The re-Education of a businessman

What business schools need to do

From The Statesman

CYBER AGE - ND Batra

Business schools emphasise quantitative analysis and sophisticated computer modelling as if real life in the street could be enclosed in a Gaussian Bell Curve and events could be predicted within margins of error. But modern tools of business and economics cannot capture outliers, for example, the rare and extreme event such as the global financial crisis that is crushing us today.

While one cannot prevent a tsunami from hitting a country, one can certainly imagine such an extreme event occurring and build enough reserve resources to reorganise and restructure.Nor do business schools teach how to resurrect and rebuild the most invaluable human asset: trust and confidence. How do you restore people’s faith in a system that has failed them?

When the CEOs of Detroit’s big three automakers went to Congress for a $25-billion bailout to avoid bankruptcy, member after member asked them why they should trust them for doing the right thing for taxpayers and consumers. Show us your business plans before we give you the money, they said, after scolding them for flying in in their private jets. The best argument the trio could muster was that bankruptcy would put millions of people out of job, which was not only unpersuasive but also a dangerous half-truth.

The foreign automakers ~ Honda, Toyota, Hyundai, BMW and Mercedes ~ who run non-union auto plants in the South are after all doing not that badly in these bad times. No one wants Detroit to disappear as an important auto-manufacturing hub that radiates its energy through every walk of American life and directly and indirectly affects the lives of 2.5 million people.

But Detroit is an exemplar of failure in persuasion. It has failed to persuade the American consumer that its cars are better than those made by Germans, Japanese and South Koreans. It has failed to persuade Congress that it is capable of making better cars ~ fuel-efficient and green. Business schools claim that they create future business leaders but they don’t teach the fine art of how to become influential in a democratic society. They train technocrats who feel more comfortable with their BlackBerrys and talking into Bluetooths rather than sitting across a hostile group of people such as a congressional subcommittee and turning them into friends.

In the ultimate analysis doing business is about persuasion. Therefore, what business schools need to do is to develop a new concentration of courses that prepares MBA students for creating and exercising soft power. For want of a better term, some people call it lobbying, though I believe advocacy is a better word. Mr Richard Hall and Mr Alan Deardorff of the University of Michigan wrote in the American Political Science Review (2006) that, “Professional lobbyists are among the most experienced, knowledgeable, and strategic actors one can find in the everyday practice of politics.” But lobbyists are sometime reviled as unethical because most people think of lobbying as greasing, golfing, wining and dining ~ an unfortunately negative attitude about a socially useful activity.

Lobbying is a multimillion-dollar global service industry. China, India, Israel, the EU and Arab countries, for example, have hired some of the best lobbyists to look after their interests in the US. The US-India nuclear deal would have never been passed by Congress but for the excellent work done by some very talented groups of people who changed perceptions about India even though the country did not sign the Nuclear Non-proliferation Treaty. Chinese lobbyists want to ensure that Americans do not turn protectionist.

American lobbyists abroad (call them by whatever name you like) prowl and trawl throughout the world wherever decision-making power is concentrated. They know how to negotiate with the powers that be and use the news media and other resources to protect their national interest. Lobbying substitutes the power of the gun with the power of the tongue. In the US, lobbying is a legitimate activity protected by the First Amendment. In other democracies too, lobbying is considered a rightful and justifiable activity.

One of the most arduous tasks for anyone is to unravel and understand the labyrinthine activities of the US Congress ~ how it works and wields power through its committees, subcommittees and public hearings. How issues emerge in the public consciousness and how they are transformed into bills that become laws.

It is important for us to understand and appreciate the role of lobbyists in the halls of power and how they facilitate legislative processes both at Capitol Hill and in state capitals. If you take away lobbyists from Washington, Congress might turn into a permanent lame-duck institution. In fact, the failure to help the Detroit automakers is as much a reflection on Congress’s disarray as it is of the big three automaker CEOs’ inability to change the perception that they can do better.

Apart from being extremely knowledgeable and strategic thinkers, lobbyists put to use an indispensable tool of persuasion, which is negotiation. While it is said that most things in life are negotiable, the art of negotiation does not come easy whether one is dealing with friends or foes.Another important aspect of lobbying is to build and manage public campaigns, which include political (presidential), corporate (as the big three are doing now), and global (environmental, human rights) campaigns.

