Sunday, January 30, 2011

Fixing the Greed of Capitalism

Unfettered greed arising out of the free market capitalistic system is at its worst as we have seen in recent times. Bernie Madoff, a former chairman of the US NASDAQ stock market operated the biggest PONZI scheme, the biggest investment scandal in history. He has swindled thousands of investors of US$ 65 billion. On June 29, 2009, he was sentenced to 150 years in prison, the maximum allowed under the US law.

The 2008 United States financial crisis led to global financial meltdown which evoked fears of another Great Depression like in the 1930s. In this most recent financial crisis that started in the the US, Investment banks and commercial banks lent trillions of dollars for housing purchases to borrowers ill-equipped to repay when the housing prices crashed. There was no 'invisible hand' espoused by Adam Smith to maintain a fair and just order in the market. The driving force of the present free market model - at least in the US is Milton Friedman's theory that business corporations are only to make profit and greed is part of the equation.

With the emerging economies of China, India and Brazil fast catching up with the developed world, there is growing pressure for a new economic world order. Can the Western liberal free market capitalism co-exist with the economic styles of the emerging economies?

Below is an interesting discussion in Davos 2011, on the future of the Business Enterprise. Now we are going back to the roots of business that Adam Smith would have envisaged. Once again business leaders have raised the issue- social responsibility of business corporations is critical to rein in the corporate greed. Business needs to create more than just one value-i.e.,profit for the shareholders.

The new mantra for developing countries that need the assistance of the world financial institutions like the IMF seems to be: public/private sector partnership.

Sunday, January 09, 2011

Hate Speech does have Tragic Consequences

All too often, we hear about gun violence in the United States of America.

The American nation is shocked in horror yet again. Today, a lone gunman opened fire in front of a supermarket called Safeway in the Arizona city of Tuscon. The gunman killed six people (including a nine-year-old girl) and wounded a United States Congresswoman.

It is not clear why the gunman went on this terrifying rampage.

But whatever his reasons, the local sheriff - who is coordinating the investigation with the FBI - believes it is time for America to do some soul-searching.

Sheriff Clarence Dupnik, speaking about Arizona: (Link)

"When you look at unbalanced people, how they respond to the vitriol that comes out of certain mouths about tearing down the government. The anger, the hatred, the bigotry that goes on in this country is getting to be outrageous. And, unfortunately, Arizona I think has become sort of the capital. We have become the Mecca for prejudice and bigotry.

"It's not unusual for all public officials to get threats constantly, myself included. And that's the sad thing of what's going on in America. Pretty soon, we're not going to be able to find reasonable, decent people who are willing to subject themselves to serve in public office."

He later added:

DUPNIK: Let me just say one thing, because people tend to poo-poo this business about all the vitriol that we hear inflaming the American public by people who make a living off of doing that. That may be free speech. But it's not without consequences."

Freedom of speech is a sacred right guaranteed by the First amendment of the US constitution.

For countries that follow this model of the freedom of speech, should hate speech be criminalised in order to deter such horrible crimes?