What's wrong with America?

 It appears that most of my posts this year deal with Indian topics, not particularly surprising since I've spent the better part of a year here. But I do stay in touch with what's going on "back home", since I must return, and I don't want to be a stranger. What propels me to touch on this topic is, frankly, the disparity I see between perceptions and reality in both countries. Indian perceptions of the United States, or what I've gathered in my interactions here, are different from the American reality and, likewise, American perceptions of India are not altogether on target. In the main, Indian perception seems to be that the United States is in decline, and that China and India will relegate it to third place.

 That the US is currently in decline, I agree. That it will be pushed to third place in global economic and/or military power, I strongly disagree. I even more strongly disagree that India has even a remote shot at displacing the USA in this century, being not only dependent on exports and inward remittances, but perennially running a current account deficit. How America's economic strength plays out depends more on Americans and far less on the Chinese or Indians, and that is what this post is about: What is it about the United States, the most powerful and influential nation of the 20th century, that has changed that permits the perception of an irreversible decline?

 For most of the 20th century, the US was driven to superpower status by an empowerment of the middle-class, motivated by public policies which advocated for higher standards of living for all who were willing to work hard. Earlier, the very idea of a middle-class blue-collar family was almost laughable, but America showed that it was not only feasible, but actually baked the pudding that proved it. A vital part of this transformation was the policy of putting American interests first, economically, politically and militarily. Corporations(and their major financiers) were allowed to amass wealth, but it had to be done inclusively, with the American people sharing in the prosperity they helped to create. As America prospered, standards were set which were emulated by other developed nations, and were aspired to by developing nations: minimum wages, social safety nets, standards for clean air and water, health care, an educational system that was the envy of the world, and so on.

 Somewhere, something began to go wrong. Minimum wages no longer kept up with inflation, social safety nets began to be eroded, clean air and water began to be perceived as an obstruction to "progress", health care and education began to be seen as a privilege, not a right. What changed, and when did it change? It's difficult to place a finger on the exact time, but one can see when substantial change began to occur. From my reading(I don't want to call it "study", because I did not formally study American economics), it began with the LBJ administration and its close links to the military-industrial complex. Yeah, yeah, I know, that's such a "liberal" thing to say! But realistically, that's when the talons really hooked into the American political system, and began implementing a series of changes which got us here.

 There is a school of thought- and there is some evidence to back it up- that the changes were at least conceived, if not actually set in motion, as far back as a hundred to a hundred and fifty years ago. But limiting myself to my own experiential observations, I see it as having taken place over the past forty years or so. It began with the insertion into government of graduates of the Friedman school of economic thought. They quickly zeroed in on China as a major instrument for their objectives, and implemented the hitherto unthinkable action of replacing the capitalist pro-western Taiwanese government with the communist Chinese government in the UN Security Council. The next few years largely involved stabilizing the leadership of that government before getting on to the agenda at hand. From 1978 onwards, communist China was aided, advised and cosseted by the US and the TNCs as no other. There were three or four hugely appealing(to the TNCs) advantages to China- a huge low-wage working-class population, a large land mass, a willingness to transfer American smog and land and water pollution, and not least of all, a central government with absolute power.

 There was, of course, the dilemma of how to sell products to a people who you essentially were making jobless or reducing to lower income. The answer was to leverage income via consumer credit. Thus the period from the mid-1970s on saw the explosion of consumer credit in the US, paralleling Chinese development, along with the systematic dismantling of financial regulations and consumer protections. During this period, there were at least three major transfers of wealth out of the hands of ordinary people, one in each of the last three decades. The first was when Savings and Loans institutions were permitted to enter the more exotic waters of regular banking, and promptly incurred huge "losses" which had to be covered by the taxpayer. The second was when traditional pension plans were replaced by 401(k) accounts, which encouraged people to try out the casino-style operations of the stock market of the 1990s, ending with the bust of 2000. The third was with the deregulation of regular banking, which allowed banks to enter the even more exotic waters of "financial products" such as hedges, securitization and their own securities and commodities trading arms, after first testing the waters with interstate banking. And they, almost as promptly as the S&Ls before them, incurred even more gigantic "losses", pushing the world to the edge of a full-blown depression. A fourth transfer in this decade is probably being engineered right now, and we will be able to see it in the light of day in a few years. I suspect it will be a mandated social security "investment" account or a "health savings" account, which can be taken as easily as the 401k accounts were.