Besides teaching negotiation and campaigning skills, business schools should teach students how to work with the news media and use the Internet and social networking sites for grassroots community building.The learning focus could vary from the outstanding success of Mr Barack Obama’s presidential campaign to the ongoing international bailout efforts to save the international financial system. Advocacy, negotiation and campaigning should be central to every management programme.

(ND Batra is professor of communications at Norwich University)

Thanksgiving in downtown America

Downtown America is downturning

Fraom The Statesman
ND Batra

We are heading toward a long weekend of vacation when millions of Americans will travel by trains, planes and automobiles to share with family and friends the joys of a Thanksgiving meal of roasted turkey with stuffing and cranberry sauce, apple cider and wine, and much more.

The day after Thanksgiving, stores will open for early bird door-buster sales, the traditional beginning of the holiday shopping season that lasts through Christmas and beyond, and is a firm indicator of how the economy is doing. But this Thanksgiving Day, as Americans mumble their prayers before the big meal and dig into their grandma pies and exchange neighbourhood gossip, the most pressing concern on their minds will be their jobs, some lost, and others threatened. Some have already lost their homes to foreclosures.

You have heard the cliché that in a market economy like the US’s, the consumer is king with a credit card, but unfortunately during the last two years the ground has been collapsing underneath him. The king feels like a pauper now. In spite of the fact that stores are offering huge discounts, even up to 75 per cent on some goods, it is uncertain whether the consumer will bring his credit card out of his wallet ~ so much is the fear of tomorrow. When your neighbour loses his job, you don’t know what might happen to you.

In some respects, it is the worst of times since 11 September 2001, when the US was attacked by terrorists. The downturn is becoming a recession and it is hitting the entire country. Nest eggs are dwindling and disappearing.

Last week the US Labor Department reported that jobless claims have risen to 516,000, which means more than a half million families, including some with children, won’t be heading to the stores with a smile on their faces. The total unemployment rate of 6.5 per cent is the highest in 14 years, according to the Labor Department. You might say that since the rest of the 93.5 per cent of people do have jobs, why worry? But that’s not how you measure misery. Unemployment of course can never be zero per cent but when it is below 5 per cent it is deemed tolerable, albeit grudgingly.

You might regard national unemployment as a revolving door through which people come and go. While some people get jobs, others lose and file for jobless claims; nonetheless, according to some economists when jobless claims, which provide a few weeks’ financial relief, touch 500,000, the situation is considered a recession. Eventually we will bottom out of the recession, though it is difficult to say when that will happen. Will it get worse? Some fear the coming of a depression. During the 1929-1930 Great Depression, 20 per cent Americans were out of jobs. We are far from that.

So the question is how the massive stimulus package of $700 billion, which was originally meant to buy out bad assets of banks and financial institutions so that they regain health and confidence and start lending again, will help Joe Sixpack who might be on the verge of getting a pink slip. In an about turn from the original plan, Treasury Secretary Henry Paulson recently announced that he would now use a part of the stimulus package to encourage consumer spending via student loans, credit cards and automobile loans so that the wheels of the economy don’t grind to a halt. But the Big Three Detroit automakers ~ Ford, General Motors and Chrysler ~ say they need a cash infusion of $25 billion or more to stay afloat.

If Detroit shuts down, millions of jobs including the entire supply chain from automobile dealers to auto part manufactures will be lost, leading to a deeper recession. The Federal Deposit Insurance Corporation is asking the government to spend $24 billion to back up mortgages so that 1.5 million threatened homeowners can stay in their homes rather than losing them to foreclosures. Many states, towns and cities are clamouring for their share of the pie. University and college endowments have slumped.A few weeks ago, I wrote “recession is worse than terrorism”.

Terrorism is man-made and can be limited and controlled. It can even be eliminated as has been done in Indonesia. But global recession ~ though its genesis indubitably lies in criminally negligent US bank lending practices in the housing market that let Joe Sixpack buy a house when he could not afford to pay the mortgage ~ is out of control and dragging every country down. As Prime Minister Manmohan Singh was heard saying at the G-20 meeting, “Emerging market countries were not the cause of this crisis, but they are amongst its most affected victims.”

