Super Economies: America and India – Where Do We Go From Here?

In the first part, we looked at the preamble that Raghav Bahl builds for his case for India’s potential case in the coveted SuperEconomy club. In the second part, we then looked at the Raghav Bahl’s separate chapter-wise exploration of the past events of the international stage, wherein the involvement US, China and India, translated into the future case of ‘Shall it or shall it not ?’ for India’s Super Economy status. In the third and penultimate part, we looked at how Raghav Bahl views the points of common heritage, common systems of governance, a critical mass of Indian Americans and examines whether these two great parallels will ever, if at all, converge.

Raghav Bahl thus completes his panoramic analysis of the factors that brings India at the present critical junction of its future journey to the SuperEconomy status. In the concluding part, we join Raghav Bahl to see Where Do We Go From Here?

Super economies 4Geopolitics seemed to be the driving force in the 20th century. That dramatically underwent a change in 1989 with the fall of Berlin Wall. By the end of the century, Japan was failing to deliver on the great post-WWII promises expected of it.EU, established in 1993, was not ticking as economic powerhouse as was anticipated. The reforms undertook in China, as well as in India, had seemed to bring in a flurry of development, and hope.

9/11 attack, at the dawn of 21st Century, changed all that…Almost imperceptibly; the forces of globalization began to change the nature of geopolitical power, once primarily exercised through the State’s military might. The sphere of influence was getting increasingly leveraged by citizens, businesses and non-governmental agencies through economic, cultural and humanitarian channels.

While the SuperPower era was characterized by a cold war of estrangement and impassivity, The Age of SuperEconomies engenders a much ‘warmer’ kind of interaction during the moments of conflicts. In citizen-to-citizen interactions too, the Age of SuperEconomies is unrecognizable from those of SuperPower era.

It is this extraordinary level of integration that distinguishes the Age of SuperEconomies from the SuperPower era….And yet, today’s world mirrors the Superpower Era in one crucial way : The one-party states like Soviet Union or China have continued to flourish under rigid government controls.

What Europe was to 20th Century, Asia will be for the 21st Century : the core theatre of global commerce and conflicts, where aspirations and political ideologies collide. For the first time in 500 years, the bulk of global power resides not in Europe or America but in Asia.

Globalization has precluded of a ‘cold war’; countries are economically so interdependent that no trading partner can be ignored, isolated or quashed without wrecking the entire global order in one or more major ways.

Just as no one could envision the Age of SuperEconomies arising from the remnants of Cold War, we probably have no way of knowing how the geopolitical landscape will unfold going forward. Of all the possible developments that would transform the world by mid-21st Century, these five seem most likely to happen:

  1. The birth of NATO and NAFTA for Pacific will help stabilize Asia. The economic Integration among Asia’s democracies will counterbalance China’s hegemony.
  2. Robust growth of India, combined with America’s success in the recovery of its own economy will help the combined growth of the two economies dwarf that of China.
  3. China will reclaim Taiwan and strengthen its foothold in the South China Sea.
  4. America, China and India will unite to forestall Islamic terrorism.
  5. China will become ‘near-democracy’, thereby becoming a more open society.

Most of the considered reviews that were published when the book was released had, more or less, painted Raghav Bahl’s version of Indian Turtle vs. Chinese Hare race as the one painted by having put on Rose coloured glasses. But, like him, every one of us knows pretty well what is wrong with the way have been approaching our destined economic, and thereby social, pre-eminence. In more than the two years that the book was published, the economic and political landscapes in the three principal theatres of USA, China and India have scripted quite different, unexpected and certainly the unintended ways.

For India it is no more question of whether it will be able to size the opportunities available at this most interesting phase of its journey. The question that every Indian must ask and answer is what everyone should do to enable India leapfrog the economic growth and thereby, social and humanitarian challenges that will come up on this journey. India has to clearly identify forces that can help it to remain the game and sustain its staying power over the long haul. The plot that is being etched is quite tantalizing. But it is a once-in-a-lifetime, Do or Die situation for India. Every Indian should do every thing that he or she should to realize this, if not for themselves, if not for becoming a Super economy, at least for its generation that will come in the future.  That is the cross of responsibility that the present generation carries on its shoulders.

