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Border Crossings by Mohammad Chowdhury

27 Nov

I first met Mohammad when he was a new direct entrant into the management consulting practice of one of the Big 4 accounting firms. We had an interesting exchange. He was about to start a small assignment for a major client, National Grid. He explained to me that Ramadan was about to start, and as a Muslim he would be fasting from sunrise to sunset. That could make him faint and potentially irritable – and as his manager on the assignment I should be aware of this.

My side of the the exchange was simpler – I explained what a spreadsheet was (he was an Oxford graduate in Politics, Philosophy & Economics, so not a difficult concept for him to grasp) and how he would need to use it in his assignment.

This small exchange encapsulates the theme of this book – how Mohammad, as a second-generation immigrant from Bangladesh, developed his career and explored his Muslim faith. In doing so, he had to undertake many ‘border crossings’ – some cultural, some the actual crossings of physical borders. He recounts both in this book, and the physical border crossings include a fascinating account of his entry to Israel at the Allenby Crossing, and how to exit from a newly-independent Kazakstan with an expired Russian visa.

The book is subtitled ‘My journey as a Western Muslim’, and some of the best parts are Mohammad’s reflections on racial, religious and ethnic tensions. In one memorable passage, he asks us to imagine what London would be like if it was ‘as fragmented by sectarian division as Beirut has been… I imagine Wood Green Turkish enclave…Southall controlled by Sikh separatists’.

But as well as the humour, he has interesting things to say about his developing faith – noting that some supposedly Muslim practices are more based on local tradition than the Koran, and contrasting earlier times of Muslim learning and flourishing with the narrower focus of Muslim learning and scholarship today. The insight I found most illuminating was his view on how long it would take for ‘home grown’ democracy to become established in the Middle East – ‘I claimed confidently that we were in the early stages of one hundred years of turmoil that began with the Iranian revolution in 1979’.

The book is definitely a ‘good read’. As a Western Christian, I found it enriched my understanding of the Muslim world. When, at the end of the book, Mohammad returns to Sonarpur, where the Chowdhury family had been landlords in colonial times, his driver notes ‘you are like your father…[willing] to sit with everyone and chat about nothing in particular’. More chatting and less posturing – and definitely less military intervention – must be the way to go in our world of racial, religious and ethnic tensions. This book helps with that.

Available at Amazon and (probably by special order) at your local bookstore – see

A EuroCard??

10 Jun

I see from yesterday’s Financial Times that a group of European banks planned to take on what they call the US payments oligopoly (

The number of European banks involved is impressive, and doubtless, with the rise of contactless payments, they have their eyes on the profit pools available in global payments. They also declare themselves worried by the ability of the US to ‘switch off’ European payments – perhaps if the Europeans fail to increase their defence spending? There is much talk of plans and blueprints, and they have even stumped up (not very much) money – €30m between 30 of them seems a bit mean.

I doubt if Visa and MasterCard – or even Apple Pay – are quaking in their boots at this prospect. As well as a 50 year lead time on the European venture (Visa was opened to banks other than Bank of America, its founder, in 1966), they will also take comfort from the failure of a group of US retailers, including Walmart, to launch their own credit card system, MCX (see logo above and How a new venture accesses the consumer history to prevent fraud will be a major issue.

Aside from that, they will need to break the chicken and egg problem – how do you get retailers to accept a card few consumers carry? How do you persuade customers to take out a card not accepted by retailers? Visa and MasterCard’s answer was a massive, costly TV advertising campaign. Today of course European banks would have an additional problem – why would I as a consumer switch from widely-accepted cards that work to the new system?

Standby for the crocodile tears of failure in a couple of years’ time.

Whatever happened to the Office of Fair Trading?

1 Mar
Lord Borrie QC pictured at his residential chambers in London Monday 25 September 2000 after he was announced as the next Chairman of the Advertising Standards Authority

Last week I commented on John Penrose’s report on competition policy – ‘Power to the People’. Now I see that Andrew Tyre, former chairman of the Competition and Markets Authority (and prior to that, civil servant at H M Treasury and then Conservative MP) has waded into the debate with a piece in the FT –

Somewhat curiously, given their similar backgrounds, Tyrie makes no mention of ‘Power to the People’ – perhaps suggesting a degree of intra-brand competition? However, the themes are much the same, and ones that Tyrie has promoted before – the need for a more pro-active approach from competition policy to protect from ‘rip-offs’, especially via price discrimination from the privatised utilities; more powers for the CMA to protect ‘the consumer interest’ (and not just to further competition).

One particular theme is common to both reports – more direct engagement with the public. Tyrie wants the CMA to follow the Bank of England’s example of more direct engagement with the public. Penrose wants ‘a new competition and consumer champion’, to be the micro-economic equivalent of the Bank of England (both Tyrie and Penrose seem to be not so secret admirers of the Old Lady). Both want a beefed-up CMA to fulfil that role. However, as Tyrie points out, ‘six years after the Office of Fair Trading was abolished and replaced by the CMA, 62 per cent of consumers had heard of the OFT. Only 19 per cent had heard of the CMA last year.’

So was it a mistake to abolish the Office of Fair Trading – which would, in its heyday, have fulfilled the ‘competition and consumer champion’ role that Penrose wants?

A brief personal digression at this point. Many moons ago – in 1977 to be precise – I was a young government economist seconded, for my second job in government, to the OFT. Gordon Borrie (see the picture above) was the Director General, having taken up the post the previous year. As his Guardian obituary makes clear (see, he was precisely the kind of consumer champion Penrose and Tyrie are looking for. The OFT, under his leadership, also tackled big issues – the London Stock Exchange, the beer industry, estate agents and car dealers.

However, it is important to understand the two factors that allowed him to do this. First, he had established his reputation as an academic lawyer championing consumer rights; second, the 1973 Fair Trading Act gave a clear role to the Director General, which was entirely separate from that of the (then) Monopolies and Mergers Commission – the DG made references to it, and implemented their findings, but he was not judge and jury on competition policy cases. By contrast, there is a clear conflict between having a chair of the CMA who is a consumer champion – an approach which both Penrose and Tyrie seem to favour – and their duties in running an impartial quasi-judicial body.

And I find it hard to think of an equivalent figure today to Gordon Borrie – who, when I was a very junior economist, would happily say “Hallo Richard” to me if we crossed in the corridor.

The curious case of the Penrose Report – ‘Power to the People’

22 Feb

You may, or may not, have seen this referred to in the press last week – it appeared in the Guardian but, as far as I can see from a quick Google search, was not reported elsewhere. The report by John Penrose MP focuses on how to improve the workings of UK competition policy, so that, as the report says on its front page, ‘markets work for people and not the other way round.’ (see

As this was a report commissioned last September by the Chancellor, Rishi Sunak, the failure of the government’s publicity machine to make more noise about might seem odd, but perhaps no odder than the report itself. I was introduced to it last week via an online seminar hosted by the Regulatory Policy Institute (see John has clearly been an industrious chap. Without (it would appear) much research help, he has produced over 40 recommendations in his 70 pages.

The report shares many of the themes of Andrew Tyrie’s letter to the then Business Secretary, Greg Clark, in February 2019, although it adds its own spin on ‘cutting red tape’ (more of that anon). But unlike that report, which clearly drew on the resources of the CMA, which Tyrie then chaired, or the Furman Review on Digital Competition, it is short on its description of process. One suspects that this is because there wasn’t one – the report (and his presentation of it to the RPI) gives the impression that John has had a few chats, read the existing reports, and added a few thoughts of his own.

If that is right, it might serve as a useful ‘tract for the times’, perhaps designed to get the Tyrie letter back from the wpb and back on the agenda. The themes both raise are important ones – does competition law place enough emphasis on consumer interests?; do the competition authorities act rapidly enough with their current legislative powers in the new digital, global economy? – but it is not clear that the Penrose solutions have been fully thought through.

To focus on one example: the report correctly notes ‘too much red tape slows businesses down.’ But in the course of its 40-odd recommendations, it manages to add quite a few pieces of red tape of its own: it wants to ban price discrimination between existing and new customers; it wants ‘supercomplainers’ to be able to trigger a request to transfer sector regulator powers to the CMA; it wants an entirely new branch of the judiciary – County Competition Courts’; and it wants protection against ‘sludge’ – consumers who are exploited by ‘nudge theory’ (or plain old inertia). No cost benefit justification is offered for any of these.

Perhaps it’s less of a report, more of a nudge that the UK’s competition laws need a post-Brexit update? If government reads it and says ‘we can’t possibly do that’ perhaps it will spur them to think what they can do. If it achieves that, it will have performed a useful service.

Caveat emptor on hedge funds

16 Jul

Monday’s Financial Times contains an important piece on the hedge fund industry – see It quotes one academic study as showing that ‘investors earned just 36 cents for each dollar in gross profits generated by the funds above the benchmark, the other 64 cents being collected by hedge fund managers’. It would seem that the people making money from hedge funds are the owners of the funds rather than the average investor.
This has some similarities with the debate on indexed fund management. Over 20 years ago, when I was working at PwC, we did a study for Barclays Global Investors, which showed that, for large cap stocks, the average active fund manager underperformed against the benchmark by 2% pa or so over a 10 year period, and that investors needed to have a top quartile active fund manager to outperform an indexed fund.
Of course, in both instances, there is a case for the defence. In the FT piece, Aon point – no doubt correctly – to the importance of picking the right hedge funds and checking their capacity limits vis a vis their declared strategy; and our indexation study did find evidence of outperformance by active managers in small cap stocks.
But you have to wonder – is this a case where competition does not work effectively? There are a number of factors at work, including optimism bias and insider/outsider issues relating to asymmetries of information.
But ultimately you are reminded of James Tobin’s little old lady. You may recall the story – the little old lady has taken by an eminent economist to the floor of the New York stock exchange. The eminent economist explains that some people are selling shares, while others are buying them – at which the little old lady exclaims ‘but they can’t both be right!’
A very perceptive remark. The little old lady had correctly noticed that the trading in shares is close to a zero sum game – some people win and some people lose. If some fund managers are outperforming the benchmark, then by definition others will be underperforming it. In practice, of course, there are a whole variety of complications to take into account – the construction of the benchmark, role of new issues, and other factors. But the basic insight of treating the trading in shares as a zero sum game is a useful one that investors forget at their peril.

HM Queen sorts Boris out on Brexit

26 Sep

Boris in BlunderlandI’m dreaming on a sunny autumn afternoon. HM Queen is on the phone to Boris…

‘Look, Boris, these japes of yours may be OK for the playing fields of Eton, but they really won’t do in my Prime Minister.

I know you keep saying you want us to leave the EU by 31st October, but it is now abundantly clear to me that you haven’t a clue how to do it. And the bigger the mess you create, the more you imperil our unwritten constitution – dragging me and the judiciary into the mire. And disunite my kingdom. It’s got to stop.

I’ve actually read all these state papers that you and the hapless Theresa keep sending me. I think it is a discipline you should follow yourself. It seems to me that all you need to do is announce that we are leaving the EU, but remaining part of the European Economic Area (EEA), and that we propose to accept the EU Commission’s original proposal of a border down the Irish Sea.

Simple. Now I know that remaining in the EEA will limit our ability to control migration from the EU, but I see that you’ve abandoned your predecessors’ immigration targets anyway. And while the border down the Irish Sea will create a different regime for Northern Ireland, the differences will be limited (initially at least) to agriculture and fishing (which are outside the EEA). And you’ve already proposed a different regime for them. Anyway, as I’ve told you before, Northern Ireland has a host of differences from the rest of the UK.

You are also no doubt aware of the argument that, in fact, we need to take no legal steps to remain part of the EEA, as we are a signatory to the original treaty. No doubt you will need your officials to look into that, but whatever you do don’t let that twit Geoffrey Cox anywhere near it.

Can you please promise that you’ll behave and do as you are told? I’m 93 and would like a quiet life without riots on the streets. And if and when you ever see that other old Etonian Prime Minister who started the mess, please tell him I’ve reserved a special lamppost for his execution outside my bedroom window if things get any worse.’


Brexit – the Elizabethan settlement is in trouble

10 Dec

Well, this morning I re-read my post from July. My prediction that the EU might play ball with Theresa May’s Chequers Plan was accurate enough, but it now seems as if the ‘Mad Hatter’ Brexiteers are even madder than I thought and the Labour Party are – at least on this subject – behaving as completely duplicitous shits. Perhaps from time to time Theresa May wishes she were back in Elizabethan times and could simply send them all to the Tower instead of facing a Commons vote.

There are both real and imaginary difficulties with the Withdrawal Agreement and Political Declaration – admirably well summarised in No 10’s ‘Explainer’ slide show (see The apparent difficulties centre on the Northern Ireland ‘backstop’ and the threat this is deemed to pose to the ‘territorial integrity of the United Kingdom’. The real difficulties centre on trade and ‘free movement’, but more of that anon.

So the NI backstop – why all the fuss? OK, it will treat NI differently, but it is treated differently already isn’t it? – think LGBT rights (see, or abortion law, where the UK’s 1967 Act does not apply, and the UK’s Supreme Court (yes, that’s right, the one taking back control) said that the position in NI is incompatible with human rights legislation. Or the rights of citizens in NI to apply for EU passports – quite handy in current circumstances. And how important (dare we ask?) is NI to the UK economy? – I recall in my HM Treasury days, when we only had figures for Great Britain rather than the UK, we had the rule of thumb ‘add 2% for Northern Ireland’. So, in short, f**k Northern Ireland and the backstop.