It might sound rather flippant, nonetheless, let me ask a question. If Pakistan goes bankrupt, who would you blame: Taliban or Joe Sixpack? Consider this. When terrorists’ attacks hit the US seven years ago, there was no gathering of the G-20 nations (developed and emerging economies that today account for 85per cent of the world economy) to save the world. The Saturday gathering of the G-20 in Washington DC aimed to erect a dynamic global financial system that would reflect the new emerging world order by restructuring the creaky post-war Breton Woods (the World Bank and International Monetary Fund) system.

But on close reading you find that it was primarily meant to unfreeze the global credit pipeline through various national stimulus packages so that Joe Sixpack can go on his buying spree again; and Joe Chan in Guangdong and Joe Slumdog in Bangalore can get back their jobs in the factory and the outsourcing cubicle.And thereby hangs the global tale of miners in Africa, shoe and toy manufacturers in China, chicken feeders in Australia, outsourcers across India, oil sheikhs in the Arab world and diamond merchants in Amsterdam, all in the same boat, the Titanic, with Joe Sixpack. Do you see the iceberg?

(ND Batra is professor of communicationsat Norwich University)

THE FLIGHT OF THE BLACK SWAN

The flight of the black swan

From The Statesman
ND Batra

The whole world is waiting for President-elect Barack Obama, one of the most inspiring orators of modern times, to hear what he will say to the American people, now in deep economic distress, as he enters the White House on 20 January 2009. Perhaps no one could have been more gracious than President George W Bush, who said, “It will be a stirring sight to watch President Obama, his wife, Michelle, and their beautiful girls step through the doors of the White House.”

I see him hugging and folding his wife and children in his huge embrace with a broad smile, waving to the milling, swaying crowd, as if to say, “Thanks for the company, we have arrived, at last.”

A generation ago, it would have been unthinkable that the American-born son of an African immigrant married to a White woman would have the courage, “the audacity of hope”, to dream of sitting in the Oval Office. By winning the presidency, Mr Obama has elevated the White House and uplifted the American people. He might transform the US into a moral force, once again a great power for good.From the White House the Obama family will survey the past, from the coming of Kunta Kinte (Arthur Haley’s fictional-historical character from Roots) to the US in a slave ship to work in the cotton fields of the South to his liberation after the Civil War, which soon mutated into the utter degradation of segregation through the Jim Crow laws; his slow march through judicial and legislative processes, for example, the1954 Supreme Court decision in Brown versus Board of Education declaring segregation as inherently wrong and the 1964 Civil Rights Act outlawing racial segregation; and his final assertion as a human being and the dreaming about a new US where one’s character and merit, as the non-violent civil rights movement leader Martin Luther King, Jr. prophesied, would matter more than the pigment of one’s skin.

In a manner of speaking, the history of the US is the history of the Black man rising and being accepted as a fellow American by the White man. Now that Kunta Kinte is entering the White House, it’s the end of history. And a new dawn of possibilities, as Mr Obama said.It is the beginning of new possibilities at home for regenerating the US through innovation, invention and entrepreneurship, of establishing a new system of universal healthcare and financial security, of re-democratising and re-dedicating the American dream so that there will always be a second chance and failure is no stigma, and yes, you can do it.

Mr Obama built a remarkable grassroots Internet-based meta-party political machine to win the hearts and minds of the young and the old, of the entire racial and ideological spectrum, and almost got a mandate to bring about transformation in American society. But as the ravaging global financial crisis shows, Americans are so densely interconnected with the rest of the world that no meaningful change can occur unless the rest of the world is willing to cooperate, a lesson the US should have learned after the 9/11 terrorists attacks. The US cannot go it alone even in its attempt to set its own house in order without help from others, whether it is the Chinese moneylender or the Pakistani badlander.

So the question is how Mr Obama will transform his campaign slogan, “Yes, we can”, into reality.On Friday, Mr Obama, surrounded by some of the best and the brightest economists and financial experts, gave his first post-election press conference. He was cool and measured in his remarks about the state of economy and sounded much less exuberant about the prospects of turning things around than when he was stumping for the election. “I do not underestimate the enormity of the task that lies ahead,” he said. “Some of the choices that we make are going to be difficult. And I have said before and I will repeat again: it is not going to be quick and it is not going to be easy for us to dig ourselves out of the hole that we are in.”

