As everybody knows, there is another global economic recession along the way. Some (including me) would argue that we never got out of the one that started in 2008, never mind what the economists and statisticians say. The UK’s GDP growth last quarter was an anaemic 0.2% and the rest of the year looks worse. I would argue that the developed world (as it is defined currently) is in a state of terminal economic decline and will never recover.
Why do I say this? Looking at Western Europe (the United Kingdom and France in particular), you will notice that there are no great globally competitive manufacturing companies left in these countries. Britain’s largest manufacturing employer is the India-based Tata Group. Britain’s economy is now kept afloat by the healthcare industry which provides jobs, and financial services, which provides profits and tax revenues.
As a result of the recent seismic events in the banking and financial services industry, a host of new banking regulations have been proposed in Britain that would curtail the powers of banks to raise capital and ultimately increase the cost of capital for both banks and borrowers. As a result of these proposed regulations, many of the banking giants based in London are threatening to relocate to other parts of the world. It is unlikely that all banking operations will be moved elsewhere, but investment banking operations would be a probable candidate. If this happens, it would greatly diminish Britain’s economic power in the developed world. And the key question here is – what would replace banking as a generator of jobs, profits, taxes and economic growth in Britain?? There is no replacement for banking at the moment in Britain. Manufacturing is not an option (why would an automotive company want to open a plant in Britain when it can produce cars at a fraction of the cost in South Asia?) and service industries moved out of Britain many years ago.
Southern Europe is in even worse shape. Britain has financial services as an engine for growth. Countries such as Greece, Italy and Portugal don’t. The only way these countries could compete earlier was because they had their own currencies and costs were lower in these countries as compared to Northern Europe. With the advent of a single currency, the euro, the disaster waiting to happen has happened. In one stroke, the competitiveness of these economies was destroyed. They were no longer less expensive economies, the cost of living increased dramatically (with the advent of the euro) and these economies were no longer able to export their way out of recession. The only hope for these countries is if the euro is disbanded, and these countries revert to their original currencies and once again become less expensive economies that can then export their way out of a recession. This will mean incredible short-term pain as these countries default on their debts, but there is no other option. Expecting German taxpayers to pay Greece’s bills indefinitely is not feasible, and there are signs that Germany itself is slipping back into recession.
The United States and Germany will hold out for another decade or so. Both these countries still have reasonably strong manufacturing industries that provide employment. However, as the years go by, more and more large manufacturing companies will move – to China and other places in South Asia that can provide a labour pool with the same skills for a fraction of the costs of production in the US or Germany. And the same key question applies here as well – what will replace these industries once they leave??
It is nothing short of a huge global transference of wealth from one part of the world to the other. It will lead to chaos and the rise of populist, nationalist parties in Europe that will blame foreigners and immigration for all their ills.
India would have been very well-placed to take advantage of this transference of wealth, but will not be able to do so due to frailties and divisions within its political system. A handful of politicians and bureaucrats will prevent India from becoming an economic superpower. When it comes to those who govern India, I agree completely with what Winston Churchill said at the time of Indian independence: “Power will go to the hands of rascals, rogues, freebooters; all Indian leaders will be of low caliber & men of straw. They will fight amongst themselves for power and India will be lost in political squabbles”. This prophecy has come to pass, and unless something changes dramatically, India will continue to be mired in indecision and administrative paralysis that will prevent real change.
So who will benefit the most from this transference of wealth? Beneficiaries will be countries that have an educated labour pool with a strong work ethic and governments that want their citizens to benefit from this transference of wealth. The primary beneficiary will be China. China is already the US’s largest trading partner and owns trillions of dollars of US debt. They are buying up European debt, and the Chinese are the largest investors in places as far-flung as Australia and Africa. The dragon is not rising. It has already risen. The king is dead, all hail the new king!
Sunday, September 18, 2011
Sunday, August 21, 2011
Economics: Don't Blame The Bankers Alone
I must start this blog by saying that I am conservative in my economic views. So I support liberalization, globalization, an open economy and capitalism. Capitalism may not be perfect, but it is infinitely preferable to socialism. I should know. Like most Indians more than forty years old, I vividly remember the 1970s and 1980s, when there were no jobs and everybody was struggling to make ends meet all the time (except of course for corrupt government bureaucrats, crony capitalists and those with ancestral wealth). Thanks to regressive socialist economic policies, India remained poor and backward for decades after independence (and thanks to the liberalization process being only half complete, large sections of India's population still remain poor and backward).
