Saturday, March 04, 2006

India Deal Is a Big Deal

Bush's trip to India looks like it may be the single biggest thing that he will do in his second term. And that's not to denigrate his second term, which is going like most second terms do: a little ragged, a little tired, lots of missteps, but still with a commitment to acting on the core principles of the first term. It's to say that a deal with what needs to be a crucial economic and military ally for the rest of the century is a very big deal.

Note the following:

  • India is the world's largest democracy and has been for some time.
  • India is the second largest Muslim country in the world, a fact seldom reported on this trip.
  • India is right next door to the Middle East, America's problem, and to China, America's rival.
  • India has a large diaspora in this country, largely still engaged with its homeland in positive ways.
  • Shaking off its tragic experiment with socialism (fly, as SWNID did two years ago, to India via Seoul/Inchon and Delhi, observe the quality of the airports and of the cities that surround them, then ask yourself which country suffered from a devastating war and which suffered from a devastating economic experiment, then ask which is worse, war or socialism), India's economy is growing at a breakneck rate of 8% per year, thanks to its people's commitment to education and its government's commitment to liberalizing business regulations.
  • India has had nukes for a generation and has never used them.

If nobody messes this deal up in the near future, India and the United States are poised to cooperate in ways that will make Asia safer militarily and richer economically. Remember when the cliche, "Finish your dinner; there are starving children in India"? Well, many in India are still hungry, but today the cliche is, "Work harder; there are outsourcing firms in India ready to take your job."

So where's the media on this. Center-right opinion writers get it. We draw attention to the following:

  • The Telegraph, capping a modest summary of the impact of Bush's visit, offers typically restrained but notably warm praise: "After five years in the White House, the 43rd President of the United States continues to surprise us."
  • The Wall Street Journal opens with this dry observation: "Critics of the Bush Administration often lament that its policies have alienated America's traditional allies and embittered just about everyone else. Everyone except, apparently, a billion or so Indians."
  • Conservative pundit and favorite of Mrs. SWNID Rich Lowry notes how remarkable the whole development is and how unreasonable media coverage has been and will be: "That the U.S. is friends with both India and Pakistan has a lot to do with circumstances (the end of the Cold War and the advent of the War on Terror), but it also speaks to a certain level of Bush-administration diplomatic finesse. The administration won't get any credit for it since it runs counter to the media's favored 'unilateralist behemoth alienates the world' storyline."

Indeed, nothing illustrates the MSM's inability to see beyond the bias of its templates than this event. NPR's All Things Considered actually allowed reporter Philip Reeves to say that in response to the Bush visit the "mood" among government officials, the English-language press and the intelligentsia is "euphoric." Reeves went on to say that demonstrators against Bush were largely from Muslim and Communist groups. Yet the web page that archives this report has the bleak heading, "India Deal Could Sour U.S. Relations with Pakistan."

We add the following observation, which is entirely impressionistic. Christianity in India has moved forward with the weakening of traditional cultural strictures that inevitably comes with economic development. So Bush's visit may be significant in yet one more, and in our Seldom Wrong opinion more important, way.


barryg said...

We really need to trade 65 years and 8 trillion dollars worth of research for the furtherment of the NWO agenda.

JB in CA said...

Too bad a significant chunk of that 8% growth rate is due to outsourcing. Things would be much better if it were due to creativity and innovation rather than simply to cheaper labor.

Jon A. Alfred E. Michael J. Wile E. SWNID said...

I'll argue that economic development in underdeveloped countries always starts with the takeover of another country's industry by undercutting its labor costs. It worked that way in Japan, Singapore, and South Korea, and now it's working that way in other parts of Asia.

India will get to the innovation quickly, largely because of its national obsession with education, especially in technical fields.

Barryg, I have no idea how you've arrived at your figures. Are you objecting to the agreement to sell nuclear fuel to India? Would you prefer that India just not have electricity? Or that they power their generators with gas from Iran? N.B. that the refusal to trade with India, especially the refusal to sell India fuel for electric generators, is choosing to keep hundreds of millions of people in penury. I find that immoral, to say the least.

JB in CA said...

I assume you're not arguing from an "is" to an "ought" here (sc., because it is the case that economic development in underdeveloped countries has proceded in such-and-such a way, it therefore ought to be the case that it proceed in such-and-such a way) since that would indicate a willingness to trade in logical fallacies--something even the most staunchly laissez-faire capitalist would frown upon (unless, of course, he could turn a buck in doing so). So perhaps your argument is simply this: the evidence indicates that the best chance India has to pull itself out of economic hardship is by undercutting the labor costs of another country's industry. The problem, as I see it, with this analysis is that it still doesn't tell me why I (or anyone else from my developed nation) should want the cost of my labor undercut in this way. It's one thing for me to give a portion of my income to the poor in India, quite another to give my job to them.

Jon A. Alfred E. Michael J. Wile E. SWNID said...

