Tuesday, 23 November 2010

Obama clamours for a New Defining Partnership

Barack Hussein Obama clamors for a New Defining Partnership of 21st Century for China Bashing
Being one of the oldest civilisations in the world India has a long standing history of scholarships and her people have made significant contribution in shaping world thinking in all facets of life. Indian philosophy is considered as the world's oldest philosophical tradition, and has witnessed the longest most continuous development. 
Given a very strong tradition of Indian minds India has produced many foremost philosophers, statesmen, mathematicians and scientists right from Valmiki (8000 BC), Charvak (Kapila: 700BC), Chanakya (283-350, BC), Arya Bhatt (5th AD), Bhaskaracharya (1114-1185 A.D.). The most fundamental contribution of ancient India in mathematics is the invention of decimal system of enumeration, including the invention of zero. Lancelot Hogbern in his book ‘Mathematics for the millions’, says: “There has been no more revolutionary contribution than the one which the Hindus (Indians) made when they invented Zero.” William James summaries Indian traditions a follows:

“From the Vedas (ancient Indian scriptures) we learn a practical art of surgery, medicine, music, house building under which mechanised art is included. They are encyclopedia of every aspect of life, culture, religion, science, ethics, law, cosmology and meteorology.”
Similarly, Prof. O.M. Mathew in Bhavan’s Journal iterated as follows:

“Numerals are found in the 3rd Century BC. This knowledge traveled to Europe and West. In Arab countries even now numerals are known as HINDSE: from India. La’place, the French mathematician and physicist, wrote during Napoleon’s time, “It is India that gave us the ingenious method of expressing all numbers by means of ten symbols”.   
Albert Einstein, father of modern physics and Nobel Laureate said,

“We owe a lot to the Indians who taught us how to count, without which no worthwhile scientific discovery could have been made”.

Despite the above tradition India’s role has always been undermined by the so-called developed (materially) West and the US. However, since the inception of neo-liberal polices in 1990s under the umbrella of globalization, these very power started caving into India’s huge market. Surprisingly, all of a sudden Indian women started looking beautiful although there have been most splendorous looking women in India for centuries. In this period four Indian women in a row were picked up for the title of Miss World to make headway into the cosmetics market in India. Similarly, following the global financial crises and recession in 2008 countries of Western Europe and the US started looking for safe parking lots or investment and building new partnerships to trap markets elsewhere. China and India became the finalists for global beauty contest for such an enterprise because these countries were not affected to that degree by global economic crises.    
Recently, protagonists of free trade economics, like Profs Bhagwat, Panagariya and others asserted that US President Obama has addressed India’s three key concerns during his visit to India: (i) backing of India for a UNSC permanent seat, (ii) full membership in the Nuclear Suppliers Group, and (iii) opening up of dual-use technologies. Some economists at Stanford University believe that from the Indian perspective, “the key goal was recognition of India as a global player despite its problems at home and in the neighborhood: poverty, corruption, Kashmir, poor regional relationships, etc.  The common belief of free trade economists is that Obama’s visit to India has been a great success. However, none of the above analyses mention about Obama’s gains from the visit which were aimed at seeking concession on liability on the sales of nuclear plants, softening India’s stand on environmental concerns at Copenhagen which deeply upset US due to its agenda being undercut by China and India and now attempt to split them, support for U.S. government policies with regard to jobs and currency for China bashing, the US leverage over technology to obtain jobs in a quid pro quo fashion: so, aircraft orders on one side and access to dual-use technologies on the other, in hard times 55000 Jobs for American, and a closing lesson to India on Human Rights in his address to parliament. Clearly, it was not only a desire to recognize India as great nation but it was also expected that India plays an important role as a US agent in Asia. 
Pangariya, a Bhagwati Professor at Columbia University and an Awante Garde champion of free trade commented on Obama’s visit that any market opening including in the area of organised retails will be on a non discrimination basis and argued that the last 20 years of external and internal liberalization have shown opening up largely works to improve efficiency. Contrary to his assertion, in fact, India might loose out on economic efficiency if allowed the politics to guide its decision to open the market for US products, i.e., ‘quid pro quo’ for India. In contrast China has shown a great political will and improved efficiency without bowing down to US pressures whether it comes to IMF loans or WTO or on the emission issues. 
Initially, US tried to entangle China in her fold to isolate Russia and India when the idea was floated to develop a strategy of collective security in Asia with a possible   alliance of  India, China, Russia and perhaps Iran. US also offered an olive branch to China giving key role in taming down North Korea and pressurizing Iran on Nuclear disengagement.  However, when China refused to play US game and evolved a joint strategy with India at Copenhagen defeating US agenda on environment issues, US started China bashing by building pressure on currency issue to discourage China’s exports and combat trade deficit. A Stanford scholar said, “the U.S. would like India’s support for the undeclared currency war. India is admittedly a minor player, but its support still counts. These results were achieved”.
Of course, free trade economist Bhagwati criticized US policy on currency war against China and warned India of its consequences should she decided to back US agenda.  Therefore, Obama’s recognition of India would mean expecting her to play a bigger part in Afghanistan, Myanmar and throughout the whole subcontinent. It would mean opening NATO door to India in future for a potential membership (Russia is already on its way to become a member) if she could police subcontinent as a US agent and help isolating China and Russia. Hence, surprised glorification of India by US is not costless as India is loosing her nonaligned foreign policy and getting sucked into a dangerous security game.
As to impact of openness let us pause for a moment and look at fundamental objectives of a development strategy.  Soon after independence from British colonial rule India adopted planned economic development under a mixed market economic system.  Regardless of our ideologies, our main objectives have always been as follows: (i) Growth, (ii) optimal employment, (iii) eradication of poverty, and (iv) self-reliance, which in nut shell could be characterized as economic growth with social justice. Perhaps it would be less controversial to say that US and India are at different stages of economic development whether it is being measured in terms of Rostow’s stages of growth or by any other measure of growth. However, it would be more controversial what growth really means to people when we talk about the differences between growth and development.  I believe this is not a simple question of positive economics but appears to be a political economic question.  Of course, political economy may mean different things to neoclassical economists like Bhagwati - Panagariya  Co on the one hand and the opponents of neoclassical economist on the other hand although each class of economists may not be so homogeneous in their views. The fact remains, India has achieved considerable progress in regards to objectives (i) and (iv) its record with  respect to objectives (ii) and; (iii) have not been very satisfactory.
If one has a closer look at claims of major gains of Obama’s visit to India, US backing of India for a UNSC permanent seat in Obama’s words do not amount to unreserved support for India’s claim. In fact, his words about “…increased power coming with increased responsibility” - suggests that India is being offered something it does not quite fully deserve yet. Clearly, Obama was noncommittal on UNSC permanent seat for India. India knows very well that a permanent seat on UNSC is nowhere near for some time. At the best she can hope of getting an UNSC seat in a few years without a Veto power. Further, Obama’s uncalled-for lecture on human rights on the floor of the parliament was particularly reflected that after all partnership is not between equals. In fact, partnership is another name for mediocrity and Obama showed India its place in his closing speech as underdog rather than  an equal partner. This reminds me a MIT Prof Noam Chomsky’s article which he wrote just after the gulf war in 1991, in which he very  eloquently summarized US foreign policy as follows:
"We are your masters and you shine our shoes.  Any weaker enemy has to be crushed so that the right lessons are taught" [Guardian Weekly 1991].

Clearly, immediate economic gain to Obama is far greater than to India. Further, Panagariya’s suggestion that 10 billion contract is a win-win as they do not inflict loss on India is an incorrect understanding of game theory.  He also claims that Indian farmers stand to benefit from improved supply chain; Indian consumers stand to benefit from reduced prices resulting from a more efficient supply chain management; and the Indian economy stands to benefit for both of those reasons  plus expanded export performance since foreign retailers are well-placed to link our suppliers to the world market. However, the reality on the ground is somewhat opposite to what is being asserted as we do not control on inflation and GDP in manufacturing, in fact grew at the rate less than 4.3% in last quarter despite Pranabda's claim of 9-10% growth. Here also Manmohan and Montek Singh (M-Squared Economics) are playing dangerous strategy of withdrawing rescue package at the same time cutting deficit despite an example of disastrous consequences faced by Republic of Ireland.    

Panagariya also advocated further economic reforms which so far have created two Indias: Rich & Poor rather than showing any sign of trickling down impact of growth at the grass-root level. He is confused between national interest and the interests of the rich by treating them synonymous, which shows a sound understanding of political economy.   In fact, 1990s Neo-liberal policies may have given a quantitative boost to economy in terms of GDP but very little to common man in terms of change in the quality of life. 
Further, Panagariya suggested India has to be prepared to retaliate against US through its own trade sanctions if it is subjected to selective protection against its exports. There are two problems with this: (i) India in essence will never be an equal partner with US, and (ii) its leadership is spineless and lacks political will to exert the pressure on US. His analysis that so far all countries have been quite successful in holding protectionism at bay despite the major global economic crisis, is not entirely correct. The evidence is just the opposite as even within the EU members protectionism is being purse to some extent.  Given the current political situation and mood of people in US I doubt if Obama could explain to the American people the benefits of openness to trade and investment. 

Therefore, Panagariya’s perception of Obama’s visit is based on assumed facts and wishful thinking to perpetuate the myth of outdated postulates of neoclassical free trade economics, which resulted in world wide financial crises at first place.   
Surprisingly, CPI(M) and other left parties except Forward Block decided not to boycott Obama’s address to Parliament on racial ground which may sounds condescending although it has done when George Bush Jr. visited India. Perhaps our readers might know Obama grew up mainly in white elite environment and his full name is Barack Hussein Obama. It appears CPI(M) anxiety about minority votes in West Bengal and Kerala might have been main reasons for mild opposition to Obama’s visit to India.           

By Prof S. Deman, Editor

No comments: