Thursday, November 15, 2012

Obama Protests Outsourcing ---It is Nothing But Slow Poison Against Indians Working in USA

PM's ability to deliver handicapped by party politics, says Jagdish Bhagwati

Renowned economist and globalisation buff Jagdish N Bhagwati says Prime Minister Manmohan Singh's hands are tied because India's political system is similar to that of the former Soviet Union, where the party was supreme and the chief of government just a figurehead.

"My wife (Padma Desai), who is a Russian expert, gives me good insights. In Russia (in the time of communist party rule), the party was all-important. The president was a figurehead. We have never had that (in India). Now thanks to (Congress president) Sonia Gandhi, the party is entirely important and the prime minister is at the receiving end," says the Mumbai-born Indian-American economist.

The professor of economics and law at Columbia University adds that the "power shifting completely to the party" has taken a huge toll on reforms.

"His (Singh's) ability to deliver reforms is handicapped by the fact that the people in favour of track-II reforms (social spending, etc) around Ms Gandhi are not appreciative of the fact that track-I reforms (growth-oriented initiatives) are absolutely necessary, that we need to intensify and broaden them to continue making a direct impact on poverty and generating revenues (for welfare schemes)," says Bhagwati.

The author of books as seminal as In Defence of Globalisation and The Wind of the Hundred Days: How Washington Mismanaged Globalisation declined to name the people "around Ms Gandhi", saying he was "talking about the system, not people".


While "this is the (political) tragedy India is currently facing", Indians in the US too are facing a sad predicament thanks to misleading propaganda over outsourcing, Bhagwati says.

He argues that though outsourcing is hardly the reason for joblessness in the US, President Barack Obama's "continuous condemnation" is leading to Indians getting a bad name in the US.

What is laughable is that Indian lobbies don't understand political games that American politicians play, he rues. "He (Obama) actually won the election largely because he was continuously condemning outsourcing, which he knows is an absurd position. But it is a populist position. He got a lot of mileage out of it apart from helping out Hispanics on immigration. There, too, he played politics. He did it in a way our Indian lobbies don't even understand because he gave what is known as the Dream Act, which is designed in such a way that young children who had come with their parents and had lived in the US for a certain number of years are given work permits, essentially. If you look at who was being helped, you find more than 80% are Hispanics. It was aimed only at the Hispanics. You saw Indian lobbies also celebrating. You see, they don't understand this," Bhagwati says, laughing.

The campaign against outsourcing is a steady poison, notes Bhagwati, emphasising that anti-Indian feelings are very much in the air in the US. "Our lobbies are doing nothing about it. You know there is this streak in us that we don't face reality," says the 78-year-old professor, who is currently in India.

"Someone has to tell Obama: look you've won your election. Stop talking about outsourcing. It complicates relations," he says.

Bhagwati claims Obama has no real "feelings" for India. That Obama carries a "little Ganesh" with him for good luck is totally irrelevant, he argues. "When you sayoutsourcing, nobody is thinking of China. About China, they think of exchange rate manipulation and all kinds of cheating. But if you ask an average person on the street in the US: what do you mean by outsourcing, then he will say it has got to do with India," notes Bhagwati.

It is not surprising then that somebody goes berserk, like the man who went on a killing spree at a Sikh temple in Wisconsin, he adds. "It is like the Sherlock Holmes question in The Hound of the Baskervilles: why didn't the dog bark? You have to ask the question: why did this guy pick on the Sikhs and not the Hasidic Jews (who look much more like Osama bin Laden than any other)?" asks Bhagwati.

Bhagwati says he and co-author Arvind Panagariya have addressed the debate yet again in their new book, India's Tryst with Destiny: Debunking Myths that Undermine Progress and Addressing New Challenges. This book tackles many policies-related myths propagated in India over the past several decades, he says.

"A lot of them (even luminaries such as Amartya Sen and Mahbub ul Haq) used to say that growth wouldn't influence poverty. Now, it is clear that growth did influence poverty. And they did shift their arguments continuously... (those economists) are like New York's cockroaches. You can't wipe them out. They will turn up perennially," says Bhagwati, claiming that he stands vindicated in his position that redistribution alone cannot make a big impact in bringing down poverty.

"Until 1991, it was reasonable to argue that growth would influence poverty. After 1991, we could say that clearly. Growth has the capacity to pull more people into gainful employment. I call it the pull-up affect, not trickle down," says the Columbia University professor.

The book also debunks the myth that the Kerala modelof development has triumphed, says Bhagwati. "You can't go by a few years' experience (referring to Kerala's growth, which is on a par with the national average for the past many years). You have to take a longer perspective in economics," he says, adding that "Kerala started off with spectacular indices: high literacy, low infant mortality, high life expectancy, etc. On social indicators, the state was way ahead. (Over the past 20 years), there is only extremely pedestrian change (in those indices) in Kerala."

"In a state like Gujarat, which still has bad social indicators, the improvement from 20 years ago has been huge," he adds.

Kerala, he argues, had high social indicators thanks to a lot of factors and one of it, again, is globalisation. "That is what we found out. Apart from foreign remittances from the Gulf, the state was exposed to global trade (for centuries), especially in spices. If it (Kerala) had not been active in the world economy, they would not have been able to achieve that," Bhagwati says.


Regional trade blocs that are gaining in strength across the world are undermining the spirit of liberalisation, points out Bhagwati, who regrets that it has become increasingly difficult for economists to discourage policymakers from pursuing such pacts. "Very few people want to worry about what is happening to the trading system. You just worry about yourself," he says.

"I have always maintained that the more bilateral and regional trade agreements you have, the more you are fragmenting the world economy. This is what I call the spaghetti bowl effect in economics," says Bhagwati, who coined the word to refer to complexities that arise from the application of local rules of origin in free-trade agreements, leading to discriminatory trade policies. "What all this leads to is increased complexities," adds Bhagwati, whose students, among others, include Paul Krugman.

As regards China - where the ruling communist party on Wednesday concluded a high-level summit to choose a new leader - Bhagwati says, "You cannot defend their politics. In the 21st century you can't have such a country that suppresses human rights (and gets away with it)." He also pokes fun at China's trade practices, saying, "For the Chinese, copyright is all about the right to copy."

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