March 14, 2020

New rules encourage China’s online media to report good news

Source: MERICS China Update

Information considered politically damaging should no longer be available on the internet in China. The country’s political leadership instead wants online content to buzz with "positive energy". Content creators and media platforms, internet users and government agencies are being encouraged to create a "healthy internet" environment. New rules for "regulating the online-content ecosystem" that came into force on 1 March make a distinction between illegal and harmful content and content that promotes the party-state’s ideology and achievements, which should be encouraged. Xi Jinping has declared that bringing “positive energy” to the internet is the media’s central task.

"In times of the coronavirus this means: no criticism of the government's crisis response, a lot of focus on the heroic efforts of doctors and nurses, and on the leadership’s success in combatting the epidemic,” says MERICS analyst Katja Drinhausen. China’s leadership is increasingly targeting negative content and once again strengthening ideological control. The rules – especially those regarding negative content – leave a lot of scope for interpretation to the local authorities and online platforms that are now expected to implement them. In early March, media platforms closed a large number of user accounts that had sent unauthorized information about the corona virus.

Coronavirus is travelling to countries and so is misinformation around it. It’s an infodemic

Coronavirus is travelling to countries and so is misinformation around it. It’s an infodemic

The COVID-19 outbreak proves again that history tends to repeat itself. This is not the first time a killer virus has travelled along connected networks.

Foreign tourists wear protective masks at the Taj Mahal complex in Agra amid the coronavirus threat | Photo: ANI
Foreign tourists wear protective masks at the Taj Mahal complex in Agra amid the coronavirus threat | Photo: ANI

Having dawdled for weeks, the WHO has finally declared the COVID-19 outbreak a global pandemic. Given that it is too soon to assess how well global institutions and governments have responded to the emerging public health challenge, that discussion is best left for another day. For the moment, three facets of COVID-19 merit comment.

First, we are witnessing what can be described as an “infodemic.” Thanks to social media platforms and an attention-hungry mainstream media, there is an overflow of (mis)information about COVID-19. For many, it can be hard to determine what is true and what is false since exaggeration is the new normal. The relatively restrained public discourse over HIV when it first made its appearance stands out in sharp contrast.

Also read: This is what makes the humble soap our best bet against coronavirus

Second, the COVID-19 outbreak proves again that history tends to repeat itself. This is not the first time a killer virus has travelled along connected networks. Nor is it the first time that travellers have carried a virus. Colonial settlers carried gonorrhoea, smallpox, and other diseases to the New World. Ships carried plague-infested rodents to foreign shores. Given China’s central role in the global economy and the outward flow of its tourists and labour through the Belt and Road Initiative, what would have once been a local epidemic, like the 2003 SARS outbreak, is now a global health crisis.

Third, COVID-19 has added a twist to emerging political realities. Will China reconsider its ruler-for-life decision or has Chinese President Xi Jinping demonstrated the benefit of opting for a reliable authoritarian system? Will American elections be altered by the national outbreak response and its seemingly significant economic implications? Will the EU be forced to rethink its immigration policy? As China provides aid to Italy and other affected countries, will we see a red dawn of another hue? These uncertainties will mutate for a long time even after the macabre march of the virus has been contained, if not halted.

This commentary originally appeared in Council of Councils — The Council on Foreign Relations and ORF. The author is president, Observer Research Foundation (India). Views are personal. 

March 12, 2020

Blood Lineage / 血统

Made in China Journal

Blood Lineage / 血统

Bloodline, or lineage, has been a political ideology of many monarchical regimes and aristocratic societies throughout history. The rise of nationalism in Europe in the seventeenth and eighteenth centuries paralleled the discourse of purity and authenticity of one’s blood/race. In the context of national formation, blood is a metaphor for race, ethnicity, and sexuality that enacts loyalty, belonging, and national consciousness. Blood lineage can be a malleable narrative explaining Self and Other, a rigid disciplining tool reinforcing hierarchy, or a fluid signifier for social groups seeking belonging and protection.

In imperial China, rulers adopted blood-based ties to clarify the hereditary rights of power and property, and as a tool for social management in order to distinguish between royalty, civilians, and slaves. For example, the imperial Chinese punishment of collective responsibility—zhulian jiuzu, literally ‘guilt by association of nine of a group/clan’—and the politics of lineage, or blood relation, played an important role in moulding, disciplining, and confining people to the social roles prescribed for them. People were expected to stay in their place in society, and transgression of the boundaries of their socially or politically ordained bloodlines could be met with severe punishment. In Chinese, shizu or zongzu represents a group tied by blood relationships as a family or a clan, led by lineage heads (zuzhang), with its family history and genealogy recorded as zupu. In the late nineteenth and early twentieth centuries, zu took on a nationalistic turn when the founding father of the Nationalist Party, Sun Yat-sen, indicated that Chinese people of the Han or Chinese race (zhongzu) had ‘common blood,’ and they should stand together as zhonghua minzu (Chinese nationality) as they were facing the threat of national extinction under Western imperialism.1 Following the turn of the century and the May Fourth Movement in 1919, the Republic of China was founded under the famous slogan—‘Five Races under One Union’ (wu zu gonghe)—to unify Han Chinese people and Manchus, Mongols, Tibetans, and Muslims, the major non-Han groups of China as perceived by the Nationalists. Following the Communist victory in 1949, the state ethnologists classified 55 non-Han peoples and stressed the importance of a unified nationality comprised of the Han as the majority ethnicity and non-Han as minorities (shaoshu minzu) (see also Bulag’s essay in the present volume). Official discourse aside, popular memories and heroic narratives centred on blood lineage also thrived. For example, the Han nationalist imagination proposes a linear history of ancient China in which an immutable Han racial identity continually existed by virtue of descent from the mythological Yan and Huang emperors (yan huang zisun).

The 1950s: A New Nation-building

After the Chinese Communist Party (CCP) took control of mainland China in the 1950s, the discourse of blood lineage temporarily shifted away from national or racial concerns to struggles over class identity, but the notion of heritability remained. Under Mao’s guideline of class struggle, each individual was labelled with a class identity by birth or by family relationships. Despite contradicting the socialist goal of eradicating imperial practices, reckoning by blood was effectively institutionalised by those in power through the practice of class struggle (see Russo’s essay in the present volume), as it inverted and brought into being new categories of people who would benefit from the revolutionary order, and those who would be its victims.

During the early 1950s, Mao’s land reform and class-motivated purge of landlords virtually removed the authority of reproductive ties between powerful lineage groups within rural communities. Throughout China, previous ruling classes saw massive socialist transformations: land was confiscated from landlords and distributed to landless and poor peasants, and private merchants and capitalist industries gradually became state-owned. Blood became a form to assess one’s revolutionary subjectivity through family background (chushen) or class labels (jieji chengfen). The ‘good ones’ were reproduced and circulated as revolutionary agents within the national body, and the ‘bad ones’ were identified as reactionary or bad blooded and outcast. A person’s class or family background not only haunted his or her own life, but the lives of their spouse, children, and relatives. In Michael Dutton’s words, class-related political problems on personal dossiers spread ‘like a virus’ and were inescapable like a ‘blood-borne disease.’2 These unfavorable classes were labeled ‘Four Black Categories’ (hei si lei), which included landlords, rich farmers, counterrevolutionaries, and bad-influencers. After the Anti-rightist Campaign in 1957, ‘rightist’ was also added to the list, making ‘Five Black Categories.’

In non-Han peripheral regions such as Inner Mongolia, Tibet, and Muslim-populated Xinjiang, local political groupings, religious authorities, and hereditary leaderships were also dismantled during the socialist reform. Following Western intellectual traditions of social evolutionism, Party cadres and ethnologists depicted Inner Asian pastoral aristocratic houses of power as primitive kinship tribal society (in Chinese buluo, or shizu), but also denounced them as ‘capitalist’ since the rich herders were accused of accumulating capital in the form of livestock, thereby reproducing oppressive class relations in pastoral production. State power materialised in omnipresent institutions in these native communities, such as the ‘pastoral office’ and the ‘pastoral production cooperative,’ with Han administrators promoting the Party’s work and policies in non-Han regions. The discourse of blood lineage operated on the basis of two contradictory and yet compatible claims: that pastoral people were backward and in need of developmental assistance, and that pastoral political economy was advanced enough to create its own capitalist class that could be subject to persecution.

When necessary, the Party-state was tactical and flexible in instrumentalising lineage as a political tool among the pastoralists; at other times, the state obliterated those lineages when they threatened perceived national interests. As the denunciation of local non-Party authorities continued, Party cadres also reflected on their lack of understanding of pastoral social structure, especially the great social power and influence endowed to lineage heads. They realised pastoral lineage heads were crucial targets for cooptation after careful indoctrination. This method effectively assured the mobilisation of powerful local leaders to assist in the dissemination of Party policy, propaganda, and new modes of socialist animal husbandry. For example, in northern Xinjiang, Han ethnologists surveyed the Chinggisid lineage of the Kazakh noble Tore clans in detail and evaluated their productivity, eventually restructuring them into major production brigades as a form of state ‘socialist primitive accumulation’ (see also Hayward’s essay in the present volume).3 On the eve of Mao’s Great Leap Forward, inter-ethnic relations became tense as increasing areas of pastoral lands irreversibly became agricultural with a huge influx of Han settlers into traditionally non-Han regions. As the overwhelming scale of socialist transformation in ethnic minority borderlands led to resistance in these regions at the end of the 1950s, the Party simply denounced the resistance as ‘local nationalism’ (difang minzu zhuyi), a ‘counterrevolutionary’ crime to be purged. The ever-shifting target of blood lineage in pastoral regions exemplifies the fluid nature of blood in twentieth-century Chinese politics.

The Politics of Communist Lineage in the Cultural Revolution

During the Cultural Revolution, the idea of blood lineage (xuetong) was revamped and gained a sinister level of national popularity. At the same time, Mao’s notion of the class line (jieji luxian) opened a path out of one’s background on the basis of one’s revolutionary devotedness and political behavior. Those from good family backgrounds, called the ‘Five Red Categories’ (hong wu lei) including poor and lower-middle peasants, workers, revolutionary soldiers, revolutionary cadres, and revolutionary martyrs, declared that they were the legitimate successors of the socialist revolution and ‘red by birth’ (zi lai hong). The ‘Five Black Categories’ were expanded to ‘Nine Black Categories’ (hei jiu lei) with new additions being capitalists, capitalist roaders, traitors, and spies. In 1966, a couplet began to circulate after appearing in the Beijing Aeronautical Engineering Institute. It read: ‘A hero’s son is a real man; a reactionary’s son is a rotten egg’ (laozi yingxiong er haohan, laozi fandong er hundan).

At first, high officials in the CCP criticised this blood lineage idea and stressed that one’s political behaviour or expression (zhengzhi biaoxian) was also important. However, in practice, the hierarchal categorisation and political naming prompted discriminatory policies aimed at innocent individuals with bad family backgrounds or class labels. It stamped indelible institutional marks on the countless bodies of the ‘Nine Black Categories,’ whose children were euphemistically referred to as ‘teachable offspring’ (ke jiaoyu hao de zinü). In fact, they were deprived of any political and social participation rights. Under this regime, they had to earn leniency or better treatment through good ‘political behaviour’ such as making a clean break with their reactionary parents and family backgrounds. Some cases resembled the imperial penal style of ‘implicating associates’ in scrutinising the class labels of up to three generations. The ‘teachable offspring’ were often excluded from opportunities, such as joining the army or acceptance to schools. They were subjected to unequal pay and reform through labour, and their unbearable humiliation and torture led to numerous unnatural deaths.

Yu Luoke, a young worker from Beijing, made a powerful counterargument to the Red Guards’ principle of blood lineage. Having suffered enough from the negative impact of his father’s ‘rightist’ background, in 1967 he published the essay ‘On Family Background.’4 Quoting Marxist and Maoist theories, Yu pointed out that one’s family background should not be equated with political identity and revolutionary consciousness. Moreover, the principle of blood lineage could not justify violence against people without a good family background—in this sense the so-called ‘Five Red Categories’ were actually the oppressors. Yu’s argument shook the foundation of the Party’s revolutionary legitimacy by rendering illegible the categories of class struggle. Without a clearly identified set of heroes and villains, the machinery of class struggle would break down. The Party became desperate for a consolidation of self-identity, ideological control, and epistemological certainty. The principle of blood lineage came in handy because it isolated people into different categories and stratifications and screened the political disloyalties of those who could challenge the Party’s status quo. As a result, top officials chose not to follow through with their criticism of blood lineage but instead exploited it as a social governing mechanism. Yu’s call for equal human rights as intrinsic to socialism eventually touched the sensitive nerves of Party authority. In 1970, he was executed for the crime of ‘organising counterrevolutionary groups.’

For non-Han pastoral societies in the Cultural Revolution, the system of class labelling established new hierarchical political categories that replaced previous ones and significantly frayed the fabric of society and family. Mongol landlords who leased land to Han peasants were denounced and disenfranchised in the name of class struggle. In Tibet, class struggle heightened internal divisions and led to tens of thousands killed in struggle sessions and sent to reform through labour. In northern Xinjiang, pastoral nomadic nobility formerly protected their lineages by disallowing their women from marrying men of lower statuses, at least in principle. This was reversed after Party cadres conducted struggle sessions denouncing landlords and aristocrats, and they went as far as forcing marriage across class differences.

Ghosts of Blood Lineage Today

After the Cultural Revolution, the CCP abandoned the principle of blood lineage, but the generation who benefitted from it had already attained high positions in powerful national-level political and economic organs. Many of them have gone on to earn profits for their entire family from corrupt practices and abuses of power capturing the prosperity produced through the privatisation of public goods during the reform era. Numerous cases have been exposed illustrating the ways in which these second-generation elites and bureaucrats enjoy above-the-law lifestyles and hold billions of dollars in offshore accounts. It has been an unspoken rule in China that the offspring of elite groups inherited their fathers’ privilege, as people have given them nicknames such as ‘officialings’ (guan er dai), ‘red second generation’ (hong er dai), or ‘princelings’ (tai zi dang).

The ghost of blood lineage continues to haunt the non-Han regions in the twenty-first century as a new era of state racism dawns. While pseudotraditional symbols of ‘Chinese culture’ such as the Han costume movement, Confucian rituals, and virtue training schools for women mushroomed in mainland China, Tibet and Xinjiang have been increasingly subjected to state-led exploitative development projects at the expense of native peoples and lands. A temporary pluralism and multiculturalism in the reform era has given way to Han-centred empire-building aiming to root out ethnic, religious, and cultural differences as social deviancy and disease. This is simultaneously shaped by Western discourses fostered by the US ‘War on Terror’ and global Islamophobia. China’s use of this discourse has fostered its own industrial complex of ‘terror capitalism’—high-tech Orwellian social control targeted mainly at Turkic Muslim and Tibetan populations.5 Up until now, over one million Uyghurs, Kazakhs, Kyrgyz, and other ethnic minorities have been detained indefinitely in ‘concentrated reeducation and transformation centres’ (jizhong jiaoyu zhuanhua zhongxin), without indictment or fair trial. On Chinese social media, they are portrayed as ‘terrorists’ or ‘religious extremists’ to justify their detention, and their religion as an ailment in need of a cure. An official was quoted saying: ‘You can’t uproot all the weeds hidden among the crops in the field one by one—you need to spray chemicals to kill them all. Reeducating these people is like spraying chemicals on the crops. That is why it is a general reeducation, not limited to a few people.’6 The CCP initially shifted away from the racial/nationalist discourse of mid-twentieth-century political movements, but it has rekindled those flames by explicitly combining the discourse of blood lineage with ethnicity in places like Xinjiang.

This hypercriminalisation process is unprecedentedly aided by cutting-edge technologies of biodata collection and surveillance networks. Since the end of 2016, a military technology used in national defence was applied in Xinjiang under the name ‘Integrated Joint Operation Platform’ (yitihua lianhe zuozhan pingtai). Its security system instantly gathers data on an individual from multiple sources such as banking, medical, and travel histories to analyse, make predictions, and generate lists of suspects. Human Rights Watch reports that on this system Uyghurs who have been arrested before or deemed ‘unsafe’ are differentiated and their personal dossiers are tagged in a different colour.7 Xinjiang residents also have been required to fill out a ‘Population Data Collection Form’ and report whether they are Uyghurs, whether they are ‘persons of interest’ (beyond a scale of one to five, there exists an extra te, or special security level), whether they are relatives of a detainee, relatives of someone being subjected to crackdown and punishment, whether they are tagged by the yitihua platform, and whether they have contacts abroad and how they are related.8 They also must submit detailed information including religious habits, whether they have passports, have travelled abroad, and so on. The Party-state’s population control measures have metamorphised into a highly organised blood lineage classification system with layers of class, political, racial, and geographical inputs. Based on the collected data, officials then categorise people in terms of reliability into three groups: safe, average, and unsafe. The collected family information enables the authorities to track down and terrorise people even when they are out of China.

While Uyghur and Kazakh masculinity is ostensibly tamed through carceral governance in Xinjiang, women’s bodies are turned into the next frontier for the state to deploy its settler politics in sexuality and reproduction. In its initial nation-making process in the early 1950s, in order to solve the gender ratio imbalance, the paramilitary settlers of the Xinjiang Production and Construction Corps recruited thousands of female students, soldiers, and prostitutes from Hunan and Shandong provinces to populate the settlements. Following Mao’s dictate of ‘anti-Han chauvinism’ and maintaining border stability, inter-ethnic marriage between Han settlers and local Muslims was strictly prohibited. Though the Han population kept rising in the past decades, low rates of Han-minority marriage are seen as an indication of ethnic tension in Xinjiang, while Uyghurs view the avoidance of such interethnic marriages as a type of resistance.9 The state turned a hard line in 2014 and started to offer incentives to encourage interethnic marriage.10 From 2015 onward, propaganda depicting secularised, mass weddings as ‘new fashion weddings’ to illegitimise Islamic nikah ceremonies and other native marriage customs as a form of ‘counterterrorism’ work has become prevalent.

From the debate on blood lineage and class labelling, to today’s detention of Muslim minorities in Xinjiang, blood is a powerful symbol used by the Party-state to envision and sometimes cleanse its political and national body. As the CCP no longer needs to mobilise ethnic minorities as a united front (see De Giorgi’s essay in the present volume), it has embarked on a mission to establish itself as an ever-expanding Chinese nation focussed on Han interests. From imperial China to revolutionary movements to the war on terror, the discourse of blood lineages remains a flexible political tool for the state. As the marriage of biotechnological surveillance techniques with Mao-era political ideas about blood lineage in Xinjiang suggests, the principle of blood lineage is still an important concept for understanding Chinese politics and society, and will remain so for the foreseeable future.

Photo: A 1963 family photo of Yu Luoke (top, right), who was executed in March 1970 for his essay ‘On Family Origin’.
This essay was first published in Afterlives of Chinese Communism, available for free download at ANU Press and for purchase at Verso Books.


[1] Dikötter, Frank. 2015. The Discourse of Race in Modern China, 78. Oxford & New York: Oxford University Press.
[2] Dutton, Michael. 2004. “Mango Mao: Infections of the Sacred.” Public Culture 16 (2): 161–87.
[3] There are multiple terms to describe genealogical and political groupings in Kazakh society (for example ulusrujuz). These terms are inconsistently translated in English and Chinese sources, and were influenced by early British anthropology’s ideological perceptions of the tribes and clans in Africa. The Chinese sources for this material used buluo, which in modern Chinese can be loosely translated as clan or tribe. However, as Morton Fried and Daniel Biebuyck argue, ‘tribe’ simplifies the innate complexity of a group’s terms for social organisation. See Fried, Morton. 1966. “On the Concepts of ‘Tribe’ and ‘Tribal Society.’” Transactions of the New York Academy of Sciences 28: 527–40; Biebuyck, Daniel P. 1966. “On the Concept of Tribe.” Civilisations 16 (4): 500–15.
[4] Yu, Luoke. 2001. “On Family Background.” Contemporary Chinese Thought 32 (4): 17–36.
[5] Byler, Darren. 2018. “A Project Far More Extreme Than the Stanford Prison Experiment.” Sinopsis, 21 November.
[6] Hoshur, Shohret (translated by Alim Seytoff and Mamatjan Juma). 2018.“Chinese Authorities Jail Four Wealthiest Uyghurs in Xinjiang’s Kashgar in New Purge.” Radio Free Asia Uyghur Service, 5 January.
[7] Human Rights Watch. 2018. “China: Big Data Fuels Crackdown in Minority Region.” Human Rights Watch, 26 February.
[8] Chin, Josh, and Clément Bürge. 2017. “Twelve Days in Xinjiang: How China’s Surveillance State Overwhelms Daily Life.” The Wall Street Journal, 9 December.
[9] Smith Finley, Joanne. 2013. The Art of Symbolic Resistance: Uyghur Identities and Uyghur-Han Relations in Contemporary Xinjiang. Leiden: Brill.
[10] Wong, Edward. 2014. “To Temper Unrest in Western China, Officials Offer Money for Intermarriage.” The New York Times, 2 September.

Yi Xiaocuo

Yi Xiaocuo

Yi Xiaocuo is a doctoral researcher who has lived in China and is now based in North America. The phrase yi xiao cuo in Chinese originally means ‘a small bunch.’ It is a recurring term in the Chinese Communist Party’s historical discourse to denigrate critical voices. Writing on a wide range of topics such as the politics and history of China and borderlands, Yi Xiaocuo uses this pen name to reclaim the political stance of social justice that is often underrepresented and stigmatised by the state’s propaganda machine

March 11, 2020

Madalasa Upadesha

 In Markandeya purana there is this lullaby called Madalasa Upadesha. The story is that Madalasa was an enlightened Queen who gave birth to a child. When the child cried, instead of diverting the child's attention with various objects she chose to introduce him to the truth. And that truth is sung in the form of a sweet lullaby which is called madalasa upadesha or madalasa putra upadesha. The mother is said to be "madalasa" which literally means one who has won over alasa or laziness. One may take it to be the Mother Sruthi teaching all of us. We are all children because we cry. Anyone who cries is a child. And we cry for various reasons. when a child cries, its because it feels unhappy about something. Here the mother is not trying to divert the child's attention by showing it a few toys. She directly teaches it the Truth which is really a joy to listen to. As we see the teaching, we will also try and see how the teaching is really an aid for us to "Just Be". Verse 1 : शुद्धोसि बुद्धोसि निरँजनोऽसि सँसारमाया परिवर्जितोऽसि सँसारस्वप्नँ त्यज मोहनिद्राँ मँदालसोल्लपमुवाच पुत्रम्। Madalasa says to her crying son: "You are pure, Enlightened, and spotless. Leave the illusion of the world and wake up from this deep slumber of delusion." Verse 2 : शुद्धोऽसि रे तात न तेऽस्ति नाम कृतँ हि तत्कल्पनयाधुनैव। पच्चात्मकँ देहँ इदँ न तेऽस्ति नैवास्य त्वँ रोदिषि कस्य हेतो॥ My Child, you are Ever Pure! You do not have a name. A name is only an imaginary superimposition on you. This body made of five elements is not you nor do you belong to it. This being so, what can be a reason for your crying ? Verse 3: न वै भवान् रोदिति विक्ष्वजन्मा शब्दोयमायाध्य महीश सूनूम्। विकल्पयमानो विविधैर्गुणैस्ते गुणाश्च भौताः सकलेन्दियेषु॥ The essence of the universe does not cry in reality. All is a maya of words, oh Prince! Please understand this. The various qualities you seem to have are are just your imaginations, they belong to the elements that make the senses (and have nothing to do with you). Verse 4 : भूतनि भूतैः परिदुर्बलानि वृद्धिँ समायाति यथेह पुँसः। अन्नाम्बुपानादिभिरेव तस्मात् न तेस्ति वृद्धिर् न च तेस्ति हानिः॥ The Elements [that make this body] grow with accumulation of more elements or reduce in size if some elements are taken away. This is what is seen in a body's growing in size or becoming lean depending upon the consumption of food, water etc. You do not have growth or decay. Verse 5 : त्वम् कँचुके शीर्यमाणे निजोस्मिन् तस्मिन् देहे मूढताँ मा व्रजेथाः। शुभाशुभौः कर्मभिर्देहमेतत् मृदादिभिः कँचुकस्ते पिनद्धः॥ You are in the body which is like a jacket that gets worn out day by day. Do not have the wrong notion that you are the body. This body is like a jacket that you are tied to, for the frutification of the good and bad karmas. Verse 6 : तातेति किँचित् तनयेति किँचित् अँबेति किँचिद्धयितेति किँचित्। ममेति किँचित् न ममेति किँचित् त्वम् भूतसँघँ बहु म नयेथाः॥ Some may refer to you are Father and some others may refer to you a Son or some may refer to you as mother and some one else may refer to you as wife. some say "you are mine" and some others say "you are not mine" These are all references to this "Combination of Physical Elements", Do not identify with them. Verse 7 : सुखानि दुःखोपशमाय भोगान् सुखाय जानाति विमूढचेताः। तान्येव दुःखानि पुनः सुखानि जानाति विद्धनविमूढचेताः॥ The deluded look at objects of enjoyments as giving happiness by removing the unhappiness. The wise clearly see that the same object which gives happiness now will become a source of unhappiness. Verse 8 : यानँ चित्तौ तत्र गतश्च देहो देहोपि चान्यः पुरुषो निविष्ठः। ममत्वमुरोया न यथ तथास्मिन् देहेति मात्रँ बत मूढरौष। The vehicle that moves on the ground is different from the person in it similarly this body is also different from the person who is inside! The owner of the body is different from the body! Ah how foolish it is to think I am the body! This is the official YouTube channel of The Art of Living. To subscribe click here:

March 10, 2020


Feb 6, 2020



For the first time in the Miss Universe contest’s history, five women of Indian origin represented Australia, India, Malaysia, Panama and Singapore for the Miss Universe 2019 crown at Atlanta, Georgia on December 8th.

Beauty pageants are a great source of interest internationally, as well as in India. In the book Beauty Diplomacy by Oluwakemi M. Balogun, one is taken into the world of beauty contests, to see how they can become “vehicles for complex ideas about gender and power, ethnicity and belonging, and rapidly changing articulation of nationhood.” In these contests, contestants are expected to integrate recognizable aspects of their country’s cultural identity while also conveying ideas of global integration.

