Niall Ferguson's ignorant defence of British rule in India

Oddly for a historian, Ferguson doesn't appear to have taken much notice of history.

There were extensive power cuts across India in late July and early August. This created the opportunity for celebrity historian and recent Reith lecturer Professor Niall Ferguson to go on the attack. Ferguson opens his article in Newsweek with a reminder of how India used to be:

The British—slightly less than a thousand of them—used to govern India. Without air-conditioning....There was a reason the British moved their capital to the cool Himalayan hill station of Simla every summer. Maybe today’s Indian government should consider following their example.

He quotes Kipling approvingly, before going on to argue that it's all socialism's fault anyway:

India’s electricity grid has missed every capacity addition target since 1951. The system is so dilapidated that 27 percent of the power it carries is lost as a result of leakage and theft. Even today, 300 million people—a quarter of the population—don’t have access to the grid. That’s one reason the blackout didn’t spark more public ire.
 
The root of the problem is one of many leftovers of India’s post-independence experiment with socialism. Half of India’s power stations are coal-fired. Indian coal is produced by a state monopoly (Coal India). The price is controlled by the state, as is the price of electricity itself. The private firms running power stations are trapped between a lump of coal and a hard place. They cannot even trust the regional distributors to order the right amount of power.

Ah yes, if only Britain were still in charge, everyone in India would have aircon and iced tea on tap....
 
Oddly for a historian, though, Ferguson doesn't appear to have taken much notice of history. Britain governed India for 50 years beyond the first electricity supplies in the 1890s. In that 50 years to independence in 1947, a total of 1,500 of India's 640,000 villages were connected to the grid. During that time, pretty well all of Britain was electrified, along with the rest of Europe and America. After independence, this is what happened:

In other words, under the seven five year plans from 1947 to 1991, the Indian government brought electricity to roughly 320 times as many villages as British colonialism managed in a similar time span.
 
This is not to say that India does not face major challenges in ensuring secure power supplies in face of its burgeoning demand from its cities, and the ongoing need of the rural areas not yet reached. But for Ferguson to insinuate that Indians are in some way less capable than their colonial masters betrays a startling ignorance of what colonialism did to India in the first place.
 
Put simply, the British colonial powers had no interest in the Indian people. India was what Acemoglu and Robinson refer to in Why Nations Fail as an "extractive colony". As a result, the formation of the Indian state and its institutions was so severly stunted that, even today, India can no longer be seen as anything like a 'complete state' of the type that developed organically, over several centuries, in Europe and then America (see here for a fuller analysis of the case of India, based on Charles Tilly's groundbreaking work).
 
For Ferguson simply to set the long term consequences of colonialism to one side, in favour of a simplistic view of why India is where it is now - a paradox not of its own making - confirms his fall from decent historian to celebrity charlatan, interested more in soundbite opportunity than in real economics and history.

Historian Niall Ferguson with his wife, the Dutch writer and activist Ayaan Hirsi Ali. Photograph: Getty Images.

Paul Cotterill is a blogger for Liberal Conspiracy and Though Cowards Flinch.

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The Autumn Statement proved it – we need a real alternative to austerity, now

Theresa May’s Tories have missed their chance to rescue the British economy.

After six wasted years of failed Conservative austerity measures, Philip Hammond had the opportunity last month in the Autumn Statement to change course and put in place the economic policies that would deliver greater prosperity, and make sure it was fairly shared.

Instead, he chose to continue with cuts to public services and in-work benefits while failing to deliver the scale of investment needed to secure future prosperity. The sense of betrayal is palpable.

The headline figures are grim. An analysis by the Institute for Fiscal Studies shows that real wages will not recover their 2008 levels even after 2020. The Tories are overseeing a lost decade in earnings that is, in the words Paul Johnson, the director of the IFS, “dreadful” and unprecedented in modern British history.

Meanwhile, the Treasury’s own analysis shows the cuts falling hardest on the poorest 30 per cent of the population. The Office for Budget Responsibility has reported that it expects a £122bn worsening in the public finances over the next five years. Of this, less than half – £59bn – is due to the Tories’ shambolic handling of Brexit. Most of the rest is thanks to their mishandling of the domestic economy.

 

Time to invest

The Tories may think that those people who are “just about managing” are an electoral demographic, but for Labour they are our friends, neighbours and the people we represent. People in all walks of life needed something better from this government, but the Autumn Statement was a betrayal of the hopes that they tried to raise beforehand.

Because the Tories cut when they should have invested, we now have a fundamentally weak economy that is unprepared for the challenges of Brexit. Low investment has meant that instead of installing new machinery, or building the new infrastructure that would support productive high-wage jobs, we have an economy that is more and more dependent on low-productivity, low-paid work. Every hour worked in the US, Germany or France produces on average a third more than an hour of work here.

Labour has different priorities. We will deliver the necessary investment in infrastructure and research funding, and back it up with an industrial strategy that can sustain well-paid, secure jobs in the industries of the future such as renewables. We will fight for Britain’s continued tariff-free access to the single market. We will reverse the tax giveaways to the mega-rich and the giant companies, instead using the money to make sure the NHS and our education system are properly funded. In 2020 we will introduce a real living wage, expected to be £10 an hour, to make sure every job pays a wage you can actually live on. And we will rebuild and transform our economy so no one and no community is left behind.

 

May’s missing alternative

This week, the Bank of England governor, Mark Carney, gave an important speech in which he hit the proverbial nail on the head. He was completely right to point out that societies need to redistribute the gains from trade and technology, and to educate and empower their citizens. We are going through a lost decade of earnings growth, as Carney highlights, and the crisis of productivity will not be solved without major government investment, backed up by an industrial strategy that can deliver growth.

Labour in government is committed to tackling the challenges of rising inequality, low wage growth, and driving up Britain’s productivity growth. But it is becoming clearer each day since Theresa May became Prime Minister that she, like her predecessor, has no credible solutions to the challenges our economy faces.

 

Crisis in Italy

The Italian people have decisively rejected the changes to their constitution proposed by Prime Minister Matteo Renzi, with nearly 60 per cent voting No. The Italian economy has not grown for close to two decades. A succession of governments has attempted to introduce free-market policies, including slashing pensions and undermining rights at work, but these have had little impact.

Renzi wanted extra powers to push through more free-market reforms, but he has now resigned after encountering opposition from across the Italian political spectrum. The absence of growth has left Italian banks with €360bn of loans that are not being repaid. Usually, these debts would be written off, but Italian banks lack the reserves to be able to absorb the losses. They need outside assistance to survive.

 

Bail in or bail out

The oldest bank in the world, Monte dei Paschi di Siena, needs €5bn before the end of the year if it is to avoid collapse. Renzi had arranged a financing deal but this is now under threat. Under new EU rules, governments are not allowed to bail out banks, like in the 2008 crisis. This is intended to protect taxpayers. Instead, bank investors are supposed to take a loss through a “bail-in”.

Unusually, however, Italian bank investors are not only big financial institutions such as insurance companies, but ordinary households. One-third of all Italian bank bonds are held by households, so a bail-in would hit them hard. And should Italy’s banks fail, the danger is that investors will pull money out of banks across Europe, causing further failures. British banks have been reducing their investments in Italy, but concerned UK regulators have asked recently for details of their exposure.

John McDonnell is the shadow chancellor


John McDonnell is Labour MP for Hayes and Harlington and has been shadow chancellor since September 2015. 

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump