📰 10% of CSIR staff exposed to COVID-19, survey finds
Research suggests smoking, vegetarianism could be ‘protective’ against infection
•A first of its kind pan-India survey tracking about 10,000 employees of the Council of Scientific and Industrial Research (CSIR) on the prevalence of COVID-19 found that nearly 10% of the staff were infected. Key neutralising antibodies that protect against the virus waned after infection but were at “detectable levels” even after six months — a proxy for the period of effectiveness of future vaccination and general immunity, the serology survey found.
•About three-fourths of the respondents could not recall having experienced a single one of the symptoms commonly associated with the disease, and a vegetarian diet as well as smoking appeared to be “protective” against the infection.
•The CSIR has about 40 labs across the country in nearly every State and its staff — from scientific staff to contractual employees — is a microcosm of India, Shantanu Sengupta, Scientist at the CSIR-Institute of Genomics and Integrative Biology (CSIR-IGIB), among the corresponding authors of the study, told The Hindu. “This is a first of its kind longitudinal study anywhere in the world in that we are tracking a cohort over time and will continue to do so. Some of the associations, of smoking and vegetarianism, are significant but we can now only speculate on why this is so but we don’t yet have a cause,” he said in a phone conversation.
•An association between smoking and protection against SARS-CoV-2 has also been reported in studies in China and France. CSIR staff and family members who volunteered to be part of the survey filled out questionnaires on their lifestyle, food and disease histories. They were also tested with two different kinds of antibody tests to study the kinds of antibodies that were produced following infection. It usually takes a week to a fortnight after being infected for antibodies to be detected in the blood.
•If the prevalence in the CSIR were a proxy to the true scale of exposure to the virus, then it is likely that over 100 million persons in India had been infected and had recovered by September 2020. “Probably 2-3x (or 200-300 million) of that by now. Not surprised therefore that India has had a quiet 2021 compared to the world,” Dr. Anurag Agrawal, Director, CSIR-IGIB and a co-author of the study, tweeted.
•A serology survey by the Indian Council of Medical Research has estimated 7% exposure to SARS-CoV-2 until mid-August, and a modelling exercise by the National Supermodel Committee estimated that 30% may have been exposed by September.
•The study, which has been submitted to a peer reviewed journal for peer review but available as a pre-print on MedrXiv, also revealed a distinct class bias in those affected. Those able to work from home and able to access private transport were nearly twice less likely to be exposed to the virus than “outsourced staff” involved with sanitation and security and using public transport.
•“Higher sero-prevalence among outsourced staff and public transport users in our cohort is more likely to be representative of general population of cities and towns that are part of the cohort. Millions of migrant workers trapped in Indian cities during the lockdown returned to villages in June in packed public transport. Outsourced workers, with highest seropositivity, reflect the high infection rate of this subgroup and it can be reasonably assumed that the pandemic had already reached rural India by September 2020,” the study notes.
•There was even a distinction in blood groups. “Sero-prevalence was highest for blood group type AB, followed by group B, group O and the lowest for group A . Blood O was observed to be protective,” the authors noted.
•Dr. Sengupta said that the 10% seropositivity was an average of the range that included 14% in Delhi, 18% in Hyderabad and 1% in Thiruvananthapuram, and could be used a proxy for “future infection trends”. When seen in light of reported trends in cities, a seropositivity of 15% represented a sort of threshold beyond which new cases started to decline. “In Thiruvananthapuram, for instance, we saw an uptick. Based on this, vaccines could be prioritised in rural India or districts with low seropositivity than the big cities that have seen high numbers,” he added.
•In August, the CSIR announced a project to track 10,000 employees of the organisation for at least 30 years to track an array of health vitals and genes. The over-arching aim is to be able to build a medical cohort to give long-term perspective on the malaises that affect Indians, and determine if such a data bank can be used to help with predicting, say, the onset of diabetes or cardiovascular disease.