In her research on beauty pageants, Making the Perfect Queen: The Cultural Production of Identities in Beauty Pageants, Rebecca Chiyoko King-O’Riain of the National University of Ireland points out that “beauty pageants are not only places where queens are chosen but also where they are made.” She says these pageants are rich in symbolism and have much in common with other agencies of culture such as “talk shows (Gamson 1998), cheerleading teams (Grindstaff and West 2006) and youth car modification (Best 2006). Through the rehearsals, judging and selection of beauty queens each year (often at cultural festivals), beauty pageants reveal processes that social groups go through in defining, debating and changing their cultural identities.”

In the early 1990s, Bangalore, India played host to the Miss World beauty pageant and some of us were fortunate to witness iconic Bollywood star Amitabh Bachchan climb a chair at the local State Government building to address a press conference. His company, ABCL, was one of the organizers that year. Of course, that year, the interest was more about Bachchan than the contestants. Oozing charm, he said he wanted to bring the world to Bangalore and he did it in style. 

The Miss World pageant ran into problems with one local group protesting not the “commodification of women,” but rather the opening up of India to “predatory global businesses” thus posing a threat to locals. In a 2001 article, Rupal Oza examined the local protests in India during the 1996 Miss World pageant in Bangalore. “State and supporters of the pageant provided an international opportunity to ‘showcase’ new, liberalized India to the world. The pageant, therefore, was a site at which political protest and anxiety with ‘globalization’ as well as the opportunity to showcase India to the world were articulated (Oza 2001, 1067). The Miss World pageant was seen as iconic of global influences forcing their way into India.”

In these contests, contestants are expected to integrate recognizable aspects of their country’s cultural identity while also conveying ideas of global integration.

In 1994, India had two global pageant winners—Sushmita Sen for the Miss Universe crown and Aishwarya Rai the Miss World crown. Another Indian, Lara Datta, was crowned Miss Universe in 2000 and has since held the record for highest score in the history of beauty pageant competitions. For example, she received a score of 9.99 from almost all of her judges, she received the highest score in the swimsuit round and her final question score was the highest individual score in any category in the history of the Miss Universe contest.

This year, India was represented by Vartika Singh at the Miss Universe Pageant. Singh, who has a master's degree in public health has worked as a technical advisor in quality assurance for the World Bank, is an ardent advocate of accessible healthcare and is the Brand Ambassador for the Government of Uttar Pradesh's State Nutrition Mission and other health initiatives in her home state.

Singh says, “If you look at Miss Universe candidates in the past, they are people who can speak their mind, lead the path, be unique personalities on their own and have a strong vision.”

Another Indian, Shweta Sekhon, represented the country of Malaysia in the contest. Shweta has had a successful career as a freelance fashion model and has worked in a number of fashion shows. Making use of her global platform, Shweta encourages people to love themselves through her social media movement, #YourBodyYourSay.    

Panama’s Mehr Eliezer is a first generation immigrant who was born in New Delhi, India but was raised in the Philippines and Panama. She is the first nationalized Panamanian to ever participate and win the Miss Universe Panama pageant. Mehr, who has a degree in international affairs with minors in economics and history, is an intern at the Americas regional office of the United Nations Office for Project Services. Moreover, Mehr is an ambassador for PROBIDSIDA, a Panamanian organization that works to reduce the amount of HIV and AIDS cases in Panama, and she also works with refugee camps based at the Panamanian border.  

Mohana Prabha Selvam of Singapore speaks Tamil and is a strong advocate of equality and inclusivity. She has volunteered for the Singapore Red Cross for over eight years. In 2010, she was part of a youth mission to Tamil Nadu, India which built a common space for the villagers in the countryside.

Priya Serrao is the first Indian-Australian to be crowned Miss Universe Australia. She currently works as a policy adviser for the Victorian government and has tertiary degrees in politics, international studies and law. She was born in India, grew up in the Middle East, and migrated to Australia at the age of 10. Her interest in social change has led her to work with several local community organizations as well as international organizations, including the United Nations Development Program in East Timor. She is an advocate for inclusive societies and gender equality, and recently started a social media campaign so that women experiencing homelessness in Melbourne can have access to free articles of clothing, nutritious food and grooming services.

This is the 68th edition of the Miss Universe and while there are many critics of beauty pageants, the supporters outnumber them. Many Indian industries including cosmetics, films, fashion and sports have been deeply influenced by the emerging success of Indian models.

China’s navy shipbuilders are ‘outbuilding everybody’

The second Type 075 amphibious warship, being built in Hudong Zhonghua shipyard in Shanghai, is about to be launched
MARCH 11, 2020

An amphibious assault ship is a type of warship which military analysts believe could play a crucial role in reunifying the island of Taiwan by force, if it comes to that, and even more are needed. Credit: National Interest.
Welcome to another headache for the Pentagon — it appears China has grasped accelerated shipbuilding technologies and related aircraft development as its march toward an imposing blue water navy continues unabated.

According to the Global Times, China is reportedly set to launch its second Type 075 amphibious assault ship soon following the launch of the first one in September.

An amphibious assault ship is a type of warship which military analysts believe could play a crucial role in reunifying the island of Taiwan by force, if it comes to that, and even more are needed, the report said.

The second Type 075 amphibious assault ship, being built in Hudong Zhonghua shipyard in Shanghai, is about to be launched, as its construction, including the hull and flight deck, is already complete, Ordnance Industry Science Technology, a Xi’an-based periodical on the national defense industry.

The ship is still in dark red due to the anti-corrosive priming paint and is not yet painted with the standard naval gray, the report said.

It is only half a year since the first Type 075 was launched, which is much faster than usual, the Ordnance Industry Science Technology reported, noting that this means China has mastered the technology of building amphibious assault ships, the report said.

Another reason for the Type 075s’ fast production is that the aviation combat equipment to be used on them is seeing smooth progress, as the Navy already has the naval versions of Z-8 and Z-9 helicopters and mass production for the naval version of the Z-20 is also expected to start in a few years, the periodical said.

The modernization of the Chinese navy, also known as the PLA Navy, has been underway since the 1990s, and its fleet has greatly expanded, National Defense reported.

In its annual report on China published last year, the Defense Department stated that its Asian rival has more than 300 surface combatants, submarines, amphibious ships, patrol craft and other specialized vessels, the report said.

In 2019, China had a 335-ship fleet, about 55% larger than in 2005, according to a recent Congressional Research Service report titled, “China’s Naval Modernization: Implications for U.S. Navy Capabilities — Background and Issues for Congress.”

“There is no doubt that they’ve been investing hugely in this,” said Nick Childs, senior fellow for naval forces and maritime security at the London-based International Institute for Strategic Studies. “In recent years, they’ve been outbuilding everybody.”

To put it in perspective, during a recent four-year period the naval vessels that Chinese shipyards produced were roughly equivalent in tonnage to the entire U.K. Royal Navy or the Japanese Maritime Self-Defense Force.

March 08, 2020

Iceland Sentences 26 Corrupt Bankers to 74 Years in Prison


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Iceland just sentenced their 26th banker to prison for his part in the 2008 economic collapse. The charges ranged from breach of fiduciary duties to market manipulation to embezzlement.

When most people think of Iceland, they envision fire and ice. Major volcanoes and vast ice fields are abundant due to its position on the northern part of the Mid-Atlantic Ridge(A hot July day in Reykjavik is around 55 degrees.) However, Iceland is also noted for being one of the Nordic Socialist countries, complete with universal health care, free education and a lot other Tea Potty nightmares. Therefore, as you might imagine, they tend to view and react to economic situations slightly differently than the U.S.

When the banking induced “Great Recession of ’08” struck, Iceland’s economic hit was among the hardest. However, instead of rewarding fraudulent banking procedures with tons of bailout money, they took a different path.

Prior to the recession, Iceland had one of the more thriving economies in the world, in spite of the fact that their total population (327,000) wouldn’t even fill a mid-sized American city. When the recession struck, they were among the earliest and hardest hit. However, instead of running to the vaults to shower the banks with money, they let the banks fail. They also resisted traveling down the European/Republican austerity road. Instead, they kept their social programs intact at a time when they were most needed.

And, they sent fraudulent bankers to jail.

When Iceland’s three major banks collapsed, it resulted in defaults totaling $114 billion in a country with a gross domestic product (GDP) of only $19 billion. In October, 2008 the parliament passed emergency legislation to take over the domestic operations of the major banks and established new banks to handle them. They did not, however, take over any of the foreign assets or obligations. Those stayed with the original banks, right into bankruptcy.

They then brought charges against several banking executives for fraud and market manipulation, resulting in sentences ranging from four to five and a half years. As the special prosecutor said,

Why should we have a part of our society that is not being policed or without responsibility?

In the U.S., we simply tapped a few wrists with small fines, that ended up being paid by their respective banks.(Can you say “got off scot free?”)

Sending the bank executives off to play rock hockey for a few years didn’t solve the problem, but it did send a message not to do that again.

At its worst, Icelandic currency, the Icelandic krona (ISK) was trading at around 250 ISK per Euro. In order to qualify for an IMF (International Monetary Fund) loan, Iceland raised interest rates to 18%, which, of course, attracted bank deposits. Iceland also received a $2.5 billion loan from Europe’s Nordic countries.

To power its recovery, Iceland utilized its natural advantages such as its clean, cheap geothermal energy to attract the tech industry. Icelandic commercial fishing remained strong and as the general world economy picked up, the tourist industry bloomed. The deeply depreciated krona also helped make Iceland and Icelandic products very attractive, economically.  On the banking front, they facilitated domestic debt restructuring and fiscal adjustments as conditions changed.

As to how it has all turned out, here’s what the International Monetary Fund Survey has to say about it:

Iceland has rebounded after the 2008/9 crisis and will soon surpass pre-crisis output levels with strong performance in tourism and fisheries. Debt ratios are on a downward path and balance sheets have broadly been restored. The financial sector is back on track though with some important items remaining on the docket.

As the above survey also states, Iceland is “the first 2008-10 crisis country in Europe to surpass its pre-crisis peak of economic output.”

The krona is now running 142 ISK per Euro(up from 290/1 in 2008) The 2014 inflation rate was 2.05%.(down from 12.59% in 2008) The wage indexis running at 190.9. (up from 132.8 in 2008)

Btw, they did all this while keeping their social welfare intact. (There goes another bagger day-dream.)

Iceland’s President, Olafur Ragnar Grimmson explained how the country managed to recover from the global financial disaster,

We were wise enough not to follow the traditional prevailing orthodoxies of the Western financial world in the last 30 years. We introduced currency controls, we let the banks fail, we provided support for the poor, and we didn’t introduce austerity measures like you’re seeing in Europe.

When asked whether or not other countries, Europe in particular, would succeed with Iceland’s “let the banks fail” policy, President Grimmson gave his answer,

Why are the banks considered to be the holy churches of the modern economy? Why are private banks not like airlines and telecommunication companies and allowed to go bankrupt if they have been run in an irresponsible way? The theory that you have to bail out banks is a theory that you allow bankers enjoy for their own profit, their success, and then let ordinary people bear their failure through taxes and austerity. 
People in enlightened democracies are not going to accept that in the long run.

Can India learn from Iceland on how to deal with Bankrupt Banks?

Can India learn from Iceland on how to deal with Bankrupt Banks?

Read below interview by Iceland Premier Mr.Olafur Grimsson

_everybody knows now, we did not pump public money into the failed banks. We treated them like private companies that went bankrupt, and we let them fail. Some people say we did it because we didn't have any other option, there is clearly something in that argument, but it does not change the fact that it turned out to be a wise move or whatever reason. Whereas in many other countries, the prevailing orthodoxy is you pump public money into banks and you make taxpayers responsible for the banks in the long run, and somehow treat the banks as if they are holier institutions in the economy than manufacturing companies, commercial companies, IT companies, or whatever. And I have never really understood the argument: why a private bank or financial fund is somehow holier for the well being and future of the economy than the industrial sector, the IT sector, the creative sector, or the manufacturing sector._

Iceland's President Explains Why The World Needs To Rethink Its Addiction To Finance

Iceland PresidentAdam Taylor / Business Insider
Here's the full transcript of our interview with Ólafur Ragnar Grímsson, who has been President of Iceland since 1996, and announced last month he would be running for a fifth term. Keep reading to hear his thoughts on Iceland's recovery, and how a large financial sector can ruin a nation.

How has life in Iceland changed since the meltdown?

It's very difficult to give a short description of how life has changed. It's absolutely clear in Iceland, like many other countries, the financial crisis came as a profound shock, not only to the financial institutions, but also to ordinary people, the economy...

So thousands of Icelanders had to struggle with fundamental change in their economic situation, loss of income, even loss of property, increased burden of loans, unemployment, and the nation as a whole also had to face -- which somehow we were fortunate to realize early on -- that the collapse of the banks was not just an economic or financial crisis, but also developed into a very profound political, social, and even judicial crisis.

Whereas in many other countries, until recent months, there was a tendency to read this, through 2008, 2009 into 2010, primarily as an economic and financial challenge. And I think one of the reasons Iceland has come out of this crisis earlier and more effectively than anyone could have expected, even ourselves, is that early on, we approached this not just with economic and financial challenge, but also attempted to deal with the profound profound social, political, and even judicial challenges, which the collapse of the bank brought about.

And during those final months of 2008 and the early weeks of 2009, what we saw here in Iceland was a fundamental threat to the political and social stability of the nation. Iceland is one of the most stable, open, and secure democracies you can find anywhere in the world.