But India's half complete transition to a modern economy is the subject of another blog. This particular blog is about why it is unfair to blame the bankers alone for the Great Recession, which sees to have reared its head just when you thought it was safe to go out shopping again. I now live in Britain, where it is fashionable to view all bankers (especially investment bankers) as the spawn of Satan. I know several investment bankers quite well, and in fact, worked as one many years ago. Nobody can accuse these former masters of the universe of being softies whose primary concern is the welfare of those less well-off than themselves. However, to blame banks and bankers alone for the current mess is wrong. Allow me to elaborate.
The last time I checked, London contributes a disproportionately large amount to the British economy (30% of Britain's GDP is generated in London). A majority of this wealth is generated by banking, since London (along with New York) is the financial capital of the world. Even in these dismal economic times, it is the banks and bankers (and the tax revenues they generate) that keeps Britain's economy afloat. It is the dramatic expansion of banking and investment banking in particular in the Noughties (circa the years 2000 to 2008) that funded the huge growth of jobs in Britain's public sector in the last decade. The public sector workers in the UK who blame the banks for everything and keep threatening to go on strike would do well to remember this. Had it not been for the buoyant tax revenues generated by London and its investment bankers in the Noughties, these public sector workers would not have found jobs in the first place. Yes, some of these bankers were reckless and did take unacceptable risks with shareholder money, but to blame them alone is wrong.
It is also important to note that some of these public sector workers (such as council heads and BBC television/media heads) make large sums of money (which I define as more than £ 150,000 a year). One of the principal tenets of finance (and life) is - higher the reward, higher is the risk associated with that reward. Therefore, if one wants to take a job that comes with large sums of money, one must also accept the fact that such a job will come with associated risks - such as the risk of getting laid off or being forced to take a pay cut. One cannot expect a guaranteed, very highly paid job for life - in either the public or private sectors. Many of these highly paid public sector worthies are being asked to take a pay cut and some of them have been saying that they could find better salaries in the private sector. Really?? When was the last time they worked in the competitive private sector, and if such jobs are available, why don't they take these jobs up?
I may be an economic conservative, but I am not anti-public sector. The public sector has an important role to play in an economy. I disagree with the Tory plans to cut back on essential services such as police, fire brigade ansd community youth programs. I disagree with any pay cuts that the defence forces may be forced to take. But council heads, fat cat administrative bureaucrats in broadcasting services and the Health Service do deserve to take pay cuts. Everybody in the private sector is taking lower salaries and bonuses home this year and next year as well. So what makes these highly paid public sector workers so special? Why do they deserve to be singled out for differential treatment?
The fact is that the economy (and the health of both the public and private sectors of the economy) will not improve until the banking sector starts making money again. So I urge these disgruntled highly paid public sector employees to start praying for a banking recovery - their own future economic salvation is dependent on the robust economic health of those they hate the most.
But India's half complete transition to a modern economy is the subject of another blog. This particular blog is about why it is unfair to blame the bankers alone for the Great Recession, which sees to have reared its head just when you thought it was safe to go out shopping again. I now live in Britain, where it is fashionable to view all bankers (especially investment bankers) as the spawn of Satan. I know several investment bankers quite well, and in fact, worked as one many years ago. Nobody can accuse these former masters of the universe of being softies whose primary concern is the welfare of those less well-off than themselves. However, to blame banks and bankers alone for the current mess is wrong. Allow me to elaborate.
The last time I checked, London contributes a disproportionately large amount to the British economy (30% of Britain's GDP is generated in London). A majority of this wealth is generated by banking, since London (along with New York) is the financial capital of the world. Even in these dismal economic times, it is the banks and bankers (and the tax revenues they generate) that keeps Britain's economy afloat. It is the dramatic expansion of banking and investment banking in particular in the Noughties (circa the years 2000 to 2008) that funded the huge growth of jobs in Britain's public sector in the last decade. The public sector workers in the UK who blame the banks for everything and keep threatening to go on strike would do well to remember this. Had it not been for the buoyant tax revenues generated by London and its investment bankers in the Noughties, these public sector workers would not have found jobs in the first place. Yes, some of these bankers were reckless and did take unacceptable risks with shareholder money, but to blame them alone is wrong.
It is also important to note that some of these public sector workers (such as council heads and BBC television/media heads) make large sums of money (which I define as more than £ 150,000 a year). One of the principal tenets of finance (and life) is - higher the reward, higher is the risk associated with that reward. Therefore, if one wants to take a job that comes with large sums of money, one must also accept the fact that such a job will come with associated risks - such as the risk of getting laid off or being forced to take a pay cut. One cannot expect a guaranteed, very highly paid job for life - in either the public or private sectors. Many of these highly paid public sector worthies are being asked to take a pay cut and some of them have been saying that they could find better salaries in the private sector. Really?? When was the last time they worked in the competitive private sector, and if such jobs are available, why don't they take these jobs up?