He urged Congress and the Bush administration to pass a stimulus package, which, apart from the $700 bailout already approved for reviving financial markets, would cost anything between $150 billion to $300 billion and would help families with tax-relief, extended unemployment insurance benefits and food stamps. It would also bolster the crumbling budgets of cities and states, without which some of the essential services would be adversely affected.

A similar stimulus package of $107 billion was given in the beginning of the year to mostly lower- and middle-class families but it worked more like a small drink of brandy for a depressed man than an energiser of economic activity.The most sobering lesson a US President has to learn is that he can’t do much about global markets. Being the leader of the free world can create a dangerous delusion. Whether there will be an opportunity for finding a new leadership role for the US in an interdependent world of rapidly emerging economic powers ~ China, Japan, the EU, Russia, and, perhaps, India ~ no one knows.

But when a reporter asked how Mr Obama would respond to Iranian President Mahmoud Ahamdinejad’s letter of congratulations, he said with a determined finality that Iran’s nuclear ambitions were absolutely “unacceptable”. I hope Mr Obama will also have the courage to say, “The decline and fall of the US is utterly ‘unacceptable’.”

But look! What a cornucopia lies in wait for Kunta Kinte in the White House: a global financial meltdown; the Israel-Palestine decades-long deadly dance; Iran’s “peaceful” nuclear ambitions; the Afghanistan-Pakistan implosion; and let’s not forget the dessert: China’s mountain of a $2-trillion foreign exchange reserve. All served up by your favourite waiter, Joe the Plumber.

(ND Batra is professor of communicationat Norwich University)

Bailing out Joe the Plumber

Everyman America too needs a bailout

CYBER AGE - ND BATRA

From The Statesman

Joe the Plumber, America’s Everyman fictionalised and popularised by both Senator John McCain and Senator Barack Obama during their fiercely contested presidential elections, cannot pay his credit card bills. After the elections, he will be forgotten but not his problems. American consumers are defaulting enormously on their credit cards and banks are bleeding red ink coast to coast.

The credit card industry and consumer advocates are asking the Federal regulators to let them write off as much as 40 per cent credit card debts for some consumers, according to Associated Press. Cash-only lifestyle in the United States has long been gone.

Barring a minuscule minority of old-fashioned people who still believe and practice what Polonius said in Hamlet, “Neither a borrower nor a lender be,” most Americans have become accustomed to living on credit. It was so wonderful when the going was good. Banks were eager to loan money to anyone who had a minimal threshold of credit-worthiness. Before the financial tsunami hit the country, the industry used to mail billions of solicitations to people offering credit cards.

There are more than 650 million credit cards in circulation in the United States for a total population of 300 million plus. American economy depends on consumer spending. Even today in spite of the credit crunch, when you enter a store a pretty girl would greet you with the solicitation: “If you open the credit card account now, you will get 10 per cent discount on all your sales today.” And then she would whisper: “You can cancel it any time.” With very little background check, instant credit would be issued to the customer and thus would begin the spending spree, for which the whole world is paying the price.

A few years ago it was thought that the American model could work for a growing economy like India; so credit cards were issued as generously and foolishly as they were done in the United States. But as they have pursued the American way of life, the rising middle-class Indians too have been sucked into the consumerism tidal wave with unforeseen consequences for the economy.

A middle class Indian would live in perpetual debt, as would Joe the Plumber for many years to come, making monthly payments for the mortgage, home equity loan, car loan, and his children’s college education. And if Joe the Plumber faces divorce, a highly probable domestic future for Everyman America, or if there is a major medical catastrophe uncovered by his health insurance, he would look for a bailout or bankruptcy. There was a time when American consumers used credit cards mostly during a holiday season. Gradually it became an all season credit addiction. When bills began to pour in and borrowers were unable to pay them, they juggled their debts from one credit card to another.