The real difficulty seems to me to lie with the Political Declaration. The ambition is fair enough – ‘an ambitious, broad, deep and flexible partnership across trade and economic cooperation’ – but it is not clear how the trade deal we want (and, to be fair, which the EU  also wants) will fit with us ‘taking back control of our borders’. Within the PD, there is a commitment by the UK not to discriminate between Member States, so we can forget banning Polish plumbers and welcoming German bankers. But more broadly, the EU has repeatedly emphasised that the ‘four freedoms’ – free movement of goods, services, capital, people – are indivisible. It is not clear how this tension will be resolved – but on the track record so far, a UK cave-in on EU migration (i.e. no real, effective, controls) must be a front runner.

But back to the Elizabethan Settlement. I am glad, at a personal level, that it seems to have at least reconciled the sensible Brexiteers (like my local MP, James Cleverly), and the moderate Remainers (e.g. Vicky Ford, MP for Chelsmford). It will mean Leave, especially over time, but will minimise the economic damage and will keep us in close co-operation with the EU. It is a considerable personal achievement for Theresa May and her unfairly maligned civil service team, and there are no credible alternatives available (there is another piece to be written on this, but not today). All we need is Elizabeth I’s secret police to get it through.


Brexit the day after: on the stairs

30 Mar

So I’m sitting in the cafe in St James Park, looking out towards Whitehall – the pulsating heart of British Government. I’m wondering how many of my former civil service colleagues are suffering from ‘Divorce Separation Blues’ (Avett Brothers).

And why ‘on the stairs’? It seems to me the relationship between Britain and the EU is rather like going to a party. We were reluctant to go to this particular gig – we thought the vibes might be better elsewhere (EFTA anyone?), and we were worried they wouldn’t let our friends come in with us (viz, sheep from New Zealand). Then eventually we said we’d go on certain conditions (‘It all depends on the terms – H. Wilson).

No sooner had we arrived than we had a quick vote on whether to stay, and ever since we got in we’ve been complaining about the food, the drink, the other guests, and how the party is organised.

Now we’ve decided to leave to explore the world, and we’re on the stairs on the way to the exit door. Will we have second thoughts? – apparently the guy who drafted Article 50 doesn’t share the common view its irrevocable. But more to the point, will the other guests ever let such a arkwark fellow back in?

Perhaps De Gaulle was right when he described us as a ‘maritime nation’ ill suited to join his European party?

Seasons Greetings

10 Dec


I confess – I’m stumped. I can manage a picture (the Christmas Tree in Brussel’s Grande Place, where I’ve recently attended the LSE’s excellent Brexit conference) but after that…

So we leave the EU, and Donald Trump is president. I suppose to look on the bright side, the EU debate may turn out, for the UK at any rate, to be a storm in a teacup, of more interest to ‘the international liberal elite’ (? how does one join this elite? is there a discount for retirees??) than the rest of the country. And in the States, the mid-terms are only a couple of years away (assuming Russia isn’t running the country by then).

But my Cassandra instincts tell me otherwise. Ten years of ‘austerity’ plus exit from the EU look to me like a return to the 1970s – with Southern Rail obligingly providing the industrial action. As for the US – how can so many supposed ‘Christians’ think backing out  of an international climate accord is a good idea?

Perhaps the UK will ‘muddle through’. I can recall the great economist Nicky Kaldor saying in 1980 (as the UK economy fell off a cliff) that we shouldn’t underestimate the resilience of the people and the companies at the micro level that made the macro economy work. Well, that resilience is certainly needed now.

And the US? – well, as I say, I’m stumped. Or should that be Trumped?



Greenspan – hero or zero?

8 Nov


Mallaby on Greenspan

Good session last night at the LSE with Sebastian Mallaby talking about his book on Greenspan. You can see some pics on Twitter via #LSEGreenspan.

The discussion on whether interest rates/monetary policy should be used to deal with asset bubbles was interesting. Mallaby’s view was that the Fed could at least set interest rates, whereas trying to use regulation to deal with asset bubbles (and financial irregularities in general) was much more difficult – attempts to do so were bound to be mired in Washington politics and/or the ‘balkanisation’ of US regulation.

The position has echoes of Keynes ‘monetary policy a l’outrance’ – taking bold an decisive action to deal with a slump or boom. But Greenspan – ‘the man who knew’, as Mallaby explained, was not a man willing to act or confront. Knowing is only half, perhaps less than half, of what a central banker needs to succeed.