I don't argue from "is" to "ought" but from "always has been" to "is nearly immutable as an economic truth." The reigning pattern of economic development is first to pursue the advantage of cheap labor in manufacturing (or, as in India, in services as well), and then to build a more sophisticaed economy through the development of capital and the skills of the workforce.

And I insist that it is in any country's best interest to trade with a country whose labor costs are lower than its own. I believe that Adam Smith opens with this very point, applied to more than labor. I can't quote, but I'll try to paraphrase: the wise householder would never make in his home what he can buy more cheaply from a merchant.

We Americans benefit from outsourcing to India as we receive services and products for less money than we would if they were produced domestically. Cheaper prices come at the cost of job losses for some. But being a hard man who reaps where he does not sow, I'll venture that humans, distinguished by their adaptability, are better off learning new trades to make themselves economically viable than by creating barriers to trade, the effect of which is to impoverish everyone.

The outcome of free trade with India's upwardly mobile masses will be some job losses in less productive capacities in this country but lower prices for better stuff for everyone, and lots of markets for the things that Americans make and do best. And if Americans don't make or do anything best, well, no amout of protectionism will help them.

JB in CA said...

So let's say you've shown me that it's in my country's best interest to outsource jobs (though, in actuality, I think you've done more hand-waving than showing in this respect) and that it is also, no doubt, in my employer's best interest to do so. I still don't see how it's in my best interest, especially if it's my job that's being outsourced, along with my retirement benefits that are being eliminated, and my life's savings that are steadily dwindling, and my children that now face the prospect of not having enough to eat.

Lower prices, for someone in this position, are meaningless, at best. Nor is it really plausible to suggest that one who has had his (or her) job outsourced at age 55 (which is not at all an uncommon age to lose one's job in these situations) is better off learning a new trade. The damage has already been done. Flexibility is one thing, but competing for an entry level position in a new trade with young, mobile, energetic workers who are relatively free of family (and other) commitments is more likely to end as a tragic exercise in futility than as a success story, especially when one's only real advantage--years of specific on-the-job work experience--has been rendered irrelevant.

Don't we as a society owe more than this to those who have contributed so many years of honest labor to our common way of life? Or are we simply to surrender to the "immutable" forces of the market? A free market, no doubt, is the best way to achieve economic efficiency and product quality at the lowest prices possible. But aren't some things in life more valuable than efficiency, quality, and affordability? And isn't this just another way of saying that the market was made for man, not man for the market?

Jon A. Alfred E. Michael J. Wile E. SWNID said...

If you're talking about preserving and enhancing social mechanisms for the care of people in difficult economic transitions, then of course "we as a society owe more than this to those who have contributed so many years of honest labor to our common way of life." But protectionism isn't ne of those social mechanisms. It's a means to penury. Decrying free trade because it displaces workers needs to be seen for what it is: a policy that ultimately makes people everywhere less able to meet their needs with dignity.

JB in CA said...

I don't recall advocating protectionism, but since you've brought up the issue, perhaps I can help clarify things a bit.

1. If by protectionism you mean what that term has traditionally meant--i.e., the implementation of tariffs, embargos, or quotas--I'm definitely not a protectionist. I agree with SWNID that those ways of meddling in the economy are usually counterproductive (though I'll allow that in certain emergencies, they may be required as a kind of stop-gap measure).

2. If, on the other hand, by protectionism, you mean any intervention into the economy for the purpose of regulating the market, I plead guilty. But then I'd quickly point out that SWNID himself (or, rather, themselves) is also guilty of the same crime. No one wants a free market in its purest sense because such a beast is inherently defective: it quickly gives way to monopolies, something we all wish to protect against. So the choice is not between protectionism (in this second sense) and a free market, but between different protectionist policies.

3. Now, it seems to me that the best way to think of the economy is as a social institution--our social institution. It is thoroughly integrated into our very way of life, in much the same way as are our political, legal, familial, and religious institutions. Any interference into it from the outside is likely to upset the internal balance achieved over centuries of "organic" social development. Now, of course, that doesn't mean that we should never allow intervention from the outside to correct (or "purify," etc.) any one of these institutions; but it does mean that we should proceed with great caution before we do so, lest we harm the very institutions that give so much meaning (not to mention sustenance)to our lives. Outsourcing proceeds with not caution whatever in this respect.

4. We would never consider allowing unrestricted access to outsiders in our political institutions. Indeed, one of the biggest social problems nowadays can be traced directly to the "open access" immigration policies implemented in the mid-1960s. No political institution can survive if its borders are unrestricted to outsiders. Sooner or later it will be converted into something foreign to the insiders, thus leading to a kind of social alienation and anxiety harmful to all involved (witness our current state of affairs). Why, then, should we allow unrestricted access to our economic institutions? Do we really believe that they are somehow immune to the same kinds of harmful social disruption?