I may be an economic conservative, but I am not anti-public sector. The public sector has an important role to play in an economy. I disagree with the Tory plans to cut back on essential services such as police, fire brigade ansd community youth programs. I disagree with any pay cuts that the defence forces may be forced to take. But council heads, fat cat administrative bureaucrats in broadcasting services and the Health Service do deserve to take pay cuts. Everybody in the private sector is taking lower salaries and bonuses home this year and next year as well. So what makes these highly paid public sector workers so special? Why do they deserve to be singled out for differential treatment?
The fact is that the economy (and the health of both the public and private sectors of the economy) will not improve until the banking sector starts making money again. So I urge these disgruntled highly paid public sector employees to start praying for a banking recovery - their own future economic salvation is dependent on the robust economic health of those they hate the most.
Sunday, March 27, 2011
Politics: Finding Weaker Enemies
Some years ago, I read a great book called “The Name of The Rose” by Umberto Eco. The book is set in 13th century Italy and France, during the Dark Ages, before the Renaissance changed Europe forever. Europe at the time was a brutal, poor, uneducated place – riddled with disease, superstition and political and religious tyranny.
While the book itself is a classic, one line in the book has stayed with me ever since. The book’s main protagonist, an impressionable young novice monk, is speaking to an older monk who is a poor peasant. The older monk in his youth persecuted Jews and participated in the slaughter of Jewish residents in his village in Northern Italy. The novice monk asks the older man why he killed Jews, when the real oppressors of the peasants were not the Jews but the Church and the King of Italy, who between them, brutally exploited the peasantry. The old monk replies by saying that “when one’s true enemies are too strong, one has to find weaker enemies”. The villains in the piece were the Church and the monarchy, but since they were too strong and powerful to fight, the Jews were attacked instead because they provided an easy, weak target.
That line has stayed with me ever since, and human behaviour does not change. So today, in the developed world for example, when governments start targeting skilled immigrants as culprits responsible for the economic recession, I realize that this is a case of finding weaker enemies. In the United Kingdom, the real enemy is the decline of leadership in the manufacturing and service industries, not the entry of skilled overseas labour. But rebuilding Britain’s leadership in research and development, science and manufacturing is something that will take a decade of focused governmental initiative in primary and secondary education. This is a formidable challenge, and it is so much easier to blame weaker enemies (skilled overseas immigrants in this case). This same principle applies to the US President’s populist outburst last year, where he vowed to stop American jobs from being “Bangalored”
In India, every single political party claims that their foremost concern is for the well-being of the “aam aadmi” or “common man”. But the rhetoric belies the political reality. Every Indian political party, irrespective of ideology, serves only itself. For fifty years after independence, the long-suffering “common man” in India was denied any opportunity for economic advancement. Three generations were condemned to a life of subsistence and mediocrity. Poverty and squalor were glorified in the name of socialism. Wealth, education and economic advancement were looked down upon as consequences of a decadent capitalist society. Then the Indian economy was liberalized in 1991 (out of compulsion, not choice). Over the last twenty years, economic growth has helped raise millions of people out of poverty.
However, many Indian political parties (especially our revisionist Communists) still target economic liberalization as the root of all evil. India’s true enemies remain poverty, illiteracy and lack of economic opportunity, not economic liberalization. However, tackling these substantial problems will require governmental discipline and efficiency. It will require taking hard decisions that will disturb well-entrenched, powerful lobbies within the government who have prospered for decades at the expense of India’s teeming millions. It is so much easier to blame economic liberalization, which is actually the solution to the country’s problems and not the cause. But then, the search for weaker enemies has not changed since the 13th century.
While the book itself is a classic, one line in the book has stayed with me ever since. The book’s main protagonist, an impressionable young novice monk, is speaking to an older monk who is a poor peasant. The older monk in his youth persecuted Jews and participated in the slaughter of Jewish residents in his village in Northern Italy. The novice monk asks the older man why he killed Jews, when the real oppressors of the peasants were not the Jews but the Church and the King of Italy, who between them, brutally exploited the peasantry. The old monk replies by saying that “when one’s true enemies are too strong, one has to find weaker enemies”. The villains in the piece were the Church and the monarchy, but since they were too strong and powerful to fight, the Jews were attacked instead because they provided an easy, weak target.