 So now we have this fait accompli of a huge, cheap and relatively modern Chinese manufacturing infrastructure made possible by enormous amounts of western debt(mostly American). In the process, the very, very wealthy have become unimaginably wealthy. But the game cannot end here, because this is no one-off special. It's part of a larger strategy, which we can just guess at. It is a strategy which has weakened the US, and has permitted the perception of an irreversible American decline. However, looking at it from the American point of view, what do you do to make sure that being an American and living in the United States does not become a hardship? I already see changes which I think will halt the erosion, and slowly rebuild the pre-eminence of the US. There is more discourse in the public space about what is really going on. There is finally an understanding that, blue-collar or white-collar, Americans need to stand together. A beginning has been made to penalize corporations for their sham globalization which is doing nothing but perpetuating an unsustainable American trade deficit, while allowing profits from that trade to enable their principals to acquire vast global personal assets while sheltering their money from taxes.

 Many people debating the China vs. US issue seem to be blissfully unaware of the essential unfairness of the trade between the two countries. While Chinese goods flow unimpeded into the US, American products are all but barred from China. While this works out very nicely for the Chinese, it's not so for Americans. Also, most goods manufactured in China today have been designed and engineered in the west, many in the USA. The iPhone, for example, could not have been designed and developed in China, but the common perception seems to be that it is a Chinese-engineered product. What the Chinese specialize in is cheap production, by any means. But that production needs to be sold somewhere, and the traditional buyers are suffering from debt stress, which is what has paid for the rise of the "global economy". That will be a sticking point for China, and India, should the United States continue in decline.

 But more needs to be done. "America-first" needs to become a principle, as other major economic powers do for themselves. When free trade is not free trade, it needs to be appropriately countered, with the same sort of tariff and non-tariff barriers which China employs to protect its own interests. A decline of American living standards should not be accepted as the price for the enrichment of TNCs and their principals. There are serious calls right now to raise the age for social security benefits to 80, which is one year under the life expectancy of the average American male. In other words, pay for up to 60 years into the SS system, and die within a year of benefits eligibility. These calls are based on the notion that life expectancy will climb, despite the fact that it is currently declining. Another factor that is usually not addressed is the quality of life that exists in the last few years, which is likely not very good. Along with cuts to healthcare in the private sector and cuts to Medicare, life expectancy will likely decline substantially. To even propose that people in their 70s in poor health should still be working is simply inhuman. If they are physically able to, and have the desire to do so, that should be their choice. But what is being thrust upon the American people is the notion that you should "work until you die", a happy collateral being that TNCs will continue to get fatter on the back of your declining lifestyle, health and well-being.

 To answer the question I posed at the beginning of this post, it is the hijacking of American national interests by the TNCs, the stateless superclass and their proxies in the US political system which has led to this point. As with any hijacking, you have two choices: co-operate with the hijackers, or defeat them. Co-operation means capitulation- and, in this instance, the price of capitulation is giving up the notion of national independence- and that is clearly unacceptable. The only choice is to retake the country.

 I believe in compassionate capitalism. The profit motive should not be the only driver. We are not automatons or egg-laying chickens. We are a society, and ultimately need to thrive inclusively. The "global economy" is not the Darwinian mechanism it is claimed to be, nor is the milieu of political and economic sovereignty(as in the China example) of this "global economy" a natural condition of economic Darwinism. Americans need to wake up, and retake the rudder of the nation from the TNCs who have hijacked it. Otherwise, we face the next logical step in this process: unhindered movement of (cheap) workers globally, effectively relinquishing nationality and governance to the global corporations. One can discern the early implementation of this step in the "blue card" program of the EU and the "guest worker" proposals in the US. Private corporations, operating in a tightly meshed and almost invisible web of proxies, are already in control of many aspects of government, from police forces to prisons to military units to lawmaking to electronic surveillance to schools, in addition to their undeniable control of the allocation and spending of public funds. The boiling frogs story is appropriate in this context. It is time that we frogs realize that the water is about to boil.

Indian notions of skin color and beauty

Something else has crept into the Indian lexicon since I've been gone. Increasingly, I find Indians referring to certain other Indians as "white", when in fact they are merely lighter-skinned than other Indians, and rather brown when compared to Caucasians. Usually, this is done in an admiring tone, as if the person in question excelled in some intellectual contest and grabbed "whiteness" as a prize. Not for nothing is India's top-selling skin-lightening cream(which I suspect is nothing but a high-SPF product) called Fair and Lovely. So I've been paying attention to Indian attitudes toward color, and the standards for beauty. It's a hot topic, and Indians bridle at any overt references to racism, which is really what it amounts to when it forms the basis for social and professional discrimination.

 That Indians have an obsession with light skin, I have long been aware. After all, Bollywood(before it conferred that nickname on itself) set the tone many decades earlier by all but refusing to consider dark-skinned actors for leading roles(Rekha was one major exception). In other regional cinema, too, the same prejudice prevailed. Notable exceptions which come to my mind are the Bengali actors Mithun Chakraborty and the strikingly attractive Nandita Das, both of whom also have Caucasian features, which apparently compensates for their dark skin. When I was a child, you could bet that if anyone was regarded as having "film-star looks", the #1 attribute was light skin. Indians do have more aquiline noses, generally speaking, than Arabs, for example, but they tend to have weaker chins and less prominent cheekbones. So having strong chins and prominent cheekbones, considered Caucasian or "Aryan" attributes, have also figured into the Indian appreciation of what constitutes good looks along with, certainly, light skin and light eyes.

Nandita Das, a Bengali actress, director and producer

 A long-standing, and annoying, habit of people from the north of India is to refer to south Indians as dark-skinned or even "blackies"("kala log" or "kallu"), a term the British used for Indians during the Raj. Generally speaking, the bulk of north Indians have similar skin tone to the bulk of south Indians, the difference being that north India has a greater percentage of lighter-skinned people than the south. There are plenty of South Indians who are lighter-skinned than the majority of North Indians, and this generally invokes consternation when a North Indian meets them("Are you an Anglo?", "Are your parents from the north?"). There is, of course, a historical reason behind the genetics, but it is something that is generally played down, because of religious reasons for propaganda. There is a tendency to decry Muslims as illegitimate progeny of Arab invaders, in order to portray them as being un-Indian and thus "foreign", "alien" and unpatriotic. In reality, while a fair number of Muslims probably do have some degree of Arab blood in them, the amount of foreign blood in them is likely quite a bit less than non-Muslim Indians who are light-skinned. The overwhelming majority of Indian Muslims I have encountered are dark-skinned.

In the centuries before the Arab Muslim conquests of large parts of India, areas of the north were subjected to repeated invasions by peoples to the north, west and even north-east(Mongolians) of India. These invasions predictably left behind more than mere destruction, desolation and, occasionally, architectural, linguistic and epicurean influence. Frequently, they left behind genetic stamps on the local population. It is delusional to think or believe that such co-mingling was entirely or even mostly consensual. But the descendants of such relationships tend to look upon their altered and more Caucasian features with pride, oblivious to the probability that those very features were the outcome of less than chivalrous unions with alien invaders, something usually only portrayed for Indian Muslims.

In the south and east of India, European features are also the outcome of the migration of mixed peoples from the north and northwest,  as well as offspring of Arab and other West Asian and southern European traders and of course European cohabitation over the past four hundred years. But all over India, dating way back to some period of unrecorded history, the acquisition of lighter skin and/or Caucasian features has also often carried with it a social reward: higher status in India's caste system, which is so pervasive that it has enfolded alien cultures which came to India as well. All except for the Zoroastrians(or Parsis), who avoided casteism by excluding the progeny of mixed-marriages and forbidding conversion into their religion, and to a lesser extent, the Jews who similarly discouraged conversions but permitted a degree of intermarriage. Zoroastrians still very much retain the skin color and features of their Persian ancestors.

The role of skin color in caste is hotly debated in India, with those disagreeing pointing to the fact that some South Indian Brahmins, for example, are darker-skinned than North Indian farmers of the Vysya caste. I think that argument is akin to claiming that the French are not Caucasian because the Scandinavians have fairer skin. Whatever the reasons, the fact remains that in India, dark skin is to this day associated with a lower caste status and is subject to overt and covert discrimination. Regardless of what some may claim, a simple walk around talking to people on the streets and in the villages will confirm this perception. Interestingly, there is a community in Karnataka, as also in some other parts of India, known as Siddis, composed entirely of the descendants of African slaves. They are still distinctly identifiable as African, despite a degree of co-mingling, and they remain outside the mainstream, not necessarily socially ostracized, but definitely excluded from greater integration, to put it delicately, even with the most discriminated-against local Indian castes.

Siddi farmers in Karnataka

The reason I thought of writing on this topic is because I am increasingly coming to the conclusion that this obsession with light skin and notions of beauty based on the Caucasian standard is behind the apathy, disdain and even outright contempt that Indians seem to have for their fellow Indians, even if most are not consciously aware of their own attitude. This contempt is probably the primary reason behind India's failure to modernize its systems and procedures to go along with increasing prosperity for some of its people. There is an endemic attitude- which elsewhere would be clearly seen as racism- that somehow the poor, who usually look less Caucasian than the rich, exist to serve those "above" them, and that any change in that relationship is undesirable even though some collateral spillover does happen. I call it "shades-of-brown racism". That attitude manifests itself in a reluctance to improve conditions outside one's own home, lest it should have the inadvertent effect of improving the living conditions of the unworthy. There are luxurious private social clubs in India which charge an absolute fortune for membership, and yet I find that immediately outside their high walls is almost always a picture of neglect and decrepitude. I have referred to this in another post as the "local" mindset, which values anything foreign above its Indian counterpart, sometimes with reason, often without. Anything foreign, that is, with one notable exception: African products, including art, music and manufactures, are generally dismissed as inferior, as are Africans themselves. I think it is well worth pondering why that is so.



It's local- Part One

 In the last decade or so, I've been hearing this phrase rather frequently in India. "It's local". At first, I just took it to mean not imported. With time, though, I was able to place it in context, and realized that it meant "of inferior quality".  The flip side of this phrase means, of course, that anything made overseas is, by perception, superior to anything made in India. Perhaps that explains to some degree India's overwhelmingly negative balance of trade.

 Over the years, I've been a critic of India's economic policies, the so-called "liberalization". Not so much for changing the status quo, but the manner in which it was done, and the enormous corruption and ineptitude with which it was, and continues to be, accompanied. Yes, India has transformed. There are real highways built and being built, high-rise apartment buildings in far suburbia, shopping malls seemingly in every upscale neighborhood, a forty-fold rise in two and four-wheeler sales, European designer kitchens in upper middle-class homes, and apparently every international brand name has an Indian presence.

  It's a morphing which is startling and seemingly ubiquitous to a people accustomed to a century of glacial change, but otherwise unremarkable. Unremarkable, because when you look at even a country like Rwanda, which was devastated by a long-running civil war and genocide, you find growth rates which have averaged over 8% over the past decade, GDP has more than doubled, Kigali's grocery supermarkets are better than any I have seen in Bangalore and it is considerably cleaner. Unremarkable, because the same or similar transformation has been occurring worldwide with the advent of globalization, which makes India's rate of progress less than unique in the global context. What is different for India is that it is, more or less, a single market of over a billion people, thus theoretically simplifying business activity, and making it stand out even among faster developing economies. It also lets the Indian government invest in military hardware and research on a scale that cannot be done by less-populated developing countries- unless they band together in a common defense infrastructure- allowing India the luxury of posturing as a major military power.

Kigali's master plan

 However, the legacy of the past continues to haunt modern India, with 90% of the population- contrary to government claims- still in what most other countries would consider poverty. The population has increased by 500 million in the past 40 years alone and is projected to increase by another 500 million in the next 30 years, the vast majority continuing in the subsistence-level poverty of their parents, making more difficult, by orders of magnitude, a task which as far back as the mid-1970s was already considered almost impossibly daunting. The disconnect between the wealth accruing to a small segment of the population and the disregard for the welfare of the people at large was exemplified by the (in)famous words of Lalit Bhanot, secretary general of the Commonwealth Games Organising Committee, who said that foreign notions of cleanliness and hygiene may "differ from our standards". Yes, our standards are "local", at least for the proletariat. One wonders if Mr. Bhanot would tolerate in his own home the same standards he found acceptable in the Games Village, or if his standards at home are noticeably different from western standards. "[T]here has been a dispute with [Planning Commission] figures because there has been a perception with everyone that within the planning commission they have one standard for the poor and another for the rich," says Nikhil Dey, a social activist.

 Most Indians I've spoken with seem to be in denial of the reality, and get quite upset at the suggestion that progress has not, in fact, touched just about every Indian. They point to cellphone penetration, which is apparently at 70%(close to 800 million) now. The fallacy of this claim seems not to impinge on anyone's consciousness. About 350 million Indians are below the age of 20, most of them in families earning less than $80 a month. Realistically, how many poor Indian families, together accounting for almost 900 million of India's 1.1 billion, provide cellphones to their children? Even among the relatively better-off, say those earning upto $200 a month, I would say that cellphone usage among their children is extremely low.

 So how does one account for the 800 million cellphone numbers in use? Simple: multiple phones and multiple SIMs. Even my housekeeper has a dual-SIM phone- as does her husband- and she keeps a couple of "spare" SIMs(which she refers to as "shims") with her. It's cheap enough to do so, unlike most cellular accounts in the west. Most middle-class to affluent people also keep multiple phones and SIM cards, and many of their children do, too. A group headed by Suresh Tendulkar, former chairman of the PM's Economic Advisory Council, reported that 42% of rural Indians(or approximately 300 million people) live on less than Rs. 15(25 US cents) per day. I don't think using a cellphone is exactly a priority for them. So claiming mobile penetration of 80% and projecting it at 98% in two more years is simply delusional, just like various other projections being made in and about India.

 What leads modern, educated and otherwise rational Indians to think that India is on the cusp of achieving developed status or becoming a superpower is that things are being seen in India, in the past decade alone, that have never been seen since Independence. One sees sleek new cars on the road, never mind that their sales total just 2%, in per capita terms, of any western country. There are swanky new high-rise buildings, with luxury apartments replete with Jacuzzis and wading pools, dotting the landscape. None- or at least not most- of this was the case even twenty-five years ago. So it does seem like there is tremendous change going on. But the reality is that this change positively impacts a relatively tiny percentage of the populace- in my estimation, fewer than 100 million. For validation of that estimate, look at first and second-world countries with a population of less than 100 million, and compare economic activity and consumption of consumer durable goods.

 Elite Indians are also unduly sanguine about the runaway population growth, arguing that as the rest of the world ages, India's young population would be able to fill in the depleted workforce. This seemingly sensible argument falls on its face, though, when one understands that in order to fit into a modern workforce around the world, the hundreds of millions of young Indians would need to be educated and healthy, two criteria that are not only inapplicable right now, but also not being adequately- if at all- planned for. Fifteen years ago, there was a rush among western companies to invest in the Indian consumer, having been misled(mostly by expatriate Indians) into the belief that India had a middle-class of 300 million and growing. Today, with a population which has grown an additional 150 million in the meanwhile, there is still no sign of that USA-sized middle-class, and it may or may not actually materialize in the foreseeable future. Truth be told, India's growing poor will eventually be a ball-and-chain shackling the country, not a fill-in for the shrinking global workforce, diverting and consuming resources which would otherwise aid a general rise in living standards. Think of it as the other side of the same coin which allows India its military strength.

 There was an ad in today's local paper from the State Bank of India, which boasts of having Rs. 1 lakh crore(Rs. 1000 billion or less than $20 billion) in mortgage loans. This is one of the largest banks in India. A loan portfolio of $20 billion wouldn't cover even 100,000 homes in a western country, let alone millions. If 100,000 new middle-class homes/apartments were being built in Bangalore this year, it would be huge news, and yet it would scarcely make a dent in the housing situation of this city of 9 million, growing at several hundred thousand a year. It's a stark illustration of the fact that the overwhelming majority continues to eke out their existence, even while the affluent continue to grow their wealth. The rising tide of affluence should have lifted more boats in India than it has done. The failure lies in the lack of foresight, the lack of planning, the corruption and, not least of all, the "local" mindset. The "local" mindset creates an affluent class which is unconcerned with the welfare of the population at large, or with the environment outside their personal properties, and more involved with propping up their own western-inspired lifestyles, cocooned from the real India of the un-deserving masses.

