THE MYTH OF RISING SUPERPOWERS

A few days back I read a chain of posts on fall of Detroit from a legendary car manufacturing centre to a seriously impaired insolvent economy needing exigent financial reconstruction for salvaging it from an imminent doom. I have been also reading many posts and articles about the fall of American economy,

 Many pundits assign the following main reasons to the fall of Detroit. Firstly, shifting of the manufacturing base from Detroit by many car manufacturing companies by opening new manufacturing bases in countries like—China, India and Indonesia; secondly, the American car manufacturers lost out to the Japanese in the competition; as the Japanese flushed the US market with more fuel efficient smaller cars; thirdly, the unionized bargain of high wages that was acceptable during good time turned highly detrimental to the viability of this industry. Decidedly, these arguments do not hold much water; they may be partially pertinent to the problem.

The multinational US corporations setting up their shops in India, China or other countries are certainly not very comfortable in those countries-- because those countries are poles apart in their business ethics and work culture to the most advanced economies of the western world. These large automobile corporations were attracted towards the developing nations primarily to reduce their cost of production, to earn competitive edge in the global market place. Further, the markets of the developing countries were fairly large with growing economies, concomitantly, growing material aspirations of their people. Undeniably these multinational corporations created several jobs in the developing countries and contributed to their economies in a significant way; also at the same time this strategy ultimately benefited their countries of origin by creation of wealth and more importantly keeping these corporations’ necks above water.

Detroit witnessed a steady erosion of its social and intellectual capitals in the post second world war period, spanning over a period of almost seven decades, finally culminating into acknowledged bankruptcy on 18^th July 2013. Its population declined from 18.5 million to a mere 700,000 during this period with a remarkable change in demographic composition—almost 1.4 million white inhabitants of the city deserted Detroit leaving thousands of buildings, residential houses empty. The city during the corresponding period earned the notoriety for its organized drug trades, arson, murders and rapes turning itself into the most crime prone city in the US. All these contributed unmistakably to the fall of Detroit. Economic reasons, in any case, are subservient to these factors. During this long span of seven decades no proactive measures were adopted to improve the qualities of social and intellectual capitals of the city, inevitably leading to its down fall.

 After the fall of Detroit, speculations are rifer in the world that the US is tumbling down without any possible signs of recovery. I have read the comments of an American citizen saying that-- Americans should start learning Chinese for communicating with their future bosses. Stories are manufactured by the American home media and some of their European counterparts, providing sensational materials to the global media to weave stories about the fall of the “Titan”. The idea of the possible down fall of the US evokes mixed responses in the world; some show apprehension about the future stability of the world; and some greatly relish such speculations with gratification. Many economic and political analysts and some hardcore patriots of countries that think the US had wronged them in the past, make premature and sweeping observations about the global shift of power and wealth towards emerging Asian economies such as China and India—China being hyped as the most appropriate candidate for the future superpower slot. Some other pro-India reports predict that by 2030 Indian economy will overtake China and India will become the largest economic and political superpower of the world.

I have no favoritism towards or bias against any country of the world. However, I do not subscribe to the views aired about fall of the US and the rise of Asian Dragon and Tiger to the position of superpowers in near future. My understanding in this respect is very simple and straightforward. I am of the opinion that the future of a great nation depends mainly upon its social and intellectual capital—what position a country occupies in contributing to the knowledge bank of the humanity.  

 A good society is a balanced blend of fairly good standard of living— fulfilling the basic needs of the people for living decently with human dignity and freedom to the best possible extent. Equally important in a good society is social and legal justice and absence of exploitation. Or to put it succinctly, it is the foremost duty of a progressive nation to consciously build its social and intellectual capitals, nurture them so as to prevent their decadence.

Today the whole world is clamoring about the economic progress of China with very scant recognition of the fact that China’s prosperity is pathetically lopsided and its social and intellectual capitals are depleting very fast. What has struck me the most is the element of fear that pervades that society. There is nothing very surprising about it. Mao in China and Stalin in Soviet Russia had incessantly used force as the main cannon of governance instilling fear in the mind of the citizens. More than ten million people perished in those two countries during their nation building exercises. This speaks volume about the value of human life in the eyes of the ruling sections of those nations.

However for a common place understanding, China and India, have made some significant strides in economic development in last three decades, but unfortunately seldom any analyst has taken the effort to evaluate the quality of their social and intellectual wealth, and the sustainability of their economic progress, before jumping into predictive conclusions. The emerging picture is not as colorful as predicted. The single party governance in China and the misplaced democratic system in India, sooner than later, will impede the economic growth of these two most populous countries of the world; the symptoms have already started surfacing.

Both the countries are incorrigibly corrupt with very thin layers of social and intellectual capitals. China is delicately balanced by the excessive use of force by the state and deliberate manipulation of information. India is a muddle, with no clear cut defined path ahead to pursue; it is characterized by political and economic adhocism. In both these much hyped nations the race for material prosperity, at any cost, is bound to result in more corruption and criminal activities. Consequently, marginalization of social and intellectual capitals, as an inevitable outcome of such derogatory social values, will inhibit their long term growth. China has embarked upon mass production of cheap industrial goods—quantity at the cost of quality has been the mantra of Chinese economy. This can never be a sustainable economic model and can never make China competitive in an integrated global economy in years to come. This reminds me of the Japan of 1960's. However, Japan could change its economic philosophy to emerge as a quality conscious high cost economy. I doubt whether China could ever be able to do so. Japan’s economic experiments and subsequent transformation was at a point in time when the world economic scenario was diametrically different and the competitive equations were simple and predictable. Even if we accept for a while that China can digress towards quality in future years, the most pertinent question will be, “When”? This “When” is a million $ question.

 The contribution of the foreign investments to China’s economic growth in last three decades is immense. Despite high level of corruption, pole-apart business culture, the investors were attracted to China for its cheap labor and lower capital costs in comparison to their home turf. But any conscious measure on the part of the Chinese authorities to transit from quantitative to qualitative economic culture is bound to experience flight of the much needed foreign capital which China can ill afford in near future. A mathematical modelling of this “When” will produce interesting result about such possible timeline clearing the misconceptions spreading the Chinese myth worldwide. .

India on the other hand, a distant second to China, is doomed to remain an unpredictable paradox. The crisis of leadership is of such tall order in India that days to come its political instability will greatly damage its economy. The process has already set in with a sharply falling currency, high inflationary trend, and serious problem of trade deficit, fall of industrial growth to all time low and erratic trends in the stock market. An economic hodgepodge, without any well defined economic goal—India’s problems and solutions to them are as complex as its hypocritical social milieu. Any attempt to analyse and evaluate India’s economy in isolation, without taking the complexities of its political, social and diverse federal character into consideration, is bound to be defeated. India will, very likely, emerge as the largest economic and political system of “Compromise”. Recurrent economic and political compromises and the fluidity of policy frameworks are some of the distinguishing features of its economy.

 India will need at least half a century more to define its political and economic polarities.  However, on the positive side, India’s accumulation of intellectual capital is likely to be better than China as a favorable factor. In contrast to China India will need lesser number of hands for its economic development and the surplus qualitative human capital will tend to engage itself in activities other than commercial, with a fair chance of contributing to the social and intellectual capital of the nation. If otherwise not deterred, India is likely to be a shade better than China on this count, in ensuing decades. But India turning into an economic power house or a world superpower in near future is clearly an unrealistic bold overstatement.

The economy of China has already started showing the signs of slowing down, and I suspect it is an over-heated economy. India’s growth saga is not unknown to anyone. The superpower of the yesteryear—the USSR fell like a pack of cards because of its poor social evolution; hence both these aspiring nations to emerge as future superpowers must learn many lessons from the experiences of the erstwhile Soviet Union

I  firmly believer that economic indices reveal nothing about a country. Statistically, India has registered an impressive economic performance in last two decades. Dose it anyway remotely indicate that India has created more wealth and happiness for its teeming billion? These statistical glories are manufactured by the ruling segments of the society to camouflage their inefficient performances. Is it not ridiculous that a nation aspiring to be the global superpower is imposing a myopic “Food Security Bill” through a presidential ordinance, clearly indicating that it is still struggling to provide the basic need of food to its citizens? Does it not reveal the impoverishment of the social and intellectual capitals of a nation of 1.24 billion people? Indian policy makers, in their anxiety to retain power and camouflage statistics are vulnerable to commit mistakes recurrently.. Any remote possibility for India to emerge as a vibrant economy, and as a world superpower has already been thwarted systematically by its political leadership. 

I had long time back come across an advertisement of a financially dwindling business establishment, which read something like this: "leave us with our people, we will make it again". A nation should never be measured by its economic indices; but by the human capital it possesses. The fundamental nature of any economy is invariably cyclical, whereas, if nurtured properly, the progression of human capital tends to be vertical and ever rising.

Where is the abundance of intellectual powers in India and China?  How many inventions or innovations they have contributed to the world in the modern age? Is it possible to sustain progress through borrowed ideas? I believe in a concept called "effortless efficiency" which can be initiated by the use of intellectual capital only. Industrial growth calls for human industriousness-- resulting in traders’ mindset and labor-class ethics and values.

As such, the backward countries of the world are not poor in their natural resources, rather are invariably rich in resources; hence their poverty can be ascribed to their inadequate intellectual wealth and lowly social capital. No country can make any perceptible progress without popularization of quality education among its citizens. This is the prerequisite for all round progress of a nation. I have traveled frequently to some African countries in last couple of years. These countries are very rich in their abundant natural wealth. But all said and done their social and intellectual backwardness is visible on the surface. Any discernible mind can attribute their economic backwardness and poverty to their poor social and intellectual capital. Corruption, poor standard of ethics, lack of reliability, lethargy and rampant social exploitation are the defining characteristics of these societies. Unruly rat race for wealth and material aggrandizement has further complicated their dreams of development. Almost all African, Asian, Latin American and Eastern European nations, barring some handful of exceptions, share the same problem of poverty of social capital and impoverished intellectual capital. This observation has made me to conclude that poverty and economic backwardness are the direct and proportionate outcome of social and intellectual poverty.

Majority of the world’s nations and population being afflicted by this poverty does not augur well for the world community at large. Such widespread intellectual and social poverty is highly detrimental to the peace, stability and development of the human race, symptoms of which are clearly evident in the current world scenario.  Unfailing and resolute efforts of the conscious citizens of the world need be directed to address these problems. What the world needs today is: more focus on improvement of the social and intellectual capitals of the world. Runaway economic growth or over emphasis on material wealth is the monster that will completely devastate human existence on this planet. We need a world society with harmonious social order and rich intellectual wealth for lasting progress of the human conditions.

The condition of the intellectual elites in any underdeveloped country is agonizingly suffocating, as they tend to be threats to the ruling classes and adversaries to the conventional thought milieu. I sometimes feel that the intellectuals in an underdeveloped nation are mute rebellions and are always looked upon with suspicion.

Today’s unfolding thought milieu is shifting from the gross to the subtle; from "brawn to brain". More than three decades ago, Alvin Toffler had written his celebrated book called "Power Shift", in which he had emphasized on the perceptible changes occurring in human civilization, and how the economic power is shifting in an evolutionary process from gross assets like land, building to currency notes, bank balance, plastic money, and of course, today's online virtual money. Similarly, in ancient days’ rudimentary societies, the political power was vested on tribal chieftains-- they were physically strong and hardy; but gradually the shift has evolved towards republics, parliamentary democracy etc, with stress upon the sovereignty of the masses.  The time is not far when the intellectuals of the world will wield the power-- the shift is from "brawn to brain"--the wealthy and the mighty without intellectual abilities will crumble giving way to an intellectual order worldwide. When Toffler wrote his book computer and software industries had hardly made any significant headway in the US or anywhere in the world. Toffler's vision has come true with the software industry, based on revolutionary intellectual properties, replaced to a large extent the gross industrial sector by its burgeoning bottom line.  The shift is evident.

The US is the largest economy in the world, though troubled by frequent engagements in wars, the economic prudence diluted by extreme liberalism in the financial sector and other internal factors like the vested interests of some large corporation and lobbyists.  Despite these temporary imbalances, the US will bounce back to its position of dominance and supremacy maybe in a different and nobler form. The critics will depreciate my view but I believe my point of view is equally strong or rather stronger than many critics as their observations are based on statistics and my observations are based on human dynamics and creative ingenuity—the social and intellectual capitals of a nation. 

I have stated before about that advertisement stressing upon the significance of manpower for revival. The US has the largest intellectual capital in the world; temporary depletion of economic capital will be well compensated by the abundance of intellectual capital they have. This intellectual capital has flourished in that country for more than a century now attracting best brains from all over the world. They have the best entrepreneurial spirits in their people, which were instrumental in building their fabulous economy and putting them at the center stage of the world, unlike the citizens of many other countries characterized by their fondness for security at the cost of enterprise. Hence, the US today has largely diversified activities unheard of in many countries. These seminal factors will see a major transformation in that country; and to my belief, the US will again emerge as a major power with a very refined new age perception. 

The US is still the global thought leader with very rich human capital, and promisingly the economy is turning around with positive growth trend (1.7%, last quarter).  Human dignity, justice delivery system and freedom of the citizens are zealously protected at all levels (with the recent exception of the clandestine activities of NSA), unlike the bookish and theoretical freedom, justice and equality granted to the citizens of India; and are conspicuous by their absence in China. What I intend to highlight is—a fair society with abundance of quality human capital  always have the tenacity to revive itself with certain structural changes, whereas a corrupt and unfair society disintegrates and crumbles on the face of economic crises.. Incidentally the US is the tenth most fair society in the world, and perhaps the fairest society among the countries having fifty million population or more. These are the inherent strength of the US to bring it back to health and prosperity again shattering many myths about the rising stars in the global horizon.