All entries for Saturday 08 January 2005
January 08, 2005
Asia Times, 11.11.2004
The conclusion made by David Fullbrook in his article So long US; hello China, India [Nov 4] can be summed up in one sentence – China's boom is probably the world's greatest, ever. As night follows day, bust follows boom. A bust to match China's, or even India's, boom will shatter the evolving geopolitical reality, bringing much instability for Southeast Asia, while creating an opportunity for a weaker, but stable, United States of America. Unfortunately for him, this boils down to reaching far bigger conclusions without any considerable analysis to back his views. Firstly, a bust does not have to be necessarily comparable to the boom a country experiences. The Industrial Revolution has shown us that the boom can be spread out over a longer period and different patterns of growth can be identified, some of which are short-term, while others much more long-term. Economic policies of Europe, Japan and the US reflect the gradualist approach of economic development after sizzling boom during their developing period. Secondly, although we can argue China to be the potentially "boom prone" economy of Asia, in no way can this be said of India. China has grown on excessive and futile government spending, too much dependence on foreign-based corporations, suppression of alternate views by a ruthless governmental structure and by a "herd behavior" by foreign speculators. Its capital markets are shuddery, its banks are a mess, the rural areas which are hidden from the world speak volume of the misery rife in the countryside and its nuclear arsenal pointing at half a dozen countries speak of its political nature. India, though much slower at generating growth, grows under a functioning democracy, domestic companies, domestic investment and a retreating government. India has mature and stable capital markets and a strong banking sector. It shows all the right trends to become a liberalized economy over the past 15 years as the government has consistently, albeit slowly, pursued economic reform. China has been more of a spurt – India is more of an ever-flowing river. Secondly, China has many more political enemies than India and is more prone to going to war than the latter. The world is [starkly] different to what Mr Fullbrook sees it to be – the most likely scenario would be a mutually destructive war between the United States and China in the future as a result of China's ambitions clashing with the US's reluctance to share the superpower tag. This would leave the world without a core state, an attracting pole. The stage will be set for the peaceful people of India to take up their place at the helm of the world community, and so they shall.
Asia Times, 25.10.2004
I read the article titled China through a Bangladeshi's eye [Oct 23] on Asia Times, at first with interest that consequently turned to disappointment and disgust following your assertion that "India has democracy; China has accountability and so on. One thing struck me. India is nationalistic; China is patriotic. Indian nationalism is often manifested in its anti-foreign postures. The root of nationalism lies in anti-foreignness." To set the record straight, I am an Indian student (from Kolkata, so we share much in common) in the UK. My objections and alternative suggestions are as follows-
1. Your claim that China has accountability is simply factually incorrect. Yes, China has a very brutal penal code, but that doesn't result in accountability for the higher strata of the communist bureaucracy, most of which is dipped [in] the sea of corruption. Even on the lower rungs, bribing of officials is rife for business contracts and so on. The harsh punishments are only used against petty thieves to remind the Chinese people of the muscle the CCP [Chinese Communist Party] still wields. Was Deng Xiaoping held accountable for Tiananmen Square? Has the same happened for Mao [Zedong] for the Great Leap Forward? When will the officials responsible for hiding details about SARS [severe acute respiratory syndrome] be brought to justice? Has the whole of the CCP been taken to court over the brutal suppression of minorities in Tibet and Xinjiang? Yes, corruption is rife in India too, but if any country out of these two has accountability, then it is the Union of India, not the People's Republic of China. When our minorities are massacred in Gujarat, there is a three-level investigation process; numerous such high-profile examples of exposing fraud exist. So when you say that India is a democracy, how can you forget that accountability goes hand in hand with this term?
2. What do you mean, "and so on"? Do you intend to indulge in [more] of these generalizations? Let's see for ourselves. India has rule of law, periodic elections at local, regional and national levels, freedom of speech, freedom to practice any religion, freedom of association, freedom of movement, a Human Rights Act and a National Human Rights Commission, Minority Rights Commission and the SC/ST [Scheduled Caste/Scheduled Tribes] Act to protect their rights, freedom of information and equality of opportunity. Let's look at China's scorecard in comparable fields – law is what the CCP conceives it to be, so rule of law is actually "rule of the CCP", farce in the name of elections, curtailments on freedom of speech, abandoning of religion (note the atrocities committed against Tibetans, Christians and Muslims), restriction on formation of associations and their activities (note the curtailments on Falungong), an appalling human-rights record, suppression of minorities like the Uighurs and Tibetans, censoring of press and other forms of information, government monopoly on most news items and inequality of opportunity (note the preference given to the Hans over the other ethnic races in China). The picture certainly does look a lot different from your utopian China.
3. Your weak assertion that Indian nationalism is based on anti-foreign sentiments is simply laughable. A country that believes in antar-rashtriya sampriti (international peace and harmony) being labeled with such an accusation! On the other hand stands a country which proclaims itself as the Middle Kingdom of the Earth, inhabited by the greatest race on the planet, apparently. Is this why peaceful and patriotic China has major border issues with almost all of its neighbors? Is this why on one hand India has never invaded another country in its long history of 5,000 years and assimilated all those who invaded us, whereas Chinese have invaded, threatened and subjugated others, namely the Tibetans, Uighurs, Indians and Taiwanese – to name a few? Does India's so-called innate anti-foreignness lead it to maintain a cosmopolitan overseas community when compared to a closely huddled and antisocial overseas Chinese counterpart? Is it China's "friendly" attitude towards its neighbors that leads it to point nuclear missiles at Japan, Taiwan and the US?
4. Perhaps you are making a generalization about us Indians from the narrowness of your personal experience, a dangerous business no doubt. Yes, Indians generally do not look kindly on Bangladeshis, not because of some inherent hatred for outsiders but because your government has failed miserably to uplift your people from poverty and so they flee to India to become a burden on our social-welfare system, contributing nothing but crime and misery to our urban and rural areas alike. Incidentally, terrorist bases in your country operating in our northeast doesn't exactly say "friendly neighbor". Bangladesh has forgotten to be grateful to India, to which it owes its existence.
5. The levels of investment have nothing to do with antagonism against foreigners. Borrowing [former US] president [Bill] Clinton's words, "It's the economy, stupid!" India's economic policy over the last 20 years has been distinctly different from China's. Indeed, we have been a lot slower in liberalizing our economy, which has proved detrimental in some sectors, but it is proving profitable in others, notably the better prospects of Indian companies in the long term compared with MNC [multinational corporation] dominated China. You mention the Forbidden City, yet you forget to mention its sponsors – Coca-Cola and American Express. Thank God, the Taj Mahal is still ours to keep.
6. China does not retain any love for its workers – it's simply a farce. There are daily worker protests in China when the subsidy-dependent white elephants known as SOEs [state-owned enterprises] collapse and thousands become unemployed. In India, the trade unions can take matters to court. In China, rule of law being absent, it's the police [who] brutally disperse the crowd.
7. Finally, please do not remain in the illusion that China is Bangladesh's potential ally. If you do, then you will be in the same position as Pakistan. China merely wants Bangladesh to be part of the wall it wants to build to encircle India, its only potential rival to worldwide clout. I hope Bangladesh realizes this folly and does not let itself be manipulated either by Pakistan or Bangladesh. Its best interest lies in building strong economic ties with India, first of all by signing SAFTA [South Asian Free Trade Agreement], and better relations will follow.
I am sorry to have offended you in any way, which is not my intent. I have merely raised some issues which I believe seriously jeopardize your analysis. It was something that could not be left undone, for a patriotic Indian does exist (who does not hate foreigners).
I submitted my proposal for funding for the Lord Rootes Memorial Fund
A comparative socio-economic study of Mumbai and Shanghai
The 21st century belongs to Asia. There is no denying this. However, for some Asian countries, the future looks grim, viz. Pakistan, Bangladesh, Indonesia, etc. For others, the peak of their economic miracle is in the past, viz. Japan and the ASEAN states. For two countries, however, the best is yet to come. India and China have been growing at roaring rates over the past couple of decades, and their development will blossom around the half way mark of this century. Since its liberalisation in 1978, China has grown in excess of 8% per annum. India, which opened up much later in 1991, has grown at nearly 7% per annum. By 2025, China and India are predicted to be the second and third largest economies of the world respectively. By 2050, according to a Goldman Sachs report, China and India will become the world’s largest two economies. Such a stupendous phenomenon cannot be left unstudied.
The focal point of the Indian and Chinese economic engines is based in their financial capitals, Mumbai and Shanghai respectively. My aim in this project is to undertake a comparative coverage of the potentials of each city, their weaknesses, their achievements and finally, their characters. The thrust of the research would be to compare these cities on parameters of economic success and social justice, and draw a conclusion on their respective prospects for the future.
The Importance of Mumbai and Shanghai
Once given as dowry to Charles II for his marriage to Catherine de Breganza, Mumbai is India’s premier port city, located on the Arabian Sea. It is the capital of India’s most industrially advanced state of Maharashtra, on the west coast of India. Nearly half of India’s total foreign trade passes through its harbour, and around 40% of India’s total income tax collections come from the city alone. Culturally, it is India’s most vibrant city- hosting the famous ‘Bollywood’ film industry. It is the seat of human enterprise- home to over 18 million people.
Shanghai is a bustling metropolis located on the mouth of the Yangtze river, hosting over 13 million people. Known as the ‘Pearl of the Orient’, Shanghai boasts a glittering skyline, thanks to its Pudong district. Pudong also hosts some of the world’s top multi-national corporations, all doing brisk business in the city. The city is at the forefront of the economic boom in China, popularly known as the ‘Chinese miracle’.
Why Mumbai and Shanghai?
Thriving metropolitan cities exist in both countries- Delhi and Bangalore in India, Beijing in China. However, no two cities are so uniquely economic in their orientation as Mumbai and Shanghai. Beijing and Delhi are the political capitals of their respective countries, which serves as a distraction from the economic focus of this project. Bangalore is primarily economic in its outlook, but the economic development there is riding on an Information Technology and Business Process Outsourcing boom. It lacks the all-rounder status of Mumbai. Mumbai and Shanghai occupy centre stage in their countries’ economies and the surrounding regions.
Benefits from the Project
Much has been said about China since its liberalisation began in 1978. Far less, but still substantial has been said about India since 1991 when it hopped on to the capitalist bandwagon. These countries are now aiming for the top. At the onset of the Asian century, we need to identify the epicentre of their aspirations, more specifically, economic aspirations- Mumbai for India, Shanghai for China. If we are to understand how India and China will shape the future world, we need to comprehend how globalisation has shaped these two cities, how it is still shaping them. There is much to identify that is inherent in the character of these cities that will reveal the story of their rise in the 21st century. It is extremely useful to be aware of their perceptions of each other, and their prospects when seen in each other’s context. For it is only then will we be able to appreciate what these cities have truly achieved, what more needs to be done and what will be realistically done. Today the global economy feels any movements in the markets of New York or Tokyo, a few decades ago they used to follow the lead of the City of London. In the coming decades, as India and China occupy centre stage in the global economy, same will be the fate of Mumbai and Shanghai. Now that it is beyond reasonable doubt that these two cities will shape the global economy, the only question that needs to be answered is how. I seek to answer that question in my project.
Direct interaction would form the bulk of the material that I hope to collect. Essentially, my interviews would target three economic entities, viz. employees, employers and tourists. This would enable me to encompass individuals from all income brackets and thus would enable me to paint a clearer picture of the city in question, both from the perspective of the insiders as well as that of an outsider. Time permitting I would like to interview two other classes- students and the unemployed. The former would help me identify the perceptions of the younger urbanites, while the latter would enable me to comment on the equitable distribution of the fruits of growth. I have already identified some companies in Shanghai for this purpose, among which Satyam Computer Services (IT/ITes), Reliance Industries Limited (Telecommunication, textiles, energy, etc.), State Bank of India (financial services) and Raymond Limited (textiles) would be a priority for me, as they are market leaders in their sectors in India. . My questionnaires would involve the interviewee’s opinions about the business environment, the political climate and the nature of the society of the city in question.
Following the local press would be an important part of my schedule. This would take the form of internet-based outlets, local newspapers and television. The presentation of pressing issues by the local media would enable me to grasp the mentality of the city towards important public policy concerns and their impact on the economy and society of the city.
Visual evidence will also be part of my methodology, as they would vividly depict, more than any other method, the achievements of the city, and the pressing concerns that lie ahead of it. Photo journals of popular urban centres, business parks and slums will help us identify the equitable distribution of growth.
My study is essentially comparative in nature. The mention of the cities in isolation would be restricted to the introduction and in areas where the same criteria does not apply for the other city. Similarities and differences between the cities would be identified in the following areas
- Factors of production- business environment, quality of workforce, infrastructure, investor perception, political environment etc.
- Losers of growth- the extent to which their economic boom is equitably distributed.
- Performance of domestic industry- How Indian companies are faring in Shanghai and their Chinese counterparts in Mumbai.
- The soul of each city- popular places of urban life and entertainment and changing trends.
After this comparative analysis, a comment on their prospects would be made. As an endnote, the following categories will be included-
- Limitations- I will be an outsider in Shanghai, therefore my background knowledge about the city and its people would be minimal. For instance, I might not correctly interpret questionnaire responses. The language barrier would make it hard for me to maximise my interaction with the subaltern classes. However, an empty page is neater than a scribbled on page. I will try to turn my position as an outsider into an advantageous one, for I will be bereft of any previous prejudices or beliefs of my own while making my conclusions.
- A brief description of interesting encounters during my interviews will be included. This will illustrate more vividly the experience of interacting with dwellers of these cities.
- Recommendations- I will include a brief section to note the main points for a future visitor or researcher to note about these cities.
I will take out travel insurance before I leave the UK to cover for any accidental damage to my possessions or myself. My family lives in India, therefore I would have enough security, both financial and otherwise, readily available there. In Shanghai, I would contact the Indian Embassy in case of an emergency. To be on the safe side, and also for the convenience of language, I would take a tour guide with me everywhere in the city.
There are certain criteria that make me particularly suitable to carry out this challenging project. I was born and raised in the port city of Kolkata in eastern India. Coming from a bustling metropolitan city of India very similar to Mumbai, I am well aware of the character of urban India, which will reflect in my methodology. My first language is Hindi, which is the language primarily spoken through out India. Knowledge of the native language would enable me to reach the most subaltern of people in Mumbai, and to appreciate the dynamics of the lower classes in India’s political economy. India and China share much in common in terms of culture and societal norms. Hence, I would be in an excellent position to conduct a meaningful inspection of life in Shanghai. For example, the issues raised by the poor in urban China reflect to a large extent those of their counterparts in India. Therefore, I will be in an immediate advantageous position to compare the demands of the two classes within the context of their adversaries, and scope for future action by the administrations. Finally, the most vibrant class in these two countries is the thriving middle class, especially since economic liberalisation. My background is also of a typical Asian middle class type. Thus, I can put myself in the shoes of the urban masses of these two great cities and calculate their aspirations and disappointments very easily, something that would not be so natural for someone with a different class profile.
Item Cost (£)
London-Mumbai Return Airfare- 450
Mumbai- Shanghai Return Airfare- 450
Accommodation for approx. 15 days in Shanghai- 350
Accommodation for approx. 15 days in Mumbai- 250
Maintenance (Food and Travel) for 1 month- 700
- I have chosen Tongmao Hotel in Shanghai because it is located in the Lujiazui Development Zone, at the centre of Shanghai’s Pudong district, which is the heart of its business community.
- I have chosen Hotel Apollo in Mumbai because it is located close to the Flora Fountain business centre. It is also adjacent to the Gateway of India, the seat of Mumbai’s urban life.
- The need to visit business centres and urban hotspots entails a lot of travelling, which incidentally will take place in India and China’s most expensive two cities.
- This project was drawn up keeping the Lord Rootes Memorial Fund in mind, therefore without almost total help from the fund, this project cannot be undertaken. I have worked part-time this year and I can contribute around £200 from my funds, but I would need a grant of a minimum of £2,000 to undertake this project. My estimate of maintenance might not be entirely accurate regarding Shanghai, due to my lack of first hand experience of the country. I will also have to employ a tourist guide in the city, the costs of which are unknown to me. Therefore, I have estimated around £30 per day as maintenance expenses in Shanghai. I will maintain regular accounts of my spending.
I expect to leave for Mumbai around the 25th of August. After having spent a week in Mumbai, I would fly to Shanghai and spend approximately 2 weeks there. On my return to Mumbai, I would stay a further week and then leave finally for the UK. The whole project would take approximately 4 weeks and should be finished by the 25th of September, 2005. I have chosen this particular month, because it is the time when the monsoon season finishes in these countries. The monsoon has a significant impact on the country’s economy, since a large number of people in both countries are employed in agriculture. The impact of the monsoon on the harvest would be evident in late August/early September and would consequently effect the issues that would be raised in the public domain. I have decided to sandwich my Shanghai trip between my stay in Mumbai, because once I have experienced Shanghai and returned to Mumbai, I would be in a much better position to compare the two, rather than if I had stayed in the cities one after the other.
The Telegraph, 08.01.2005
It is sad that all Rudrangshu Mukherjee can think of remembering 2004 by was Sonia Gandhi’s giving up the prime-ministership. As a developing country, we should remember this year for our successes and failures in switching to a market economy, and not for any political stunt. Whereas I do not believe in the xenophobic cries of Sonia Gandhi being a foreigner and thus unfit to govern India, I seriously believe that Manmohan Singh was a far better alternative. In all seriousness, the finest prime ministers of India have not come from the Nehru-Gandhi family — think of P.V. Narasimha Rao, Atal Bihari Vajpayee or Manmohan Singh.
In the new year, Indians should be more concerned with the challenges that lie ahead, and how to best overcome them. Political gamesmanship can wait.
The Telegraph, 03.01.2005
It was bad enough to watch the constant bickering in the Lok Sabha. Now we have to contend with the claims of Somnath Chatterjee’s “tanashahi” (Somnath, tanashah!”, Dec 28). Our parliamentarians have absolutely no idea about international standards of conduct in representative legislatures. In the House of Commons or the Congress in the United States of America, rarely is the speaker so vehemently attacked. Moreover, this kind of sloganeering and mud-slinging is reprehensible in the representative chambers of the world’s largest democracy. The legislators are people who have been elected to look after the interests of their constituencies. Yet they waste time and and public money to fan their egos. Hardly does a day go by without the opposition walking out or rushing to the well of the house.
Besides, our whole system of holding the elected accountable is faulty. In Britain, there is a session every Wednesday where the premier faces questions from the opposition. We see Tony Blair and his ministers frequently appearing on television chat shows, answering questions from the common people. Where is the equivalent in India? Sure, Manmohan Singh did have an open session at the start of his premiership, but that is not enough. We do not want our politicians to merely strut in the corridors of power, we want them to carry out the task we set them.
The Telegraph, 02.01.2005
The legacy of P.V. Narasimha Rao would not be the demolition of the Babri Masjid or the charges of corruption. He will be remembered as the Deng Xiaoping of India — the prime minister under whom India opened up to the world and discarded some of its age old socialist baggage. The appointment of Manmohan Singh as the finance minister and more important, sticking by him during the balance of payment crisis, speak volumes of his political insight.
The Telegraph, 28.12.2004
One cannot easily find the relevance of “Lear’s anguished words” to Bhaskar Ghose’s critique of the “free world” (“None does offend”, Dec 22). All his examples, ranging from Korea and Vietnam to present day Iraq, are the result of some states behaving “badly”. But when does the moral code of a state fail? The obvious answer is when the state gets too big for its boots. The moral degeneration is already apparent in India, but Ghose says nothing of that.
As for the “free world”, one should remember that it is “free” because of individual empowerment in these societies. States here are mere tools to protect individuals’ liberty and property. It is when states try to step out of this limited role that events like Iraq occur. Ghose hints that this “moral code” should be restored. But nothing in history happens because of conscious planning. It is spontaneous actions of individuals that bring about changes — be it a Gandhi, a Margaret Thatcher or a Ronald Reagan.
It is tiresome to hear discussions on morality that lead to no conclusion. One point has to be made however. In India, the state has to be prevented from controlling citizens’ lives on the pretext of safeguarding public morality.
The Telegraph, 23.12.2004
Bhaskar Ghose does not shy away from calling a spade a spade. The Bengal that was once India’s pride, has now become its shame. Buddhadeb Bhattacharjee has a tough challenge ahead of him. Not only does he have to convince investors that West Bengal is an attractive investment destination, but he also has to fight his own battle with his more hardline party cadre, who still swear by Marx and Lenin. If it is to be counted as an elite among Indian states, West Bengal has to upgrade its infrastructure, loosen regulations and, most important, tame the militant trade unions. As Ghose points out, a whole generation of Bengalis have been taught to hate entrepreneurs. They need to realize that it is the businessman who creates wealth, and in Deng Xiaoping’s words, “To be rich is glorious”.
The Telegraph, 15.12.2004
Ashok Mitra’s “A gleam in the eye” (Dec 10) misleads the reader about the causes of India’s rather uneven economic growth. He castigates widely respected international agencies like the World Bank, the Asian Development Bank and the International Monetary Fund without remembering that if they hadn’t bailed out India a decade back, its balance of payments, and thereby its economy, would have been in a mess. Second, India survived the 2003–04 drought to post an 8.1 per cent growth rate. As a similar agricultural boom is impossible to repeat without another drought, it is natural that the growth rates came down to 6.5–7 per cent at the start of this fiscal year. When unforeseen events like the hike in international crude prices and the uneven monsoon hit the economy, the growth rates had to be naturally revised again. Thus there is no conspiracy behind India’s growth figures. The same kind of revision happens in the left’s holy land — China.
The growth rate of 10 per cent should not shock Mitra. The east Asian tigers sustained such growth rates for decades. India can do the same, and despite the left, not because of it. Mitra may be right in saying that the manufacturing sector employs the most people. But has he questioned why other sectors don’t? Poor infrastructure, age-old labour regulations, patronage to small and medium enterprises, licence raj and high taxes strangle the other sectors. Mitra’s mockery of India’s IT sector is a slap on the face of the hardworking men and women in this industry. Indian IT is here to stay and the world is taking note of it. Does Mitra realize that his cries of foreigners whisking money abroad have long been discredited? What about the fat profits Indian companies bring home? Also, if a foreign company makes profits and expands in India, it not only employs more people but also fuels the economy. On the other hand, the increased disposable income of the new workers means more demand in the economy, which means increased output, and growth.
The Telegraph, 13.12.2004
What was the need to repeal Pota? Democratic governments need to muster every resource to tackle terrorism and ensure the safety of citizens. The repeal of Pota should be seen in the light of the introduction of anti-terrorism laws in the United States of America and United Kingdom. Shouldn’t the Manmohan Singh regime have looked into the misuse of Pota and rectified the mistakes, instead of repealing the act? It is also frustrating to see the left’s opposition to the amendments to the Unlawful Activities (Prevention) Act. This is a watered down version of Pota, but the left is still not satisfied. If it is argued that these anti-terrorism acts encroach upon the liberty of citizens, then the dastardly acts of violence by terrorists also violate the individual’s right to live. There are always more victims than terrorists, so should we sacrifice the lives of innocent Indians to protect the individual liberty of terrorists?
The Telegraph, 07.12.2004
Ashok Mitra wants to turn the clock and take India back to the licence raj. His concerns about Enron are justified. However, the debacle at Dabhol was not caused by economic reforms, but by a mismanagement of the bidding system. Mitra’s concerns about free trade are laughable. Just two decades ago, the cars on the street were prehistoric, colour TV was rare, and computers and mobile phones were beyond the reach of the middle class. Economic liberalization has brought in competition, which has brought down prices and kicked laggard Indian companies into shape. Mitra talks about the problems of Indian farmers after the opening up of the agricultural sector, but he forgets that the real blame should lie with the socialist mindset which has resulted in the fragmentation of farms and made difficult farmers’ access to credit.
Also why should we pay high taxes? Has the government given us good infrastructure, a conducive business environment, good public services or healthy law and order conditions? Yes, foreigners know more than us in many sectors. It is the refusal to accept this that has held us back. The consumer has no nationality, especially in a poor country like India. We want the best and the cheapest, desi or not.
The Telegraph, 01.12.2004
Pratap Bhanu Mehta’s article, “Debates and Divisions” (Nov 25), misconstrues the impact of financial incentives on Kashmir. The Kashmiris are unenthusiastic about these development projects not because they want to control them but because there are not enough new jobs being generated in the region. Contrast this with the Chinese government’s promotion of investment in Tibet and Xingjiang, which has led to a dilution of the independence movements there. In the process, China has alienated the local populace through brutal suppression. India should not repeat this mistake. It should encourage local entrepreneurs as well as businesses from other parts of India and abroad. If a reduction in coercive methods accompanies this inflow of funds, the Kashmiris will have little to protest about. Setting up a few special economic zones and reviving the traditional Kashmiri crafts will help integrate the state with the rest of India. We must create a visible material gap between Indian Kashmir and PoK to pressurize Pakistan and present a credible case to the rest of the world.
The Telegraph, 29.11.2004
In “The verdict and after” (Nov 26), Ashok Mitra talks about “American imperialism” and the “war of liberation against American might”— ideas that have become irrelevant today. Our denouncing the US through editorials and demonstrations has very little impact on the hawkish policies of the Pentagon. So it would be better if we learnt to live with this country and use it for our benefit. In his article, Mitra sheds copious tears for Iraqis, Vietnamese and Afghans, conveniently forgetting the plight of some people near home — Kashmiris, people in the North-east or the farmers in Andhra Pradesh. Moreover, Mitra’s disparaging views about the US brings him dangerously close to lauding the terrorist attacks of September 11.
Indians are not the Chinese, their protests mean nothing to the US. One more thing. Mitra seems to favour the protectionist Kerry over Bush, who is in favour of outsourcing jobs to India. So, does he prefer unemployment in India to the fulfilment of the interests of the American working class?
The Telegraph, 23.11.2004
The odious regulations that govern the starting of an enterprise in India are often a discouragement for entrepreneurs and investors. The prime minister can talk about the Indian economy being able to “absorb” $150 billion in foreign investment, but the question foreign investors will ask themselves is why invest in India when China, a safer destination, is close at hand? India needs to give them something special. It needs to identify its unique selling proposition to woo investors, both direct and institutional. Added to the hangover from the licence raj, are the appalling infrastructure and age-old labour regulations. Shockingly, the World Bank report even puts Pakistan and Bangladesh ahead of India in the category of those countries which are investor-friendly. We should turn a blind eye and a deaf ear to some of the extremists, both from the left and the right, and let the prime minister and the finance minister do their job.
The Telegraph, 16.11.2004
Abhirup Sarkar has correctly identified the “colossal” size of the Central government sector in West Bengal as a major contributor to the purchasing power of the people of the state, in the backdrop of declining industrial production and insufficient agricultural output (“Import to consume”, Nov 4).
However, Sarkar can be offered more clues in his quest to solve the puzzle of how Bengal pays for its substantial imports. First of all, the state has seen a lowering of job opportunities — which are also comparatively less-remunerative — over the last three decades. This has resulted in an exodus of professionals to other states and foreign countries as well. This is particularly true of the information technology sector. A good part of the earnings of such professionals is usually ploughed back to the state in the form of remittances to parents and relations.
Another major contributor is, perhaps, the parallel economy being run on the black money generated by corruption — instances of such unethical income in government and quasi-government establishments, public sector undertakings and even in the private sector are easy to come by. Smuggling is perhaps yet another source of the surge in the purchasing power of a section of people.
The Telegraph, 31.10.2004
Our postal system needs a dose of modernization which can only come through competition and its transformation into a business enterprise, if not a public limited company. The same should be done with Indian Railways.
But Europe tells a different story. Look at the vastly improved railways of France and Germany, both of which are nationalized as compared to the privatized British rail system which is in a shambles. In both France and Germany, the railways operate as a corporate entity unlike in India. A vast railway network such as India’s cannot operate efficiently with bickering private firms, but it should certainly undergo a dose of corporatization. This will bring greater efficiency and transparency.
The Telegraph, 26.10.2004
Sunanda K. Datta-Ray’s article, “Knave or fool?” (Oct 23), shows that there is a desperate need for a different paradigm through which to see the war on terror and the so-called American imperialism. Haven’t we all got tired of the repeated accusations of the falsification and fabrication of evidence that led to the war? Have we not heard enough about the need for the British and American electorates to punish the imperialists, or about the apparent loss of national sovereignty? It has become fashionable among the urban middle classes, old or young, to hate Bush. The demonstrations in London were about people trying to jump on to the bandwagon of popular culture, not about some deep feelings of remorse. In fact, the West hardly cares about “the rest”.
But how does this war affect us Indians? For all I can see, it pinpoints Britain and the United States of America as the two principal targets for Islamic extremists all over the world. Which would mean that all other countries, including India, can rest in peace and prepare themselves for fending future attacks. We can also take this opportunity to play off countries that have better relations with us — such as Iran — against the US-UK combine to divert attention from us. Dwindling Western stock markets post-9/11 have actually helped the Bombay Stock Exchange.
This may sound unbelievably selfish to many, but when are we going to learn to focus our attention on areas which actually matter to India? We seem to care too much for the rest of the world and not nearly enough for ourselves — an attitude that will not help India become a global player.
To talk of India’s immediate concerns, with George W. Bush we can be assured of a tough handling of Pakistan and China. This is necessary for India to maintain the balance of power in Asia. Bush will not stop outsourcing with the protectionist fervour of Kerry. The war on terror was, is and will be, good for India. Americans voting for Bush will indirectly do us Indians a favour.
The Telegraph, 21.10.2004
The report, “Small-unit clusters in the offing” (Oct 11), is a little too optimistic. The government’s economic policy on this sector has been misdirected over the past half-a-century. Small-scale units are not embodiments of efficiency because of their size constraint. They often over-employ, are poor in technology and overtly labour-intensive and thus cannot compete in the international market. As a result, the government has to either subsidize them, or act as their chief buyer, or put up tariff walls around the market to prevent entry of foreign firms.
The consequences of these measures are a poor fiscal situation, unavailability of cheap products to customers and no incentive to grow and increase efficiency. Our textile sector has been killed with such kindness. Indian firms are unable to compete with Chinese, Pakistani and even Bangladeshi ones, constantly losing markets in the United States of America and the European Union, and are tipped to lose more after quotas are dumped in 2005. The story is the same in the retail sector, where protective tariffs have prevented the rise of an Indian Tesco or Walmart. Dumping the pro-small-scale industries attitude may cause short-term pain to the laid-off workforce, but in the longer term it would result in Indian multinationals emerging, employing a larger number of people, and competing successfully with foreign firms.
The Telegraph, 28.09.2004
It is exasperating to see the left, especially Jyoti Basu, criticizing Montek Singh Ahluwalia so vehemently (“Left five line up against Montek”, Sept 22). Its objections only unmask the party’s hypocrisy. If accepting advice on our economic policy from foreigners is so reprehensible, why do the leftists refer back to the gospel of Marx or the sermons dished out by Kremlin or Beijing, some of which even threaten our national interests? While it is true that the IMF-prescribed policies have resulted in crises in many Latin American and east Asian economies, it has to be remembered that these countries are not comparable to India both in terms of development as well as size. Besides, mentioning Joseph Stiglitz’s book, Globalization and Its Discontents, to substantiate his claims does Basu’s image no good. Has he not heard of Jagdish Bhagwati’s In Defense of Globalization?
The Statesman, 14.09.2004
The edit page special article by Bharat Jhunjhunwala (2–3 September) provides useful thoughts on the problems public enterprise have faced in India with an international perspective. However, the alternative path chalked out by the author, summarised in one sentence “... the government must itself start new industries on a pilot basis and then hand them over to private hands when successful” renders much of his argument futile. It’s an irony that the author refers to Adam Smith in his piece and admits laissez faire to be the contemporary mantra of economics. It seems apt to point out that Smith, and later Mill, advocated reducing government role in the economy to create the base over which the edifice of economic growth is built. In practical terms this translates into government initiative in maintaining law and order, providing infrastructural backing and erecting decent public services for ensuring a skilled workforce. This is purely because the private sector has consistently shown to be more efficient and innovative. Also, the author is incorrect in assuming that just because a government venture is successful, the market for potential buyers would be good.
Additionally, it would involve the government making huge capital investments, much of which can be soaked up in populist economics and tilts dangerously towards disrupting the fiscal imbalance further and resulting in us spiraling out of the parameters of Fiscal Responsibilities Act 2003. The private sector can thus, if given the correct incentives, can generate the necessary investment and employment. I think it’s time we realised that the 'public' in public sector is a mirage. In reality, it’s government sector.
The most effective way in which the people can control the means of employment and production in the country is to give individual entrepreneurs more of a chance. Moreover, people can actually own shares in private companies and become part of the entity more directly and get involved in the decision-making process. Hence, instead of expansion, contraction of the government arm in the economy over time is needed while the state can concentrate on its duty of a night watchman. In the immortal words of John Locke, “least government is the best government”.
The Telegraph, 09.08.2004
There has been much speculation in the press regarding India’s reaction to the hostage debacle in Iraq (“A penchant for blunders”, July 29). But surprisingly enough, not much has been said about the factual discrepancies in the kidnappers’ demands. They have asked India to withdraw its troops, yet we have no military presence in Iraq. They have also asked India to condemn the American occupation of Iraq, which we have already done (albeit not in the strong terms that the kidnappers might want).
Our ever-so-patriotic leftists are already demanding everything to be done to get our people back. True, we must not desert our citizens, but hasn’t the government’s handling of the whole issue again underlined India’s image as a soft target for extremists? I feel that India ought to have threatened to send its armed forces to Iraq if the kidnappers do not release the three Indian truck-drivers.
What has the release of Iraqi prisoners of war in American prisons got to do with India? I think India is giving in to a lot of arm-twisting and bullying, even though this may not ensure the safety of our citizens. The prospect of having to deal with the Indian army would have scared the terrorists of the Holders of the Black Banner far more than our ministry of external affairs ever can.
Originally reviewed for India Nest
Three years since Chang portrayed a doomsday for the People’s Republic of China, perhaps it is the right time to reflect upon the predictions made in this lucidly written book, naturally banned in China.
Himself the son of a Chinese who left the country in search for a better future, and found it in the land of opportunity, home of the free world, the United States, it is natural that Chang does not look favorably on the dictatorship that rules China with an iron fist. He blames Mao for his disastrous Great Leap Forward and Cultural Revolution that ripped the heart out of rural China and killed millions of innocent, he blames Deng Xiaoping for Tiananmen Square and not carrying forward with the economic and political reforms and he looks at Jiang Zemin with uttermost disdain as a worthless and orthodox leader, more interested in securing his own political position rather than the welfare of the billion people he subjugates. Yet, quite ironically Chang does seem to have a certain respect for various qualities in Mao and Deng, the former being credited with being a leader with a vision and the latter as one with a dose of pragmatism and both endowed with tremendous charisma and personality and widely respected. His wrath befalls Zemin and his to be successors, Hu Jintao, Wen Jiabao and the like, who he argues to be callous and not worthy of leading China.
Not surprisingly, Chang’s argument is rooted in economics, or in China’s case, politics of economics. As an American, Chang sees the ideal model to be one with least government interference and ultimate say in the ‘invisible hands’ of the market, coupled with free trade and movement of capital and finally, a civil and equitable society with solid democratic traditions and institutions. Chang is prepared to forgive Mao for organizing China initially into communes because China at that time was a nascent nation, facing crisis at all fronts with little entrepreneurial zeal. But he deals a mortal blow to leaders after Mao, even Deng Xiaoping for not furthering the reforms fast enough, resulting in continuous slowing of economic development. Chang dismisses the shiny skyscrapers of Shanghai as a symbol of over capacity, gigantic nationalized companies as ‘white elephants’ living off subsidies and bad loans from the banks and highlights the crushing inequality and poverty that rages and has actually worsened due to the fluctuation in the speed of reforms. His wicked sense of humor and sarcasm rips apart Communist policies. He mentions an incidence when a private company was strangled on the grounds that it was ‘too innovative’.
Perhaps, he was overtly fatalist. China has managed to stabilize its collapsing banking system since the time the book was written and credit to state owned enterprises (SOEs) have been squeezed to encourage restructuring and efficiency. It is also managing to ‘cool down’ its economy quite efficiently, thus not letting the over capacity problem become precarious. China’s ‘Go West’ campaign also seems an acknowledgement from the Politburo about the inequality problem.
However, here again Chang’s far sightedness is astounding. As he predicts, the booming sectors of the Chinese economy are indeed because of multinationals or government monopolies. With China’s accession to the WTO, the latter will have to be opened up to competition, which Chang argues is impossible for them to sustain and will result in their collapse. Also, most of the fuel for China’s economic engine comes from the government coffers. There will be a time when China runs out of money to pump in the system. Chang points at that day when China’s economic meltdown begins.
We must make two minor points here on which Chang can be taken to task. Firstly, his constant emphasis on the erstwhile splendor of the Middle Kingdom, unmatched by any in the world is frankly not acceptable. Even leaving aside the flourishing civilizations of Egypt, Sumer and later, Greece and Rome, he forgets to look across China’s southern border over the Himalayas, where India sustained itself as a much more diverse and cosmopolitan civilization for an equal, if not more, time. Secondly, he indulges in far too many speculations regarding private entrepreneurs in China. It is possibly premature to predict the rise of a Chinese entrepreneurial class, because the economic model in China is based on SOEs and MNCs. Even with a much longer socialist baggage, or perhaps because of it, India has developed a world class private sector which can compete successfully in a post WTO world in 2005 and beyond and thus commands the reins of India’s economic development in its own hands, unlike China.
Lest we take credit away from Chang, it must be reinstated that this witticism clad book about the future and eminent collapse of China as we know it is a must read to display the rot in its institutions and the forces at work to end the Communist parties’ monopoly on power. Chang argues persuasively that the Chinese people are tired of their overtly regulated lives, dictated by a microscopic minority and enforced by crude coercion.
A day will come when the Chinese will eventually have had enough of the sermons of Beijing. That day the tanks of Tiananmen will not be enough to stop them, nor will the bags of cash from the banks. It is that day that one sixth of humanity will decide to take their destiny into their own hands and their erstwhile dictators will tremble with fear. It is that day Chang has foreseen.
The Communists had a chance to reverse this by allowing for more freedom. They couldn’t let go. Now it is too late. They have run out of time, they cannot turn away from the imminent future. The collapse is near.
Originally reviewed for India Nest
We certainly do not need another descriptive review of this masterpiece which developed out of an initial article in the Foreign Affairs journal that created such a stir among academic circles and that dealt such a hammer blow to Edward Said’s notion of a multi-polar, multi-cultural harmonious world. Comparable in its stature to On Political Economy by David Ricardo and Parson Malthus in the 19th century that tore apart the wonderful world of Adam Smith to depict the terrible and inevitable doom that lay ahead of mankind, this book will make you sit up. To avoid the descriptive pitfall, let me summaries the entire argument of the book in one line- In the future, the world will be divided on the lines of civilization, with each such regime revolving around one core state (for instance, China for Sinic civilizations, India for Hindus), with conflict imminent. What I intend to do in this review is criticize thoroughly three strands of Huntington’s arguments in which he puts forward generalizations that are meant to be ‘one size fits all’, but don’t really fulfill that category when applied to India.
Firstly, he argues that if a civilization adopts a Kamelist approach, ultimately it will result in a backlash from the core of that civilization, resulting in it returning to its roots (his most detailed example is that of Turkey). He goes on to say that people who tend to proclaim their superiority to the west- ideologically or culturally, unwittingly resort to following paths shown by the west itself (obvious example is USSR and its ideology), again resulting in a backlash from the elites to return to its roots. However, we can take this further by arguing that civilizations that resort to a more moderate form of copying the west (while maintaining the air of superiority about their indigenous norms) ultimately end up diluting their culture and ending up identity less. The most striking example is that of Mainland China, where western institutions, values, norms are speedily attaining a level of automatic assumed undisputed superiority, unquestionable and above all indigenous counterparts. Lastly, countries which aim to co-exist peacefully with others and do not proclaim the superiority of indigenous cultures end up sticking closest to their roots, at the same time developing economically and socially (India).
Secondly, I shed doubts on his arguments on 'language of wider communication' (LWC). I feel that if English is used as a third language (common as second language to both the involved parties), then his argument about LWC stands. Thus, it is also valid to point out the south Indians using English and not Hindi as their preferred means of communication. However, when an Indian speaks English to a British or an American, then his argument loses ground because rare is the case when the latter speaks Hindi. Thus, aren't people of other civilizations (non-English) losing the integrity of their culture when they are speaking English to an English speaking person? Thus, the case against his argument that English is not becoming a world language stands firmly
Lastly, Huntington makes one gross generalization. He constantly labels India as the core of the 'Hindu' civilization and mention that there is a distinct 'Islamic' civilization in India. This is inaccurate given that the civilization of the sub-continent is generally tremendously heterogeneous and can only be termed 'Indian' and not branded according to religion. The Hindus and Muslims in India can be better labeled according to language, caste, class or region, but not religion. Even in Pakistan, which was a nation based on the false notion of Islamic brotherhood, the Punjabis, Sindhis, Afghanis, Pathans, Mohajirs are very much divided on the above categories and not bound together at all by the common religion. The only entity that binds the whole sub-continent is the inherent 'Indianness' of the culture that has developed over 5,000 years and whose primary characteristic is 'unity amidst diversity'. Any religious labeling of this land is bigotry. Thus, in my view India will not emerge just as a core for the Hindu world, but for all those who have similar civilization traits, namely South East Asia, certain parts of Africa besides South Asia.
Overall, however, Huntington can be forgiven. Unlike many of his western counterparts, he does admit his lack of proficiency in the issues revolving round India, some of which as illustrated above, certainly appear markedly different from the universal generalizations. To me, the best part of his book remains where he mentions the possibility that China and the US might stumble into a bitter and mutually destructive conflict in the future and thereafter the world being left wide open for India to shape it as it pleases. All I have to say to that is ‘Amen’.
Originally reviewed for India Nest
It has become the norm for us to expect vehement criticisms of economic globalization from the left wing circles of the world, especially in the developing countries. That has been the most common breeding grounds for some of the harshest critics of this phenomenon viz. the Marxists, the environmentalists, the nationalists and even domestic entrepreneurs striving for subsidies and protection. This book comes from the heart of the developed world, the USA and from an individual who has not only had a brilliant academic career, but has also served in the highest strata of the bureaucracy of the developed world, and the international organization shaped by the ideas most preached by the same. Joseph Stiglitz has served in the Council of Economic Advisors to President Clinton, and has also served as the Chief Economist at the World Bank. Therefore, he has witnessed first hand events that shape much of the activities of the global economy and his account of the same is thus so very influential.
This book is also different because of its rooted belief in democracy, social equity, justice and most importantly, a freely functioning market economy. Often critiques have offered a wholesale alternative model viz. either the one with collective ownership of the means of production, or the one with protection and subsidies. Stiglitz does not offer a different model: he simply believes that the neo liberal policies of the Washington Consensus that dominate the international organizations such as the World Bank and more importantly, the IMF, are detrimental to achieving a functioning market economy. Ideologically speaking, he sides with Keynes rather than Hayek, emphasizing demand more than supply.
