Invisible China How the Urban-Rural Divide threaten’ s China’s Rise – Scott Rozelle and Natalie Hell

Invisible China

Over the past month and a half, China has been in the news for all the wrong reasons. Engaging their Indian Army counterparts in a bloody border skirmish at the Sino-Indian border in Ladakh that resulted in casualties on both sides, intruding into Taiwanese air space before being ‘driven out’, and increasing their aggressive posturing in the South China Sea, the second biggest economy of the world has been indulging in a set of tactics that seems inexplicable in addition to being downright indiscreet. In his recent book, journalist Howard French brought out an inextricable link between two planks on which the Chinese Communist Party (“CCP”) relies, for a stable functioning of China. While the first plank is the economic philosophy of fast growth, the second constitutes the purely ideological pillar of nationalism. The political ramifications of either of these pillars failing to be in lockstep with the other could be enormous. For example, in the event, China’s pace of economic growth was to slow down or even stagnate, the CCP might have no alternative but to whip up the nationalism rhetoric to a frenzied level. Such boosterism might even include overt military moves to seize the Diaoyu/Senkaku Islands thereby lighting the fuse that is the South China Sea. Howard French seems to be a man endowed with a fair degree of prescience. But is China really stagnating from within? Is there something that is ailing the dragon from within triggering an extraordinary burst of irksomeness, from which it wants the world’s attention to be deflected?

In an eminently readable book, “Invisible China”, Scott Rozelle and Natalie Hell illustrate from a development perspective, an insidious divide that is threatening to cleave the hegemon, resulting in the creation of a vertical divide. This divide is the massive Urban-Rural gap that has set off one of the biggest (if not the biggest) in-country income-inequality scenarios in the world at the time of this writing. Mr. Rozelle, a Senior Fellow at the Freeman Spogli Institute for International Studies and a Co-director at the Rural Education Action Program (REAP) in addition to being a Faculty affiliate at the Center on Democracy, Development, and the Rule of Law at Stanford University, brings to bear his extensive “China experience and exposure” in educating his readers about the potential perils that China is facing domestically. This is the problem of “Invisible China”, a China that is oblivious to the world and is hidden from every scrutinizing gaze.

 Due to a rapidly risking wage rate for unskilled jobs, China’s hitherto unchallenged title as the Factory Of The World might be at great risk of being dismantled. As Mr. Rozelle illustrates, in the long run these rising wages would distort China’s competitive advantage in low-skilled, labour intensive production. “In a globalized world where wages rise, companies simply find cheaper labour elsewhere or (increasingly) find a way to automate.” This unfortunate situation leads to what Mr. Rozelle terms, “The Middle-Income Trap.” Quoting the economist Paul Collier, Mr. Rozelle explains the fact that development is a game of Chutes and Ladders. “if a country is lucky enough to land on a “Ladder”, it gets whisked to a higher level on the Board. Landing on a “Chute” on the other hand, means moving, just as quickly to a lower point in the game and having to retrace one’s steps.” This Chute is known as the Middle-Income Trap. This is where Mr. Rozelle’s book gets really interesting. In order to avoid this perilous Middle-Income Trap, Mr. Rozelle argues that there is an inherent need to invest in and enhance human capital. On this critical parameter, China is rendered susceptible in more ways than one. An “inconvenient truth” as Mr. Rozelle puts it, is the fact that a teeming majority of China’s population just does not possess the requisite skillsets to move up the supply chain or to trade a blue-collar job for a white collared one. This woeful dearth of human capital is starkly borne out by the fact that currently about 70 percent of the Chinese labour force is unskilled with no more than a junior high school education. A yawning gap in education and skill levels means a fertile ground for dangerous polarization. The urban-rural ‘gap’ is more of an abyss than a chasm as Mr. Rozelle illustrates in the book. “The average citizen in urban Shanghai makes twelve times the income of someone living in rural Gansu. In the United States by contrast, the average income differential between Manhattan and West Virginia is less than a factor of four.”

Exacerbating this problem is the singularly unique dichotomy, courtesy the One Child norm. This myopic policy coupled with a preference for the male child has meant that around forty million men in China will neither have a wife nor a family. As Mr. Rozelle highlights, a well-established fact in criminology is one that links celibacy to crime and gangs. Young unmarried men are more likely than their married counterparts to engage in crime and join gangs regardless of the circumstances. True to logic, crime rates in China are already rising. “From 1998 to 2004, criminal offense increased by 14 percent every year. Over the same period, the number of arrests for both property crimes and violent crimes nearly doubled.”

However, the primary reason for the plummeting human capital and the consequent urban-rural divide is a draconian and antediluvian Government policy that ensures that inequality in the form of an urban-rural divide is deeply entrenched within the populace. Under a household registration system termed, hukou”, “at birth all citizens are assigned either a rural or an urban identity. This status fundamentally affects every moment of life in China and is very difficult to change….all public services depend upon one’s hukou status. For example, rural and urban children move through almost entirely separate educational systems. Rural students, with few exceptions, are allowed to attend only rural schools, and urban students go to urban schools. Even if rural families migrate to the cities to find work – as hundreds of millions have done – in most places they are not allowed to put their children into urban public schools. Instead, most migrant parents must choose between leaving their children behind to live with relatives in the countryside so that can go to public school (the genesis of the infamous “left behind child”), or keeping their children with them in the cities but sending them to low-quality and legally provisional private schools for migrant children.”

Just take a couple of minutes and read the aforementioned paragraph aloud to grasp the unfortunate ramifications of a crazily denuded system.

The Hukou has spawned a gap in human capital that is hard to fathom in the ordinary course of economic and social perception. According to the 2015 micro census, while 97% of urban students attend high school and graduate, only 43 percent of the rural youth go to high school. However, of late, extensive efforts by Government to rapidly expand access to education has ensured in pushing nearly 80% of rural kids to attend school.

The quality of schooling is also an area of concern in the overall Chinese landscape. While the elite Chinese students attend privileged high-quality schools, for the unluckier ones unable to ace their tests, there are vocational institutions as alternative learning streams. The vocational high schools are three-year programmes, where students divide their time between in-class instructions and professional internships. While there are some excellent institutions providing quality education to the enrolled students, on the whole the Vocational high schools are in an appalling state of functioning. Here is a nightmarish experience as recounted by one of the students. “As he walked to class on his first day, there were no adults in sight. He passed groups of kids hanging out in the courtyard, smoking cigarettes and laughing…The teacher were cold and unfriendly. Some would lecture woodenly from the front of the room, writing on the chalkboard with their backs to the students, never turning around to see if anyone was paying attention. Other teachers would come into the classroom, mumble a sentence or two about the new assignment, and walk right out again. The few students who came to class spent most of the time sleeping on their desks, playing games on their phones, or listening to music through headphones….Outside class, students spent their time in the dorms drinking beer or in the computer lab playing League of Legends, chatting online, or watching porn. Sometimes Tao’s (the student) math teacher would stop by a group of students to sell them cigarettes.”

It came as no surprise when Mr. Rozelle’s team found that 91% of the students scored the same or worse after an additional year of schooling. Students majoring in “natural gas pipeline design” were delivering gas canisters house-to-house or working as cashiers in roadside gas stations.

When it comes to infant and child health parameters, “Invisible China” does not score good either. Millions of children inhabiting Invisible China, suffer from iron-deficiency anemia. This disease has significant physical and cognitive effects, interfering with the body’s ability to ferry Oxygen to the various organs, including the brain. As a result, this causes fatigue, poor attention and long-term cognitive impairment. A research conducted by Mr. Rozelle’s team between 2009 and 2012 revealed that greater than 30% of elementary school students in rural China suffered from iron-deficiency anemia. Poor vision is yet another menace that is plaguing the children of Invisible China. “In rural China, the rate of nearsightedness (myopia) ranges from about 10% among third graders to 30% among sixth graders. In other words, the rate of poor vision in rural China’s schools is two to three times in other countries.”

Many of the children, even while infants in rural China, fail the classic Bayley Scales of Infant and Toddler Development (Bayley test), a test employed to measure babies’ and toddlers’ cognitive and motor development. This is basically due to a lack of engagement between the parents and the children. As Mr. Rozelle evidences, inexpensive and perfectly implementable interventions such as provision of multivitamins and de worming tablets, issuing corrective glasses to children, and enhancing the interaction between children and their parents may go a long way in mitigating these adverse outcomes.

China finds itself at a crossroad today. Jobs are being ferreted out of the country at an alarming rate and tens and thousands of people are being laid off. The putative destination of choice is now a mere alternative. In the year 2015, the Korean Chaebol, Samsung declared its intention to move its production base from China to Vietnam. Meanwhile the footwear industry, has commenced relocating its factories to countries such as Ethiopia, where the shoe export segment has increased fivefold over the past five years. Close to forty thousand factories are shutting shop every single year. In spite of the Government instituting a slew of reforms, the country is nowhere close to achieving an acceptable traction in so far as human capital is concerned. And unlike what Mr. Rozelle alludes to as the “Graduate” countries – countries that managed to avoid the Middle-Income Trap – such as Portugal, Spain and Ireland, there is no European Union to bolster China in this endeavour. This lesson of China is a clarion call for other countries such as India etc. to act before the situation moves beyond redemption.

Meanwhile, the hegemon embarks on its ill-advised strategy of ticking off a multitude of neighbours and threatening to envelope the whole world into a perfectly avoidable geopolitical stalemate.

 (Invisible China How the Urban-Rural Divide threaten’ s China’s Rise – Scott Rozelle and Natalie Hell is published by University of Chicago Press and will be released on the 6th of October 2020.)

1991:  How P.V.Narasimha Rao Made History – Sanjaya Baru

1991: How P. V. Narasimha Rao Made History by Sanjaya Baru

Reticent, muted and with a ubiquitous pout, Pamulaparthi Venkata Narasimha Rao was the impeccable Machiavelli of Indian politics. At seventy, and with a monk-hood to boot, Mr. Rao was all set to retire and pursue a life of contemplation, when he was catapulted into the eye of a terrible storm. On the 1st of August 1990, one of the world’s premier credit rating agencies, the New York-headquartered Moody’s, placed India on ‘credit watch for possible downgrading’ because, as it explained, ‘political conditions in India have weakened since our initial rating assignment [in 1987]’. Moody’s perceived India as being bogged down by two types of ‘risks.’ One, a shot term liquidity crunch. This risk signaled a short-term liquidity crunch that would leave the nation unable to finance its external imbalance and forcing it to undertake a sharp balance of payments adjustment. The second risk, lay in the fact that the proposed measures to achieve the balance of payments adjustment in the short-term would disrupt the process of structural change, jeopardizing political support for efforts to improve India’s international competitive position, in the medium term. The proverbial straw that broke the camels back however came in the form of the resignation of Chandra Shekhar, the Prime Minister forming part of a minority Government formed with the support of the Congress. Chandra Shekhar who seemed to have had enough of the leader of the Congress Party and former Prime Minister Rajiv Gandhi’s repeated threats to pull the rug from under Chandra Shekhar’s feet submitted his resignation. A hasty election and a horrendous assassination later, Mr. Narasimha Rao, amidst the most trying of economic and political circumstances, found himself at the highest helm of the nation’s affairs.

Sanjaya Baru, a political commentator and policy analyst, served as Secretary General of the Federation of Indian Chambers of Commerce and Industry (FICCI), prior to which, he was Director for Geo-Economics and Strategy at the International Institute of Strategic Studies. However, he is known for his proximity to former Prime Minister Manmohan Singh, in his capacity as the media advisor and chief spokesperson (PMO) from May 2004 until August 2008. A journalist and author of formidable mettle, Mr. Baru was also associated in various capacities with the Economic Times. Times of India, Business Standard. In “1991”, Mr. Baru deftly crafts the story of one man’s political astuteness, social acumen and economic alacrity that not only led India to stave off what might have been the most disastrous of all economic crisis, but also, in doing so, laid the path for a stupendous growth and development that is still continuing.

Following the ghastly assassination of Rajiv Gandhi and some deft political maneuvering by his supporters, a polyglot with a voracious reading appetite, Mr. Narasimha Rao (or PV as Mr. Baru chooses to address him throughout his book), was elected as India’s ninth Prime Minister. However, as alluded to in the preceding paragraphs, the adverse circumstances of the time ensured that his stint at the top would, by no stretch of imagination be a breeze. Due to years of mismanagement and myopic polices courtesy the Nehru-Gandhi dynasty, “the current account deficit (CAD), that is the sum of the deficit in foreign trade and in capital flows as a share of national income, went up from -1.7 per cent of GDP in 1980-85 to -2.9 per cent in 1985-90. The total external debt trebled from US$20.6 billion in 1980-81 to US$64.4 billion in 1989-90, with the share of external debt in national income going up from 17.7 per cent to 24.5 per cent during that period. In all this, the share of private debt kept rising as the government liberalized external commercial borrowing and allowed Indian companies to borrow abroad. The key factor contributing to the sharp rise in CAD during the 1980s was a steep increase in imports—especially defense imports—and in external commercial borrowings of the private sector. After hovering below 3 per cent for a long time, the share of defense spending in national income went up to 3.6 per cent in 1986-87 and 1987-88, with most of this increased spending financing increased defense imports.”

Twenty metric tonnes of confiscated gold, worth US$200 million, had to be made available by the Reserve Bank of India to the State Bank of India for sale, with a repurchase option, to the Union Bank of Switzerland. This was the first time India was selling gold to avoid default and to ensure that its external payment obligations were met. “Both the Bank of England and the Bank of Japan demanded the actual shipment of gold to their vaults. It would not just be a paper settlement. Gold bars of acceptable quality had to be airlifted and sent out. “

Rao’s cutting-edge political acumen came to the fore immediately after assuming office in the form of his appointments of credible personnel to various portfolios of importance. J. N. Dixit, one of India’s most gifted and extraordinarily talented diplomats was made foreign secretary in December 1991. A seasoned China-hand, Shyam Saran, assumed office as joint secretary, while a bright young diplomat, Ramu Damodaran, assumed office as PV’s personal secretary. “PV also counted on Ronen Sen, Rajiv Gandhi’s closest diplomatic aide and someone who was au fait with Rajiv’s key initiatives with the US, China, USSR and Pakistan.” However, when it came to the crucial and unenviable role of Finance Minister, the man who would subsequently go on to craft the watershed policy that liberalized India from the shackles of Nehruvian socialism, Dr. Manmohan Singh, was surprisingly not the first choice of PV. Post deliberations with his good friend and former Governor of Tamil Nadu, P.C.Alexander, PV homed in on Dr Indraprasad Gordhanbhai Patel. “IG” as he was known fondly to those well acquainted with him, Patel came with a stellar reputation attached to him. After a stint with the United Nations Development Programme (UNDP), Patel was made the Governor of the Reserve Bank of India (RBI) in 1977 by the then Prime Minister Morarji Desai. “Soft-spoken, dapper and with an interest in the arts and music, IG was a renaissance man. He related with equal ease to fellow economists, civil service colleagues and politicians of all hues. Despite his long years in government he retained an academic’s curiosity and easy way of dealing with younger people. As director of the Indian Institute of Management-Ahmedabad(IIM-A; 1982-84) and later as director of the London School of Economics and Political Science (1984-90), IG was very popular with his students.”

However, when IG refused to take up PV on his offer, the call went out to the soft-spoken Dr. Manmohan Singh to assume control of the Finance Ministry. PV also gave Mr. Singh a free hand to assemble his team. The result was a dazzling array of intellect and intuitive abilities. Montek Singh Ahluwalia was brought in as Secretary, economic affairs, and Ashok Desai as Chief economic consultant. The team included a roster of capable IAS Officers of the likes of K.P.Geethakrishnan, Y.V. Reddy, N.K.Singh, D. Subbarao, Valluri Narayan and V. Govindarajan. Y.V. Reddy and D. Subba Rao, of course would go on to be known as Central Bank Governors.

A soft-spoken external demeanour that made PV look like a reluctant mendicant, belied a will power that was cast in iron. The man neither had time for fools nor was inclined to tolerate political shenanigans and chicanery. His ability to deal a strong hand when the situation warranted – but without losing even a shred of composure in the process – was legion. “In July 1992, Commerce Minister Chidambaram, one of the ministers Rajiv first drafted into government, offered to quit following allegations of financial impropriety on his part in a matter pertaining to the ownership of shares in Fairgrowth Financial Services, a Bangalore-based company charged with involvement in a stock market scam. Chidambaram believed he had done nothing wrong and was being politically targeted. He publicly offered to resign at a press conference. He had hoped that the prime minister would reject his offer and ask him to continue. This would have vindicated him. Most Congress MPs regarded Chidambaram as uppity and arrogant. That is partly a reflection of his demeanour. Tall and good looking, whether in his starched white veshti and crisp shirt or in jeans and T-shirt, Chidambaram wears his brilliance on his sleeve. He assumed the prime minister would turn his offer down. PV was, however, very annoyed with Chidambaram. How could a minister go public with a resignation tendered in response to allegations of misconduct and then expect the prime minister to reject it, thereby giving him a clean chit? What did PV owe Chidambaram? Nothing. So, the prime minister promptly accepted the minister’s resignation. Chidambaram was stunned. More than a message to Chidambaram, it was a message to all his Cabinet colleagues—that they should not take the prime minister for granted.”

A similar fate befell Civil Aviation Minister, Madhav Rao Scindia, who made a capital show of resigning his post owning moral responsibility for a tawdry handling of events by the Delhi Airport, following a crash-landing of an Uzbekistan Airways flight in 1993. Not one to put up with either pettiness or petulance, the no-nonsense PV, put the Maharajah of Gwalior and a Gandhi backer to utter embarrassment by accepting the resignation.