Super Economies: America and India – Heritage Link, Democratic States – Positives Enough for Convergence !?

Super Economies

America, India, China and The Future of World

By Raghav Bahl

ISIN: 978-06-7008-812-6 ǁ Publishers: Random House ǁ Price: Rs. 699/-

In the first part, we looked at the preamble that Raghav Bahl builds for his case for India’s potential case in the coveted SuperEconomy club. In the second part, we then looked at the Raghav Bahl’s separate chapter-wise exploration of the past events of the international stage, wherein the involvement US, China and India, translated into the future case of ‘Shall it or shall it not ?’ for India’s Super Economy status.

In this third and penultimate part, we will see how Raghav Bahl views the points of common heritage, common systems of governance, a critical mass of Indian Americans and examines whether these two great parallels will ever, if at all, converge.

Super economies 2Foetal Siblings or Estranged Democracies?” draws on the pre- and post-independence America and India. The first common challenge both nation faced was to create a federal union out of the group of separate, sometimes disparate, states. Indeed, like America 150 years before, India was blessed at birth with a set of wise and principled leaders who guided the country with their foresight and courage. America’s experience in tackling the challenges that arose during its first century of free-market democracy can be instructive to India, from its transition from an agrarian economy to largely an industrial one.

As America grew and prospered in the nineteenth century, the Puritan ethics of simplicity, hard work and fair play gave way to a more materialistic, aspirational mind-set of what came to be known as “robber barons’. First used to describe medieval nobleman who ambushed traveling merchants and demanded payments or confiscated their goods, the term “robber baron” initially carried a negative connotation, implying ruthless, lawless money grabbing. As the America grew in its economic strength, the term got tagged to the ruthless new class who gained in the riches. This was partly as a result of technological innovation, boosting efficiency and competition which asked nothing of ideas of art and science, but the application towards ends of use and profit. The influx of some seven million immigrants between 1820 and 1870 only heightened the shift.

America’s first generation titans of industry started poor and scrappy. They found themselves torn between the national doctrine of ‘equality for all’ and the rise of ‘free-booting citizen’ who by his own efforts, by whatever methods, had wrested for himself a power that flung its shadow upon the liberties and privileges of others.

With the Government committed to free-market capitalism, it became frightfully easy for these industrialists to expand their holdings, in the process building up properties that East India Company would have envied.

Like the excesses of East India Company, which prompted London to step in, the behaviour of Gilded Age (end of 19th century period) tycoons spurred new legislation to help modulate America being free-market economy.

Since then, the period has undergone dramatic historic revision. After all, one man’s ‘robber baron’ is another’s ‘visionary entrepreneur’. The term ‘political entrepreneur’ who used government subsidies and patronage to build their empires and stifle competition and ‘market entrepreneur’ who simply built superior product at a lower cost now gained recognition.

Thanks in the large part to their legacy; today’s entrepreneurs operate in a drastically different world – one that is not only more global, but vastly more competitive, inclusive, regulated and democratic.

Post-1991-opening of the then regulated economy, Indian tycoons can be classified as ‘reform barons’, who seized the opportunities afforded by the economic liberalization. India now also has ‘first-generation barons’ who have built widely respected businesses from scratch.

Unfortunately, it is neither first generation nor reform barons who are dominating the headlines today. It is the another class, so-called less principled ones, the crony capitalists, who use corruption and cronyism to disproportionately benefit from the allocation of the country’s natural resources at stage-managed low costs.

Rather than allow similarities to let them take one another for granted or needless criticizing each other for the apparent flaws, America and India should use the core likeness and advance the self-correcting powers of the democratic form of governance.

In “The Centre Will Hold “ with a sub-title of ‘Democracy and Law’, Raghav Bahl takes up the subject of similarities in the forms of governance in USA and India, as the modern states, with respect to India’s tryst with the status of being (or failing) a SuperEconomy. George Bernard Shaw allegedly once quipped that America and England are ‘two counties separated by a common language’. Making a parallel comparison can also be made between America and India, Ogilvy & Mather’s India vice-chairman, Madhukar Sabnavis considers two counties separated by a common political system. Furthermore, both countries are home to multi-cultural populations. America’s diversity is largely the result of immigration of from across the world, whereas India’s diversity has grown out of its long history as a sprawling collection of isolated, highly territorial regional populations. That makes US qualify as traditional nation-state, while India is better defined as ‘state-nation’. While the traditional federal system is ‘symmetrical’, India’s is asymmetrical.

Holding together a collection of disparate factions requires far more strategic savvy and collective will….whatever the difference in form or style, however, American and Indian democracies share an essential character and spirit.

A successful democracy depends on achieving a balance between centralized and decentralized forces and serving the interests of powerful without excluding the disenfranchised. In this, both, US and India have largely succeeded.

A democratic system may not guarantee upstanding conduct, but it does guarantee demanding transparency, checking the power and pursuing the justice… the ability to speak freely is perhaps the most essential check on runaway power….In a democracy, no matter what goes wrong, the rule of law ultimately prevails…But no process better highlights the connection between US and India – and their disconnect with China – than the peaceful transfer of power. In a democracy, protocols exist to handle even the most unforeseen circumstances…The good news for China is that if it ever does decide to embrace democracy, India, more so than US, can provide a shining example of successful, multi-national state….In the meanwhile, India and US will draw closer, driven by a mutual appreciation of their democratic institutions, their drift towards centre, and the desire to overcome the diplomatic obstacles still blocking their way.

In “Treading Softly”, with a very speaking subtitle of ‘The Race to Win Investors and Other Admirers’ Raghav Bahl takes a very close look at the grass-root economic factors that can make, or unmake, India’s foray to the SuperEconomy club. In atmosphere that sometimes it takes more than three days just to transport goods across a state boundary…. Investors driven strictly by short-term bottom-line considerations would chose China. Gurcharan Das says that, ‘India is rising from below, unlike China which is rising from above. From below is more enduring, happens irrespective of who is ruling, the people make it happen’. What India needs, Gurcharan Das says, is a strong liberal state. Such a state would have the authority to take quick, decisive action; it would have the rule of law to ensure those actions are legitimate; and finally, it would be accountable to the people. But achieving this will not be easy, says Das, because India has historically had a weak state and a strong society.[ Reference: India Grows at Night : A Liberal Case for a Strong State][1] . In a Goldman Sachs Report “Ten Things for India to Achieve its 2050 Potential’ (Jim O’Neill and Tushar Poddar, 2008) notes that India could be 40 times bigger by 2050. For this to happen, it needs to implement many changes like improve the governance, control inflation, introduce credible fiscal policy, liberalize financial markets, increase trade with neighbours, raise its basic education standards, increase quality and quantity of its universities, boost agricultural productivity, improve its infrastructure and environmental quality……Hard power may still come more easily to China than soft power, but as it settles into the role of SuperEconomy, it will eventually figure out how to win hearts and minds naturally, instead of by cold calculations.

The Ties That Bind” is the Raghav Bahl analysis of The Power of the Indian Diaspora. In the globalized Age of SuperEconomies, the diaspora populations hold unprecedented economic and diplomatic advantage. Of all the America’s diaspora populations, Indians are the highest-earning ethnic group, in the fields from media to medicine….Other immigration groups view unparalleled success of America’s Asian Indians with a mix of admiration ad envy….Americans’ attitude towards Asians in their midst are inseparable from their feelings about Asia itself…Indian Americans may be the secret key to securing India’s future both as a twenty-first century SuperEconomy and as a steadfast US ally.

Raghav Bahl thus completes his panoramic analysis of the factors that brings India at the present critical junction of its future journey to the SuperEconomy status.