That line has stayed with me ever since, and human behaviour does not change. So today, in the developed world for example, when governments start targeting skilled immigrants as culprits responsible for the economic recession, I realize that this is a case of finding weaker enemies. In the United Kingdom, the real enemy is the decline of leadership in the manufacturing and service industries, not the entry of skilled overseas labour. But rebuilding Britain’s leadership in research and development, science and manufacturing is something that will take a decade of focused governmental initiative in primary and secondary education. This is a formidable challenge, and it is so much easier to blame weaker enemies (skilled overseas immigrants in this case). This same principle applies to the US President’s populist outburst last year, where he vowed to stop American jobs from being “Bangalored”
In India, every single political party claims that their foremost concern is for the well-being of the “aam aadmi” or “common man”. But the rhetoric belies the political reality. Every Indian political party, irrespective of ideology, serves only itself. For fifty years after independence, the long-suffering “common man” in India was denied any opportunity for economic advancement. Three generations were condemned to a life of subsistence and mediocrity. Poverty and squalor were glorified in the name of socialism. Wealth, education and economic advancement were looked down upon as consequences of a decadent capitalist society. Then the Indian economy was liberalized in 1991 (out of compulsion, not choice). Over the last twenty years, economic growth has helped raise millions of people out of poverty.
However, many Indian political parties (especially our revisionist Communists) still target economic liberalization as the root of all evil. India’s true enemies remain poverty, illiteracy and lack of economic opportunity, not economic liberalization. However, tackling these substantial problems will require governmental discipline and efficiency. It will require taking hard decisions that will disturb well-entrenched, powerful lobbies within the government who have prospered for decades at the expense of India’s teeming millions. It is so much easier to blame economic liberalization, which is actually the solution to the country’s problems and not the cause. But then, the search for weaker enemies has not changed since the 13th century.
Saturday, November 27, 2010
India: Caste – The Beginning of the End?
I am not religious. I was born a Hindu, and there are many aspects of Hinduism that I consider praiseworthy. Hindu philosophy (what little I have read of it) is profound and rational. At its best, Hinduism is a gentle way of life that preaches compassion and tolerance. There is room for speculation, discussion and debate. However, there are things about the way Hinduism is practiced that is truly detestable. The worst of these is caste. Caste (and the way casteism is practiced in certain parts of India) represents all those things about Hinduism I would rather forget.
Nowhere is casteism practiced more aggressively than in the Hindi-speaking heartland of North India, in the states of Uttar Pradesh and Bihar. Together, these two states are the most backward in India, on virtually any parameter you select – whether it is economic development, literacy, gender equality, infanticide, healthcare, crime or primary education. Together, Uttar Pradesh and Bihar form about 30% of India’s population, and unless there is significant positive change in these two states, India’s dream of becoming an economic superpower can be forgotten.
So-called “lower” castes were persecuted for millennia under the garb of religious sanction. After independence, every Indian government irrespective of political persuasion has found ways to develop and maintain caste-based “vote-banks”, playing off castes against each other to obtain votes and power. This political tactic of divide-and-rule is still very widely practiced all over India. In more progressive parts of India, education, literacy and economic development have made a significant dent in caste-based politics, and though caste is still important, it is no longer all-important. It is not easy to eliminate thousands of years of institutionalized prejudice and it will take time for things to change.
Many right thinking people had given up hope regarding any significant change in Uttar Pradesh and Bihar. Which is why the re-election of Nitish Kumar as the Chief Minister of Bihar is such a refreshing development. As Chief Minister of Bihar, Nitish Kumar has brought about much needed change in India’s most backward, benighted state. Instead of focusing on caste-based politics in a quest for power, Kumar has focused on economic development and security. The changes he has brought about in Bihar in the five years he has been Chief Minister would be considered modest in most other places. He has built roads and schools and put criminals in prison. He has provided modest livelihoods to the desperately poor. In Bihar, a state where there was no security, no roads, very little education and absolutely no economic development, these changes are truly revolutionary. There is still a long way for Bihar to go. It remains extremely poor and backward. But still, a beginning has been made.
Kumar’s shrewd tactic of focusing on security and economic development must have been a huge gamble, especially in a state where everybody assumed that the only way of obtaining power was propagating destructive caste and religion based politics. But against all odds, it has worked.
Does this mean the beginning of the end of destructive caste-based politics in India? I certainly hope so. It took thousands of years to build the destructive institution of caste. It may be too optimistic to think that it can be dismantled in twenty years. Can we dare hope that a start has been made?
Monday, November 1, 2010
Politics: Obama’s India Visit: No Good Deed Goes Unpunished
I am a big fan of the United States of America. I lived there for six years, and since then, have been back a few times. No other country in the world is freer, more diverse or tolerant. No other country in the world is more honest – Americans make no bones about the fact that you do need money to be happy, and a firm belief in capitalism is a cornerstone of the American way of life. It is a country that respects and encourages individualism, and believes that personal choices and not governmental intervention are the key to individual and societal happiness. I happen to agree with all these principles.
India and the US have had an indifferent, sometimes tense relationship over the last sixty years. During the Cold War, India was a Soviet ally and was in the ludicrous position of opposing the US ideologically, while being heavily dependent on US food aid to prevent mass starvation.
Over the last twenty years, however, the Indo-US relationship has thawed considerably. On the economic front, India’s economy has liberalized and the country has prospered. India views the US as the biggest market for its services and manufacturing exports. From the US perspective, the impressive purchasing power of India’s rapidly expanding middle class has resulted in US corporations making a beeline for India. On the political front, both the US and India view the rise of authoritarian China with increasing nervousness. India has an aggressive, authoritarian China as its immediate neighbour on its eastern border and crumbling, increasingly fundamentalist Pakistan on its western border. India and the US are both liberal, progressive, secular democracies and a strategic relationship between the two countries should be in the natural order of things. India needs the US to remain a superpower to guarantee its own future prosperity.
Under George W. Bush’s presidency, the Indo-US friendship improved considerably. Bush pushed aggressively for free trade as well as the Indo-US nuclear partnership. The Bush Administration agreed with India’s aspirations of becoming a permanent member of the United Nations Security Council. So, Indian hopes were running high when Barack Obama became US president.
However, Obama’s early pronouncements were not encouraging. He railed against jobs being outsourced to India (and probably invented the term“Bangalored”) to win cheap political brownie points, when any economist worth his salt would have told him that free trade is mutually beneficial. His administration’s message seemed to be – You must open your markets to our good and services, but our markets will remain closed to your goods and services.
Obama now wants India to buy billions of dollars worth military equipment. This will create jobs for American workers in a tough recession. I have no problem with that. But I do have a problem when he says that he also plans to give similar military equipment to Pakistan - FOR FREE. I find this mystifying.
Pakistan is indeed under attack from within, but I fail to see how providing it with the latest jet fighters and tanks will help it fight fundamentalists who live in caves in the mountains. The Obama Administration is also conspicuously quiet about China’s plans to supply Pakistan with nuclear technology, but at the same time, is pressing India to sign the Nuclear Non-Proliferation Treaty (NPT). India has been a responsible nuclear power for nearly forty years, and has never exported nuclear technology to pariah states such as North Korea or dubious Middle Eastern tyrants.
India’s foreign policy has never been aggressive or expansionist. India has contributed billions of dollars of developmental aid to the redevelopment of Afghanistan. India has contributed troops and money to many of the UN’s interventions around the world – from Kosovo to Rwanda.
Despite India being a model international citizen, the Obama Administration seems to be indifferent to India, at least when it comes to concrete benefits on the ground. Which just goes to prove the old adage – no good deed goes unpunished. And Obama’s constant refrain about how much he admires Mahatma Gandhi doesn’t count. We would prefer free trade and equal access to US markets, thank you very much.
India and the US have had an indifferent, sometimes tense relationship over the last sixty years. During the Cold War, India was a Soviet ally and was in the ludicrous position of opposing the US ideologically, while being heavily dependent on US food aid to prevent mass starvation.
Over the last twenty years, however, the Indo-US relationship has thawed considerably. On the economic front, India’s economy has liberalized and the country has prospered. India views the US as the biggest market for its services and manufacturing exports. From the US perspective, the impressive purchasing power of India’s rapidly expanding middle class has resulted in US corporations making a beeline for India. On the political front, both the US and India view the rise of authoritarian China with increasing nervousness. India has an aggressive, authoritarian China as its immediate neighbour on its eastern border and crumbling, increasingly fundamentalist Pakistan on its western border. India and the US are both liberal, progressive, secular democracies and a strategic relationship between the two countries should be in the natural order of things. India needs the US to remain a superpower to guarantee its own future prosperity.
Under George W. Bush’s presidency, the Indo-US friendship improved considerably. Bush pushed aggressively for free trade as well as the Indo-US nuclear partnership. The Bush Administration agreed with India’s aspirations of becoming a permanent member of the United Nations Security Council. So, Indian hopes were running high when Barack Obama became US president.