Six States where the vaccination drive was carried out are Andhra Pradesh, Arunachal Pradesh, Karnataka, Kerala, Manipur and Tamil Nadu.
•Nearly 2,24,301 individuals have been vaccinated so far, with about 17,000 of them vaccinated on Sunday, the Health Ministry said in a briefing. With 3,000 vaccination sites and a capacity of 100 persons per site, the Centre had planned to vaccinate 300,000 persons nationally on Saturday. Consolidated figures on Sunday show that about 207,000 — or about seven in ten — were inoculated on the inaugural day.
•Of all those vaccinated so far, 447 reported reactions such as pain, mild swelling, mild fever or nausea, with only three persons requiring hospitalisation. The drop in hospitalisations compared to the inaugural day on Saturday was because of it being Sunday with only six States — Arunachal Pradesh, Andhra Pradesh, Karnataka, Kerala, Manipur and Tamil Nadu — conducting vaccinations.
•The Health Ministry has advised States to conduct vaccination sessions on only four days every week to minimise disruption to routine health services.
•Sunday’s briefing was conducted by Dr. Manohar Agnani, Additional Secretary (Health), with no follow-up questions by journalists taken up.
•India plans to inoculate 3 crore health workers, municipal workers, sanitation workers, and later on, 27 crore of those most vulnerable to the disease by July. The Health Ministry claimed that the nearly 200,000 vaccinations undertaken on Saturday were the highest “day 1” numbers anywhere in the world, and exceeded that of the United States, France and the United Kingdom on their first days of vaccination.
•However, the Ministry did not share numbers on how many of those who were supposed to be inoculated on Saturday and Sunday actually turned up for their shots. Nor was information shared on how many doses Bharat Biotech’s Covaxin, being dispensed in clinical trial mode, and Serum Institute of India’s Covishield, were dispensed. The government has announced that it has stocks of 11 million doses of Covishield and 5.5 million doses of Covaxin.
•So far, health workers don’t have a choice in the vaccine being administered, with 12 States in receipt of Covaxin. Because the vaccine has to be administered again after a gap of 28 days, each site is expected to administer the same kind of vaccine.
📰 Update debate: On WhatsApp and privacy
Privacy of citizens is too important to be left to the business practices of digital companies
•WhatsApp’s decision to delay the update of its privacy policy, following a backlash from its users, is an implicit acknowledgement of the increasing role played by perceptions about privacy in the continued well-being of a popular service. Problems for the Facebook-owned app started earlier this month when it announced an update to its terms of service and privacy policy, according to which users would no longer be able to opt out of sharing data with Facebook. February 8 was kept as the deadline for the new terms to be accepted. This triggered a mass exodus from WhatsApp, the likes of which it has never encountered, not even in the aftermath of the Cambridge Analytica scandal, which did bring a lot of bad press to its parent, or when the messaging app’s co-founders called it quits a few years ago. The WhatsApp policy update has clearly spooked many users, who, concerned about their privacy getting compromised, have shifted to alternative platforms such as Signal and Telegram. In recent weeks, according to media reports, messaging app Signal has topped the app store charts in India and many other countries. Interestingly, WhatsApp uses the same end-to-end encryption protocol as Signal.
•An under-fire WhatsApp, on its part, has tried to allay fears about privacy being compromised because of the updates. It has put out numerous messages and taken out advertisements to convey that the changes are “related to optional business features on WhatsApp, and provides further transparency about how we collect and use data”. Millions of business interactions take place every day on WhatsApp, and the new privacy updates are supposedly to make these easier while also enabling personalised ads on Facebook. After all this, WhatsApp has pushed the update to May 15. The change will ultimately be inevitable, given that WhatsApp, bought by Facebook for a whopping $19 billion and having subsequently given up plans to charge its users, would be betting on its handling of business interactions to make its big monies. Even then, it cannot force these changes on its users in Europe. For, Europe’s stringent General Data Protection Regulation, more popularly called GDPR, prevents such sharing between apps. Users there are in control of their data much more than anywhere else in the world. India could do with such a law. All it has is a draft version of a law, and it has been so for a few years now. Privacy of a billion citizens is too important a thing to be left just to the practices of a commercial enterprise. It will be reassuring if it is guaranteed by a strong law.
📰 Bridging the gulf between dream and reality
Dr. Martin Luther King Jr.’s ideas and his movement have enduring appeal, including in India
•Celebrating the lives of visionary leaders who left an indelible imprint on thought and action not only refreshes our memories of their transformative impact but also rekindles hope. Among those who influenced American society and inspired many across the world in the 20th century, Rev. Dr. Martin Luther King Jr. stands out. Reflecting on the legacy that Dr. King left in setting the U.S. on the path to a more inclusive society and polity assumes significance in the context of persisting racism leading to the death of innocent African-Americans coupled with the rise of the Black Lives Matter movement.
•As Americans celebrate his life in the U.S., it is befitting to reflect on his lasting legacy in India too, focusing particularly on the ideas he articulated and the movement he led, which have enduring and universal appeal, particularly at a time when some of those ideas are under threat.
Dr. King’s dream
•If there is one idea that captures the essence of Dr. King’s contribution, it is his dream of an inclusive America. Though the election of Barack Obama as the first African-American President in 2008 was a major stride towards the fulfilment of this dream, Dr. King’s dream was much more grandiose in its breadth and scope. He expanded the horizons of the dream both in its conceptualisation and actualisation in the 1950s and 1960s.
•In his 1963 oration at the Lincoln Memorial, Dr. King eloquently unpacked his vision for an inclusive and equitable America, which is famously remembered as the “I have a dream” speech. Acknowledging the contribution of President Abraham Lincoln who signed the Emancipation Proclamation that set the African-Americans free from slavery, he underscored that “the life of the coloured American is still sadly crippled by the manacle of segregation and the chains of discrimination.” Given persisting racial injustice even after a hundred years since 1863, he gave a clarion call saying: “Now is the time to lift our nation from the quicksands of racial injustice to the solid rock of brotherhood.” The spirit of Jesus Christ’s Sermon on the Mount and the Gandhian method of nonviolence burst forth beautifully when he cautioned his community not to “satisfy the thirst for freedom by drinking from the cup of bitterness and hatred.”
•He raised a perceptive question: “When will you be satisfied?” And he answered it saying, “We can never be satisfied as long as our children are stripped of their selfhood and robbed of their dignity.” From thereon he made the world spellbound with his inimitable oratory by expounding the dream that he had for America. “It is a dream deeply rooted in the American dream that one day this nation will rise up and live out the true meaning of its creed… that all men are created equal.” He unfolded the dream further by saying, “I have a dream my four little children will one day live in a nation where they will not be judged by the colour of their skin but by the content of their character.” He ended the speech with the old Black spiritual that gave them hope against all hopes, “Free at last! Free at last! Thank God Almighty, we are free at last!”
The Civil Rights Movement
•Dr. King’s contribution to the Civil Rights Movement was remarkable. There have been many African-American leaders who have propagated the message of freedom and dignity since the mid-19th century. Among them, Dr. King was unique; he changed the very architecture of the movement. He added flesh to these insightful ideas by leading a relentless and nonviolent movement. He was fully aware that his majestic dream could never be realised without galvanising all those who have the same vision. The movement adapted ideas from India’s forays into civil disobedience. The 381-day Montgomery bus boycott demonstrated the potential for nonviolent mass protest and galvanised the Civil Rights Movement. He tirelessly worked with Rosa Parks, E. D. Nixon, Jo Ann Robinson, Ralph Abernathy, Ella Baker, John Lewis, Andrew Young, Jesse Jackson and C.T. Vivian and many others.
•Right through the movement, Dr. King strived to be the conscience and unifier of a nation that was deeply divided on racial lines. He bridged the gulf between the dream and reality. Dr. King’s major contribution to the U.S. in general and African-Americans in particular is in invigorating the benchmarks of equality, justice and dignity.
•The power of these illuminating ideas and the tenacious movement eventually resulted in a number of path-breaking laws such as Civil Rights Act of 1964 and Voting Rights Act of 1965, which ended several vestiges of racial discrimination and led to the empowerment of African-Americans like never before.
•In the process of realising this glorious dream he was jailed almost 30 times, his house was bombed, he was stabbed once, and finally assassinated. He sacrificed his life for the dream of a better and inclusive America. Both in life and death, he was a beacon of hope for America.
•May India, where there are continuing atrocities on the Dalit, tribal and minority communities due to a hierarchical social structure, as well as the marginalised communities across the world, draw inspiration from Dr. King and strive for a more inclusive, just and equal society.
📰 The unravelling of liberal globalism
Donald Trump has been defeated, but not Trumpism and the anti-globalist politics it has unleashed
•Few Presidents have tried to alter the fundamentals of American foreign policy since the end of the Second World War like Donald Trump has done in the past four years. Mr. Trump broke with the Washington consensus on what western policymakers and strategists call the liberal internationalist order. He put his ‘America First’ doctrine in the driving seat of his foreign policy wagon. He decried the North Atlantic Treaty Organisation (NATO), the bedrock of the trans-Atlantic military cooperation, pulled the United States out of international organisations and multilateral treaties, and launched tariff wars with both friends and foes alike.
•Barring a series of normalisation agreements between Israel and some Arab countries, Mr. Trump does not have any major foreign policy achievement to his credit. But he is more of a disruptor than an achiever. And he has caused disruptions in America’s foreign policy which could outlive his presidency. When Joe Biden assumes the White House very soon, the biggest foreign policy challenge he faces is whether he could unmake the Trump legacy and take Washington back to its liberal international consensus.
America and isolationism
•America’s isolationism did not start with Mr. Trump. He was rather harping on an old foreign policy doctrine that shaped and drove American policy before the Second World War when he pulled the U.S. back from the stage of global leadership. Before the war, the U.S., an emerging economic and military power, was largely an isolated country that was focused on its own rise and expansion. The economic catastrophe caused by the Great Depression and the losses it suffered in the First World War prompted the American isolationists, including progressives and conservatives, to push for a policy of non-involvement in European and Asian conflicts — a policy Washington had largely followed throughout the 19th century.
The Wilsonian imprint
•The roots of the liberal internationalist order can be traced to the ideals of the 28th American President, Woodrow Wilson. Wilson, who led the U.S. to the First World War, called for a rules-based global order governed by international institutions in which countries could cooperate and achieve peace (what he called “an organised common peace”) rather than going to war to meet their goals. The Wilsonian principles on self-determination, rule of law within and between countries, liberal capitalist economic model and freer trade and emphasis on human rights would lay the foundations of the liberal global order which the West would wholeheartedly embrace after the Second World War, but they did not have many takers in the U.S. during the inter-war period. The U.S. was not even a member of the League of Nations.
•Washington unearthed the values of Wilsonian globalism only after it suited America’s strategic interests during the Cold War. When the world was divided between the capitalist and communist blocs and when the communist and socialist parties (under the patronage of the Soviet Union) started making advances into Asian and European countries, the U.S. turned to liberal globalism and took up the leadership of the western world. It called itself and its allies the “free world”, claiming moral superiority over the communist and socialist dictatorships. While this remained the larger narrative, it did not stop them from embracing the dictators who were opposed to the red bloc. Basically, liberal internationalism embodied the transborder cooperation of western democracies and their allies in their fight against the socialist internationalism of the rival bloc. When the Soviet Union collapsed in 1991, many pundits and policymakers saw it as a triumphant moment for liberal internationalism. Some even predicted “the end of history”. The U.S. stepped up its leadership role: It started wars to protect human rights, export democracy and defeat jihadists. But history did not proceed as the end-of-history theorists had prophesied.
Structural shifts
•From a normative point of view, the geostrategic charm of the liberal moral argument about freedom has diminished in the post-Cold War world. On the other side, with the rise of religious terrorism, even liberal democratic governments started arming themselves with more powers that often clashed with civil liberties. The liberal promise of ‘minimum government’ stayed confined to the economic realm, while the security state kept expanding its powers. On the global stage, the U.S.’s repeated military adventures have tested its own hard power superiority. The U.S. effected a regime change in Yugoslavia in 1999, but the campaign eventually led to the disintegration of the country. In Iraq, the U.S. never won a conclusive victory. In Afghanistan, after 19 years of war, the U.S. has struck a deal with the Taliban and is badly looking for an exit. In Libya, the country “liberated by NATO”, there are two governments and two armies and many militias backed by rival regional powers. When it comes to Iran and North Korea, the U.S. is not as confident as it was with Iraq and Afghanistan on using force. This inability to win wars and prolonged military campaigns turned foreign interventions unpopular again.
•The biggest blow to the western liberal order, however, came from within. The crisis in capitalism that broke out in 2008, has weakened the U.S. and western Europe (the guarantors of the post-war order) economically, and unleashed political changes. The focus shifted away from human rights and civil liberties to fighting terrorism and stopping immigration in many of these countries. Illiberal, far-right and anti-immigrant Islamophobic parties started rising. They challenged post-war internationalism, mobilised the public based on cultural nationalism and vilified immigration and the flow of refugees (which was in part triggered by the wars the globalists fought in poorer countries).
From Trump to Biden
•The rise of Mr. Trump to power in the U.S., the leader of the western liberal order (and the Brexit vote in the United Kingdom) was the sharpest manifestation of this tectonic shift that has been under way. Unsurprisingly, Mr. Trump, a product of the crisis in globalised capitalism, took the U.S. back to pre-war isolationism. It may not be a coincidence that Mr. Trump is the first American President since Jimmy Carter who has not launched a new war.
•Mr. Biden’s foreign policy would be different from Mr. Trump’s. He would seek to strengthen alliances and build a more consistent foreign policy approach to the myriad problems America is facing. He could undo some of the policy decisions of Mr. Trump’s such as the U.S.’s withdrawal from the Paris Climate Accord or its exit from the World Health Organization. But could Mr. Biden, a liberal internationalist himself, revive the western liberal international order? Could he revert to liberal trade, embrace globalisation like, say, Bill Clinton did, or launch wars in the name of protecting human rights or exporting democracy? Could he establish the U.S. hegemony over a fast-diversifying international system? The forces of history are against him.
•After the Second World War, there was a trans-Atlantic consensus among the ruling elites of North America and western Europe on how to tackle the challenges from the Soviet Union. Now, there is no such consensus on how to tackle the challenges they face. There could be broad agreements on issues such as climate change or the fight against COVID-19, but on critical strategic issues such as the rise of China and the challenges from Russia, there is a huge gap between the old globalists and the new populists.
•Mr. Trump has been defeated, but not Trumpism and the anti-globalist politics it has unleashed. Even if Mr. Biden overcomes the currents of isolationism at home, he could face similar challenges across the Atlantic where a bunch illiberal populist leaders and cultural nationalists such as Marine Le Pen of France, Matteo Salvini of Italy, Norbert Hofer of Austria and Geert Wilders of the Netherlands are on the ascent. Like Mr. Trump, none of them represents the old order.
