years older and the world had moved on. The tournament was better for these teams packing their bags at the earliest possible stage[4]. In contrast, the youngest team (Russia) had a run into the semi-finals, demolishing the tournament favourites on the way, and losing only to the second youngest team – who went on to become champions. It was different with managers – the oldest won the tournament, and two other oldies reached the semi-finals with teams that set the tournament alight.
What can be discerned from this? First, glorious comebacks do not happen – you have to be Zidane to do this gracefully, and none of us are. If you should go – go! And when you go, don’t turn around! And second, there is a time when you should be moving on to new challenges, and when you get that TTMO[5] (time to move on) feeling, you will not be doing yourself and your career favours by choosing comfort and stagnation over hunger and achievement. Past achievements are nice, but life has to be lived in the future.
Hype vs. Substance: The two most hyped players on the planet (or at least the English Premier League) were there – chocolate looks, silken skills and all. How did they fare? Cristiano Ronaldo had all the lesser lights flabbergasted by his stepovers but went missing at the first sign of real opposition (when Portugal played Germany). Fernando Torres was substituted in every game that Spain played, but he also decided the tournament with his only significant contribution to the team – a goal that was marvellous for its intent, aggression and power – no chocolate here. Football lovers were blindsided by Russia and Turkey, who reached the last four from nowhere. With the advantage of hindsight, Russia was a pretty obvious candidate for success, with one of football’s most brilliant tacticians managing them, and a Russian team just winning the UEFA Cup. But, no pushy PR agent behind them! So – real success is defined by performance on the ground – not by who your godfather is, not by how you look, not by what you (and others) say, and not by the weight of your wallet. And there are no short cuts for this!
Screw-ups happen: The lights went out in Vienna (an electrical storm, we were informed), disrupting the coverage of the semi-final between Germany and Turkey in Basle for viewers across the world. Yes, apparently this happens outside India. Bihar State Electricity Board – it looks like you have competition.
The lightness of nationalism: The Swiss team had three Turks. The Portuguese were, as usual, overloaded with Brazilians. The Turks had a Brazilian and an Englishman, the Germans had Poles, the Poles had a South American and even Spain had a Brazilian. The team lists were pragmatic reflections of ability and availability rather than national pride and honour. Even Spain lacked the usual sub-nationalist tensions within the team, and seemed better off for it. It was left to the Swiss authorities to indulge in jingoism, playing a pre-world war II national anthem for a Germany game – supposedly a mistake, but one that pissed German fans off big time.
The myth of the free market: The English Premier League is the best football league in the world. It is also the richest. It is also the one most guided by free market principles. You may dispute the first statement (though you would be on thin ice with four English clubs making it into the last eight of the Champions League in 2008, three into the last four and two into the final), but there is no disputing the second and third. The players are the best paid, the clubs have the money to buy the best players, and ticket prices are the highest. Anybody with money can own an English club – Russian oligarchs, Thai politicians, sheikhs from Dubai, Indian steel tycoons, US business magnates – anybody! In fact, the English Premier League was the league with the second-highest number of players at Euro 2008 (after the Bundesliga) – without any British team having qualified.
What was that again – England did not qualify? Yes, the national team was not good enough to be among the sixteen best teams in Europe. A cursory analysis suggests that this was an aberration caused by a bozo of a manager. A deeper one points to the fact that players are not coming through the lower divisions into the Premier League any more – better players are available cheaper from South America and eastern Europe. Great for the clubs, which sometimes play eleven foreigners, great for the quality of the league, but is it good for the national team and for the larger interests of English football?
Substitute companies for clubs, economic growth for the premier league and broader national interest for the national team and you revisit the debate about whether an unfettered free market is in the best interests of a nation.
It isn’t over till the fat lady sings: Watching Turkey play must have had Turkish heart patients dropping like flies. In the league, they lost to Portugal, were one down against Switzerland and scored twice (including once in the last minute) to win, and were two down in the must-win against Czech Republic before scoring three times in the last 15 minutes to go through to the quarters. Croatia scored in the last minute of extra time (the 119th minute of the game), only to see the Turks equalise in the 122nd minute, take the game to penalties and win it comprehensively there. Turkey had only 11 eligible players against mighty Germany (the rest were injured or carded), but came out and played as if they were the favourites for the game – ultimately losing the semi-final 2-3. What a team! And what a lesson on not giving up until the absolute end!