I clearly need more space to address this topic!


Read more on the "local" mindset in Part Two.

It's local- Part Two

 The tragic disconnect between the wealthy and the poor in India is probably best exemplified by the creation of an artificial Indian village, where the rich pay $150 a day(or the equivalent of six months income of real inhabitants of real Indian villages) to play at being peasants. The Gini index for India is greatly skewed by the lack of proper data- or intentionally distorted data- and the unwillingness of government to acknowledge the ongoing failure of projects ostensibly designed to lift people out of poverty. Those Indians who escape the clutches of poverty do so serendipitously, in spite of rather than because of government actions. It's not that government initiatives and policies cannot help. They can, indeed, as China has shown. The failure in India is the failure of intent or, if you prefer, of the "local" mindset. Recently, the Chief Minister of Karnataka, Sadananda Gowda, was compelled to resign, and was replaced by Jagadish Shettar. Mr Shettar's selection of his cabinet, as indeed his own appointment, was embroiled in caste-based controversy. This should have been at least mildly surprising to supporters of the Bharatiya Janata Party, which currently rules the state, because the BJP has always- officially, at least- railed against caste politics and communalism, and portrayed itself as a "clean" party. Some of the ministerial appointees were upset that they weren't given the most "lucrative" portfolios(that is, posts which have higher corruption potential), as reported by The Deccan Herald. The national BJP leadership takes a predictable stand: "It's local." That a party which runs on a national platform of honesty, integrity and patriotism so openly and irresponsibly bases the composition of a State cabinet on caste and lucre spotlights the fundamental apathy of Indians to one another. It's a chase after personal wealth accumulation, principles and the nation be damned. It's as "local" as one can get.

 No doubt some who read Part One are wondering what my objections were to the "liberalization" initiated by then-Prime Minister Narasimha Rao and his Finance Minister(and current PM) Manmohan Singh. I should bring some clarity to my remark. Unlike China- and before that, Japan, Taiwan and South Korea- India's liberalization failed to provide needed protections to its citizens during the process, particularly for the poor; for food and income security, and to a lesser extent, to protect existing and nascent industries against undue economic pressures while they adapt to competition and develop survival skills. To be sure, some industries are still protected, but a large part of the new industrial infrastructure is owned or controlled by MNCs, who are free to(and do) take their profits wherever they please. Take a look at the automotive sector: barring Tata and Mahindra, the rest of the four-wheeler sector is controlled by entities with no commitment to national objectives. Contrast that with China, where foreign participation is limited to a minority stake, with mandatory technology transfer. That policy, combined with China's active industrial espionage and nurturing of its domestic high-tech industry, has enabled the Chinese to go from making poor copies of Soviet-era fighter jets to putting together its own manned space program and GPS system in less than two decades.

 By contrast, India is still unable, despite having some expertise in launching satellites, to build its own turboprop trainer airplanes, and is buying them from a country not particularly known for aeronautical prowess. India buys its short-haul jets from Brazil, which is still considered a developing economy, and doesn't impinge on the Indian consciousness as a technically advanced country. While India has apparently developed long-range nuclear capable ballistic missiles, it is still unable to produce one of the staples of modern warfare: tank shells. Having previously made arrangements with a supplier from tiny Israel, India is now looking once more to Russia for this critical armament. India has also failed to develop a reliable automatic weapon for the infantry- again, a staple of the modern military. Not exactly what one would expect from a country which brags of having "arrived on the world stage" and aspires to be acknowledged as a "global military power".

 In the meanwhile, food insecurity is growing, with farm laborers helping cultivate grain crops whose prices are influenced by commodities sharks on the other side of the world, at the Chicago Mercantile Exchange, compelling them to compete for these staples of life with people earning hundreds of times more than they do. I recall a few years ago when grain prices suddenly skyrocketed. It was attributed to President Bush's ethanol initiative, which allegedly put extraordinary demands on the global grain market. That has turned out to be just so much equine excreta(because Brazil has greatly expanded their own ethanol program for many years without significant impact on global grain prices), but what was accomplished- and what was the intent all along- was to open the door to the acceptance of global grain price volatility manipulated by those without(i.e., outside of) the actual production and distribution system. Money for nothing, like taking candy from a baby.