In spite of the fact that the law in the United States now makes personal bankruptcy rather more difficult, on average about a million people filed for bankruptcy every year. Now it is going to be much worse. Bankruptcy of course is no shame in the United States. From Lehman Brothers to Joe the Plumber, everyone does it. It is only a minor embarrassment. Call it a method of re-inventing oneself; or re-structuring.

Americans routinely use the card to make all kinds of payments: medical bills, gas, groceries at the supermarket, college tuition bills; and even dial-a-porn. It is so convenient. In fact consumers are rewarded for using their charge cards. Many card companies offer cash back, frequent flyer miles, or some other horny corny temptation every time the customer uses the card. Without savings, how can a family balance its budget in tough times, except through more borrowing with the credit card? According to Federal Reserve estimates, the total credit card debt carried by the US households in November 2007 was $900 billion.

As long as the good times rolled on, banks did not feel that credit card delinquencies posed a serious threat to the banking system because most card customers were good, so good that their business covered up not only the losses due to bankruptcies but also due to frauds. The cardholder liability in fraud cases is limited to $50 only. Every year thousands of people become victims of card frauds. There have been several reports from major news media whipping foreign hackers for most of the card frauds in the United States. Credit card thieves come in all shapes, colours and nationalities and they have the same working methods: hack into the data bank of a major retailer and once logged on, download customers’ social security, credit status, and addresses.

With stolen ID they can live the other person’s life for a long time and then move on to another victim. The usurer, the debtor, and the gentleman crook were all doing well in the United States, though it had been a continuous challenge: life in perpetual debt, worry about paying the next month’s bill; or jail for fraud. But in hard times like these, the credit card industry cannot survive if the losses reach a point that the credit card system collapses like a house of cards.

So what should India be doing?

Instead of pursuing the American way, India should consider the French way where most people opt for a debit card. This will allow an aspiring Miss Bollywood to spend as much on her Prada collection as she has in her bank account.

(ND Batra teaches communications and diplomacy at Norwich University. He is working on a new book: This is the American Way, Stranger!)

For the want of a nail...

America ain’t collapsing but…

From The Statesman
ND Batra

'For the want of a nail, the shoe was lost; for the want of a shoe the horse was lost; and for the want of a horse the rider was lost, being overtaken and slain by the enemy, all for the want of care about a horseshoe nail.'--Benjamin Franklin

Today we are much more connected with each other than in the good old times of Benjamin Franklin, one of the founding fathers of the United States, a man of immense genius who invented the lightening rod and the bifocals and published Poor Richard’s Almanack, among his other great deeds of innovations and inventiveness. In fact the whole world, like a massive web, has become so interconnected that a slight tremor ripples through the entire global eco-system. The collapse of a bank in New York might dry up credit flow in South Korea, sink stocks in Russia, or trigger a financial stampede in India, prompting the governments to take extra-ordinary protective measures.

Last week, in the first attempt, when the US House of Representative defeated the $700 billion proposal to bailout the financial system, it was clearly perceived as a stunning rebuke to the Bush administration, Congress leadership and other smarty-pant dealmakers that they had not explained themselves to the American people, most of who now regard Wall Street as a nest of thugs worse than 9/11 terrorists. It’s a terrible failure in communication at a time when the American people need to understand how their daily lives are connected with what happens in Wall Street and how its collapse would spin the global economy out of control and plunge it into an irreversible downward spiral.

Whether you like it or not, global economy is anchored in Wall Street.

Grasping quickly the anger and frustration of the American people and what might happen to the already weakened economy that has been rapidly shedding jobs (159,000 in September alone) if the credit pipelines remained frozen, the Senate revised the bailout proposal to incorporate some of the most popular demands including tax breaks of more than $150 billion for families as well as businesses. The new proposal also included increased Federal protection for bank deposits from $100,000 to $250,000, among other popular though economically less sensible provisions. In other times this kind of wheeling-dealing would have been called pork-barrel politics but this is how American democracy works sometime.