Stiglitz’s main achievement is to highlight in detail the inequities of the global order. He argues persuasively that the international organizations have promised much, but have failed miserably to keep up to most of them. He identifies the reason for the same as vested interests that dominate the international agencies. For example, the US being the largest contributor and the only member with an effective veto at the IMF often results in overt influence of the Treasury on the Fund, which pursues the interests of the finance lobbies of Wall Street rather than poor farmers in Botswana or Ethiopia, or that of the middle classes of the countries of the erstwhile USSR in transition from a command to a market economy. He blames the disparity in regulations relating to openness to foreign trade and subsidies as another example where international agencies have failed to implement global laws to developed countries, when all too often they forcibly apply these rules to the developing countries.
The IMF, according to Stiglitz, has not only been plagued with vested interests of a narrow elite in the western world, but it has also blinded itself with the spectacles of ideology. The IMF’s belief in the infallibility of markets is clearly misplaced. Markets when left on their own manage to distort their own functioning. Stiglitz points to the over capacity generated by the market in the construction industry of Thailand as one of the numerous examples of markets behaving badly. He associates such wastage of resources to the causes of the East Asian crisis in the late 90s, precipitated further by the callous policies of the IMF. He believes that market institutions must be in place before liberalization can be successfully pursued. He cites the disastrous case of Russia to show how lack of mechanisms, regulations and institutions led the market to severely distort itself, resulting in capital flight from the country, massive corruption during privatization and widespread unemployment and impoverishment.
However, Stiglitz’s most severe attack on the IMF comes because of the interventions the Fund has made in various economies, in times of crisis or not, that have managed to worsen the situation many times over. He cites the severe contractionary monetary policies imposed on the already severely indebted economies of East Asia, resulting in a bankruptcy spree and the economy sinking into further depression and unemployment and poverty soaring. He also condemns the various bailout plans arranged by the IMF, which have often served the interest of the rich in the country, at the expense of the middle classes and the poor. For instance, it was IMF which forced prices to be ‘market set’ in Russia as soon as it opened up, resulting in hyper inflation wiping off people’s savings. Then, realizing its folly, it induced a huge bailout package to support the currency which only managed to help the oligarchs from exporting their money to unknown Swiss accounts while common people found it harder to borrow, firms found it harder to export and imports flooded the domestic market at the expense of Russian products. Thus, Stiglitz manages to unclothe the IMF’s sermons regarding economic crisis and points out the mishaps in the Fund’s policies.
A staunch believer in gradual reform, Stiglitz demolishes the edifice of invincibility that ‘market fundamentalism’ has built for itself. He argues that markets are inherently embedded in the society, essentially echoing what Karl Polanyi wrote half a century ago, and if markets are not overseen by the society, they can be easily manipulated. The Nobel laureate economist cries out for global action, especially on behalf of the developed world, to restore faith in the international agencies by making them more accessible, fair and free from their ideological shackles. He calls for more flexibility and transparency in the global bureaucracies that determine the fate of billions behind closed doors.
All in all, a very entertaining read and a sizzling critique, not of the world market economy in the globalised era, but of the distorting elements in the same.
Originally reviewed for India Nest
The celebrated economist that wrote this book needs hardly an introduction. Perhaps the name awarded to him by left wing sympathizers through out the world ought to summarize it all. He’s been called ‘the world’s foremost free trader’ for many years now. Undoubtedly one of the strongest candidates to be knocking on the Nobel Prize’s door for decades now, Bhagwati summarizes his perspective on globalization, a much talked about phenomenon especially in recent decades. Bhagwati deals a mortal blow to the arguments of celebrated economists like Amartya Sen and Joseph Stiglitz, rendering much of them paralyzed. Perhaps it’s the title of Stiglitz’s book (Globalisation and its Discontents) that prompted Bhagwati to title his book like he has. Bhagwati writes persuasively and has facts, common sense and historical evidence to back his points. Coupled with that is his uncanny witticism clad sarcasm that reduces his opposing arguments to the stature of rodents.
The core of Bhagwati’s argument revolves around the debate over the economic implication of globalization, especially in the developing world. Too much has been written about how bad is economic integration, how it has led to ruination in poor countries and how organizations like the WTO and IMF are really satanic in fervor. For Bhagwati, the question whether globalization is good or bad is fruitless. He devotes his time to arguing that not only globalization is good, but has a potential to do far more. This distinguished Columbia economist shows through empirical analysis and evidence that poor public policy outlook in regions such as East Asia and Latin America are the main causes of their financial meltdown and not free trade itself. Bhagwati consistently shows the fruits of open trade have brought to countries across the world, poor or rich, and how it could be pursued further. In essence, globalization does not need a ‘human face’- it already has one- more so than the opposers of free trade. Bhagwati identifies the evils often associated with globalization to poor governance, hegemonic tendencies of developed countries, hypocritical double standards in international organizations and pure ignorance. Thus he relieves free trade from these erstwhile shackles, arguing that it is the single most important phenomenon to material well being of the nations of the world. In all, the book moves forward at blistering pace, demolishing every pseudo edifice of mercantilism on the way, providing sizzling entertainment to the reader.
However, reservations could be made about two arguments in the book. Firstly, his argument, the classical liberal one put forward by Adam Smith and David Ricardo, of ‘comparative advantage’ is not convincing enough. It is true that most countries will indeed find their niche in the world market to develop their unique selling points, but at least in two circumstances this could not be the case- 1) the country concerned having no resources to base exports on and 2) a country’s companies being wiped out at their infant stage by giant MNCs and thus it being dependent on MNCs for employment and imports for consumption which potentially has national security implications for that country. To resolve this, surely we need to return to the Smith and List’s notion of ‘infant industry protection’, whereby a potentially competitive industry needs some breathing space to realize its full competitiveness before being exposed to the cutthroat competition in the international market. Perhaps Bhagwati means so, but his argument is not always clear on this issue.
Secondly, his arguments on multiculturalism being facilitated through globalization are rather idealistic. Indeed, certain aspects of Oriental cultures have made a great impact on the Occident, but surely the control of the channels through which these interactions can occur by the ‘west’ undermines this whole process. As a result, in countries in India, the youth have increasingly failed to distinguish anything native and western merely as ‘different’ but have invariably placed them in a ladder of superiority-inferiority, with the Indian counterpart always occupying the latter rung. This ultimately deals a blow to the pride and confidence of the nation concerned.
These reservations aside, a work that is no doubt nothing short of a masterpiece from a scholar from who we have now gotten used to receiving classics.