Even where PV harboured doubts about the instituting and implementing a particular policy he deferred to the wisdom of the experts – in spite of his reservations – if he could be convinced of the plan’s efficacy or outcome. A classic case in point – the devaluation of the Indian Rupee. “On 1 July, the rupee was devalued by around 9 per cent and on 3 July there was a further devaluation by around 11 per cent, with the adjustment working out to a 17.38 per cent devaluation. The rupee slipped from Rs 17.9 to a US dollar to Rs 24.5. By the end of 1992 it was approximately Rs 31 to a dollar and remained. The entire exercise was dubbed ‘hop, skip and jump’ by Singh and Rangarajan. It was a game the two played in secrecy. But while Singh had secured the prime minister’s authorization, PV developed cold feet after the first step, on 1 July. Devaluation was a bad word in Indian politics. PV would have known of the 1966 devaluation episode and how Indira Gandhi had been criticized for it…. So, when PV’s critics attacked the government for the first step devaluation, the prime minister advised the finance minister to hold back the second step. But Singh, who was familiar with the 1966 episode (the economists who handled it were all his mentors or friends—K. N. Raj, I. G. Patel, D. R. Gadgil, Jagdish Bhagwati, P. N. Dhar and Manu Shroff), decided that if the second step was not taken as planned it might never be taken. ‘The first step was to test the waters,’ Manmohan Singh recently revealed. ‘So, although there was opposition to the move, it was manageable. So, I said that by July 3 [1991], we must complete the full thing. C. Rangarajan was the Deputy Governor [of RBI]… Prime Minister Narasimha Rao had doubts over the second instalment of the exchange rate adjustment and told me, in fact, to stop it. But when I called up Rangarajan, he said that he had already shot the goal.’ Once the two-step action was taken, government spokespersons moved fast to assure the markets that there would be no further devaluation. The rupee had found its warranted level. The markets stabilized.”

P.V.Narasimha Rao led the first non-Nehru-Gandhi Government that ran a full term since the beginning of the Indian Independence in 1947. He transformed Indian politics from a family run feudal proprietary denomination into an open, transparent and meritocratic level playing field. This he did by juxtaposing diplomacy with determination. “The Nehru-Gandhi family retainers and cronies, the nondescript men and women who acquired power and wealth doing the family’s bidding, were in fact doing a disservice to the Congress by repeatedly emphasizing the primacy of the family in the party. This was the way smaller, regional, sectarian and caste-based parties were run, with political power passing from one generation to the next.” However, such an exemplary achievement came at a heavy price. PV was abhorred by his own party following the completion of his tenure. While Dr. Manmohan Singh went on to finish two turbulent terms as a Prime Minister, PV’s legacy was relegated to the confines of a silent history. The ugliness of fractal allegiances and party politics shone it its most ugly form, when following his demise, “the party shut the gates of its headquarters and refused to bid official farewell to a former president. His crime: seeking to end the proprietary control of the INC by the Nehru-Gandhi family. PV died on 23 December 2004. In the decade since then the only Congress leader who has regularly and religiously paid tribute and honoured PV’s memory on the occasion of his birth anniversary has been Manmohan Singh— the man whose political career was made by PV. But even Manmohan Singh was unable to honour PV with a Bharat Ratna during his decade-long tenure as prime minister. The party had again become a proprietorship.”

The fact that the man who in a single swell swoop, liberated the second most populous nation from the draconian vice like grip of a license-permit-quota Raj, is yet to be bestowed upon with the Bharat Ratna, speaks a lot about the credibility, colour and cadence of Indian politics. Once when PV was asked, perhaps, in a jocular vein, about who between PV and Dr. Manmohan Singh ought to be credited for India’s swing in fortunes, replied in his inimitable poke faced fashion, “‘A finance minister is like the numeral zero. Its power depends on the number you place in front of it. The success of a finance minister depends on the support of the prime minister.”

The Zero in 1990 represented just that power. It required PV to alter the 9 preceding it and the rest, as the cliched saying goes, was history.

Contagion: Why Things Spread – and Why – Adam Kucharski The Rules of Contagion: Why Things Spread--And Why ...

One of the most followed and admired epidemiological handles on Twitter is the one belonging to Adam Kucharski. A Mathematician, and Epidemiologist at The London School of Health and Tropical Medicine, Mr. Kucharski keeps his ‘followers’ informed, invested and entertained thereby allowing them to find their way through times unprecedented. One of his threads on the fundamentals of how a virus works has been the one of the most accessed on social media. Now Mr. Kucharski brings the same insights and information to bear in his authoritative new work, “Contagion.” A delight for the expert and the uninitiated alike, “Contagion” demonstrates with a pleasantly surprising verve, a myriad of linkages connecting the study of epidemics with other seemingly unrelated spheres such as gun violence, financial crisis etc.

As Mr. Kucharski points out, following the woeful financial crisis that rocked the world in 2008, central banks across the world, latching onto the repository of knowledge built upon the study of infectious diseases, homed in on the concept of networks. A structure of a network could amplify contagion. This was a theory pioneered by researchers engaged in the study of Sexually Transmitted Infections as far back as in the 1980s and 1990s. Similarly, notions such as the basic rate of reproduction or reproduction numbers are enabling researchers quantify the spread of innovations and online content.

Mr. Kucharski begins the book with a poignant personal reference. Struck down by Guillain-Barre Syndrome when still a toddler, the author completes a long and arduous path to recovery aided and abetted by a pair of resilient and resolute parents who keep reminding their son that GBS stands for ‘getting better slowly.’ Mr. Kucharski, in an eerie coincidence comes face to face with his old adversary after many years, when, in 2015, during a course of investigating a dengue fever epidemic in the Fijian Capital of Suva, he finds many patients afflicted by GBS. This endeavour results in the evaluation of surprising linkages between GBS syndrome and various other neurological ailments. As the COVID-19 epidemic of today is leaving the medical and the political community stumped with its mischief, so did the Zika virus with its shenanigans when it first struck. Mr. Kucharski requotes epidemiologist Laura Rodriguez in 2016, “rarely have scientists engaged with a new research agenda with such a sense of urgency, and from such a small knowledge base.” Since then as Mr. Kucharski illustrates, we have come a long way using welcome aids such as Information Technology and community outbreak research. “One of the best examples is the Nextstrain project, pioneered by computational biologists, Trevor Bedford and Richard Neher. This online platform automatically collates genetic sequences to show how different viruses are related and where they might have come from…Nextstrain has proved to be a powerful idea, not just because it brings together and viualises all the available sequences but because it’s separate from the slow and competitive process of publishing scientific papers.”

Mr. Kucharski keeps his narration riveting and shies away from employing technical jargon that might put the lay reader into a bind, if not a tizzy. Taking his readers through various epidemiological techniques employed by pioneers such as Sir Ronald Ross whose forays into the study of malaria are legendary, to the studies of William Kermack (who in 1924 was permanently blinded while working on a corrosive alkali solution in the Edinburgh’s Royal College of Physicians Laboratory) and Anderson McKendrick, Mr. Kucharski highlights the marvelous trajectory that epidemiological research has taken as time has evolved. Kermack and McKendrick evolved the Susceptible Infectious Recovered (“SIR”) Model, which postulates that for an outbreak to gain traction, three important factors are necessary: “a sufficiently infectious pathogen, plenty of interactions between different people, and enough of the population who are susceptible.”

Mr. Kucharski finds himself possessing two unusual and seemingly unconnected domains of expertise. Starting out his early career as an aspiring investment banker, he plied his trade with one of the financial institutions in Canary Wharf before the lure of epidemiology took over him. Hence he brings to bear this an invaluable two-pronged knowledge identifying unique connections between medical outbreaks and spreads of a non-medical nature, such as ideas. Referring to the 1962 work of Everett Rogers, “Diffusion of Innovations”, Mr. Kucharski informs us that four types of people are responsible for a product to become popular: “initial uptake comes from ‘innovators’, followed by ‘early adopters’, then the majority of the population and finally ‘laggards.”

As Mr. Kucharski holds forth, the economist Jean-Paul Rodrigue proposes dividing a financial bubble into four main stages. These stages bear an uncanny resemblance to an epidemic outbreak too. It all begins with the stealth phase, where specialist investors invest in a new idea. This is closely followed on its heels by the awareness phase, with a wider gamut of investor involvement. As and when the idea gains popularity and spreads fast, the media and the public drop their hats into the fray, driving the prices in only one direction – north. Finally, the bubble bursts, during the ‘blow off’ phase. Now compare this with the four phases of an outbreak: spark; growth; peak, and decline.

