Is India in the grip of an employment crisis? This question has acquired a good deal of salience in the wake of media reports that the Indian government has tried to suppress an official report that shows that unemployment has reached historically unprecedented levels. The key findings of the report were leaked to a leading financial newspaper in India.
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The Royal Commission Report into Misconduct in the Banking, Superannuation and Financial Services Industry will be released to the public this afternoon (4 February 2019). The Commission had already published an Interim Report in September 2018.
The Interim Report had hardly anything good to say about the industry. Rather, the Commission used the word “greed” to describe the industry’s behaviour and how the industry largely treated the ordinary customers. Otherwise, how can one explain fees charged for services not provided? Fees charged to dead people?
The Australian banking industry had been politically very successful for decades. In the post-GFC years, the industry used the excuse of ‘rising costs of funds’ in international markets for raising their interest rates asynchronous to the RBA’s rate decisions. Nobody raised an eyebrow when the major four banks reported record profits year after year while still crying poor about rising costs of funds. The crux of the matter is the banking industry fell into a culture of profit at any cost and bank executives’ remunerations were linked to profit and revenue. Thus, the bank executives in Australia all they cared for was whether they were contributing to the bank’s revenue and profit. Bank leaders did not care enough whether their employees were doing the right thing for their customers. If the bank management were thinking that they were more focused on creating shareholder wealth, shareholders thought differently. ANZ, NAB, and Westpac – all received a ‘first strike’ 2018 under Australia’s ‘two strikes’ rule. CBA received a ‘first strike’ in 2016.
So, the bottom line is: yes, we want our banks to be profitable and financially strong. Yes, we need strong banks for a strong economy. But the profit must be clean.
I was invited by the Dhaka-based South Asian Network for Economic Modeling (SANEM) to deliver a keynote speech at its inaugural workshop on macroeconomics that was held on January 11, 2019. I was part of a panel that included Dr. Atiur Rahman, former governor of the Bangladesh Bank, Professor Shamsul Alam, member of the Planning Commission, and Professor Selim Raihan, Executive Director of SANEM. I reflected on the need to rethink macroeconomics that is more suited to developing country circumstances than the dominant neoliberal framework.
This blog revisits the sudden resignation of Urjit Patel on 10 December as the governor of the Reserve Bank of India (RBI). Patel cited ‘personal reasons’ for his resignation, but it is widely acknowledged that he was unable to manage or withstand a rift with the government. Does this threaten the RBI’s autonomy and thus portend an uncertain future of a venerable institution? Or is the significance of central bank autonomy overrated, as some critics contend? Perhaps, as some have argued, Patel’s resignation is a reflection of his aptitude and characteristics as an individual rather than an existential struggle over the future of RBI.
I had the pleasure and privilege of representing the Griffith Asia Institute at an international forum on poverty reduction. It was held in Beijing on November 1 and 2, 2018. The aim was to showcase China’s stunning economic success.