How the financial system could pose a fundamental threat to the political and democratic framework of Iceland illustrates the grave political and social responsibility which the market and the financial sector carries, because if a collapse in the financial sector can bring one of the most stable and secure democracies and political structures to his knees, as happened in Iceland, what could it do in countries that have less stable democratic and political history?

So this journey in the last three years has not only been difficult for ordinary people, families, homes, many companies, but it has also been a profound learning experience for the nation, not just economically, but as I said before, politically and socially as well.

Do you look at Greece and wonder if they should be learning from the Icelandic model?

I have been very hesitant and reluctant to pass judgment on what other countries should do. I saw many misleading judgments made by people in other countries with respect to Iceland in recent years that I don't think it is wise or fair for me to tell other countries what they should do.

But I think it is our obligation in Iceland to give an open and honest description of our own experience, of the lessons we have leaned, and other people can draw their own conclusions. I have already mentioned that if you want to deal with this economic crisis, you must treat it not only as an economic challenge but also as a fundamental social, political, and even a judicial challenge.

On the judicial side, we appointed a special commission headed by a Supreme Court judge that issued a report in 9 volumes, we appointed the office of special prosecutors, we have enacted various legislation and laws that relate to the judicial and legal system.

A second lesson, interestingly enough, is in terms of our economic policies. We have, to some extent, gone against the prevailing economic orthodoxies of the American, European, and IMF model in the last 30 years. This has even been recognized by the IMF leadership.

As you know, the IMF program finished last year, and we organized a celebratory conference in October, where we said goodbye to the IMF program, and it was attended by Paul Krugman, and other prominent economists, as well as some of the leading officials of the IMF. And it was very interesting to hear them acknowledge that the IMF had probably learned more from this experience with Iceland than Iceland had learned from the IMF. It has made the IMF reconsider some of their orthodox stances on what should be the proper economic and financial response to a crisis on this nature.

Thirdly, we have, in our economic measures, tried to protect the lowest income sectors, we have to try and protect some of the elementary social and health services, and done more of that nature than has traditionally been done in dealing with such a crisis.

As everybody knows now, we did not pump public money into the failed banks. We treated them like private companies that went bankrupt, and we let them fail. Some people say we did it because we didn't have any other option, there is clearly something in that argument, but it does not change the fact that it turned out to be a wise move or whatever reason. Whereas in many other countries, the prevailing orthodoxy is you pump public money into banks and you make taxpayers responsible for the banks in the long run, and somehow treat the banks as if they are holier institutions in the economy than manufacturing companies, commercial companies, IT companies, or whatever. And I have never really understood the argument: why a private bank or financial fund is somehow holier for the well being and future of the economy than the industrial sector, the IT sector, the creative sector, or the manufacturing sector.

So if you add all of this together and throw in the devaluation of the currency as well, it's clear that what some people have called the Icelandic model includes a number of measures and approaches that have not been adopted in other countries. On the contrary, it includes some methods in the process that go directly against what has been adopted in other countries. But the outcome is the Icelandic economy is recovering faster and more effectively than any other economy, including the British and the American that suffered from a big financial crisis in 2008.

One aspect of the crisis you were personally involved in, involved you effectively using your veto over the Icesave accounts and how much money to pay back to the UK and Holland. Constitutionally, you had that right, even if it was an unusual move — was that a tough decision?

It was absolutely very tough indeed, especially the first veto decision I took because every government in Europe was against me. Every big financial institution, both in Europe and in my own country was against me, and there were powerful forces, both in Iceland and in Europe that thought my decision was absolutely crazy.

And to some extent, of course, it was a complicated issue. But once I had analyzed every aspect of it, it boiled to the fundamental choice of the interest of the financial market on one hand, and the democratic will of the people on the other, and rarely in history -- but it does happen -- do we come to such crossroads that we are forced to choose.

And my answer was clearly, not only with respect to the democratic structure of Iceland, but also with respect to Europe's contribution to the world. What is our primary legacy to countries and nations in modern times? Is the European democracy the right of the people? Capitalistic financial markets can exist in many other parts of the world, even without democracy. So in my opinion, Europe is and should be more about democracy than about financial markets. Based with this choice, it was in the end, clear that I had to choose democracy.

But there were other issues at stake as well. What the British and the Dutch were arguing was that somehow the European banking system was such that a private bank would operate anywhere in Europe, and if it succeeded, the bankers got extraordinary benefits, the shareholders got big profits. But if it failed, the bill would simply be sent to ordinary people back home: farmers and fishermen, nurses and teachers, young people and old. And that, I maintain, is a very unhealthy formula for the future of the European banking system. If you sent a signal to the bankers that you can be as irresponsible and daring as you want to be, and if you are lucky, you become very rich, but if you fail, other people will pay.

I don't think that is a wise journey to enter if you want to build a healthy European financial system in the future.

In addition, the British and the Dutch government did not consult us when they decided to pay out. And as I have pointed out many times, the estate of the failed bank was sufficiently strong, as is now turning, out to pay these depositors out of the estate of the failed bank. There were predominantly three Icelandic banks that operated outside: Glitnir bank, ‪Kaupthing‬ and Landsbanki.  Glitnir and ‪Kaupthing‬ have paid all their depositors and everybody in Germany and the Netherlands and Scandinavia, everywhere. It's only the case of Landsbanki in Britain and the Netherlands, because the British and the Dutch government were not prepared to wait to see if the estate of the failed bank was sufficiently strong to shelter the payment, as it's now turning out to be. So I think if you look at the case objectively, there are strong indications that this was political maneuvering, especially by the Gordon Brown government, who was in a tight corner during those days in October, and simply decided that Iceland was small enough for them to go up against us -- in the same way that Margaret Thatcher went against Argentina over the Falklands -- instead of looking at the issue from a more responsible and long-term perspective.

Do you feel like relationships are getting back to normal now with Holland and the United Kingdom?

We have an excellent relationship with Britain and Holland, and the Netherlands. Even if the Gordon Brown government decided to put Iceland under the terrorism legislation, which is something that did enormous damage to the Icelandic economy, and was a great offense to the Icelandic people -- one of the most peace-loving countries in the world, a founding member of NATO, a strong ally of Britain during the Second World War -- was put together with the al-Qaeda and the Taliban on the official list of terrorist organizations. And the least Gordon Brown should do is to apologize. I notice that Alastair Darling didn't have the decency to apologize in his new book for this affront against a friendly ally. And it gets shows the nervousness and the imbalanced decision-making taking place within the Gordon Brown government during those very days.

But of course one can understand these were new times, new uncertainties... I'm not blaming anyone, I'm simply saying to put the case that here were these good fellows in the British and Dutch government acting on the behalf of the people, and there were the bad Icelanders who were not willing to pay. It's a completely misleading and dangerous way of phrasing it, as it has turned out to be. Even now, we have already started paying out of the estate of the failed bank. They will pay what amounts to all the deposits that were in the bank, so the remaining dispute is about the rate of interest that the British and the Dutch government want to put on the money — how much money should the British and the Dutch government make out of this transaction.

And I think it is also worth remembering, because very few people at that time saw it from that perspective, that if you take the relative size of the Icelandic economy and the British economy, and you transfer over to the British economy the sum that the British government was asking the Icelandic taxpayers to be responsible for due to the failure of this private bank, would have been equal, given the relative size of the British economy, to asking the British taxpayer to be responsible for an 800 billion pound-bill from a failed British bank in Spain and Italy and Greece.

Everybody sees in a moment that that's not a viable proposition, but that was, relatively speaking, the burden that the British and the Dutch governments, supported by all European governments, were asking the Icelandic taxpayers to shoulder in 2009. And I have often thought this is something the European Union needs to examine very honestly. How on earth was it that all the governments of the European Union supported these outrageous demands at that time?

One has to hand it to the editorial board of The Financial Times and The Wall Street Journal, that they supported Iceland's case all along. And if The Financial Times and The Wall Street Journal, who have never been special friends of Iceland, saw through this argument by the British and the Dutch government, why on earth didn't the other European governments do so?

Iceland PresidentAdam Taylor / Business Insider
"The North Atlantic is important to Scandinavia, the US and Britain. This is a fact these countries now seem to ignore. Then, Iceland should rather get some new friends"

I don't know if that's out of context or misleading, but do you think, since 2008, Iceland, long seen as part of Europe, close relationships with obviously Denmark, the U.S., do you think it's a shift away?

No, I don't think we can draw long-term conclusions from that. I'm simply saying if the collective decision-making structure of the European Union can take such wrong decisions and follow a misleading course and fundamentally unwise for the healthy future of the European banking system, as I advised before, Arguing that private banks should operate in a way that the profits go to them, but the losses go to ordinary people back home is something that they need to examine.

We have, however, concentrated on our recovery, and paradoxically, what we are seeing in the last two years is that many sectors in Iceland: the energy sector, the tourism sector, the IT sector, the manufacturing sector, and the fishing sector are doing better in the last two years than they did prior to the banking crisis. And you might also find it interesting that the collapse of the banks revealed to us a very interesting aspect of modern banking, which I think has been more or less overlooked in this discussion in Europe and in America in the last two or three years: the Icelandic banks, like all modern big banks in Europe and America and all the other parts of the world, are no longer banks in the old-fashioned way. They have become high-tech companies. High-ranked engineers, mathematicians, computer scientists, programmers and so on and so forth. And their success depends largely on how successful they are in hiring people with this education and capability, not necessarily those trained in business schools or finance, but in engineering, mathematics, computer science and so on.

And when the Icelandic banks collapsed, what we saw was that a great number of companies in these creative sectors, IT, high-tech, and all of those, who had the large growth potential in the previous years, but had not been able to realize it because they couldn't get the people, due to the fact that the banks were buying up all the best engineers and mathematicians and computer scientists, suddenly had the pool of talent available to them. And within six months, all these people who came out of the banks with these qualifications had been hired. So since then you have seen a great growth period in the Icelandic IT sector, the high-tech sector, the manufacturing sector, because they could suddenly get the engineers, the mathematicians, the computer scientists.

So the lesson from this is: if you want your economy to excel in the 21st century, for the IT, information-based high-tech sectors, a big banking sector, even a very successful banking system, is bad news for your economy. You could even argue based on this that the bigger the banking sector is, the worse is the news for your economy, because their magnetic attraction of taking engineers and technically qualified people and computer scientists into the banking sector is due to high bonuses and higher salaries prevents these creative growth sectors from realizing their full potential.

We were not aware of this in the years leading up to the collapse of the banks, but once it happened, what we have seen since is an extraordinary interesting demonstration in what I have just described to you. And to me, it should urge people, both in Europe and in the United States to look at the prevailing orthodoxies of a big financial sector versus other parts of the 21st century economy, at least that's my view. If you want to excel in the 21st century economy, it's more important to give high priority to your creative sectors, and IT companies and high-tech companies, and not building up big banks, because if you need money you can always get it somewhere in the world in the globalized financial system. But if you lose the most valuable manpower in your creative sector, there is nothing you can do to repair that damage.

This was a very interesting lesson which in the last two years or so has become absolutely clear to us. And I think that within the U.S. and Europe, people should seriously examine what is the consequence of a high-tech, big, modern banking sector, because the banking sector today is a high-tech sector. Do you want to base your competitive advantage as a nation on that? Or do you want to do it on other companies that could become global in a relatively short time, as Facebook and Twitter and all these other companies, and Microsoft have proved. That is why you see all those companies in Iceland coming out with more growth, bigger profits, stronger marketing positions in the last two years than they have in the years prior to the collapse of the banking system.

Iceland, of course, up til the late '90s didn't have a huge history of banking...

At that time, all the major banks were owned by the state. Their primary aim was to serve the Icelandic economy. Then two major transformations took place. One was the ideological emphasis in the West on privatization: the more you privatized, the more you deregulated, the more success you would have, this was the mantra. We followed that, as did many others. And that is why the state banks were privatized, but unfortunately that took place at the same time as the other shift was happening: the globalization of finance and the creation of the interlinked global financial market, which meant that these new privatized banks could go directly into this overblown global financial market and start to play there and grow big in a relatively short time. Which would have been difficult even if they were privatized.

If the global financial situation had been less favorable, and when, for example, we were beginning to hear critical voices about the Icelandic banks -- in late 2006, 2007, early 2008 -- when one listened to those critical voices, and were trying like myself to evaluate the sense in what they were saying, we faced on the other hand, the credit agencies who were giving the Icelandic banks a very clean bill of health, all of them, and secondly, we were seeing all these prominent European and American banks, like the Royal Bank of Scotland, Deutschebank, and others, doing extensive business with the Icelandic banks.

And I said to myself -- I know it's a mistake now -- in early 2007, if all the credit agencies are giving the Icelandic banks a clean bill of health, these pillars of European banking are doing integral business with the Icelandic banks, these critical voices are not really onto what's happening. Because neither these credit agencies, nor these pillars of banking would be doing business with the Icelandic banks if they were fundamentally unhealthy. But it turned out to be, they were, once the financial crisis happened.

So among the questions that still have to be answered after the crisis, is why did the credit rating agencies give the banks such a clean bill of health? What was wrong with their evaluating system? They haven't really answered that question. And secondly, why did these big established pillars of western banking all seek business with the Icelandic banks if they were so unhealthy. And that question has not been answered either.