As the entire world is left to grapple with the consequences of COVID-19, one of the most, if not the most important facet associated with the management of the pandemic is reigning in its “reproduction number’ or ‘R Nought/Naught’. What exactly is this notion? Mr. Kucharski educates his readers on the work of Mathematician Klaus Dietz which resulted in the use and implementation of the R Nought. “R represented the number of new infections we’d expect a typical infectious person to generate on average…If R is below one, each infectious person will on average generate less than one additional infection….If R is above one, the level of infection will rise on average, creating the potential for a large epidemic.”

Drawing on the concept of R, Mr. Kucharski comes up with the acronym, ‘DOTS.’ DOTS stands for: duration of time a person is infectious; the average number of opportunities they have to spread the infection each day they are infectious; the probability an opportunity results in transmission; and the average susceptibility of the population.”

Mr. Kucharski relies on the work of the epidemiologist Sunetra Gupta in 1989 to correlate the dynamics of infection with a financial contagion. The spread of infections is dependent upon whether networks related to it are ‘assortative’ or ‘disassortative’ in nature. In the former, highly connected individuals are linked mostly to highly connected people. “This results in an outbreak that spreads quickly through these clusters of high-risk individuals, but struggles to reach the other, less connected parts of the network. However, in a disassortative network, high risk people are connected to low-risk ones, making the spread of the infection slower initially, but resulting in a larger overall epidemic. The banking network, according to Mr. Kucharski, turned out to be disassortative. This led to failed institutions such as Lehman Brothers spreading the contagion far and wide. Social contagion is also an interesting concept that has captured the imagination of the public at large. Physicians Nicholas Christakis and social scientist James Fowler’s famous, albeit controversial study on “The Spread of Obesity in a Large Social Network over 32 Years”, gets a special mention in Mr. Kucharski’s book.

“Contagion” abounds with interesting references such as the ones mentioned in the preceding paragraphs. Peculiar and asymmetrical patterns are dissected and social relationships analysed. In an interesting reference to “transmission of suicides”, Mr. Kucharski refers to a 1974 paper published by David Phillips examining media coverage of suicides. “He found that when British and American newspapers ran a front-page story about a suicide, the number of such deaths in the local area tended to increase immediately afterwards.” In fact, researchers in Columbia University found a 10 percent increase in suicides following the death of Hollywood actor Robin Williams.

The correlation between online platforms and biological occurrences can also be uncanny. Most of these platforms that are algorithm driven, feed on a self-perpetuating diet of undesirable viewing choices, pulling people further and further down what technology researcher Zeynep Tufekci terms an online rabbit hole. These algorithms draw people towards content that are more incendiary in general according to Ms. Tufekci. As Mr. Kucharski expounds, “the same situation arises in the biological world. Many species have to adapt simply to keep pace with their competitors. After humans came up with antibiotics to treat bacterial infections, some bacteria evolved to become resistant to common drugs. In response we turned to even stronger antibiotics. This put pressure on bacteria to evolve further. Treatments gradually became more extreme, just to have the same impact as lesser drugs did decades earlier. In biology this arms race is known as the ‘Red Queen effect’, after the character in Lewis Carroll’s Through the Looking-Glass….”

At the time of this writing, there seems to be a glimmer of hope in so far as the efforts to combat COVID-19 go. In a drug trial titled “Recovery” – an acronym for Randomised Evaluation of Covid-19 Therapy that was set up in nine days, and had recruited 11,500 Covid patients in 175 hospitals across the UK, it was revealed that Dexamethasone, an anti-inflammatory steroid which has been in use since the early 1960s has the potential to cut the risk of death for patients on a ventilator by a third, and for those on oxygen by a fifth. This has been the most welcome news in an otherwise depressing miasma of death and excruciatingly prolonged recoveries laced with lasting side effects. This refreshing piece of news bears monumental testimony to the indefatigable work of people such as Adam Kucharski and his ilk. A band of selfless virus hunters who have taken it upon themselves to make the world a happier, healthier and harmonious place to inhabit. And to their efforts, we remain eternally indebted.

(Contagion: Why Things Spread – and Why by Adam Kucharsky is published by Basic Books, an imprint of Perseus Books, a subsidiary of Hachette Book Group Inc and will be released on the 7th of July 2020.)

The COVID-19 Catastrophe: What’s Gone Wrong and How to Stop it Happening Again – Richard Horton

The COVID-19 Catastrophe: What's Gone Wrong and How to Stop It ...

One of the most reputed publications in the annals of medicine, “The Lancet” recently published a controversial study based on Surgisphere data, that demonstrated enhanced death rates in COVID-19 patients being administered with the drug Hydroxychloroquine. Touted indiscriminately and inanely by President Donald Trump as a “miracle drug” against the COVID-19 pandemic, the use and the unfortunate, abuse, of the drug had stirred a disproportionate amount of global interest. The Lancet study however, led to the World Health Organisation (WHO) issuing directives to terminate global trials of Hydroxychloroquine for Covid-19 in May, based on the study’s startlingly adverse findings. However, the proof in this instance, was not to be found in the pudding. The study was hastily retracted post a Guardian investigation where researchers unearthed damning inconsistencies in its data, courtesy a database owned by Surgisphere. The New England Journal of Medicine also retracted a study with findings based on Surgisphere data and a third paper involving Surgipshere and Desai – the author or co-author of all three studies – holding forth on the impact of the drug ivermectin on Covid-19 patients, was excised from the website SSRN, a repository for scientific papers.

Richard Charles Horton is the editor-in-chief of The Lancet, and an honorary professor at the London School of Hygiene and Tropical Medicine, University College London, and the University of Oslo. In his newly published book titled, “The COVID-19: What’s Gone Wrong and How To Stop it Happening Again”, this much acclaimed and respected man of medicine tries to pry open the scientific and political causes behind the viral spread of this dangerous pandemic before dissecting its potential socio-economic consequences. However, the lofty title belies the content that succeeds it. Although thought provoking and deeply introspective in some parts and a fount of good advice in some others, “The COVID-19 Catastrophe” is frankly speaking, a disappointment. The greatest let-down of the book lies in its treatment of China. In the diverse continuum of rich conspiracy theories, astringent, albeit methodically researched criticisms and everything in between, China’s role in the entire pandemic, has at best been, suspect, and at worst, downright complicit. However, Mr. Horton seems to eat out of this behemoth’s hands. All that China receives from this expert of medicine is a mild rebuke instead of even a reluctant rap on its condescending knuckles.

As Mr. Horton himself informs his readers, China made a capital hash of handling the Severe Acute Respiratory Syndrome coronavirus (SARS-CoV-1), when it first reared its ugly head in 2002-03. The former Prime Minister of Norway Gro Harlem Brundtland, who was heading the WHO at that time, was extremely critical regarding China’s efforts (or rather a complete absence of them to reign in the epidemic and to share information with the rest of the world). Mr. Horton, however, asserts quite ebulliently, that China has learnt its lessons and has done an exemplary job in so far as reigning in COVID-19 is concerned. “After enduring the global opprobrium following its handling of SARS, Chinese leaders invested heavily in their universities, and specifically in their capacities for scientific, technical and medical research. Confronted by a new virus, Chinese scientists were ready, equipped and swung quickly into action. They reported the first 41 cases of COVID-19 in The Lancet on 24 January. The Chinese team was led by Bin Cao, a professor in the Department of Pulmonary and Critical Care Medicine at the China–Japan Friendship Hospital in Beijing. He assembled groups in Wuhan and Beijing which began to put together the epidemiological, clinical, laboratory and radiological data from this initial group of patients. Bin Cao and his colleagues provided the first case descriptions of symptoms and signs for COVID-19, an essential and urgent resource for doctors around the world facing patients with an unfamiliar type of pneumonia. They made the connection between the illness and exposure to the live-animal market. They described how a third of patients had to be admitted to intensive care. They calculated the average time from the onset of symptoms to ICU admission (10.5 days). They showed that patients often had blood profiles that revealed serious cardiac, renal and liver injuries. Chest computed tomography produced images that were abnormal in every case. One pattern of investigation was particularly disturbing – elevated levels of cytokines that constituted a ‘cytokine storm’. The Chinese team described how some patients needed invasive mechanical ventilation and a special means to oxygenate blood when the lungs failed – a technique called extracorporeal membrane oxygenation. They also described how 15 per cent of the patients admitted to hospital had died. The contrast between this impressive response and China’s pitiful efforts during SARS in 2002–3 illustrates the remarkable scientific renaissance that had taken place in the country in just two decades. Bin Cao’s team was not only able to gather state-of-the-art data on these early patients but also encouraged to write up their work, publish it free from censorship in foreign English-language medical journals, and make their findings available to others – all within weeks of the first reports of the new disease. The cultural, as well as the scientific, shift that had taken place in China was monumental”.

The only feeble complaint against China takes the form of a reproduction of a letter from an anonymous writer who prefers to address herself as Moon, that bemoans the appalling situation in Wuhan as a result of the virus running amok. Whilst a gleeful China is the recipient of such a warm Panglossian warmth, the United Kingdom received a stinging rebuke – and deservingly so. At the onset of the pandemic, the UK Government was being advised by a group of scientists, who upon hindsight, turned out to be so ill-advised about the very pandemic regarding which their advice was urgently sought. This resulted in both the administering and the administered running around like headless chickens. This should not have been the case. The extent of preparedness in the United Kingdom ought to have been much higher. “Exercise Cygnus” a scenario planning for a pandemic influenza outbreak took place in the UK as long back as in October 2016. “Pandemic influenza is top of the UK government’s National Risk Register. A pandemic is deemed the most severe civil emergency risk to our society. The same is true for most Western democracies. The result of Cygnus was a stark warning: UK preparedness was ‘currently not sufficient to cope with the extreme demands of a severe epidemic.”

In early March,  Prime Minister Boris Johnson chaired COBRA, the civil contingencies committee that is convened to handle issues of national emergency. “After that meeting, he agreed that COVID-19 presented ‘a significant challenge’. ‘But we are well-prepared,’ he said. Was Johnson aware of Exercise Cygnus and its clear conclusion in 2016 that the UK was most definitely not well-prepared? If he was, he lied to the public. If he was not, then he is surely guilty of misconduct in public office. Remember: a pandemic is top of the UK’s National Risk Register. A prime minister should reasonably be expected to understand the capability of his country to address the most severe civil emergency risk. The best that Prime Minster Johnson could do was advise handwashing. He was still arguing that the UK ‘remains extremely well-prepared’ on 3 March. On ITV’s This Morning he said, ‘Perhaps you could sort of take it on the chin, take it all in one go and allow the disease, as it were, to move through the population without really taking as many draconian measures. I think we need to strike a balance.’ He displayed his own disregard for the risks of infection by regularly shaking hands with those he met – and bragging about it afterwards. Herd immunity.”

 ‘Is the government’s objective to suppress infection or to manage the infection?’, asked Sir David King at the first press conference of a newly formed Independent Scientific Advisory Group for Emergencies (SAGE), held in May.

Mr. Horton is also scathing in his indictment of the United States. He illustrates the inexplicable and jaw dropping shenanigans of President Donald Trump from expressing denuded denials about the seriousness of the pandemic to cutting off all funds to the WHO. In fact, he reproduces Trump’s speech in full, wherein he makes the incredulous decision to deprive the WHO of all funding. The WHO itself has been a peculiar study in contrast. From issuing perplexing guidelines on asymptomatic patients, before retracting them to introduce an even more bewildering element of pre-symptomatic patients to the COVID-19, confounding mix, to halting drug trials based on suspect data, it can be safely said that neither the WHO nor its Director General Dr Tedros Adhanom Ghebreyesus have covered themselves with glory.

The most interesting part of Mr. Horton’s book deals with the unfortunate, yet unavoidable socio-economic and civic chasms formed as a result of the pandemic and the disturbing results such divisions have produced. Quoting from the works of Michel Foucault, Slavoj Zizek, Samantha Brooks, Jacques Ellul and Didier Fassin, Mr. Horton bemoans a loss of empathy and an alarming rise of divisive politics that could have undesirable societal ramifications. Mr. Horton employs a very interesting metaphor “panopticonisation of society” to describe the various contact tracing apps that are making the rounds, and which inadvertently might possess an element of intrusion into the most private lives and details of its users. However, Mr. Horton offers five sagely conditions complying with which such apps may turn out to be beneficial.

  1. Commitment by the government to universality, and inalienability – privacy protection must be accorded to everyone;
  2. Indivisibility – our rights are interdependent. It is not for the state to determine which rights it will and will not guarantee;
  3. Equality and Non-Discrimination – all human beings are equal in their dignity;
  4. Transparency – Governments must be open about information and their decision making

On the whole “The CovID-19 Catastrophe” falls short of what it actually could have been considering the wisdom and versatility of the author.

Bad Money: Inside the NPA mess and how it threatens the Indian Banking System – Vivek Kaul

Bad Money : Inside the NPA Mess and How it Threatens the Indian ...

In the memorable American Christmas fantasy drama film “It’s a Wonderful Life” starring James Stewart, there arises a bank run in a small town and the protagonist (James Stewart’s character George) uses his own money to stop the institution from dissolving. Released in 1946 and directed by Frank Capra, based on the short story and booklet The Greatest Gift, by Philip Van Doren Stern “It’s a Wonderful Life” is now considered one of the greatest films of all time. It was nominated for five Academy Awards, including Best Picture, and has been recognized by the American Film Institute as one of the 100 best American films ever made.

Fast forward to 2019. On September 23rd, the Reserve Bank of India placed Punjab and Maharashtra Cooperative (“PMC”) Bank, an urban co-operative bank under what is known in banking parlance as ‘Directions.’ Under these Directions, depositors could withdraw only up to Rs.1000 from their respective accounts. Much angst, trepidations and apprehensions later, the withdrawal limit was increased to Rs.50,000 on the 5th of November thereby alleviating the concerns of a greater part of 78 percent of the depositors.

Vivek Kaul is a writer who has worked at senior positions with the Daily News and Analysis (DNA) and The Economic Times. Also, the author of the Easy Money trilogy, Mr. Kaul’s latest book, “Bad Money” is an arrestingly compelling discourse on the burgeoning Non-Performing Assets (“NPAs”) that have racked India thereby causing immense stress to the banking eco system. As per Mr. Kaul, as of 31 March 2019, the overall bad loans of banks stood at a staggering Rs 9,36,474 crore. These bad loans were primarily the result of defaults by corporate borrowers – the biggest of them being Bhushan Steel, which had defaulted on over Rs 56,000 crore.

To maintain the health of this flailing banks, the Reserve Bank of India over a period of 8-9 years invested Rs 2,91,504 crore by way of ‘recapitalization’ into these ailing banks. But what is it that results in the accumulation of such an incredible proportion bad loans by the banks in general and by Public Sector Banks (“PSBs”) in particular? Mr. Kaul attempts to answer this fundamental question and in this endeavour takes his readers back in time to the formation, constitution and birthing of the banking eco-system in India. With a view to put a check on the proliferation of professional and unscrupulous moneylenders, the then government decided to nationalize the erstwhile Imperial Bank of India and establish the State Bank of India (SBI). SBI was established on 1 July 1955, with all the assets and liabilities of the Imperial Bank being transferred to it.

The second and the most controversial phase of bank nationalization occurred in the year 1969 when the then Prime Minister Indira Gandhi, unilaterally decided to implement a programme of nationalizing private banks. As Mr. Kaul highlights, “On 18 July, Gandhi met I.G. Patel, who was then the Economic Affairs Secretary in the central government. She asked him if banking was under his charge. He said that it was. After this, as Patel recalls in ‘Glimpses of Indian Economic History: An Insider’s View’, Gandhi told him: ‘For political reasons, it has been decided to nationalise the banks. You have to prepare within 24 hours the bill, a note for the Cabinet and a speech for me to make to the nation on radio tomorrow evening. Can you do it and make sure there is no leak?’. Patel told her that what she wanted would be done. At the same time, he offered her two suggestions. The first being that foreign banks should not be nationalized and the second being that there was no need to nationalize all the banks – only banks which accounted for 85–90 per cent of the total banking business should be nationalized. Gandhi agreed, and told him that she would leave the details to him. An ordinance to nationalize six more banks was issued on 15 April 1980. The six banks that were nationalized were Andhra Bank, Corporation Bank, New Bank of India (which was merged into PNB after it ran into trouble later), Oriental Bank of Commerce, Punjab & Sind Bank, and Vijaya Bank (since merged with Bank of Baroda).

Mr. Kaul reveals in a fascinating and jaw dropping manner the excesses in lending practices resorted to by the PSBs under various Government directives following a report submitted by the Gadgil Study Group which identified huge credit gaps prevalent in key sectors like agriculture. Under the garb of “priority sector lending”, the PSBs were directed to disburse loans with gay abandon with nary a need for either due diligence or credit worthiness assessments of the borrowers. Extravagant “loan melas” were organized under which loans would be distributed to the public at mass gatherings. To quote Mr. Kaul, “one politician who really pushed for loan melas organized by PSBs was Janardhana Poojary. Poojary was the minister of state for finance between December 1984 and 1987. A magazine profile of him written in 1987 said: ‘To watch Poojary at a loan mela is to see the actor merge with the politician.’” It came as no surprise when defaults soon became the norm necessitating loan waivers. “The first nationwide loan waiver was announced by the then deputy prime minister, Devi Lal, who was himself a large farmer, in 1989. It was done through the Agricultural and Rural Debt Relief Scheme (ARDRS), 1990.” With the liberalization of the Indian economy in 1991, the trajectory of the growth rate took pointed northwards and this positive optimism further boosted the lending practices of the banks in India. “In 2003–04, the total bank lending to industry had stood at Rs 3.35 lakh crore. This jumped to Rs 26.16 lakh crore by 2013–14 in a decade. This was a jump of 681 per cent.” The financial recession of 2008 however dampened the Keynesian animal spirits and projects began to be abandoned or shelved. In February 2008, Finance Minister P. Chidambaram announced a farm loan waiver, which eventually cost the nation around Rs 71,680 crore. Since November 2008, the central bank pumped Rs 3,00,000 crore into the financial system.