However, Obama’s early pronouncements were not encouraging. He railed against jobs being outsourced to India (and probably invented the term“Bangalored”) to win cheap political brownie points, when any economist worth his salt would have told him that free trade is mutually beneficial. His administration’s message seemed to be – You must open your markets to our good and services, but our markets will remain closed to your goods and services.
Obama now wants India to buy billions of dollars worth military equipment. This will create jobs for American workers in a tough recession. I have no problem with that. But I do have a problem when he says that he also plans to give similar military equipment to Pakistan - FOR FREE. I find this mystifying.
Pakistan is indeed under attack from within, but I fail to see how providing it with the latest jet fighters and tanks will help it fight fundamentalists who live in caves in the mountains. The Obama Administration is also conspicuously quiet about China’s plans to supply Pakistan with nuclear technology, but at the same time, is pressing India to sign the Nuclear Non-Proliferation Treaty (NPT). India has been a responsible nuclear power for nearly forty years, and has never exported nuclear technology to pariah states such as North Korea or dubious Middle Eastern tyrants.
India’s foreign policy has never been aggressive or expansionist. India has contributed billions of dollars of developmental aid to the redevelopment of Afghanistan. India has contributed troops and money to many of the UN’s interventions around the world – from Kosovo to Rwanda.
Despite India being a model international citizen, the Obama Administration seems to be indifferent to India, at least when it comes to concrete benefits on the ground. Which just goes to prove the old adage – no good deed goes unpunished. And Obama’s constant refrain about how much he admires Mahatma Gandhi doesn’t count. We would prefer free trade and equal access to US markets, thank you very much.
Sunday, October 3, 2010
India: Superpower Status and the Ever-Present Banana Skin
This week has been a newsworthy one for India, since the Ayodhya verdict has been announced. While the Indian newspapers will devote large amounts of newsprint to the analysis of this verdict, the British newspapers have been full of the Labour leadership elections, the impending “savage” cuts to public finance and of course, India’s lack of preparedness for the Commonwealth Games in Delhi.
The British press seems to have two very different views about India. The first is respectful – one that holds that India (along with China) is becoming an economic superpower in the 21st century. The second is dismissive – an older, established view of India as an uneducated, impoverished, backward nation. A recent newspaper article (I think it was in the London Evening Standard), claimed that 800 million Indians (80% of India’s population) lived on less than £ 1 a day. This is rubbish. The number of Indians living below the poverty line is about 350 million, or 35% of the population. In this day and age of course, it is a tragedy that so many Indians are still so poor. Between the two opposite views mentioned above, there is no middle ground.
Regarding the adverse coverage in British newspapers regarding the Commonwealth Games, the editorial in the London Times last week got it spot-on when it said that there were two Indias – one led by a vibrant, competitive, efficient private sector which is rapidly becoming a world-beater, and the other led (if that is the right word) by a slow, corrupt, incompetent public sector that isn’t accountable to its citizens or anyone else.
Unfortunately the Commonwealth Games is being organized by India’s public sector, which consists of discredited politicians, and their corrupt minions – the bureaucrats. If this organizational exercise had been handed over to a private sector group such as Reliance or Tatas to manage (with government funding), these Games would have been the best in the world, and would have cost far less.
Why? Because I am extremely optimistic about most companies in India’s private sector. Many of them are better run than their Western counterparts, and I am confident that in ten years, India’s private sector companies will be major global players in automobiles, banking, medical research, pharmaceuticals, life sciences and engineering goods, just like their counterparts already are in information technology and computing.
India’s private sector will boom and bring prosperity to India’s teeming millions only if it is allowed to do so by an obstructionist, corrupt government.
So while India’s private sector grows from strength to strength, the country’s public sector languishes. If anything, the public sector is getting worse. Apart from being corrupt, it is also unaccountable to the people it is supposed to serve – the citizens of India. While foreign media commentators have been concerned by the shoddy preparations for the Commonwealth Games, they have been dismayed at the callous, uncaring attitude of the Indian government officials who created the mess in the first place. Indians on the other hand, have not been surprised by either the incompetence or the attitude of their government representatives. That is because the Indian government does not view itself as being there to work for its citizens, and we as Indians, know this. It is as simple as that, and it is a situation that has actually gotten worse over the last few decades.