The House members, confused and flabbergasted, followed the Senate lead and passed the bailout package with grim faces and muffled protests, as if a heifer were being led to the slaughter house. It is doubtful nonetheless that these measures would quench the rage of those who are convinced that Wall Street investment bankers and tycoons, those who count their working hours in millions of dollars and have fail-proof golden parachutes, those whose greed and incompetence plunged the country into an unprecedented financial crisis, apart from triggering a global chain reaction that left no country untouched. To calm the mood of vindictiveness that has gripped the entire nation, Senator Christopher Dodd (D-Con) said, “We can take a cut at Wall Street, but Wall Street won’t feel the brunt of the pain.”

The pain is not only being felt by the common man on the Main Street who has become a victim of the opaque financial system over which he has no control. The pain is also being felt by cities, counties, school districts and even states, because due to their limited cash reserves and the non-availability of credit, some of them cannot meet their payroll obligations. Car dealers can’t sell their cars unless customers can get credit, thus, locking up millions of dollars on unsold car lots. Perhaps the most desperate plea to unfreeze credit pipelines came from Governor Arnold Schwarzenegger of California who asked the Federal government last week for an immediate loan of $7 billion to maintain the government operations.

He was quoted in the New York Times for having written to the Treasury Department that “The federal rescue package is not a bailout of Wall Street tycoons — it is a lifeboat for millions of Americans whose life savings, businesses, retirement plans and jobs are at stake.” But how do you explain this to Joe Sixpack or a hockey mom whose son might not get a college loan?

A similar sentiment was expressed by Bill Novelti, president of American Association of Retired People (AARP), one of the biggest and most powerful lobbying groups in the United States, who said, “It is no secret that people are angry about bailing out Wall Street. But Wall Street is us. These are our stocks, our retirement funds and our futures.” Millions of retirees depend upon a healthy functioning Wall Street for a steady flow of income. When a chill wind blows through Wall Street, some retirees wonder what they might have to give up; a prescription medicine, perhaps?
Wall Street cannot die, though you see some Asian investors salivating over the prospects of pecking over the carcass.

Fan Dizhao, an investment manager at Guotai Asset Management in Shanghai, was quoted by Ariana Eunjing Cha of the Washington Post saying, “The United States may be grappling with its worst economic crisis since the Great Depression, but these are the go-go days for China.” And because of the “mountains of cash,” which China has built up through export, he said, “It is inevitable that we will take the US’s place as the world leader.” If you believe that China’s “mountains of cash” and America’s “mountains of debts” are not interconnected, pay heed to Ben Franklin, “For the want of a nail…”

(ND Batra is professor of communications at Norwich University)

A New Home For Nano

Nano to Nowhere?

From The Statesman
ND Batra

The Nano is dead and will live happily hereafter in Gujarat.The crisis in Singur, West Bengal, nonetheless, drew global attention especially in comparison with China where a similar project would have been consummated long ago. No one would have heard of the protesters. Mamata Banerjee of Trinamool Congress, who spearheaded the opposition, would have been in jail in China, perhaps, waiting for international humanitarian rescue. Now you understand why foreign direct investors prefer to set up their manufacturing facilities in China rather than anywhere else. The noise and chaos of unruly democracy is not heard in China. Ratan Tata would have received a friendly welcome in China. Perhaps I am exaggerating. Mr. Tata received a warmer reception in Gujarat than he would have gotten in China.

Moving the Nano to Sanand, Gujarat, should leave no doubt that industrialization in India too can be hastened but only by consensus and persuasion; and not by decree, as the Buddhadeb Bhattacharjee government in West Bengal, in spite of its good intentions, tried to do. In a democratic country, a well-organized opposition party can wield tremendous negative political power, the power to frustrate the government, which of course is not the same as the power of creative destruction. But losing a shining icon of progress and modernity, which had stirred global imagination, to Gujarat or any other state, was the last thing on the mind of anyone in West Bengal. I thought everyone would come down from their hobby horses and compromise in the interest of the people of West Bengal. But political brinkmanship of mutual recrimination and humiliation became the endgame. It will be sometime before such a beautiful thing happens again in the state of West Bengal. Many Bengalis must be angry with the government; and they should be. A Kolkata friend, a financial expert and lover of poetry, recently wrote to me in desperation, saying: “Over the last three decades CPI (M) turned West Bengal into a graveyard of industries, which had gone to the top position in industrialization among all the Indian states during the time of Dr. Bidhan Chandra Roy. With no nobler object, but to tide over the election round the corner CPI(M) wanted to showcase the Nano even by ruthless destruction of agriculture and dislodgement of the farmers from the most fertile land in the country, a most horrifying recent record of cruelty and human rights violation.” The Nano shouldn’t have become a contest between the sickle and the hammer.