In conclusion: A relationship with football is akin to love – it gives pleasure, it gives pain, and it gives a lot more. If your child loves football, get used to it. Get used to the smell of sweat in his/her room, to the TV being on at odd hours once in two years, and to weekend football being more important than parties. Don’t fight it! If it dies, it will do so on its own. If it doesn’t, s/he will probably one day be just short of 45, confined to the home with a foot injury, writing about love. Like I am right now! Life could be worse!
[1] The statement is attributed to Bill Shankly, a legendary football manager.
[2] Coincidentally, I had also been witness to the same friend getting a similar lecture from his father back in the early 1980s.
[3] No offence meant – they are good commentators when they are neutral, and they are not neutral when a British team is playing. For the experienced viewer, it brought back memories of the last tournament with good English commentary – the 1994 World Cup.
[4] Yes, yes, before the Pundits among you bombard me with email beginning with ‘Are you aware’, the exception was Italy, which lost in the quarterfinals.
[5] I thank Shampa Kamath, my colleague at India Today, for introducing me to this term some years ago.
A 2-Pager by Ajit Chaudhuri
‘Football is not a matter of life and death – it’s a lot more important than that’[1]
Introduction: I have been at the receiving end of lectures on the evils of football for a long time (some of my dear readers – do you recognise yourselves?). There is a pattern to this. The crescendo is highest during a World Cup or a Euro and during my (increasingly frequent) injury breaks. The troughs occur when I am listless, pale and crabby, when it is pretty obvious that I am ‘not getting enough’. I have learnt to accept them with equanimity – along with the comments about the need to focus on the important things in life and the observations that it is just ‘22 morons in perms chasing a ball’. I was also recently witness to a friend’s 15 year old son getting one of these from his father – something along the lines of ‘what do you learn from sitting up every night to watch Euro 2008?’[2]. Having also been awake every night for three weeks in June, I am reasonably qualified to address this question for my friend and similar sceptics. But first –
Why football? Many people consider two things important to growing up – playing a team game, and having a dog. The former teaches you about group dynamics, supporting each other, winning, losing, and rejection. The latter provides you with love that is pure and non-judgemental while teaching you about authority and responsibility. I don’t have any specific recommendation for football – most team games (basketball, hockey, etc.) are just as good, cricket possibly minutely less so being an individual game that is played in a team, rugby possibly more so except for the higher chances of your body parts being severed. A deeper analysis of the specific benefits of football is available in my blog theintelligentwomanstoyboy.blogspot.com in a paper entitled ‘Alive and Kicking’.
Lessons in life from Euro 2008: Much has been written about the successes of Euro 2008. As a neutral football lover, the quality of football on display was, for the most part, brilliant. The best team actually won. And, with no British teams playing, we could watch with the volume on and not have to cringe at the moaning, griping, whining English commentary[3]. But were these lessons in life? Nope – these follow!
TTMO: There is an old joke that goes – what is the similarity between dying and taking a crap? The answer – when you gotta go, you gotta go! Unfortunately, some teams had players who should have taken their walk into the sunset earlier, and these teams did badly. Particularly at fault were the French and Italians, where many were playing a tournament (or two) too many – particularly criminal for the French because they had the young talent available. The Swedes were the oldest team of the tournament and they were huffing and puffing in the second half of their games. The Greeks brought in the same personnel and tactics that won them the tournament in 2004 only to find that the same legs were four years older and the world had moved on. The tournament was better for these teams packing their bags at the earliest possible stage[4]. In contrast, the youngest team (Russia) had a run into the semi-finals, demolishing the tournament favourites on the way, and losing only to the second youngest team – who went on to become champions. It was different with managers – the oldest won the tournament, and two other oldies reached the semi-finals with teams that set the tournament alight.
What can be discerned from this? First, glorious comebacks do not happen – you have to be Zidane to do this gracefully, and none of us are. If you should go – go! And when you go, don’t turn around! And second, there is a time when you should be moving on to new challenges, and when you get that TTMO[5] (time to move on) feeling, you will not be doing yourself and your career favours by choosing comfort and stagnation over hunger and achievement. Past achievements are nice, but life has to be lived in the future.