In the concluding part, on 6th March, 2016, we will join Raghav Bahl to see ‘Where Do We Go From Here?’.

[1] India Grows at Night: A Liberal Case for a Strong State

Super Economies: The Settings of an International Plot: Shall or Shall Not?

Super Economies

America, India, China and The Future of World
By Raghav Bahl
ISIN: 978-06-7008-812-6 ǁ Publishers: Random House ǁ Price: Rs. 699/-

In the first part, we looked at the preamble that Raghav Bahl builds for his case for India’s potential case in the coveted SuperEconomy club. In this second part, we look at the Raghav Bahl’s separate chapter-wise exploration of the past events of the international stage, wherein the involvement US, China and India, translated into the future case of ‘Shall it or shall it not ?’ for India’s Super Economy status.

Super economies 2In “From Falling Towers to Falling Tickers”, Bahl sees “The Dawn of Super Economy Era”. The events of 9/11uninteionally created the new opportunities for the developing nations, hastened the levelling of global playing field, ushering in new geopolitical order, whose contours would be boldly sharpened by the collapse of Lehman Brothers seven years later. The three most important words of the decade following 9/11 turned out to be not ‘war on terror’ but ‘made in China’ – be it supply of cheap goods or pouring in of Chinese savings into US Dollar….It was no accident that ubiquitous term now used to describe the first wave of globalization – BRIC(S)- was coined in aftermath of 9/11. The customised model of these countries, based essentially on free-market capitalization, allowed India and China to heal quickly from the wounds of 2008 financial meltdown.

Raring to Go” focuses on “A Growing Concert of Democracies” in the face of newly assertive China’s experiment to strengthening its grip over trade and diplomacy. Rare Earths became the symbol. By the turn of 20th century, China was supplying over 90% of world’s rare earth metals, even though its own resources were of the order of third of the global reserves. The true extent of China’s stranglehold on rare earth became alarmingly clear after a show-down with Japan in September, 2010. Even as it denied any official embargo, the shipments of rare earths to Japan drastically dwindled. China’s efforts to improve order and price leverage unintentionally driven the revival of global rare-earth production in the US and allied democracies. The united economic power of the democratic world proved to be an antidote to China’s combativeness.

Neutral No More” portrays the developments in Burma during the end-of-20th-century-beginning-of-21st-century. During the course of mid-20th century, Burma’s relation kept swinging between India and China. However nullifying the results of 1990 elections, the Military Junta sought to isolate Burma back towards democratic reforms by way of series of trade and economic sanctions. That gave China a right window to enlarge influence in the resource-rich land. However, by mid-1990s, India’s leadership began to adopt a ‘strategic realistic policy’, which favoured the limited engagement with Burma’s military rulers. Burmese military leadership’s wariness of Chinese-backed Maoist insurgency in the hills went on to aggravate over a period of time. So the Junta started diversifying its support system. India went on balancing its relationship with autocratic regime on one hand and the pro-democracy movement on the other hand. By 2011, the Junta was disbanded and was replaced by nominally civilian government. The new government hardly lost any time in unchaining Chinese shackles over its economy. Burma was now deftly playing the same multi-alignment game, mastered by the countries such as Kazakhstan in trying to escape the Soviet-Russian sphere of bear-hug influence. With most recent win Aung San Suu Kyi’s NLD the sense of transformation is now palpable.

The Burmese Story reinforces the efficacy of rare-earth showdown coordination of the democratic nations to counteract Chinese adventurism. India’s new strategic ties with countries, as varied as Japan, Australia, Singapore, Indonesia, South Korea, Vietnam, erstwhile Soviet-bloc countries as well as its neighbours continues to gain its strong impetus against the mighty dragon under PM Narendra Modi’s present central government too.

A Region at Sea” maps, primarily, South China and, secondarily, the Indian Ocean, as the main theatres of rivalry for the 21st century Super Economies. The fact that 80% China’s oil imports travels through the crowded Strait of Malacca across South China Sea partly underscores the strategic importance of the erstwhile historic events. China appears keen to expand its presence not only in South and East China Seas but also in Indian Ocean, where it has ‘helped’ in ramping up the ports in Sri Lanka, Bangladesh and Pakistan.

China’s increasing marine power has spurred small littoral states like Vietnam, Singapore and Malaysia to bolster their naval capabilities. Though, albeit tentatively. India keeps backing their tiffs with China.

China’s actions in South China Sea have tested the alignments of 21st century in much the same way its approach to Burma and rare-earth metals did. Deterring China in the South China Sea has proven far more challenging for Team Democracy than solving rare-earth crisis or winning over Burma. For one thing, many Chinese harbour an unshakable conviction that their sovereign claims are legitimate. At the same time, it also believes that US has absolutely no legitimate claim to the region, and is merely using its power to egg on China’s rival claimants….Fortunately, China is not eager enough incite actual military conflict in Asia’s waters.

In the age of Super Economies, the most promising bulwark against Chinese creep comes not from US but from the rapidly strengthening bond between Japan and India. Outwardly, Asia’s two largest democracies have little in common, but their cultural and religious connections stretch back to centuries.

To be sure, India and Japan have gone out of their way to reassure China their goal is not containment. As their bond solidified, the language of Indo-Japanese partnership grew less circumspect….To hedge its bets, China has explored broad new west-oriented foreign policy.

The fact remains that the today’s world powers don’t need to choose between being rival or allies; they can be both, or neither. Managing such bifurcated relationship requires a revolutionary kind of teamwork, careful coordination of policy, purpose and rhetoric among the like-minded countries.

Aligned With India, But Allied With Pakistan” is ‘The Great American Paradox’. The 9/11 incidents linked Osama Bin Laden’s liquidation, US presence in Afghanistan and similar incidents led to sinking of Pakistani public opinion of America to the lowest. Correspondingly, Americans too did not think much better of Pakistanis…The imploding US-Pakistan alliance heartened – or less surprised – India. The cross border sponsoring of extremist terrorism seems to have accelerated the convergence of US-India strategic interests. For America, the old adage – India can be friend, but not ally and Pakistan can be an ally but not a friend – was seen to be turned upside down. Pakistan was behaving neither like a friend nor like an ally and India was suddenly exhibiting signs of becoming both.

With Osama Bin Laden dead and Afghanistan’s future uncertain, what was left of US-Pakistan partnership quietly unravelled…One of the tensest issues between them was nukes – or rather, the security of nuclear armament in the hands of Pakistan. As the only Muslim-majority country in the world with a successful nuclear weapons programme, Pakistan would be the first stop for Islamic radicals looking for nuclear option. Pakistan’s continuing ability to secure nuclear arms remains suspect in US eyes.. As Pakistan’s behaviour grew increasingly defiant and irrational, the US found itself looking more and more to India. While preparing for departure from Afghanistan, India seemed more in place to occupy the US space. So far, India’s assistance to Afghanistan has been entirely economic and humanitarian…The continued instability in Afghanistan seems to raise the risk of India – Pakistan (probably nuclear, this time) war. The best option to try to reduce Pakistan’s India-obsession is to increase the cross-border trade and transit between the two countries. Another option is for India to rise above squabbling and push for progress on the Kashmir issue, fostering the dialogue while reducing it military presence and addressing humanitarian abuses…But the best hope may yet come from another giant presence lurking on the border – China. China has remained on the side-lines for most of the Afghan conflict; however it has started adopting a more active role once the present theatre starts to wind down. China also continues to exert subtle pressure on Pakistan t crack down harder on terrorism if its wants their economic relationships to grow.

Afghan region could end up being the first great theatre of Super Economic collaboration among US, China and India. Unlike in South China Sea or the Indian Ocean, where they play a competitive game of brinkmanship, their strategic interests align in seeing an orderly, growing AfPak as their best chance for curbing terrorism and advancing peace and prosperity in the region, and beyond.

We will continue with Raghav Bahl’s detailed background analyses in the next part – Super Economies: America and India – Heritage Link, Democratic States – Positives Enough for Convergence !? on 21st February, 2016………………….