A few years ago I heard a similar cry of pain from a Kolkata industrialist whose chinaware and pottery works factory, which once upon a time was known for its quality all over India, was systematically decimated by the CPI (M) government supported goons. To be fair, I have been in no position to verify the allegation. After all, many industries are doing very well in West Bengal, though, you might say, in spite of the government. Gujarat has not only gained the Nano but has also refurbished its sullied image. Before Gujarat became the new home for the Nano, the state had permanently become associated with the communal riots of 2002 when the fire-bombing of a train carrying the returning Hindu pilgrims had led to widespread riots killing of more than two thousand people, mostly Muslims. One wondered how the gentle Gujarati known derisively as a passive and timid shopkeeper could suddenly turn into a ferocious monster. But when Mr. Tata told his admiring audience in Ahmedabad (Gujarat) last week that bringing the Nano to Sanand was like homecoming, it seemed the gods of industry might forgive Gujarat after all. “We chose Gujarat because of the conducive and industry-friendly environment as well as infrastructure. Also, the location of the land (1100 acres) that was being offered was very attractive,” Mr. Tata said. The Tatas are Gujarati-speaking Parsis, but industrialists are seldom sentimental when they invest their millions. Safety and growth of their investments is their primary concern. “This is Tata Motors’ maiden venture in Gujarat, and will broad-base the company’s manufacturing footprint. We are happy to contribute to Gujarat’s strong industrial progress by creating an auto cluster, which will have a cascading impact on the state’s economy,” Mr. Tata added. But that is exactly what was supposed to have happened in West Bengal if the politicians had not played the Russian roulette with the state’s future.


However, not everyone is so forgiving. Visiting Gujarat recently, historian William Dalrymple, the author of The Last Mughal: The Fall of a Dynasty: Delhi, 1857, was quoted in the local media having said, “Chief Minister Narendra Modi might have proved that he is an efficient administrator by bringing the project to state, but the world is still waiting for him to bring justice to riot victims and punish the culprits.” Some people implicate Mr. Modi for being silent too long and not taking aggressive steps in stopping the killing in the 2002 riots.

Perhaps the greatest humiliation for the West Bengal government came when Mr. Modi had the gall to advise Mr. Bhattacharjee and opposition leader Ms. Banerjee to cooperate for the good of state. In an open letter to Bhattacharjee, Mr. Modi said, "The condition for the growth of (the) Nano has not yet developed in West Bengal in view of its present work culture despite your serious efforts.” He did not explain what is wrong with the Bengali work culture when the state is one of the most highly industrialized states in the country. He apologetically said, “People of West Bengal may think I have snatched (the) Nano to Gujarat. But it is not so. There is no scope of misunderstanding." In a similar open letter to Ms. Banerjee, he advised her to "shun ultra-leftism” in outdoing “the Leftists and show West Bengal the rightist way to usher in development." One wonders at the audacity of the man whom the US government has been treating as a pariah, refusing to give him a visa for visiting the United States. Maybe Mr. Modi is not such a bad person. He has many admirers. In any case he has the interest of Gujarat above all. Mr. Modi said that he supports the Nano in the “national spirit,” adding that “After ship-breaking, pharma, petrochemicals and textiles, this project will make Gujarat a force to reckon with in the surface transport sector as well as automobiles.” But who is listening? Chief Minister Bhattacharjee? Ms. Bannerjee? They have their own political axes to grind.

(ND Batra, the author of Digital Freedom, teaches communications and diplomacy at Norwich University. He is working on a new book, This is the American Way, Stranger.)

The New World Order

A world beyond our control

CYBER AGE
ND BATRA
From The Statesman

The idea that markets are always right was a mad idea. ~ President Nickolas Sarkozy of France

It seems the words of comfort or condemnation by world leaders do not mean much to the financial world. The two-day Europe-Asia heads of the state conference held in Beijing last week called for a concerted and coordinated global action to control the global financial crisis and restore confidence. But the meeting did not amount to much because the leaders did not offer any concrete and specific measures to solve the problem, except issuing a call for the need for more rigorous regulations and monitoring of the financial markets. Perhaps they do not know enough.