Therefore, when people talk of China and India emerging as the new superpowers of the 21st century, I agree as far as China is concerned since this is a stated objective of the Chinese government and they are concertedly working towards it. I am not so sure about India. While Indians have the intelligence, industriousness and gumption to eradicate poverty and become a superpower (as our private sector so aptly demonstrates), the Indian government and its’ corrupt, incompetent and apathetic administration is like a banana skin, on which our national aspirations could slip up on at any time.
The British press seems to have two very different views about India. The first is respectful – one that holds that India (along with China) is becoming an economic superpower in the 21st century. The second is dismissive – an older, established view of India as an uneducated, impoverished, backward nation. A recent newspaper article (I think it was in the London Evening Standard), claimed that 800 million Indians (80% of India’s population) lived on less than £ 1 a day. This is rubbish. The number of Indians living below the poverty line is about 350 million, or 35% of the population. In this day and age of course, it is a tragedy that so many Indians are still so poor. Between the two opposite views mentioned above, there is no middle ground.
Regarding the adverse coverage in British newspapers regarding the Commonwealth Games, the editorial in the London Times last week got it spot-on when it said that there were two Indias – one led by a vibrant, competitive, efficient private sector which is rapidly becoming a world-beater, and the other led (if that is the right word) by a slow, corrupt, incompetent public sector that isn’t accountable to its citizens or anyone else.
Unfortunately the Commonwealth Games is being organized by India’s public sector, which consists of discredited politicians, and their corrupt minions – the bureaucrats. If this organizational exercise had been handed over to a private sector group such as Reliance or Tatas to manage (with government funding), these Games would have been the best in the world, and would have cost far less.
Why? Because I am extremely optimistic about most companies in India’s private sector. Many of them are better run than their Western counterparts, and I am confident that in ten years, India’s private sector companies will be major global players in automobiles, banking, medical research, pharmaceuticals, life sciences and engineering goods, just like their counterparts already are in information technology and computing.
India’s private sector will boom and bring prosperity to India’s teeming millions only if it is allowed to do so by an obstructionist, corrupt government.
So while India’s private sector grows from strength to strength, the country’s public sector languishes. If anything, the public sector is getting worse. Apart from being corrupt, it is also unaccountable to the people it is supposed to serve – the citizens of India. While foreign media commentators have been concerned by the shoddy preparations for the Commonwealth Games, they have been dismayed at the callous, uncaring attitude of the Indian government officials who created the mess in the first place. Indians on the other hand, have not been surprised by either the incompetence or the attitude of their government representatives. That is because the Indian government does not view itself as being there to work for its citizens, and we as Indians, know this. It is as simple as that, and it is a situation that has actually gotten worse over the last few decades.
Therefore, when people talk of China and India emerging as the new superpowers of the 21st century, I agree as far as China is concerned since this is a stated objective of the Chinese government and they are concertedly working towards it. I am not so sure about India. While Indians have the intelligence, industriousness and gumption to eradicate poverty and become a superpower (as our private sector so aptly demonstrates), the Indian government and its’ corrupt, incompetent and apathetic administration is like a banana skin, on which our national aspirations could slip up on at any time.
Friday, July 30, 2010
Observations: An Alien in El Dorado
If you look up “El Dorado” on Google, you will find many different definitions for it. The simplest one says that it means "the Gilded One" or "the Golden Man," which refers to a legendary South American king who covered himself in gold – a sort of South American King Midas. European adventurers (mostly Spanish) became obsessed with finding the legendary treasures of El Dorado, and searched for a city filled with gold in the 16th and 17th centuries. These Spanish conquistadors were initially led by the notorious Cortez. They were filled with missionary zeal and insatiable greed. For two centuries, they raped, pillaged and brutalized the original inhabitants of the South American continent in their search for the fabled “City of Gold”. In many ways, the phrase itself came to symbolize the obsession with material greed that consumes us as human beings.
The Middle East in general and Qatar in particular, appear to symbolize the new “El Dorado”. The region’s economy is booming, thanks to the world’s insatiable demand for petroleum products. Tiny Qatar is the world’s third largest producer of natural gas, and is well-positioned to cash in on this demand. There are new, futuristically designed office buildings coming up everywhere. Local inflation rates and real estate prices have skyrocketed over the past few years. The number of foreign expatriates has also skyrocketed. Like the rest of us, they come to Qatar only for the money. The total population of this country is approximately 1.5 million people, of which 80% are expatriate workers – a polyglot of nationalities, of which South Asians form the majority.
So what is life like in this new El Dorado? On the surface, everything is new, larger than life and shiny. The locals drive around in super-sized SUVs since petrol is ridiculously cheap. The men are immaculately turned out in their Arab traditional white dress. The women are covered from head to toe in their black “abayaas”, yet wear large amounts of make-up and expensive designer clothes under their traditional garb.
The aim is to impress peers and countrymen with large houses, oversized cars, branded luxury goods and a lavish lifestyle. The amount of food one sees wasted at local restaurants is staggering. Recycling of plastic bottles, newspapers and cans is unheard of. Someone told me that all plastic cans and bottles are sent to India as trash – they are then recycled there. Qatar is a desert with no large bodies of fresh water or rivers, yet very few people think of conserving water. Desalinated sea-water is used to satisfy the country’s water needs. It is an expensive proposition but money is not a constraint for such a small, rich country.
Obesity amongst the local population has reached alarming levels. Conspicuous consumption (and the need to let everyone else know that you have “arrived”) is the order of the day. This need for an ostentatious display of wealth is contagious, and one sees it amongst locals and expatriates alike. If the United States is (or at least was) the land of plenty, the oil-rich states of the Gulf are the land of excess.
Part of this phenomenon can be traced back to the fact that the entire Gulf region was unproductive desert only two generations ago. It is only in the last forty years or so, and particularly since the OPEC oil crisis of 1973, that these tiny autonomous states became prosperous overnight. Therefore, the wealth is all new, and one can understand (though not necessarily sympathize with) the desire to flaunt this new-found status. On the surface, all material needs of the population (resident and expatriate) are met, with more than enough to spare - which is why all the expatriates are here in the first place.
There are strict social hierarchies here, as rigid and inflexible as any caste system. The locals are at the top of the social totem pole, followed by those with passports from developed Western countries (it doesn’t matter where you come from, as long as you are blessed with such a passport). Next on the totem pole are Arabs from other rich countries, followed by Arabs from less fortunate countries (Sudan, Somalia and parts of Africa). Then come the Filipinos who do a lot of the semi-skilled work in the country. Bringing up the rear are the South Asians (Pakistanis, Indians, Bangladeshis, Nepalese and Sri Lankan Tamils – in that order). The Indian community is a mixed bag – a majority are laborers, clerks and peons, but there are quite a few highly qualified Indians as well. The way you are treated depends in large part on the nationality stamped on your passport.
I often wonder whether the Indians here are a happy lot. One of the people I know here is a man who irons clothes for a living. I will call him Dilip. He is typical of the large South Asian labor community. He is from eastern Uttar Pradesh, India’s Gangetic heartland, an area that is culturally and historically rich, yet economically impoverished. He has been here for many years. I used to walk by his little shop every evening, with a bunch of clothes that needed ironing. There was a beat-up old cassette player in the corner of his shop, which played old Hindi movie songs by Kishore Kumar, Mohammed Rafi and Lata Mangeshkar. I often watched Dilip through the glass window of his shop while walking by late at night, with the music playing inside. You could see the grief, homesickness and sense of loss in his eyes. He was in Qatar because his own country was been unable to provide him with a decent livelihood.
Looking at people like Dilip, I feel ashamed; ashamed that one of my countrymen is forced to live in such deprived circumstances so far away from home; ashamed that sixty-three years after independence, we still haven’t found a way to provide basic essentials such as elementary education, safe drinking water, healthcare and literacy to a third of our population. Spin it as you will, that is the grim truth.
As Indians, we are proud of our lively parliamentary democracy. I am all for parliamentary democracy and the ability of an individual to participate in guiding the destiny of his or her nation. However, how much of a difference does this make to people like Dilip and three hundred million other Indians who do not have access to the basic necessities that most of us take for granted? For people like Dilip, what is more important? Are they happy with a democratic political system that provides them the fundamental right to vote and (at least theoretically) participate in shaping their destinies? Or would they prefer to live under a totalitarian (but efficient) system of government in India if it provided them with a roof over their heads, moderately paying jobs, an education for their children and uninterrupted access to safe drinking water, healthcare and electricity?
I do not know the answer to this question, and neither, I suspect, does Dilip. He probably hasn’t thought about it, and I do not blame him. He is too busy struggling to survive in this alien land and save up some money for his retirement and his children’s future. Unlike Indian expatriates in Western countries, he cannot assimilate into this culture, since that is not an option in this part of the world. So he remains an eternal alien in El Dorado.
My time in Qatar has been financially rewarding, and provided me with significant financial security. Still, looking at Dilip, I realize that all that glitters is not gold. And even gold exacts a very heavy price on those who come to El Dorado in search of it.
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