Super Economies: A New Century, A New Power Dynamics

Super Economies

America, India, China and The Future of World

By Raghav Bahl

ISIN: 978-06-7008-812-6 ǁ Publishers: Random House ǁ Price: Rs. 699/-

Super economies 1Our times are characterized not by estranged superpowers building formidable arsenals, but by engaged societies building a robust global economy. Emerging countries are redefining the geo-economical (and geopolitical) dynamic in the new world order; a soaring GDP and a booming population are the new indicators of a nation’s strength.

The 21st century will be led by a handful Super Economies – large, prosperous counties with a fairly high growth rate, ranking among the world’s top trade partners, commanding 15 to 20 % of global GDP; having nuclear arms but using economic leadership to effect significant changes.

A New Century, A New Power Dynamics

The WWII rearranged geopolitical landscape to produce the Age of Superpowers. From ‘50s through end of ‘80s was the period of great Cold War conflict between the Soviet block and US and its allies. Even as the political conflict pivoted around ideological – communism vs. democracy or capitalism – eyeball-to-eyeball real ground realities were played through nuclear arms race. Only when Berlin Wall fell in 1989 did the Cold War end, and with it the bipolar Superpower era. For quite some time, USA ruled supreme.

Between 9/11 attack and subprime meltdown of 2008, America’s place as numero uno power of the old world was deeply shaken. BRIC(S) economies had started to emerge as alternative power centre in the beginning of 21st century. If the 20th century power rested mainly on in the hands of bureaucrats, country’s military was its main instrument of influence. This is now replaced by power of the marketplace in which economic prowess emerged more influential than the military strength in driving the global agenda. What Superpowers achieved with missiles and warships, The Super Economies seek to achieve with economic leadership, organising multilateral trade dialogues, setting the terms of inter-country engagement and using tough negotiations to establish everything from exchange rates to climate policy.

The Super Economy recognises the superior value of ‘soft power’ – what Joseph Nye defined as the ability to get what you want through attraction rather than coercion or payments[1] – and is adept at deploying its economic and cultural assets to win influence.

Even after the major disasters of 9/11 and 2008 financial meltdown, USA has recovered economical as emotional Super Economy leadership role. Even as large part of old economic activities or low-end activities of current times remaining off-shore, US has carved out its prowess in high-tech fields like nanotechnology and digital manufacturing, advanced software(s), composite materials or 3-D printing to name a few. Crumbling big-city infrastructure has spawned creative public-private partnerships to undertake the repairs and reconstruction. Otherwise erstwhile advanced economies of Europe or Japan are beset with varying degree of structural constraints.

Of all the emerging economies, China has earned the spurs of Super Economy. Its Purchasing Power Parity adjusted GDP has surpassed that of USA, for the first time in 40 years. The recent surfacing of some major issues and too rapid economic growth has given birth to a hot new debate on the US-China race outcome. Most of the Western economists firmly bet for American supremacy in the foreseeable future. However it should be noted that they do not manifest confidence, in equal measure, in pushing aside the long term Chinese dominance of world affairs.

While the Europe dominated the 20th century, the Indian Ocean is clearly accepted to occupy the centre of attention, in military and economic terms. For the first time in 500 years, the bulk of global resides in Asia.

That puts India in the right place at the right time. Raghav Behl bets strongly in India taking over as Super Economy in wake of decisive mandate in favour in wake of decisive mandate in favour of the present Narendra Modi led BJP/NDA government. This is in spite of India being critically hobbled by among other things political extremism, corruption and expanding rich-poor divide. [2] China’s rise an economic superpower has unintentionally helped India and USA into a closer strategic alignment.

Raghav Behl goes on to trace India’s potential journey to Super Economy status through several happenings and factors, each one being presented as a separate chapter, which we will take up on 2nd February, 2016,  in the next part of this article.

[1] Joseph Nye on Soft Power

[2] Will India become a Superpower? – Ramchandra Guha