Prime Minister Manmohan Singh, who participated at the Asia-Europe summit meeting attended by 45 leaders, summed up how helpless global leaders had become in dealing the crisis: “We are not in complete control. There are bigger players and we are victims of that. The crisis is not of our making.” Big or small, every country today has become a victim of the unknowable, which makes one wonder whatever happened to the early warning systems. Few people believe that the coming of the new United States administration, whether led by Senator Barack Obama or Senator John McCain, would make much difference to the global financial crisis. The financial world with floating currencies, innovations such as margins, credit default swaps and securitisation of debts has become too complicated for any single global leader or a country to handle, even though a dominant economy like the United States might have triggered the butterfly effect that developed into a raging storm.

The raging storm analogy may not be too disconcerting because eventually even the most devastating storm peters out on its own. At present every rescue step taken by governments, for example, the US $700 billion bank bailout package and infusion of another $250 billion for unfreezing bank credit, the U.K.’s $692 billion financial-rescue plan and sundry other steps taken by other European and Asian governments do not seem to have amounted to much in restoring confidence. Wild gyration in the market continued.

Since Wall Street is still the ultimate measure of global finance, whether you like it or not, whatever happens there cannot be ignored. From its record of 14,000 in July 2007, the Dow Jones Index has been mostly moving downward and last Friday it pulled back to 8,378. The die-hard optimists believe that during these wild gyrations the Dow has been going up too and touched 10,000, giving some hope that eventually the market would stabilise and rise again on its own.

n other words, government authorities or politicians, Senator Obama or Senator McCain, French President Nickolas Sarkozy or British Prime Minister Gordon Brown, do not have any decisive impact on financial markets, though they use impressive rhetoric to sum up the situation and make prediction about the future over which they have no control. Mr Sarkozy said a while ago that the era of Anglo-Saxon no-holds barred Darwinian market capitalism, symbolized by Wall Street greed from obscene bonuses to golden parachutes, is dead. But this kind of contemptuous anger against the system that has been responsible for tremendous global economic growth and reduction in poverty is perhaps not fully justified. It is also true that the system cannot be left alone because the marketplace cannot solve all our problems; nonetheless, it must be made to work in the public interest and necessity, which will require state intervention.

Financial market cannot handle so much freedom and need global monitoring because a mishap in one country might cause turbulence in the whole interconnected system, which can spin out of control. But the question is that since the global financial crisis began with irresponsible sub-prime lending in the United States, can the world afford to let the US do what it wants to do with its financial market?

Why should Iceland, Norway, or Pakistan, for example, pay the price for the greed and mismanagement by the tycoons of Wall Street? Does the world have a right to expect better behavior from the US since it has been the primal cause of the trouble? Just consider China-Japan-US financial relations. A substantial portion of the staggering foreign exchange reserves of China ($1.9 trillion) and Japan ($995 billion) are parked in US treasuries, which made cheap credit available to everyone, even to those who could not afford it.

Shouldn’t China and Japan expect some accountability as to what is being done with their funds rather than merely assuring the safety of their capital? What a country does with its resources is a matter of sovereignty about which every nation is very sensitive. For example, Pakistan has been warning the US that its sovereignty should not be violated by the US troops in pursuit of terrorists who take shelter in Pakistan territory. But now that Pakistan is in financial trouble, it rushed to China for help.

Having been rebuffed by its all-weather friend, lately it has asked the US dominated IMF for infusion of capital for which it will have to accept tough conditions, some affecting its sovereignty. What is the difference if a country seeks capital infusion to keep itself alive or let’s foreign troops into its territory to kill terrorists?

In the ultimate analysis, both capital infusion and troop intrusion violate Pakistan’s sovereignty. In the interconnected world of finance and terrorism, national sovereignty has become an unsustainable myth. And what is true of Pakistan is equally true of the United States, which cannot be left alone to mess up with the world.

(ND Batra is professor of communications at Norwich University)