Yes, Prime Minister
Manmohan Singh’s speech and his analysis of the need for FDI in retail was an insult to our intelligence.
How many lies can you pin on an honest man?
As I watched the Prime Minister address the nation on the urgency for economic reforms, my attitude turned from dismay to anger. I was dismayed to see the leader of the world’s largest democracy speak to his people in a manner which would have embarrassed leaders in former Soviet Union. I was angry with his speech-writers all of whom should be fired.
Speech-writers are powerful people who have to exercise utmost caution and responsibility. I speak from experience. Apart from factual accuracy, the speech has to speak to the context. If it is spoken by a person whose communication skills are not his best asset, the speech has to be written in such a manner that disadvantages are minimised and the connect with the language and the people remains strong and unflinching. Language is critical – it influences thinking.
At a time when the country is engulfed in doubt, suspicion, anger, violence and frustration, the speech-writers had the gall to write that money does not grow on trees. In recent times, we have seen that money grows not only on trees, it grows above them, on them and below them. There is no word to describe the speech-writers’ arrogance inviting the aam aadmi to strengthen the Prime Minister’s hand. Then came the invitation to strengthen the Prime Minister’s hands as he set about ensuring that our economy gets back on track. “The challenge is that we have to do this at a time when the world economy is experiencing great difficulty. The United States and Europe are struggling to deal with an economic slowdown and a financial crisis. Even China is slowing down”, was such a giveaway of poor research and subservience. Northern Europe is not doing badly at all. Southern Europe is and France, which still has illusions of being a global super power, is stuck in the middle. Poor research apart, when the economies of the world were booming, did we think about our aam aadmi in Jharia and Dhanbad. I appreciate the challenges of being connected to the right international clubs and countries, but fail to see why time after time we find ourselves in the “we have no choice” spot. Worse, how can an economist Prime Minister surrounded by top economists not be able to factor in the vagaries of the global economy since we globalised in 1991? The final irony was that just a few hours before the address to the nation one of our Prime Minister’s economic advisors had said there would be displacement of workers and kirana stores, but once organised retail reached 25-30 per cent they would be assimilated into the modern system. That was also the promise in 1991 for us – that we would be assimilated into the world economy, millions of jobs would be created and garibi would be hataoed.
Negotiations are based on the basic principle of give and take. Trade experts in Geneva point out that no nation makes unilateral trade concessions about opening its markets without securing equally robust guarantees for itself. From publicly available information, it appears that we have unilaterally agreed to open Foreign Direct Investment (FDI) in multi-brand retail for as much as 51 per cent, far more than anything that the rule-based World Trade Organisation (WTO) demands of us. How heavily the World Bank and the International Monetary Fund (IMF) have leaned on us, only time will tell. It would also be interesting to learn about the role of Washington and Brussels. Banks love to lend money, even to the poorest of the poor. They are now selling weather insurance to poor farmers. We are also the world’s most lucrative disease destination – I am surprised the speech-writers didn’t think of this or perhaps didn’t see how health concerns can also be a national emergency.
The Prime Minister has addressed the nation. Political parties and personal ambitions have been articulated on the streets of India and elsewhere and the Trinamool Congress Party (TMC) has withdrawn support for the United Progressive Alliance (UPA). Experts have outdone themselves explaining why FDI in multi-brand retail is good and bad for us and why you are anti-national, anti-progress, anti-globalisation if you ask a few questions about how India will be served in the second round of liberalisation. Do you genuinely believe that companies who come will invest 50 per cent of their money in building new warehouses, cold storages and transport facilities, and that farmers will earn more and consumers will pay less? The time to be cute has long passed.
I suspect most Indians know that the challenge comes not only from Wal-Mart and other companies. The challenge comes from us, our massive corruption and our stupidity. The challenge comes in trying to understand what we have really “enabled and safeguarded.”
One explanation for what we are currently being subjected to as Indians can be found in the writings of Carlo Maria Cipolla, an Italian economic historian (1922 – 2000). His most popular work is a collection of two essays called Allegro ma non tropo (happy but not too much, or in my Hindi zara hatke, zara bach ke) and another essay on the spice trade and demographics.
Allegro ma non troppo is an enquiry into human stupidity which Cipolla calls The Basic Laws of Human Stupidity. Being an aam aurat of all trades and master of none, I dare to think that these laws can serve as enablers to safeguard our sanity.
Cipolla divides people into four categories. The first category comprises saints who spend an entire lifetime helping others. Next come bandits whose intentions need no explanation. Egalitarians make the third lot who help society and themselves. The stupid person brings up the rear. According to Cipolla, a stupid person is the most dangerous because he destroys everything and everybody around him – a capacity that frightens and baffles organised crime and military intelligence. The reasons for this he says are (a translation from Italian can be found in http://en.wikipedia.org/wiki/Carlo_M._Cipolla)
- Always and inevitably everyone underestimates the number of stupid individuals in circulation.
- The probability that a certain person (will) be stupid is independent of any other characteristic of that person.
- A stupid person is one who causes losses to another person or to a group of persons, while himself deriving no gain and even possibly incurring damages.
- Non-stupid people always underestimate the damaging power of stupid individuals. In particular, non-stupid people forget that at all times and places and under any circumstances to deal and/or associate with stupid people always turns out to be a costly mistake
- A stupid person is the most dangerous person in any group or society
Over the past few weeks, we have seen a few examples of the phenomenon. We have watched slanging matches between NDA-malnutrition versus UPA-malnutrition over a critical national problem that kills and stunts half our children under five while nobody goes on a hunger strike at Jantar Mantar for their sake; my secularism versus yours in a country where every Lok Sabha seat is handed out on the basis of religion, caste and sub-caste in addition to family links and the financial capacity to fund the election and where asking basic questions about safety and security is tantamount to sedition. We also went into a huddle when a high-level Chinese dignitary gave us envelopes with some money sending our sleuths into a huddle in search of a sinister plot to destabilise India. The Chinese are usually not known for such faux moves. I thought it was a public slap on our face.
Some sections of the media, civil society, former bureaucrats and lawmakers are beginning to use the word stupid. The two journalists whose twitter handles were censored recently, laughed it off and one of them, Kanchan Gupta of NitiCentral called it “frighteningly stupid” in a debate on this website. Shiv Aroor of Headlines Today said he had trouble taking the censorship seriously. Krishna Prasad, Editor-in-Chief of Outlook, who with refreshing honesty said recently that his job does not allow him to be an expert remained rightly unfazed to see the Left and the Right holding hands for the Bharat Bandh (September 20th). Till then for some stupid reason, if you were pro-FDI in multi-brand retail, you were also democratic and secular. To an already complex situation, we have now added the spectre of secularism (no translation possible in any Indian language because it is a foreign concept relevant to European history) that pits Indian against Indian. You cannot be centre-right and what was that word again…? Stupidity is indeed frightening.
In my earlier piece on this website about unfair trade-offs, (http://www.newslaundry.com/2012/09/not-a-fair-trade-off/) I shared some of what I was reporting, reading and witnessing during the Uruguay Round of trade talks held from 1986 to 2000 that led to the creation of the WTO which drew global trade rules for the 21st century and to which we are signatories. Ambassador Tran Van-Thin, chief European negotiator told reporters that the talks have “…also to be seen in the wider geopolitical context of the United States to maintain its position as a global superpower. The US finds its power under challenge not only militarily, but also in terms of its post-1945 status as the dominant center in the capitalist world (Recolonisation – GATT, the Uruguay Round and the Third World 1990, Chakravarti Raghavan). Context is critical – it influences policy.
At the time of writing, available information says there is no direct risk to states if they decide to opt out of the recent announcement. In a press release last week, the Department of Investment Policy and Promotion (DIPP) – the lead department for framing FDI policies – has clarified that we are not bound by any Bilateral Investment Promotion Agreement (BIPA) that would force states in India to accept 51% FDI in multi-brand retail. The DIPP has also made it clear that the policy will not clash with our WTO commitments.
So, what is the fuss all about and why are the Prime Minister’s men and women repeating that he is an honest man, a gentleman and a statesman? Is it because a restive, more educated and better informed electorate is asking difficult questions? Is it because the rich are getting richer and the poor are getting poorer, something we have heard all our lives, so what’s new? Or is it because our leaders know something we don’t? I am reminded of what one of France’s best comedian-actors, the late Michel Coluche, said. “It is easy being a politician. You need a good conscience and a bad memory.”
On August 22, 2012, Minister for State in the Ministry of Commerce speaking on the issue of FDI in multi-brand retail in Parliament quoted a report from the Switzerland-based UNI Global Union when he said FDI in multi-brand retail “…will lead to widespread displacement and poor treatment of Indian workers in retail, logistics, agriculture and manufacturing.” The report “Walmart’s Global Track Record and the Implication for Multi Brand Retail” was presented to DIPP earlier this year and has been widely circulated and discussed.
“Wal-Mart’s track record speaks for itself and we would urge India to be extremely cautious and examine all aspects including bribery and corruption”, said Christy Hoffman, Deputy Secretary General of the Union. Following the bribery in Mexico which was reported in The New York Times, she said the Union has backed calls for an enquiry into Walmart’s business practices including in Brazil, China, South Africa and India. UNI Global Union is a 900-strong group funded by its members including from India.
We are not required to take their report as anything more than one among many inputs that was quoted by a minister in Parliament and read widely. The issue is not about company X or Y or FDI in general. It is about trust and the need for extreme caution when bold steps are taken, assuming they are bold. Unfortunately, crony capitalism has painted all of us into a corner and taken good business sense down with it. Political memory may be short, but business memory isn’t. Business people no longer shy away from resurrecting the Enron case and Union Carbide. In the former, where the gestation is long and upfront investments heavy, we changed our policies on a whim. In the latter, the company’s CEO Warren Anderson’s escape from India after the Bhopal gas leak was facilitated by us. It is very fashionable now to say corruption is a governance issue. Indeed it is, and we all know how many who govern us work around governance to enrich themselves and global consulting firms produce reams of garbage on how to do business in India and how we must think of the country in the long term. “Where will they go, they will have to come to us” is the reply when people talk about the absence of any rules, the cancellation of contracts and increasingly, the challenge to bribe the right people in the hope that the job will get done.
Since WTO nomenclature places FDI in retail under services, will the new policy have any impact on manufacturing, infrastructure and agriculture? What have we enabled as a nation and what have we safeguarded? The aam admi and aurat would also appreciate legal definitions for clauses like enabling agreements, binding agreements, safeguards, non-tariff barriers, etc. From time immemorial, traders have travelled the world looking for new markets and in most cases economic domination. It is stupid to say politics has got the better of economics. Good politics and sound economics go hand in hand especially in a country that needs massive investments in root and branch sectors like power, infrastructure, public health, etc. When entire colonies in big cities get uninterrupted water and electricity because VIPs live there we thank our stars, calling it collateral benefits. When the Prime Minister of potentially the world’s largest free market apologises to India about tough decisions taken under duress (nobody will lend, investors will not come) it speaks of remarkable failure, lack of vision and inexplicable fear. What are we afraid of? When a country with our potential repeatedly finds its coffers empty, there can only be one explanation and it is not called policy paralysis.
Remember that song “Yeh public hai yeh sab jaanti hai…”
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