Liberal Globalisation meets its nemesis - Welcome Mr.Trump

The wheel has come full circle

It was 1991. My country was going through a huge period of turbulence. Rajiv Gandhi had been brutally assassinated, and the leading party Congress was rudderless, when a dimunitive but extremely intelligent politician Mr P V Narsimha Rao was thrust into the limelight. All other satraps imagined he wouldn't last too long, but he did. He not only lasted five full years, he ended up transforming India.

India abolishes industrial licensing - headline in Economic Times.
India adopts the New Economic Policy - headline in Times of India.
India opens up for business - headline in Hindustan Times.

As a young man about to graduate from the IIT Delhi, I was a curious newcomer reading these newspapers with intense interest. For the first time, I was introduced to the concepts called "globalisation", "liberalisation", and "privatisation". These were projected almost as the panacea for an economy struggling with rapid population growth rates, but poor industrial output.

Prime Minister Rao thrust India into the golden period of high GDP growth rates (despite all the leaking public services) and ensured that Indian entrepreneurs (like me) got a fair chance at doing what we loved to do - building enterprises. That would have been impossible just a few years ago.

(By the way, the public services have remained leaky till date!)

It was a bright new era. Open borders. An open world. Free trade (whatever that was supposed to mean). A new WTO coming up (Jan 1995). Wow. The world will be a free place, no borders stopping capital or labour.

Today, 26 years later, while sitting with my son about to enter college, I watched Donald Trump say everything that was the direct opposite to what I experienced in 1991.

We will put America First ⇒ The end of liberal globalisation as we know it.
We will ensure that Americans get their due ⇒ The whole Chinese narrative of "free trade" whacked.

We will bring back jobs to America ⇒ The end of a free run for Indian IT companies

We will ensure others don't get enriched at our cost ⇒ Allies, beware!
We will eradicate radical Islam from the face of this Earth ⇒ Pakistan - any reply to that?
We will eradicate radical Islam from the face of this Earth ⇒ Music to a patriotic Indian's ears.

We will ensure that power goes back to the people ⇒ Ooooh, bad days ahead, Establishment.

In the most radical of ways, Mr Trump has made it clear that starting Day 1, he intends to remain true to those who voted him to power, despite the brutal ridiculing he received at the hands of the liberal mainstream media and "coastal elite". Even the media and the elite have powers that are not infinite. While he shook hands warmly with Obama, he made sure to pull the philosophical rug from under his feet almost immediately.

I could hear the globalisation engine emit a loud noise as the gears went into reverse.

Here is my take on what the coming era will hold for all of us :

1. Bad days for Indian I.T. companies, if Trump really does what he said today. Since most Indian IT companies make their profits using cheap labour packaged into dollar-billable assets, their basic model may evaporate. Since these companies are largely into services and lack any world-beating product (say, in consumer internet segment - the market of the future), their profit story may get a rude shock. And don't even imagine what will happen to the hundreds of engineering colleges dependent on "mass campus recruitments" to stay liquid. Bad luck for IT cos. shareholders, as valuations will tumble down the hole. If they don't, it will be another mystery of this story called "globalisation". All  the effort Mr Jinping put in at Davos seemed futile today.
2. Pakistan and China may get the hard end of the stick pretty soon. India has cried herself hoarse reminding China (touchy as they are about "One China") that our own territorial sentiments must be respected. In the most blatant, devious and insulting of ways, the Pak-China combo has rubbed salt into India's wounds. It will be very bad days for that approach, if Trump sticks to his words. And anyway, for Trump "Hindus are a great people". Thank you Mr.Trump.
3. India's overall geo-strategic interests will get a terrific boost. We are not a major manufacturing nation anyway - at least not when compared to China. So any harm that comes to exporters to the US, will be minimal in our case (relatively). We will recover. But for those hoarding trillions of dollars and using that leverage geostrategically, time to make fun of the Commander in Chief is all but over. Good luck to them!
4. The closeness of many Indian businessmen and leaders to Mr. Trump must be leveraged to push India's case real hard. The time is right to reclaim the Indian Ocean Region for a long, long time. The time is right to speak aloud that enough is enough, stay off us. And anyway, Mr Rex Tillerson has warned the dragon to stay off the south China sea islands.
5. More populism across the world - Trump's remarkable campaign (for all the hatred it evoked) will be a template for many more watching him closely. The frustration of the 99% may spill over, flooding and swamping away the riches of the 1%. Anything seems possible now.

To all the liberal lobbies tearing their hair out, it is time for a cold, objective look into what prompted this amazing populist backlash.

Can technology really be allowed to take over millions of jobs?
Will people just sit and watch as elites corner all the benefits progress has to offer?
Will a condescending attitude towards the less fortunate ever sustain in the long run?
Will the narrative of a Utopian future in the presence of dystopian present ever hold?

Mr.Trump's arrival is the beginning of a whole new era of trade, finance and economics. He will not rest until he gets the job again (the next 4 years). In that light, among other things, I wonder what mighty institutions like the IIMs will do now, as the whole edifice on which their lofty existence was built is crumbling right under their feet. First it was Baba Ramdev and Acharya Balakrishna who threw all the polish and facade of modern management practice down the gutter by upstaging monolithinc rivals through brutal innovation and back-to-the-roots. And now Trump. Ha ha - unimaginable.

Welcome to the brave new world, ladies and gentlemen. Get your seatbelts along.

And stay glued to Twitter. He is about to announce something soon :)

Read a detailed analysis on "The Arrival of Donald Trump"

उपरोक्त को हिंदी में पढ़ें
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World trade and India

The storm of liberalisation, privatisation and globalisation that started blowing across the world from the 1980s was so strong that all the standards and benchmarks of world trade underwent a metamorphosis. If a nation wanted to become prosperous, it became not only important but also mandatory that its economy integrated, or tried to integrate, with the 'world economy'. India undertook reforms in several local rules and regulations to ensure this. It is a separate matter altogether that pressurised by several factors acting in tandem, we undertook economic liberalisation from 1991. Prime Minister Narasimha Rao undertook systemic reforms on such a scale that the entire industrial landscape of India began transforming. The Chinese dragon, under the leadership of the dynamic Deng Xiaoping, had realised the need for comprehensive reforms much earlier starting 1979 and had unleashed the wave of change starting from the Special Economic Zones located in the south-eastern coastal regions. That very nation is the source of the biggest headache for us today, when it comes to trade deficits.

The SEZ miracle of Deng

So we woke up from our slumber in 1991. Now the licence-quota-permit Raj in place since the 1950s was on its way out, and quality-based, research-oriented and entrepreneurial-energy driven products and services alone were to flourish in the markets. The good part was that India was a part of the World Trade Organisation (WTO) right from its inception in January, 1995. We had also hoped that the South Asian Association for Regional Cooperation will boost our trade volumes, and our global exports will fly. Every government that came after it pushed the agenda of reforms further. But today, after all these attempts and experiments, our position in world trade remains extremely delicate. It can be attributed to five primary causes, and the solutions lie within those problems.

First, India's share in global annual world trade is less than a measly 3 percent. While there are multiple historical reasons for it, a nation that is home to 18% of world population will lose out significantly in such a scenario. This percentage has to be grown anyhow. Several policy changes are being undertaken even now. These will lead to more business and newer jobs in the country too.

Second, the pathetic state of our exports. If we examine closely, then barring the Information Technology exports where we rock, the condition of our merchandise trade is not too good. Two prime reasons explain this situation - our huge domestic market that makes it easy for even low-quality goods to get absorbed quickly, and our relatively small manufacturing base. We need to improve on both these parameters. Perhaps that is why the government is pushing ahead with its 'Make-in-India' programme with such urgency.

Third, and an important reason, is our introverted nature. This is quite surprising given the fact that our ancestors in the Indus Valley civilisation were great traders, who 5000 years ago would roam thousands of miles in boats without engines. The Silk Route also had India as the most prominent player after China. Then, despite us claiming upto half the world's GDP, we just lost our way. Today is the time to recover that lost glory in the truest sense of the word. We need to work on transforming our mindset. The fame that Ayurveda and Yoga enjoy should find its reflection in our exports as well.

Fourth is the compulsion with which we have resorted to the legal safety measures - pressed by our huge population numbers and omnipresent poverty - that angers our Western partners on fora like the WTO. For example, consider the 'compulsory licensing' norms in Pharma sector, or the 'public stock-holding programmes' in the public services sector. Our trade relations have continuously soured due to this. And simultaneously, the size of trade among the south Asian nations has been so small that no major benefit can be expected from it. Till the time Pakistan does not open its doors whole-heartedly for business with India, we are not going to benefit at all.

The fifth emerging challenge is the eagerness of America to rapidly conclude new mega-trade deals like the TPP (Trans Pacific Partnership) and the TTIP (Trans-Atlantic Trade and Investment Partnership). These would be the new giant trade bloc that would exclude India, and whose regulations, especially pertaining to the Intellectual Property Rights (IPR), would be so stringent as to make our present system look completely anachronous. We need to immediately improve our local IPR structures, including making the administrative and judicial machinery fast enough to dispense effective justice quickly, so entrepreneurs launching innovative products through original research are not frustrated.

The constantly growing youth population and the need to generate new jobs reminds us time and again that we must use opportunities to augment our world trade quantum. In such a scenario, the new rays of hope visible now are the mega-ambitious infrastructure programmes of the government of India like Sagarmala, Bharatmala, High-Speed Rails, Industrial Corridors etc. that hold in them the potential to totally transform India upon fruition. We will need to restructure the entire educational structure of India in such a manner that the needs and imperatives of world trade start reflecting in the study-patterns and examination system of our students. That alone will ensure a steady supply of trained manpower so essential to make these government plans a reality.

Quality in all we do, an extroverted mindset, and the insuperable desire to have our flag flying high across the world alone can transform our genuine potential into trade numbers. It would benefit everyone. Vasudhaiv Kutumbakam (the world is one family) can include trade also, in addition to the staple ingredients love, compassion and trust. After all, it is only when we multiply our per capita incomes by a factor of 3 or 4, will be reach a moderate prosperity level.

[ This article in Hindi originally appeared here ]
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