📰 Rise of shadow entrepreneurship
Without regulation, the situation could spiral out of control
•Recently, a professor at a business school allegedly misused his faculty position to provide fake certificates to students whom he had compelled to attend an online course that he taught. He essentially took advantage of India’s rising pre-pandemic gig economy in education. When authorities at the institution discovered the racket, they suspended him. This is a cautionary tale for the global rise of shadow entrepreneurship, not just in education but other sectors such as finance (for easy loans), the betting economy (online games) and healthcare (e-pharmacies). Given the potential perverse consequences of shadow entrepreneurship in the long run for consumer welfare, regulation is needed to monitor quality of services.
Supply and demand shock
•What might drive the rise of shadow entrepreneurship? When there is a supply and demand shock as momentous as COVID-19, a new market may open up to tackle the shifting inwards of markets, owing to rising prices and lower quantities available. Shadow entrepreneurs, offering the allure of technology-mediated services, can help release the associated distortions and frictions in the market by offering complementary services that traditional service providers may be constrained to offer or consumers might not be able to access due to lockdown constraints. This could produce a redistribution of old consumers towards these new markets provided through technology and also entry of new consumers. While markets may self-correct using the invisible hand principles, the initial spike in demand and ensuing lock-in effects might imply higher market power for early movers.
•The manifestation of such market power will happen through a variety of ways beyond the obvious price setting effects. Small firms will get acquired by large firms. First movers in the space with deep pockets could generate irrationally high valuations. This may also show up with cross-border and national security implications as recently reported about shady loans being provided by Chinese instant loan providers online. Such technology-mediated shadow entrepreneurial platforms could also harbour less than safe spaces as is happening with harassment in Indian telemedicine platforms.
•It will also mean that unscrupulous individuals who are not entrepreneurs per se but are complementary service providers will potentially take more advantage of these post-pandemic market constraints, extracting money from consumers by means such as document forgery. Clearly, while such shadow entrepreneurialism may spike short-run welfare effects with technology mediated access, they could create perverse welfare consequences in the long run.
The way forward
•What is then the way forward to regulate such activity? As research by Amit Seru at Stanford University and his colleagues found through studying shadow finance in the U.S., or research by the Indian Institute of Management, Ahmedabad found in the world of private coaching houses in Indian education, strong monitoring of quality would be essential. This needs to be complemented with non-compliance being punishable with a jail term, clamping down on services and related strict consequences. Those shadow firms that comply are more than welcome to join the dominant mode of service delivery with non-shadow firms. But without regulation, the situation could spiral out of control, given monitoring needs of public goods distribution for the developing world. There also needs to be an associated harmonisation of activities between competition authorities of governments (in India’s case the Ministry of Corporate Affairs in regulating shadow entrepreneurship and government departments in healthcare, education or finance).
•The big question though is, caught in the stress and fatigue of trying to manage the virus, will governments worldwide pay attention? If not, we may be in for the non-COVID-19 adverse welfare consequences of COVID-19, given the rise in shadow entrepreneurship around the world.
📰 Financial boom at a time of economic stagnation
The paradox becomes clearer by recognising the circuit of financial flows beyond the real economy
•Divergences between the booming financial and the stagnant real sectors, which appear rather confounding as well as disconcerting, warrant an explanation.
•Enumerating the facts in India’s major secondary stock market, the Sensex (the benchmark index of the BSE Limited, or formerly the Bombay Stock Exchange Ltd.) has been found tracking an upward path, from 40,817 on January 8, 2020 to 48,569 a year later, on January 8, 2021. In between, the temporary downward slides were responses to the pandemic-related lockdowns during early 2020. Jubilant upward strides in the stock market continued, along with speculatory financial transactions in real estate, gold and even commodities. However, we notice that financial gains booked in the market on transactions do not originate from productive activities in the real economy, a fact which contrasts the floating of shares by enterprises, as initial primary offerings (IPOs) for capacity expansions.
•With the start of the novel coronavirus pandemic during April-June (Q1) of 2020, India’s GDP growth rate in real terms sank to a low of minus 23.1%. The deceleration in the second quarter continued at minus 7.5%. The official advance estimate for 2020-21 as a whole also stands at a negative again, of minus 7.5%. GDP in India has been subdued even before the pandemic, declining from 6.12% in 2018 to 4.18% for 2019, while the financial sector has continued moving up.
In advanced economies too
•The paradox of the continuing financial boom with the real economy going through a stagnation has been found to be replicated in other developing as well as advanced economies. These include the major emerging economies such as Brazil and Argentina along with advanced economies such as the United States and the United Kingdom. Simultaneously, the story of employment in countries has been dismal, with jobs at levels much less than what is needed .
•The discord within countries between the real and financial activities clearly imparts a dissonance within economies. Thus in India, the bonanza reaped in the stock market bears no testimony to the dark side of the economy — these include the uprooting of migrants following the pandemic lockdowns, protesting farmers on land rights and the vast stream of the jobless in the country. It remains an open question whether this can continue. An answer, if negative, casts a gloom not only on those having large exposures in the financial market but also for the economy as a whole.
•To understand a little bit more the magical properties of the on-going prosperity in the financial sector and to question its sustainability over time, we need to recognise the circuit of financial flows beyond the real economy.
Flows of finance
•Finance as above, having no counterpart in the productive sector, was identified, first by Karl Marx, as fictitious capital. Flows of fictitious finance consist of credit in circulation, bonds on the basis of future earnings, interest on loans (at the cost of foregone consumption or from surplus value when loans permit an access to productive resources). Earnings from fictitious capital include interests, dividends and capital gains as well as profits on derivatives such as forwards and futures used to hedge against uncertainty in de-regulated markets. All the above come in the category of unearned or rentier capital.
•Despite the fact that flows of fictitious finance do not originate from the real economy, their accumulation, however, leaves a mark by generating financial wealth for those with access to the financial circuit. Interestingly, financial assets, sold with capital gains at higher prices, are met with a rising rather than with the usual declines in demand. Evidently, possibilities of accumulating assets turn even brighter with the high value assets (used as collaterals), fetching credit for further business. As for the stock prices, which reflect the stream of dividends over time discounted by interest rates, lower rates can help pitch stock prices higher. We recall that cuts in interest rates are often preferred as tools under mainstream prescriptions limiting expansionary policies, which evidently helps stock prices.
•A journey as above for the financial circuit continues, is subject to market confidence, along a concentric circle which widens with rising asset prices, asset incomes and capital gains. The ingrained uncertainty in de-regulated markets works as a barometer for setting the pace of expectations and decisions. The market may suddenly stall when expectations turn adverse. The standard computer-run packages in the market available for investment decisions, while based on the rather erroneous calculation of probabilities, fail to work to attain the desired goals of profitability. Recent examples include instances of the financial collapse with the dot-com bubble or the sub-prime crisis of 2008, inflicting large social costs of unemployment and poverty in the real economy.
Link to state
•Finally, to look at how finance has attained its present status as the major happening sector within economies, especially, as a major force in the power relations, we need to look at the evolving pattern of the alliances between finance and the ruling state. The path started with the sweeping pace of financial de-regulation in the late-1990s when banks were allowed to profit by dealing with securities and with the emergence of hedging devices such as futures and options in the market. It also reflects the rise of non-bank financial institutions as well as shadow banks operating beyond regulations even at cost for the regular banks which had large exposures to the non-banks. The state’s close proximity to big finance is also evident in the revamping of downhill finance, even with bailouts in the name of restoring financial stability. It speaks even more of the pro-finance stance of the state in the benign official neglect of upswings in the financial sector despite the continuing downslides in the real economy.
Alternative policies, caution
•Possibilities of a sudden collapse of confidence in the financial sector, incurring financial losses borne by those holding such assets go further with social costs borne by the economy as a whole — a reality which cannot be ignored. Catastrophes, as mentioned above, highlight the need for alternative policies on the part of the state as well as a bit of caution on part of individual investors — in a bid to usher in a sustainable and equitable path of growth for the economy as a whole.