Hype vs. Substance: The two most hyped players on the planet (or at least the English Premier League) were there – chocolate looks, silken skills and all. How did they fare? Cristiano Ronaldo had all the lesser lights flabbergasted by his stepovers but went missing at the first sign of real opposition (when Portugal played Germany). Fernando Torres was substituted in every game that Spain played, but he also decided the tournament with his only significant contribution to the team – a goal that was marvellous for its intent, aggression and power – no chocolate here. Football lovers were blindsided by Russia and Turkey, who reached the last four from nowhere. With the advantage of hindsight, Russia was a pretty obvious candidate for success, with one of football’s most brilliant tacticians managing them, and a Russian team just winning the UEFA Cup. But, no pushy PR agent behind them! So – real success is defined by performance on the ground – not by who your godfather is, not by how you look, not by what you (and others) say, and not by the weight of your wallet. And there are no short cuts for this!
Screw-ups happen: The lights went out in Vienna (an electrical storm, we were informed), disrupting the coverage of the semi-final between Germany and Turkey in Basle for viewers across the world. Yes, apparently this happens outside India. Bihar State Electricity Board – it looks like you have competition.
The lightness of nationalism: The Swiss team had three Turks. The Portuguese were, as usual, overloaded with Brazilians. The Turks had a Brazilian and an Englishman, the Germans had Poles, the Poles had a South American and even Spain had a Brazilian. The team lists were pragmatic reflections of ability and availability rather than national pride and honour. Even Spain lacked the usual sub-nationalist tensions within the team, and seemed better off for it. It was left to the Swiss authorities to indulge in jingoism, playing a pre-world war II national anthem for a Germany game – supposedly a mistake, but one that pissed German fans off big time.
The myth of the free market: The English Premier League is the best football league in the world. It is also the richest. It is also the one most guided by free market principles. You may dispute the first statement (though you would be on thin ice with four English clubs making it into the last eight of the Champions League in 2008, three into the last four and two into the final), but there is no disputing the second and third. The players are the best paid, the clubs have the money to buy the best players, and ticket prices are the highest. Anybody with money can own an English club – Russian oligarchs, Thai politicians, sheikhs from Dubai, Indian steel tycoons, US business magnates – anybody! In fact, the English Premier League was the league with the second-highest number of players at Euro 2008 (after the Bundesliga) – without any British team having qualified.
What was that again – England did not qualify? Yes, the national team was not good enough to be among the sixteen best teams in Europe. A cursory analysis suggests that this was an aberration caused by a bozo of a manager. A deeper one points to the fact that players are not coming through the lower divisions into the Premier League any more – better players are available cheaper from South America and eastern Europe. Great for the clubs, which sometimes play eleven foreigners, great for the quality of the league, but is it good for the national team and for the larger interests of English football?
Substitute companies for clubs, economic growth for the premier league and broader national interest for the national team and you revisit the debate about whether an unfettered free market is in the best interests of a nation.
It isn’t over till the fat lady sings: Watching Turkey play must have had Turkish heart patients dropping like flies. In the league, they lost to Portugal, were one down against Switzerland and scored twice (including once in the last minute) to win, and were two down in the must-win against Czech Republic before scoring three times in the last 15 minutes to go through to the quarters. Croatia scored in the last minute of extra time (the 119th minute of the game), only to see the Turks equalise in the 122nd minute, take the game to penalties and win it comprehensively there. Turkey had only 11 eligible players against mighty Germany (the rest were injured or carded), but came out and played as if they were the favourites for the game – ultimately losing the semi-final 2-3. What a team! And what a lesson on not giving up until the absolute end!
In conclusion: A relationship with football is akin to love – it gives pleasure, it gives pain, and it gives a lot more. If your child loves football, get used to it. Get used to the smell of sweat in his/her room, to the TV being on at odd hours once in two years, and to weekend football being more important than parties. Don’t fight it! If it dies, it will do so on its own. If it doesn’t, s/he will probably one day be just short of 45, confined to the home with a foot injury, writing about love. Like I am right now! Life could be worse!
[1] The statement is attributed to Bill Shankly, a legendary football manager.
[2] Coincidentally, I had also been witness to the same friend getting a similar lecture from his father back in the early 1980s.
[3] No offence meant – they are good commentators when they are neutral, and they are not neutral when a British team is playing. For the experienced viewer, it brought back memories of the last tournament with good English commentary – the 1994 World Cup.
[4] Yes, yes, before the Pundits among you bombard me with email beginning with ‘Are you aware’, the exception was Italy, which lost in the quarterfinals.
[5] I thank Shampa Kamath, my colleague at India Today, for introducing me to this term some years ago.
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