Friday, February 24, 2006

US, India, China and the Dollar

One may like or loathe America. But we all have to accept one fact -- that the USA is one nation that puts its interest uppermost, come what may. Rules of the game, propriety; ethical, social or environmental concerns just don't matter. Everything is fine as long as America is fine.

It's a country that practises the "Theory of enlightened self-interest" to the last detail. When there is a conflict between your principle and self-interest, which one will you sacrifice? America doesn't sacrifice either; it merely changes the principle to suit the new self-interest!

See, how America gets professionals from all over the world, and makes them work for their country! America is a country that is run by the best people from around the world.

America never liked India for two reasons (in spite of sharing almost all values systems that America itself practises): one, we were close to its Cold War enemy, Soviet Union; and two, more importantly, America never had access to India's huge market.

Ever since India began opening up its economy in the early 1990s (not because we wanted to, but we didn't have an option), the West in general, and the US in particular, have become interested in India. There are umpteen illustrations of that.

The fact that George Bush will come calling on March 1 is another indication of their interest. His will be only the fifth visit to India by a US President. Earlier ones were by Dwight Eisenhower (1959), Richard Nixon (1969), Jimmy Carter (1978) and Bill Clinton (2000).

And, in the runup to his India visit, Bush granted interviews to two Indian newspapers, The Times of India (English) and Dainik Bhaskar (Hindi). Not surprisingly, he has lavished praise on his would-be hosts.

One point stands out. In the interview he talks of how India's middleclass population is far greater than the population of entire America. "..... 300 million middle-class citizens in India. That's larger than the population of the United States. And so we shouldn't fear relations with India -- matter of fact, we ought to welcome them and work on ways to strengthen them. That's really what the purpose of the trip is."

We shouldn't feel bad that Bush is taking care of his country. Only that he is very candid about it. What we need to ask is "Do our politicians take a similar interest in our own country?" Sadly NO; at least not to the extent a country like China does.

China is one country -- yes, the only country in the world -- which can stand up to the US. To put it bluntly, America crawls when China asks them to merely bend. Why? America's self-interest is at stake. American dollar after all comes from China!

China is such a fascinating country -- politically Communist, economically Capitalist. Nobody has been able to get that combination as effective as China has.

Remember how China intercepted and forced an American spy plane to land in its island of Hainan, after it collided with a Chinese fighter in April 2001? China refused to let Americans even come anywhere near the plane. China wanted an apology from the US for the collision, in which a Chinese pilot went missing. The US was finally made to apologise. But by then China had literally dismantled the entire aircraft. The US had to piece them together and take it back in utter humiliation. Read the entire sequence of events here.

No other country in the world could have done something even close to what China did.

There is a lesson here, which India can adapt in its own way. Open the market, entice America with dollars (that is a trap America will willingly fall in); and make them play the game with our set of rules.

See the influx of foreign companies to Bangalore. While they have gained by opening shop here (outsourcing has saved many of them from closing down back in the US), how much have we gained, other than many Indians getting jobs? How well have we capitalised on the interest the West has shown for our city and our country?

Some points there to ponder over as, arguably, the world's most powerful man gets ready to visit India.


  1. Awesome post. You have every right to criticize USA because you are not a software engineer and a potential candidate for a software project in USA. But I crossed seven seas and several time zones to come to US to earn in Dollars. While doing so, I also found that Americans are not as bad as they are picturized, atleast inside their country. And they do not burn trains with people inside them or demolish mosques. Add to the fact that we talk English (thank the British Raj), multiply in large numbers and India is a potential super power because of the one million new call centers.

  2. Prasanth, I fully agree with you. 100 per cent.

    There is a difference between Americans and American policy. Most of the informed criticism we hear from across the world is against the US policy, and not people per se.

    I only wish and pray that many Indians -- especially those who have been fortunate to see closely Americans work -- imbibe the good values (like those of civic sense, a near-spiritual attitude towards work etc) and put them into practise in India too. Indians and much of the world have a lot to learn from Americans and how they go about various facets of daily life.

  3. Very intelligent n informative post n i fully agree with u how china has become politically communist n economically capatalist but here lies the catch means all the manufacturing units r state controlled n they have all kinds of subsidies there means they dont have to pay any taxes n this saving in taxes they pass on to consumers all over the world n none can face this competition coz virtually all other manufacturing units have to pay in taxes n this they have to include in their costs of production n they have one economic sense i.e. the economies of scale produce the goods to its full potential n reduce the costs n pass these benefits to the consumers n capture the market n no democratic country can do it coz of certain fundamental rights of citizens but do the chinese have a same say their i dont think so. It will be intresting to see the average per capita income of a chinese in real internation terms means evaluating their income in dollor terms. Americans have one simply theory that is to consume n this habit of consuming create a chain effect. For them supply creates its own demand. N how Americans r better than anyother one can see this by measuring them on purchasing parity means the thing that is for 40/- in india may nt of US 1$ in america it cud of more than one dollor n this habit of consumption has made america the most advanced nation n china too has benefitted frm it.

  4. Very interesting write-up. There is nothing wrong in "enlightened self interest" as long as it does not cross the Lakshman Rekha which the US has violated time and again. It would be tempting indeed to give them a dose of their own medicine now that the ball is in our court to some extent if our marktets attract them so much. However taking the long term interests in mind, one has to be tactful. China is in a different league and we are not really in a position to compare ourselves. Better to rely on our own unique strenghs vis-a-vis china- proper banking system, share mkt and a large English speaking population.

  5. loved your post!!!!
    When there is a conflict between your principle and self-interest, which one will you sacrifice? America doesn't sacrifice either; it merely changes the principle to suit the new self-interest!
    this statement was so true!!!
    Was never aware of the Chinese fighter incident prior to this!! :(
    prob because it was before the time i started reading papers!! Yup!! We should seriously take a feather out of the chinese book!! But with self obsessed rulers of the nation is it a feasible option? Until date I was quite proud of the way India would more or less stand its ground ( if not confront, atleast take a neutral stand - Iraq) ... but what with the current Indo - US deal... What the hell is going on ???

  6. Hi pradeep,

    We have to stop thinking in blocks. America is a polariser. In its zeal to promote American values (and business), it comes across with a distinct message to the world. So distinct that countries/people/cultures tend to see the difference rathar than commonality. This is why people have such a strong opinion about america. Surely no one else would think of Switzerland or Ireland. Its a question of self identity for America. They are a young nation in the teens and like teenagers have this confusion about their own identity. Give them so more time, like greece, like rome and like britain they would fade out quietly and be contended to live within their cocooon. A combination of evangilical attitudes about culture and a constant doubt about their self identity has made them effervacent..

    What we must not do is try to counter this position by admiring what comes to represent its opposite. by doing so, we are getting into thinking in blocks which has shaped the world the way it is today.

    China is not a success. In my opinion its an artificially created set designed with lies, deceit, forgery of economic numbers and a carefully cultivated image to the outside world.

    China hides its underbelly and subjugates its own citizenry. China's fall is iminent as there is one widearching theory about the story of humans. Freedom. Many wars have been fought and many battles won and lost for this notion. China is in denial and once this economic pack of cards falls, you will find a mess much bigger than what we have seen till now.

    Whenever you think of economic success think about the SEAsian crisis in the 90s. Economics and investment is a fickle mistress.


  7. Thanks a lot all those who commented. This is one post where I saw such detailed and incisive comments being made. I enjoyed reading them as much as I did writing the post.