 Legitimate hedging of crop production has given way to unrestrained speculation which literally takes the food out of the mouths of the world's poor. Commodities trading used to be a low-key, lusterless, bordering-on-boring but necessary component of price stability for industrial inputs and farm incomes. Now it's become a high-stakes gambling activity, with superstar billionaire traders and princely returns to the select few at the cost of food security for hundreds upon hundreds of millions of the world's poorest. Countries like India should de-link their domestic commodities from the global market until such time as the people are able to accommodate world prices. Persistent double-digit inflation is destroying the lives of people on fixed incomes, as they constantly adjust to making do with less. Savings are losing real value even at the highest rates of interest currently available, with inflation running higher than the best rates, making it a double-whammy for people living on interest income: higher prices year-over-year and erosion of their capital base. No doubt some part of the population is seeing their incomes and assets grow quite satisfactorily(and some even spectacularly), but the overwhelming majority are suffering declines in real per-capita incomes, assets, food and water availability, and of course access to education and health care. No number of shopping malls, luxury apartments and other indicators of the high life for a tiny minority can nullify that fact, even if they do provide a convenient veil for those of the "local" mindset.


 In liberalizing India's economy, there should have been some sacred cows protected until such time as the people were able to deal with them without undue suffering. One, and the most important, is the food chain. "Globalizing" grain prices is nothing but disaster for people surviving on less than 50 US cents a day. Another is the financial system, including banking and insurance. While certainly the system needed to be modernized, there was no reason to open up the sector to foreign players at this time, particularly the insurance sector which is almost money for nothing in the virtually unregulated Indian market, and when there is no technology or value-addition being brought to the table. I have argued other points as well with people, such as the unaffordably liberal dispensation of hard-won foreign exchange, which has never been the hallmark of a country seriously building up export earnings as the catalyst for internal growth. For all the talk about the Indian economy being internally driven and not dependant on exports, the reality is quite the opposite. Exports(over $300 billion in 2011), and the multiplier effect from them, probably account for half of the real GDP of the country. Add in the effect of NRI remittances, and it's easy to see how precariously dependent India is on foreign sources of income.

This is the outside of a new restaurant in Bangalore. A perfectly walkable sidewalk has been rendered unusable for pedestrians, who will henceforth have to take to the street. Sure it looks nice, but is it worth having people run the risk of being mowed down by traffic? Why you bother, yaar? Its "local" problem, no?



 But it isn't all government alone to blame. I think there is a cultural indifference to what is perceived as "not mine", and to the effects of one's actions on society. Walk around any "upscale" neighborhood in any city in India. Odds are, you will find beautifully designed and executed homes, some with features like fountains and gazebos until recently only seen in estate homes. The patches of lawn will be immaculate emerald green. There is likely expensive paving, cladding and panelling, pride in displaying a meticulous sense of style and wealth. But that ends immediately beyond the property wall, where you will find sidewalks that are either rendered unusable by the homeowner making them an extension of his garden or using it as a parking space. If neither is the case, you will probably find them in a state of perpetual neglect, unpaved or broken, with trash strewn on them and in the gutters alongside. Money, obviously, is not a constraining factor in keeping these small public spaces in front of these expensive homes tidy and usable, and it is not a constraining factor in many less expensive neighborhoods either. What is a constraint is the mindset that nothing outside the walls deserves any consideration or upkeep. That is someone else's problem, easily dismissed as something "local".


If you aren't bored to death already, go on to Part Three!

It's local- Part Three

This is a Domino's outlet in Indiranagar, Bangalore. Two things are immediately apparent: the business owner doesn't care about the environment immediately outside the restaurant, as evidenced by the trash around the tree and the state of the sidewalk, and he/she/they do not care about the need of pedestrians to move unimpeded on the sidewalk, rather than have to take to walking on the road in this busy area. Another example of the discourteous "local" mindset.

 This is a pivotal time for gated communities in India, which have no current legal basis for gated security. There is a dispute under way in Bangalore, which I am almost certain will be resolved by new legal provisions to maintain the security and privacy of these communities.  The futurists Alvin and Heidi Toffler, in their brilliant book "Powershift: Knowledge, Wealth, and Violence at the Edge of the 21st Century", predicted what a future India would look like. In brief, they said that India would have islands of prosperous secure gated communities, populated by those either working for MNCs or catering in some way to employees of MNCs, and earning globally competitive incomes and living western lifestyles, surrounded by masses of the proletariat living in continuing poverty barely touched by anything resembling progress. It's a powerfully prescient scenario, as the current unfolding of precisely such communities bears out.

It doesn't have to be, though, and a future India could be a more inclusive India. But for that to happen, some fundamental attitudinal changes are necessary. People have been brainwashed by the glittering promise of globalization, that goods and services will freely flow from areas where they are best produced and that everything will work for the best. I am constantly amazed by the ability of people to believe in promises and projections contrasting starkly with conclusions which may be drawn from sober analysis. Take a look at the fundamental premise of globalization: free trade. Is there really free trade? I would argue that some countries permit freer trade than others, but real free trade exists only in the tiniest of countries, city-states, if you will, which are small enough to permit a specialization that serves them well. The American proponents of globalization argue that globalization has brought immense price relief to ordinary Americans because of Chinese sweat shops. The reality is that with declining incomes and rising expenditures, Americans have only been able to absorb the Chinese output through the massive expansion of consumer credit that accompanied the Sinicization of manufacturing and the global outsourcing of middle-class jobs.

Flashback to the 1960s and earlier, when the US was relatively more insular, with import restrictions on competing goods coming from countries with disparate advantages in terms of worker pay, safety, and so on. There were restrictions on interstate banking, let alone transnational banking. Only the wealthy had credit cards, and ordinary people only had store cards, which had to be paid off in months. The average consumer debt was a few hundred dollars, for furniture or Christmas gifts, and was usually paid off quickly. Unsecured debt was virtually unknown. Yet this was a country where people were fairly affluent, could aspire to put themselves through college without taking out huge loans, where innovation, enterprise or sheer hard work could put you solidly in the middle-class, where stock certificates could safely be stored away for a rainy day or for your kids' college funds, where people could look forward to working for 30 years in the same company and retiring on a sufficient pension. It had a balanced international trade, it's national debt was low and barely rose with inflation, and it was a net creditor globally. This was also the same country that people lined up to migrate to.

Now fast-forward to today, and the impact of the globalization which began in 1972 with the induction of Red China into the UN Security Council. The US has become the world's largest debtor, and its people the most personally indebted. Real incomes have declined, higher education and healthcare have become unaffordable. Job insecurity is unprecedented, and research scientists and accountants are being asked to "reinvent" themselves as plumbers, electricians and small businessmen. No longer is it a country that people from Asia dream of settling in, and now Americans seriously contemplate job opportunities elsewhere. Oh yes, fortunes have been made by some, mostly by putting ordinary Americans into debt servitude via personal and government debt. The trillions in profit from government debt along with the additional trillions in consumer and housing debt have found homes somewhere very private. No doubt China has also prospered, but on the back of western debt and incipient insolvency. The big winners here are the MNCs- or, rather, TNCs(Trans-National Corporations)- which have no national loyalties and do not suffer from any desire to be humane. Their goal is simple: acquisitions and profits without borders.

Now, what does this have to do with India, and the "local" mindset? Frankly, nothing if what we want is only rising lifestyles for the few. On the other hand, if we are concerned with lifting all boats, then the needs and aspirations of the many need to be considered. That means giving up the local=inferior or unworthy mindset, being more socially conscious, having the same aesthetic aspirations for your neighborhood as your home, foregoing some entitlements(like a Rs. 2.5 crore imported bathroom sink or luxury weddings in Bali using foreign exchange earned through underpaid laborers), opposing official policies or actions which do not put nation first, and- most importantly- beginning to hold public officials, elected or unelected, accountable for their actions and responsibilities. The problems are not somebody else's, they shouldn't be accommodated with "sab chalta hai" or "swalpa adjust maadu", or dismissed with complacency. China is on the verge of becoming the largest economy in the world but, for all their problems with corruption, official policy puts China first, and globalization and free trade are skillfully given lip-service while they do what they need to. The solution for India will not come from someone else, or from the Bill Gates Foundation or some multi-national conglomerate or NYT columnist beating the "globalization is good for all" drum.

The solution has to be, and is, local. It's you.