Mr. Kaul exposes the nexus between the banks and the crony capitalists by providing two powerful examples. The first example takes the form of regulatory forbearance. Forbearance means to hold back, to show restraint. “In the normal scheme of things when companies were not able to pay the loan, the banks should have seized the collateral and sold it to recover the loan.” Instead, the RBI came up with myriad restructuring programmes. At one point in time, as Mr. Kaul highlights, there were twenty-eight different circulars on various forms of loan restructuring. “In fact, by March 2015, the total corporate loans subject to restructuring had stood at Rs 5,28,538 crore. It had stood at just Rs 10,210 crore in 2006–07. In fact, to some extent this was also a case of what behavioural economists call the sunk cost fallacy. The fallacy shows up in many areas of life. Right from trying to finish a boring book to remaining in a bad marriage or an abusive relationship for that matter. Nobel prize winning psychologist Daniel Kahneman in his book Thinking, Fast and Slow defines this fallacy as ‘the decision to invest additional resources in a losing account’.”

Another key reason for bank defaults is the unfortunate separation between knowledge and power. Bankers were doling out funds to industrialists with bare minimum due diligence preceding such disbursements. “In fact, many did not even do their independent analysis and depended on SBI Caps and IDBI to do the necessary analysis. Any such analysis introduced a weakness into the system and multiplied ‘the possibilities for undue influence Bankers chasing industrialists. This practice resulted in the borrowers gaming the system by resorting to a practice referred to as “gold plating.” Paraphrasing Mr. Kaul, “let’s say a business promoter approached a bank for a loan of Rs 20,000 crore to build a steel mill. Of the total project cost, the bank would give a loan Rs 15,000 crore and the promoter would bring in Rs 5,000 crore. So far so good. The thing is that the promoter knows that the mill can be built for as low as Rs 10,000 crore. This is the gold plating. The promoter has passed off a project which costs Rs 10,000 crore at best as something which costs Rs 20,000 crore. He gets a loan of Rs 15,000 crore against it. The difference between the loan amount and the actual cost of the project is the amount that the promoter can pocket.154 In this case, it works out to Rs 5,000 crore. This Rs 5,000 crore is also his investment in the project. By pocketing Rs 5,000 crore of the loan amount, the promoter basically has not invested any of his money in the project. Hence, the risk that he has in the project is zero.”

In March 2007, just ten large conglomerates owed the Indian banks a jaw dropping sum of Rs.99,300 crores. This constituted approximately 5.7% of the total disbursements by the banking system! These ten defaulters were Adani, Essar, GVK, GMR, Lanco, Vedanta, Reliance ADAG, JSW, Videocon and Jaypee. Mr. Kaul also raps the RBI on its knuckles for being blissfully reticent about the issues faced by the banks in the form of an unhealthy accumulation of bad loans. A classic example being the case of Infrastructure Leasing & Financial Services (IL&FS). “In October 2018, the government superseded the board of the company, which was believed to be in a financial mess. By the time, IL&FS and its subsidiaries started to default, its problems were not on the radar of the banks which had lent money to it. The entire IL&FS group had a debt to equity ratio of close to 17:1 and a total debt of a little over Rs 91,000 crore as on 31 March 2018. In a report, the RBI found that IL&FS had not declared bad loans in a period of four years up to 31 March 2018.”

Mr. Kaul also acknowledges certain concrete measures that were instituted by the RBI to inculcate a semblance of discipline into the lending practices of the banks. The Insolvency and Bankruptcy Code (“IBC”) of 2016 was preceded by an Asset Quality Review in mid-2015, which forced the banks to recognize bad loans in their books. The government also introduced the Indradhanush reforms under which the post of the chairman and managing director of a PSB was split. A Banks Board Bureau (BBB) was set up. The BBB, it was said, would be a body of eminent professionals. The former Comptroller and Auditor General Vinod Rai was appointed as its first head. The IBC itself as Mr. Kaul demonstrates has made some tangible progress. “…on 13 June 2017, recommended that ‘12 accounts totaling about 25 per cent of the current gross NPAs [bad loans] of the banking system would qualify for immediate reference under IBC.’309 These twelve companies which had defaulted on a huge amount of banks loans were Essar Steel, Monnet Ispat and Energy, Bhushan Steel, Bhushan Power and Steel, Era Infra Engineering, ABG Shipyard, Jaypee Infratech, Amtek Auto, Alok Industries, Jyoti Structures, Lanco Infratech and Electrosteel Steels. Candidates. Between December 2016, when it came into force, and September 2019, a total of 2542 defaulting companies have been admitted into the corporate insolvency resolution process (CIRP) adjudicated by the NCLT. Of this, a resolution plan has been approved in 156 cases. Given that 1045 cases have been closed, in nearly 15 per cent of the cases a resolution plan has been approved. The total claim of the lenders stood at Rs 3,32,087 crore. Of this, Rs 1,37,919 crore, or around 41.5 per cent, has been recovered. This is clearly better than the recovery which was happening in the pre-IBC era. Also, if these firms were to be liquidated, the liquidation value would have come to Rs 74,997 crore. So, clearly, the recovery through CIRP looks much better.”

But there is still a long way to go before the mess that is bad loans can be reasonably cleaned up. One significant spoke in the wheel according to Mr. Kaul is an excessive degree of Government intervention. The P.J. Nayak Committee had in an earlier study commented that: ‘Governance difficulties in PSBs arise from several externally imposed constraints. These include dual regulation, by the Finance Ministry in addition to the RBI; board constitution, wherein it’s difficult to categorise any director as independent; significant and widening compensation differences with private sector banks, leading to the erosion of specialist skills; external vigilance enforcement though the CVC (Central Vigilance Commission) and CBI (Central Bureau of Investigation); and limited applicability of the RTI Act. A more level playing field with private sector banks is desirable.’ The top brass of the Public Sector Banks, unlike their counterparts in the private sector are incredulously insulated from any wrongdoings or malpractices. The RBI made Rana Kapoor, one of the founders and the managing director and CEO of Yes Bank forcefully retire when it was found that Yes Bank had under reported its bad loans by Rs 10,470 crore in 2015–16 and 2016–17. In October 2017, the RBI had fined the bank Rs 6 crore for breaching standards on bad loans recognition. And yet when the unscrupulous diamond magnate Nirav Modi coolly deceived the then second largest PSB in the country, making it poorer by a whopping Rs 12,646 crore loss, nothing happened to the MD and CEO of the bank.

Mr. Kaul’s book is meticulously researched, and the reader must contend with a phalanx of tables and a waterfall of numbers. However, the language employed is easy on the eye and explains every fact with a clarity that is refreshing. “Bad Money” would make for a handy primer for the expert as well as the uninitiated and would be a great refresher for every economics student and policy maven.

Pandemic Capitalism: From Broken Systems to Basic Incomes – Chris Oestereich

Pandemic Capitalism: From Broken Systems To Basic Incomes by [Chris Oestereich, Jonathan Cohn]

The Corona virus pandemic that is currently busy wreaking havoc across the globe, while causing massive dangers to the health of the global populace has also set back the world economy as mankind tries to come to grips with this highly infectious disease. The people most impacted by this virus represent the lowest and deprived strata in society. The homeless, the ailing who cannot afford healthcare, the downtrodden and the neglected. With many countries imposing a ‘lock down’, a multitude of sectors have shuttered down businesses and left their employees in the lurch. Even the ‘essential’ services sector such as healthcare and retail are not ensuring that the monetary benefits being made available to its workers are equivalent to, if not deservedly greater than, the risks borne by them.

Chris Oestereich founded the Wicked Problems Collaborative, and also engages in fundraising for his seed-stage social enterprise, Full Circle Filament, which will work directly with informal waste collectors to make 3D printing filament and other socially valuable products. He is also a co-founder of the Circular Design Lab, an open innovation platform that focuses on prototyping and delivering solutions to the sorts of challenges he writes about. In his new and engaging book, “Pandemic Capitalism”, Mr. Oestereich joins the clamour for ushering in a scheme of Universal Basic Income (UBI) so that people of all strata irrespective of caste, colour, creed, sex, religion and other extraneous factors, can lead a life of dignity, self esteem and self sustenance. Cocking a snook at Adam Smith‘s “Invisible Hand“, Mr. Oestereich draws our attention to three potential states along a continuum for the economy: “an entirely non-competitive society, need-based competition, and want-based competition.” The first state was what was vehemently advocated by the Communists. “In theory, all are equals. Gains are shared. This approach is believed by adherents of capitalism to reduce the incentive for people to work hard and increase the size of the economic pie.”

Second in the continuum is “want-based competition.” This is what characterises the rat race economy of today. As the author informs us, “people are forced to compete for necessities. Food, water, and shelter are not human rights, but rather things to be ‘earned.’ Surviving, and thriving, are ‘spoils’ of the arena. Homelessness and hunger are among the costs of losing—risks of the game. We cull ‘the weak’ while the ‘strong’ thrive. The cost of the game is a society that becomes increasingly mean.”

Separating non-competitive society from the want based competitive economy is the need-based competition. In this scenario we would look after each other’s backs and we would be satisfied with all our genuine needs thereby letting go of the pernicious attribute of greed. “Think of it as a cake made of socialism with a layer of capitalist icing. Everyone gets what they need without the complete avoidance of greed. We would just keep the rapacious ones a safe distance from our necessities.”

According to Jason Hickel, an anthropologist at the London School of Economics and a Fellow of the Royal Society of Arts, global inequality, has attained damaging and dangerous proportions. In a fascinating piece titled, “How Bad is Global Inequality, Really?” and published on his website, Mr. Hickel observes that, “the poorest 60% – the ones depicted as the “winners” in the elephant graph – continue to live under the poverty line of $7.40 per day (2011 Purchasing Power Parity).” The elephant graph here refers to a famous and popular graph, originally developed by Branko Milanovic and Christoph Lakner using World Bank data. This graph charts the change in income that the world’s population have experienced over time, from the very poorest to the richest 1%. Mr. Hickel’s findings paint an extremely somber picture. In his own words, “…the top incomes… well, they have grown by what can only be described as an obscene amount, with millionaires doubling or tripling their annual incomes, gaining some 14,000 times more than the average person in the poorest 60% of the world’s population”.

The proponents of and for UBI are slowly, but steadily making their arguments known and felt in all the relevant places such as Corporate Boardrooms, Parliaments and the portals of renowned and progressive think-tanks. The Economic Security Project, a new UBI think-tank, deliberates thus: “In a time of immense wealth, no one should live in poverty, nor should the middle class be consigned to a future of permanent stagnation or anxiety.” Michael Faye, the co-founder of the intrepid GiveDirectly that is piloting its UBI in Kenya states, “We could end extreme poverty right now, if we wanted to.” Philippe Van Parjis and Yannick Vanderborght make an arresting case for the implementation of UBI in their best-seller, “Basic Income: A Radical Proposal for a Free Society and a Sane Economy” Adding to an already burgeoning number are stellar thinkers such as Nick Srnicek and Alex Williams, the authors of “Inventing the Future”, Rutger Bregman, and Guy Standing, a long standing member of BIEN, the Basic Income Earth Network, a primary body advocating for UBI.

Mr. Oestereich joins the UBI bandwagon and his reasons really merit more than a mere perusal.


I received an advance review copy for free from, and I am leaving this review voluntarily.

Good Blood: A Doctor, donor and the incredible breakthrough that saved millions of babies – Julian Guthrie

Good Blood: A Doctor, a Donor, and the Incredible Breakthrough ...

James Christopher Harrison, an effervescent Aussie lad was all of fourteen years old, when a seemingly innocuous bug that caught him turned into a bad case of triple pneumonia. With the antibiotics failing to do their job, young Harrison’s condition worsened before it was decided that a pediatric pulmonary lobectomy, a complicated surgical procedure to excise the diseased portion of the lungs, had to be performed upon him. Three necrotic lung lobes, thirteen units of blood, and eleven hours of surgery later, young Harrison is finally wheeled out of the Operating Theatre. Surgeon Harry Windsor had miraculously brought Harrison back from the very brink. As the boy is recovering his devout father reminds him that the latter was saved by the “blood of strangers.” James Harrison promises his father, a donor himself, and his family that he would “return the favour.”

Dr. John G.Gorman booked himself a berth on the Queen Mary seeking to carve out a name for himself by sailing to the United States of America from his motherland, Australia. Armed with an insatiable curiosity and the book Ideas Have Consequencesgifted by his father, Gorman was willing to risk it all in the search of achievement and professional success.

Julian Guthrie’s latest book, “Good Blood”, brings together the promise of James Harrison and the pedigree of Dr. John Gorman in a manner that will leave the reader poleaxed. An American journalist, and an acclaimed author, Ms. Guthrie has been nominated for the Pulitzer multiple number of times, and it is not at all hard to fathom why. In “Good Blood” which may be her best work yet, Ms. Guthrie’s writing is invested with passion and informed by a purpose. The unlikely, yet stupendous inter-linkage between the selfless contribution of a donor and the indefatigable pursuit of a doctor in combating the ravages of a peculiar disease targeting babies, puts even the raciest edge of the seat fiction thriller to utter disdain.

Dr. John Gorman after bagging himself a position at the Columbia Presbyterian Hospitalin Manhattan becomes obsessed with the workings of the insidious Rh Disease. In this disease, a baby inheriting Rh positive blood from the father, with the mother’s blood being Rh negative, gets its red cells destroyed by the mother’s own antibodies, made by the immune system to fight things it didn’t want in the body. This ultimately results in the baby developing anemia, and the mother having a miscarriage. Dr. Gorman finds an able perpetrator-in-crime in trying to decipher the intricacies of Rh disease in the form of Dr. Vince Freda. This eager beaver of a man and a former air force surgeon had the privilege of having studied for a year under Alexander Wiener, who in turn was a protégé of Karl Landsteiner, popularly known as “the Father of Blood Science.”

As doctors Gorman and Freda spend their every waking hour mulling about the Rh disease, unbeknownst to them, a continent away, James Harrison gets busy honouring the promise given by him to his father. Beginning to donate blood from the legally eligible age of eighteen, he goes about this task with a dedication bordering on the maniacal. As Ms. Guthrie informs her readers, “he went to donor mobiles – large converted school buses first called into use in Australia in 1942 – whenever they rolled into town, meeting different nurses and doctors with each visit. But when he got a promotion working in the accounting and clerical department at the railway and was relocated to Sydney, he found a home of sorts in the Red Cross blood bank at 1 York Street.” But James was met with a unique conundrum. His blood could be used only for research and not for transfusion. This was because of the presence of unusually high level of antibodies in his blood that when, transfused might create complications for the donee.

Meanwhile, Dr. Gorman gets his moment of epiphany courtesy a textbook given as a complementary copy by a traveling salesman from W.B. Saunders Company. Titled “General Pathology” and penned by Australian Nobel laureate Sir Howard Florey, the book is based on a series of lectures delivered in the school of pathology at Oxford. As Ms. Guthrie, writing in an effortlessly jaw dropping fashion informs her readers, “he {Gorman] flipped back to the table of contents and then forward to Chapter 34, page 697. The Chapter was titled, “Biological Factors in the Production of Antibodies.”……He continued reading until one sentence gave him pause: the presence of circulating antibody, whether produced actively or received passively, depresses and may completely inhibit the human response to the relevant antigen, although not to other antigens.” An excited Gorman tears off in search of Freda. The cure for Rh disease might be on the horizon!

Gorman and Freda embark on a fascinating trial recruiting convicts at the notorious Sing Sing prison facility. Their whole trial is based on the logic that when a mother is given passive antibodies thereby inhibiting her from producing her own antibodies, her immune system gets fooled into thinking that it has already responded to the Rh antigen. After a laborious wait and a daring, albeit potentially dangerous exercise of using Gorman’ sister-in-law Kath as an experimental candidate to test the passive antibodies with, Gorman and Freda’s efforts finally bear fruit and the United States Government officially grants approval to the RhoGAM shot. RhoGAM is an injection made up of antibodies called immunoglobulin that help protect a fetus from its mother’s antibodies.

This is where the book becomes most interesting and puts an end to the possibility of finishing it with a pair of dry eyes. Women who have already lost their babies to the dreaded Rh disease and people such as Harrison, whose plasma composition is unique thereby making it an ideal form of donation, are identified as potential donors of blood. The blood thus donated by these individuals, can then be used to save babies of mothers who are Rh negative. As Ms. Guthrie illustrates, oblivious to their own and irreparable loss, women flock in drones to blood collection centres to donate their blood so that mothers-to-be are spared a similar fate. In contrast to blood, blood plasma, can be donated as often as once every two weeks. Ms. Olive Semmler, who had one live child out of eight pregnancies, donated blood a stupendous five hundred odd times. “One woman who became a donor had lost ten babies to Rh disease. To get to the Sydney blood bank, she started her day by rowing up a river, walking a mile to the bus, then taking a train to the central station.”

But the most ebullient of all donors was James Harrison. Now that his blood could be used not just for research but also for actual transfusions, he made a staggering 1,173 donations throughout his lifetime. His last donation was when he was eighty-one years of age and eighty-one was the cut off age for donating blood in Australia. Harrison’s donations are estimated to have saved over 2.4 million unborn babies from Rh disease. Affectionately known throughout Australia as the “Man With The Golden Arm”, a perfect moniker for a cricket obsessed nation, Harrison was awarded the Medal of the Order Of Australia on the 7th of June 1999.

Gorman and Freda, went on to win the prestigious Lasker-DeBakey Clinical Medical Research Award in 1980 along with Cyril A. Clarke, Ronald Finn, and William Pollack for “pioneering work on the rhesus blood group system, the role of rhesus D antibodies in the causation of Rh disease and the prevention of Rh disease.”

The most poignant moment in the book, predictably, is reserved for the last blood donation of James Harrison. Surrounded by a bank of television cameras and grateful mothers with babies whom James had helped save with his donations, Harrison donates his blood under the watchful and benevolent supervision of nurses Lizzie Thynne and Robyn Barlow. ‘James thinks his donations are the same as anybody else,’ a director of the blood center said, standing next to James. “But he’s a national hero.” James demurred, saying, ‘no, no, no. it’s just something I can do. Its one of my talents. Probably my only talent.”

At the time of this writing facing unprecedented times. The wrath of a pandemic called COVID-19 has engulfed us in its wake and set us back not just economically, but more dangerously, morally as well. We seem to be helpless in not just countering the rapid spread of this disease but are also rendered incapable of nurturing a universal bonding in this period of crisis. Riven by racial tension and divided by a chasm of hatred, mankind seems to be at a crossroad. There is a deepening erosion of faith and a severe loss of hope. The crying need of the hour is for an epiphanic John Gorman to take the SARS-COVID 2 virus head on and an effervescent James Harrison to restore the faith in humanity. Hope we manage to get them booth sooner rather than later.

Meanwhile we can all once again be immensely grateful to Ms. Julian Guthrie for her marvelous efforts in bringing to worldwide notice, one of Earth’s greatest collective altruistic endeavour.

(Good Blood: A Doctor, donor and the incredible breakthrough that saved millions of babies by Julian Guthrie is published by Abrams Press and will be released on the 8th of September 2020.)

2030 How Today’s Biggest Trends will collide and reshape the future of everything – Mauro F. Guillen

2030: How Today's Biggest Trends Will Collide and Reshape the ...

Would Lehman Brothers have had a more encouraging prospect if it was Lehmann Sisters instead? What is the connection between block-chain technology and a national election? In his book “2030” (one of the shortest ever main titles for a book succeeded by what has to be one of the longest subtitles ever for any literary work), Mauro F. Guillen, Zandman Professor of International Management, Wharton School and Director, Lauder Institute, tackles these questions along with a whole horde of seemingly unconnected but intricately linked phenomena as he proceeds to dissect some of the most disruptive trends that the world would be a spectator to by the year 2030.

The book mulls about the tectonic trends, that by the year 2030 would put paid to the conventional, and upend received wisdom. For example, as the author highlights, the most powerful middle class both in terms of sheer population and purchasing power by the year 2030 would be in India and China. In a humorous take on Arthur R. “Pop” Momand’s memorable conception of “Keeping up with the Joneses”, Mr. Guillen mulls that in future, it would be a case of “Keeping Up With the Singhs and Wangs.” This is also in line with the funnel of innovation that seems to have sprouted in the two most populous nations on Earth. “…while in 2016, the number of patent applications filed in the United States was three times greater than in 1995, in India it was seven times greater, and in China, a whopping seventy-two times greater.”

If you are a woman and you are reading this, drop whatever it is that may be doing, do a cartwheel, or two, and whoop out in undisguised glee. For according to Mr. Guillen, women will get rich – and most importantly richer than men – by the year 2030. This trend, the author argues is in keeping with the famous, or rather infamous (depending upon how one interprets the findings), “Harvard-Yale Study” that “resonated with educated women who were trying to balance their professional goals with personal life.” From a risk aversion perspective, women tend to spend more on their own physical and mental well being and are more inclined to ensure that their parents, off-spring and grandchildren get the healthcare that is essential. The author after quoting Gloria Steinem “we can tell our values by looking at our checkbook stubs”, argues that, “its not much of a stretch to argue that if instead of Lehman Brothers we had Lehman Sisters, the crisis of 2008 might have been averted.”

Whilst holding forth on futuristic trends, one cannot afford to either neglect or ignore the existential threat of Global Warming, and neither does Mr. Guillen. Cities, according to him have become teeming masses of humanity and unless drastic and conscientious measures are instituted, these megapolises face imminent peril. “Cities occupy 1 percent of the world’s land yet are home to about 55 percent of the human population. Told another way, the total land mass on Earth is 196.9 million square miles and cities account for roughly 2 million of those. With 4 billion urban residents, that’s an average of 2,000 people per square mile in cities, which is quite a crowd. Cities account for 75 percent of total energy consumption and 80 percent of total carbon emissions.” Sobering statistic and a time for introspection in so far as humanity, that is more tightly packed than a cliched can of sardines, is concerned.

An added melancholic aspect attached to the new age city, according to the author is its dehumanization. Mr. Guillen proclaims that our cities have lost their soul and are beginning to alienate themselves. Characterised by stereotypical architecture and grotesquely towering monuments, that bear shameless testimony – in addition to paying brazen obeisance – to capitalism, one cannot but agree with Mr. Guillen. Drawing his reader’s attention to the twentieth century Italian metaphysical painter Giorgio de Chirico, Mr. Guillen mulls about the bleak paintings of the acclaimed artist. He also quotes the poet Federico Garcia Lorca, who in 1929 after a stay in New York said, “there is nothing more poetic and terrible than the skyscrapers’ battle with the heavens that cover them.”

Mr. Guillen also offers a kind of liberation and escape from the vice like grip of a city life. Drawing on the principle of “mundanity of excellence” – a term coined by the sociologist Daniel Chambliss, Mr. Guillen educates his readers that high performance is not a natural outcome or corollary of quantum leaps or innate talent, but, a product of a series of tiny and incremental improvements.

Mr. Guillen also jumps on the bandwagon of vertical farming and its perceivable benefits (if this statement comes across as an exercise in complaining, then I ask the author to pardon me.). This proposition of Dickson Despommier of Columbia University has fast gained traction, and companies such as Sky Greens, Green Collar Foods and Artesian Farms have made a veritable enterprise out of the novel concept.

But one of the most important trends identified by Mr. Guillen in “2030” appears in a chapter titled “Imagine No Possessions.” An obvious take on John Lennon and Yoko Ono’s immortal melody, this chapter deals about the inescapable rise of the gig economy. The likes of Uber and Airbnb have demonstrated with a chilling precision that the best way to enjoy possession is by not possessing the product or the service or the experience that triggers such enjoyment! As Mr. Guillen illustrates, “in 2014 Facebook paid $19 billion to purchase WhatsApp, a messaging app with virtually no physical assets to speak of and fewer than sixty employees.” Airbnb, in addition to providing hassle free accommodation to the egregious back packer also bestows upon the owner a spectacular financial benefit. A senior citizen who owns a house can now earn a steady income by letting out a part of his property without being beholden to a bank, which otherwise would have been the unfortunate case in the event loans were obtained with the house as an inevitable collateral.

However, the gig economy brings along with it, a set of unfortunate inconveniences. Crowded cities, and traffic congestion may result in a tragedy of commons, a concept pioneered by the sociologist Garrett Hardin, in 1968, and first observed by the nineteenth century British economist William Forster Lloyd, who penned the environmental hazards that might accrue as a result of grazing on unregulated lands.

Mr. Guillen rounds off his book with a Chapter on Bitcoins and Cryptocurrencies. The burgeoning rise of cryptocurrencies has ensured that there are more currencies on Earth than countries. What makes cryptocurrencies very alluring is their perceivable safety. “Consider that the odds of guessing a winning Powerball lottery number is 1 in 292 million. The probability of hacking a bitcoin private key, which uses 256-bit encryption, is a minuscule 1 in 2 to the power of 256, or 1 in over 115 quattuorvigintillion – a number with 78 digits. That’s equivalent to the odds of winning Powerball nine times in a row.”

Estonia seems to have grasped this concept perfectly well. Presenting itself to the world as “e-Estonia”, the country is a Digital Republic. The citizens, as the author points out can apply for benefits, source medical prescriptions, register their businesses, vote and even access nearly three thousand other digital services online. The author opines that from facilitating elections to funding development, blockchain technology may be the way forward.

As we are trying to tortuously untangle ourselves from the grip of an insidious pandemic, words like the “new Normal”, “social distancing etc.” are rewriting our everyday Lexicon and rewiring our attitudes and outlook. These unprecedented times are the ones where re-imagination, reinvention and repackaging would save the day for mankind. Yet more trends, perhaps for Mr. Guillen to seriously start mulling about a sequel!

(2030 How Today’s Biggest Trends will collide and reshape the future of everything by Mauro F. Guillen, a St Martin’s Press Publication published on the 25th of August 2020).